Volume 1 PDF

SAN BEDA UNIVERSITY
COLLEGE OF LAW
Centralized Bar Operations
BEDAN
RED
BOOK
POLITICAL AND INTERNATIONAL LAW

LABOR LAW AND SOCIAL LEGISLATION
CIVIL LAW
TAXATION LAW
A Reviewer based on the 2019 Supreme Court Bar Exam Syllabus
Volume 1
Series of 2019
SAN BEDA LAW
CENTRALIZED
BAR OPERATIONS
2019
EXECUTIVE COMMITTEE
Over-all Chairperson Mary Cyriell C. Sumanqui
Chairperson for Academics Erica Mae C. Vista
Chairperson for Hotel Operations Ben Rei E. Barbero
Vice Chairperson for Secretariat Jhelsea Louise B. Dimaano
Vice Chairperson for Operations Daniel Philip V. Barnachea
Vice Chairperson for Finance Ma. Angelica B. De Leon
Vice Chairperson for Audit Arra Olmaya J. Badangan
Vice Chairperson for EDP Jordan N. Chavez
Vice Chairperson for Logistics Hanz Darryl D.Tiu
Vice Chairperson for Membership Colleen F. Dilla
• SUBJECT MITTO,E
Subject Chair for Political Law Cherish Kim B. Ferrer
Subject Chair for Labor Law Kristina D. Cabugao
Subject Chair for Civil Law Ma. Cristina D. Arroyo
Subject Chair for Taxation Law Maria Carissa C. Guinto
Subject Chair for Mercantile Law Dentzen S. Villegas
Subject Chair for Criminal Law Maria Regina C. Gam.eng
Subject Chair for Remedial Law Raymond F. Ramos
Subject Chair for Legal Ethics Rhev Xandra Acuiia
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Roger P. Cuaresma Camille Victoria D. Dela Cruz

Gabrielle Anne S. Endona Paulo 0. Hernandez
Joelle Mae J. Garcia Teresa Katherine R. Kua
Micah Regina A. Gonzales Ma. Lourdes M. Santos
Marie Anna Karla M. Regencia
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Dean Atty. Marciano G. Delson

Vice Dean Atty. Risel G. Castillo-Taleon
Prefect of Student Affairs Atty. Adonis V. Gabriel
Administrative Officer Atty. Francesca Lourdes M. Seaga
Legal Aid Bureau Director Atty. Peter-Joey B. Usita
PREFACE TO THE NINTH EDITION
In 2011, the Bedan Red Book (BRB) was crafted as an apt response to the
Bar Examination Syllabus released by the Supreme Court, complementing
significantly the other bar review materials in the repository of the San Beda
Centralized Bar Operations.
Now on its NINTH EDITION (9TH ed.), the BRB is tailor-fit for the 2019 Bar
Examination as to include the latest law and jurisprudence covered by the syllabus.
Being comprehensive yet concise, it serves as a handy tool for the reader's bar
review.
With this issue, the San Beda Law Centralized Bar Operations seeks to
uphold its legacy of service and excellence in helping the examinees achieve their
goal of becoming worthy members of the legal profession.
UT IN OMNIBUS GLORIFICETUR DEUS
SAN BEDA LAW

CENTRALIZED
BAR OPERATIONS
2019
THIS IS THE INTELLECTUAL PROPERTY OF THE

SAN BEDA UNIVERSITY COLLEGE OF LAW
CENTRALIZED BAR OPERATIONS.
THE UNAUTHORIZED COPYING, REPRODUCTION,
MODIFICATION OR DISTRIBUTION
OF ANY OF THE CONTENTS OF THIS BOOK IS
STRICTLY PROHIBITED.
.&:".1•
1„/4
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TABLE OF CONTENTS
I. Preliminary Provisions and Basic Concepts 2

II. Legislative Department 9
III. Executive Department 29
IV. Judicial Department 42
V. Constitutional Commissions 49
VI. Bill of Rights 54
VII. Citizenship 93
VIII. Law on Public Officers 96
IX. Administrative Law 130
X. Election Law 141
XI. Local Governments 162
XII. National Economy and Patrimony 174
XIII. Social Justice and Human Rights 177
XIV. Education, Science, Technology, Arts, Culture and Sports 179
XV. The Family 180
XVI. Amendments or Revisions of The Constitution 180
XVII. Public International Law 182
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I. General Provisions 220
II. Pre-Employment 221
III. Labor Standards 231
IV. Social Welfare Legislation 271
V. Labor Relations 288
VI. Post-Employment 326
VII. Management Prerogative 353
VIII. Jurisdiction and Reliefs 357
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CIVIL LAW
I. General Principles 374

II. Persons and Family Relations 389
III. Property 444
IV. Succession 503
V. Obligations and Contracts 553
VI. Sales 613
VII. Lease 646
VIII. Partnership 651
IX. Agency 675
X. Credit Transactions 687
Xi. Land Titles and Deeds 708
XII. Torts and Damages 721
Cr
I. General Principles 738

II. National Taxation 769
III. Local Taxation 967
IV. Judicial Remedies 1009
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Appendix A: Syllabus for the 2019 Bar Examinations: 1019

Political and International Law
Appendix B: Syllabus for the 2019 Bar Examinations: 1025
Labor Law and Social Legislation
Appendix C: Syllabus for the 2019 Bar Examinations: 1028
Civil Law
Appendix D: Syllabus for the 2019 Bar Examinations: 1032
Taxation Law
Bibliography 1037
POLITICAL AND
INTERNATIONAL LAW
CHERISH KIM B. FERRER
Subject Chair
CHARLO 1'1'hVINA S. CASINILLO

Assistant Subject Chair
ROEN G. MECANO
Subject Electronic Data Processing
SUBJECT HEADS
Constitution Law I CHRISTIAN S. TADURAN

Constitution Law II PATRICK RAY B. BALISI
Administrative Law LEONORE MAE P. DEGOLLADO
Law on Public Corporation LEONORE MAE P. DEGOLLADO
• Election Law VOLTAIRE P. SOMERA
Law on Public Officers VOLTAIRE P. SOMERA
Public International Law GERANI D. MALIJAN
SUBJECT MEMBERS
AARON FRANZ SP. AURELIO REGINA PURITA B. LAVARIAS

FRANCIS ARTHUR A. CORPUZ JAIME NIKOLAI K PAGGAO
MARIA KATRINA L. DATUIN MARIA YSABELLA B. PALAMOS
JOHN LORENCE N. DE MESA KRISTINE JOANNE T. SAGMON
MARIA ERICA L. DELA CRUZ ELLAINE ROSE S. TAN
— -FRANCES CAMILLE A. FRANCISCO MAYRELL T. TAN
FERDINAND ELBERT D. JOMILLA JR.
ADVISERS
Atty. ADONIS V. GABRIEL Atty. ROWELL D. ILAGAN

Comm. RENE V. SARMIENTO Atty. ANTONIO EDUARDO S.
NACHURA, JR.
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POLITICAL AND
INTERNATIONAL LAW
I. PRELIMINARY PROVISIONS AND BASIC CONCEPTS
A. NATIONAL TERRITORY
Q: What are included in the national territory of the Philippines?
ANS: The national territory of the Philippines includes the following:
1. The Philippine archipelago, with all the islands and waters embraced therein;
2. All other territories over which the Philippines has sovereignty or jurisdiction,
consisting of its terrestaalefluVialralid'aedal domains;
s
3. Its territorial seaythg .seabed, the 'rattle insular shelves, and other
submarine areas',and I
4, .1
4. The waters.orpung, between"'aTia" EtinnVing_the islands of the archipelago,
regardles0:Qh9ir;breadth aqd....dimensiorisk whiCh s:forkn part of the internal
waters ophe PhilippinesibONSIVUT/M-ArN3Yheremkfter, CONST.].
Q: What is the archipelagooctane?

ANS: The waters...arcfind, b:etween„...atid.Z6dnnecting the Isla gr) 's. of the archipelago,
regardless of TheiAreadth and dimensns Jo pa of themntdrnal waters of the
Philippines (CONSIgArt. 4 Sec. lilt;,se6citp.d",sig111
- .ence. Undelitlis -*trine, a straight
baseline is dra .0.43y connectmg the'dthatm•rOpeints qf he, a r c iperibtb and consider all
the waters enclosed4ter4ly;Ainternatzkaf6rs-ICRU2 ilippur Po/ ical Law, (2014),
p. 24) thereindtetc13 Z, Philippine Politic t j.
Q: By dropping the phi*e 11i&io hippines by hig oric right or legal

title", did the ColiktitutioNn esfa tippine/Claim to Sabah?
ANS: No. The clause dis,g01 •8abe. It haillowever, avoided the
use of language historically o ep-sive4L,salt sixarrdtlas edinstead the clause "over
which the Philippines has so. eifignty oraictidl4.)Nh " Jcfmula is recognition of the
t cpnstit
fact that unilateral assertionskiQ„ jilogornicipal law, by themselves, do
not establish an international Tight4p a,;:tescitorY (BERNAS, The 1987 Philippine
Constitution: A Comprehensive Reviewer, (2011), p. 5) (hereinafter BERNAS, Philippine
Constitution Reviewer].
Q: By entering into UNCLOS, and by enacting the baseline law, did the Philippines
lose territory?
ANS: No. UNCLOS III has nothing to do with the acquisition (or loss) of territory. It is a
multilateral treaty regulating, among others, sea-use rights over maritime zones (i.e., the
territorial waters [12 nautical miles from the baselines], contiguous zone [24 nautical
miles from the baselines], exclusive economic zone [200 nautical miles from the
baselines]), and continental shelves that UNCLOS III delimits.
On.the other hand, baselines laws such as RA 9522 are enacted by UNCLOS Ill States
parties to mark-out specific basepoints along their coasts from which baselines are
drawn, either straight or contoured, to serve as geographic starting points to measure
the breadth of the maritime zones and continental shelf. Thus, baselines laws are
nothing but statutory mechanisms for UNCLOS III States parties to delimit with precision
the extent of their maritime zones and continental shelves. In turn, this gives notice to
the rest of the international community of the scope of the maritime space and
2
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submarine areas within which States parties exercise treaty-based rights, namely, the
exercise of sovereignty over territorial waters (Article 2), the jurisdiction to enforce
customs, fiscal, immigration, and sanitation laws in the contiguous zone (Article 33), and
the right to exploit the living and non-living resources in the exclusive economic zone
(Article 56) and continental shelf (Article 77) (Magallona v. Ermita, G.R. No. 187167.
August 16, 2011).
B. DECLARATION OF PRINCIPLES AND STATE POLICIES

Q: What is the function of the "Declaration of Principles and State Policies" in the
Constitution?
ANS: The "Declaration of Principles and State Policies" is a statement of the basic
ideological principles and policies that underlie the Constitution. As such, the provisions
shed light on the meaning of the other provisions of the Constitution and they are a
guide for all departments of the government in the implementation of the Constitution
(BERNAS, Philippine Constitution Reviewer, supra at 8).
Q:.What is the nature of the PhilippiOdItate?
ANS: The Philippines is a democretieanftepublican state. Sovereignty resides in the
people and all government authoritY.qmAtpes from them (CONST., Art. II, Sec. 1). It is:
1. Democratic as it is a pei-tiCipeow democracy, and contemplates instances
where the people woukVIO-CiPdi[ectly„ and not always through their
representatives (Tolentino ELE'GFG.d1300.0,48334, January 21, 2004);
and
2. Republican \Oq'vit is a repreeez ,ive government runalt,and for the people, its
essence is r#preAentation.,ind ienovation (CRUk,' Philippine Political Law,
supra at 90,4a "A;
;511,1:
Q: What is thtforeign,apolicy of theAP.hi 'Opines? .„.
ANS: The Statesphall parpe an_ inderiertd:6;nt foreignveolichiti.4tslrelations with other
states, the aramoiffir cdritideraiitin, sha natiorrategiref**Tecritorial integrity,
national interest;and thVidit to sgICtL ete 'ination (CONSItart0; Sec. 7).
Vergil 7
Q: Does independelii. oreidp policy re • uire the Philippines to be isolated from the
rest of the world?
• 4Aia
ANS: No. The ConstittIfitirnid not esivAsi9w 3714,tpevolation
• • of the country from
the rest of the world. Ifirs DecgatiOn-orPlincrtles-andllate Policies, the Constitution
"adopts the generally asdceptedrAnciples of international law as part of the law of the
land, and adheres to ttariperfiC , of peace, equality, justice, freedom, cooperation and
amity, with all nations." By the doctrine of incorporation, the country is bound by
generally accepted principles of international law, which are considered to be
automatically part of our own laws (Tanada v. Angara, G.R. No. 118295, May 2, 1997).
Q: May the Philippines declare war?
ANS: No. The Philippines renounces war as an instrument of national policy, adopts the
generally accepted principles of international law as part of the law of the land and
adheres to the policy of peace, equality, justice, freedom, cooperation, and amity with all
nations (CONST, Art. II, Sec. 2). However, it is to be noted that this provision speaks of
an offensive war, not of a defensive war, as it authorizes the declaration of the existence
of a state of war (CONST., Art. VI, Sec. 23). Such defensive war is presumably
commenced or provoked by the enemy state (CRUZ, Philippine Political Law, supra at
101).
Q: What is civilian supremacy and what is its basis?
ANS: Civilian supremacy means that civilian authority is, at all times, supreme over the
military (CONST., Art. 11, Sec. 3). The principle is based on the fact that "sovereignty
resides in the people and all government authority emanates from them" (CONST., Art.
II, Sec. 1).
It is ensured by:
1. The installation of the President, the highest civilian authority, as the
commander-in-chief of all the armed forces of the Philippines (CONST., Art.
VII, Sec. 18); and
2. The requirement that members of the AFP swear to uphold and defend the
Constitution, which is the fundamental law of the civil government (CONST.,
Art. XVI, Sec. 5, par. (1)).
Q: Are members of the Armed Forces of the Philippines (AFP), triable by regular
courts?
ANS: Yes, Section 1 of R.A. No. 7055 lays down the general rule that members of the
AFP and other persons subject to military law, including members of the Citizens Armed
Forces Geographical Units (CAFGU), who commit crimes or offenses penalized under
the Revised Penal Code (like coup d'etat), other special penal laws, or local ordinances,
shall be tried by the proper civil court.
,
The exception is where the civil' court, befgre arraignment, has determined the offense
to be service-connected, the:rithe%pffendlo)solaislj'allpeAried by a court martial.
1 j
The exception to thnxceptioewhere V the Presiuefci th,e*POliippines, in the interest
of justice, directs before,ipiptgn ent-thlUary' l such crii-ne-s br offenses be tried by the
proper civil courtfqeza/es v. bayapP.Fro4640074 AuvstpN006).
i l f ter.
.„
Q: What is theafole of he Pe? i r (*)
ANS: The AFP ikesthe protecr6rolltie pzple—ErKt State. -6' gRal is to secure the
sovereignty of the-State and the iiire,grity f‘ttie,iiitional territo CONST., Art. II, Sec.
3). TZ.KilD.W.:; -e4
\,.e. , ,
Q: What is the Rape duty,p, e Govern erg? . 2:) A.:,.<4
ANS: The primTkafut of thkA jetcfseryt_a d pr-otect file people. For this
purpose, the Gqyernmkt m.x..c'ca ti-i4(ortaXo d9fend the' State and, in the
fulfillment thereof all citizens mg-pirfe-tiRder cAditionshrovided by law, to
render personal mil(tary, orsliykskqbe '9efin .W /I ec. 4).
Note: The duty of int governmeztAti-s r h ate% ang,cf be performed except
through an army. To leavedefiranization.of,an rt‘ .ri4yi,..t,o,t ewill of the citizens would
be to make this duty of Tr ovVimeri c *sable,*our there be no sufficient men
who would volunteer to enlist therein (lf G.R. No. L-45892, July 13,
1938).
Q: Discuss the doctrine of separation of Church and State and its consequence6.
ANS: The separation of Church and State shall be inviolable (CONST., Art. II, Sec. 6).
Under our constitutional scherhe, it is not the task of the State to favor any religion by
protecting it against an attack by another religion. Vis-a-vis religious differences, the
State enjoys no banquet of options (Iglesia ni Cristo v. Court of Appeals, G.R. No.
119673, July 26, 1996).
(Please refer to the discussion on Freedom of Religion under Constitutional Law 2).
Q: Discuss the State's independent foreign policy and freedom from nuclear
weapons.
ANS: The constitutional policy of a self-reliant and independent national, economy does
not necessarily rule out the entry of foreign investments, goods 'and services. It
contemplates neither economic seclusion nor mendicancy in the international
community (Tanada v. Angara, G.R. No. 118295, May 2, 1997). However, there is a
marked antipathy in the Constitution towards foreign military presence in the country, or
4
•
of foreign influence in general (Lim v. Executive Secretary, G.R. No. 151445, April 11,
2002). Moreover, the Philippines, consistent with the national interest, adopts and
pursues a policy of freedom from nuclear weapons in its territory (CONST., Art. II, Sec.
8).
Q: What is the policy of the State on human rights?

ANS: "The State values the dignity of every human person and guarantees full respect
for human rights (CONSTI. Art. II, Sec. 11). As the government is the chief guarantor of
order and security, the Constitutional guarantee of the rights to life, liberty and security
of person is rendered ineffective if the government does not afford protection to these
rights especially when they are under threat (Razon v. Tagitis, G.R. No. 182498,
December 3, 2009).
Q: Does the Constitution allow abortion?

ANS: No. The Constitution affords protection to the unborn from conception. The clear
and unequivocal intent of the framers of the 1987 Constitution in protecting the life of the
unborn from conception was to pr,0,01 the Legislature from enacting a measure
legalizing abortion. The intention ....,.AoftitAke sure that there would be no pro-abortion
laws ever passed by Congress CVAIISRpWabortion decision passed by the Supreme
Court. ',q""W„,:t14
0;14-;:ta,
Note: A reading of the RH Law vyoult 002.4natiittj s in linclph this intent and actually
proscribes abortion. While the,BburtoPteglittroltrint2Ony determination, at this
stage, when life beginslitlfites that th'e It Law itself clearl {mandates that protection
be afforded from theanoment of fertkizat on. Moreover, the RH Law recognizes that
. 24V;1 ti:•M'unt • . '0 which• penalizes the
abortion is a crime under Article 256,of tie Revised Pen I Code,
destruction or expulsiffl cppOfertiiized tiS3ium (Spouses or)4 v. Ochoa, Jr, G.R.
Nos. 204819, 204,014, 20,49Z ,, 204988,205003, 20500, 205188, 205478, 205491,
205720, 2063055,9207114 207172 & 2Q7568, April 8, 20,1).
%,199
Q: What is thbpolicy o e Stairen local autonomYRe
ANS: The Statvsp1109athe au!smo 4473"4 f local governmentsICONST., Art. II, Sec.
25). The territorial griVedliticgt subdiVisio sishall enjoy local autonomy (CONST., Art. X,
Sec. 3). The above-quotedprovisions of t e Constitution and the LGC reveal the policy
of the State to empoaer Local governmn eits :P tIGUs) to develop and ultimately,
become self-sustainingrand effetiertrrnaltaltbRrirational
c economy (Belgica v.
Ochoa, G.R. No. 2085 6tNoveliti,er 19, 2013).
Q: Is there a constitutionslmg t to a balanced and healthful ecology?

ANS: Yes. While the right to a balanced and healthful ecology is to be found under the
Declaration of Principles and State Policies and not under the Bill of Rights, it does not
follow that it is less important than any of the civil and political rights enumerated in the
latter. Such a right belongs to a different category of rights altogether for it concerns
nothing less than self-preservation and self-perpetuation — aptly and fittingly stressed
by the petitioners — the advancement of which may even be said to predate all
governments and constitutions. As a matter of fact, these basic rights need not even be
written in the Constitution for they are assumed to exist from the inception of
humankind. If they are now explicitly mentioned in the fundamental charter, it is because
of the well-founded fear of its framers that unless the rights to a balanced and healthful
ecology and to health are mandated as state policies by the Constitution itself, thereby
highlighting their continuing importance and imposing upon the state a solemn
obligation to preserve the first and protect and advance the second, the day would not
be too far when all else would be lost not only for the present generation, but also for
those to come — generations which stand to inherit nothing but parched earth incapable
of sustaining life (Oposa v. Factoran, Jr., G.R. No. 101083, July 30, 1993).
5
• 4A1.-gz'd',.t.atr-fAtAk;i1Zz'':"..ri74.41'0;i*:;,':(7q.,
Q: What is the policy of the State on access to public service?

ANS: The State shall guarantee equal access to opportunities for public service and
prohibit political dynasties as may be defined by law (CONST., Art. II, Sec. 26).
Note: This provision does not contain a judicially enforceable constitutional right and
merely specifies a guideline for legislative action. It is not intended to compel the State
to enact positive measures that would accommodate as many as possible into public
office. The privilege may be subjected to limitations such as the provision of the
Omnibus Election Code (OEC) on nuisance candidates (Pamatong v. COMELEC, G.R.
No. 161872, April 13, 2004).
Q: What is the policy of the State on disclosure of matters of public interest?

ANS: Subject to reasonable conditions prescribed by law, the State adopts and
implements a policy of full public disclosure of all its transactions involving public interest
(CONST., Art. II, Sec. 28).
Note: Article II, Section 28 of the Constitution recognizes the duty of officialdom to give
information even if nobody demands,„This:.prAyklon is essential to hold public officials
accountable to the people. TO,,abVenceof-an imPlbrnekting legislation is not an excuse
in not effecting such poliqp(The bro„vincloi NPVICOtaqato,et al. v. The Government of
the Republic of the Pp, ilipgriapiPdace..Panel: dpce:strarDomain, et al., G.R. Nos.
183591, 183752, 183893 and,183951, October 14;°"2008) „.."
C SEPARATIONOOP:0 ERS ..
(:•
Q: Discuss the separation cf powers. ,,'.'
ANS: The principle-ofteparation-of-po)ivifs)-efers-to-t e co pcitrtIrlal demarcation of
the three fundirp4ai powert of'gmernrOrlt.-Tp:„the legislatiV Itirer4 of government,
through Congress, , ibpongs !the p14.r..16._.. de 14s; to t e_eReputive branch of
government, irOjOhRthecPrpident, "e o • g$frlthe poi/Vo e forcd aws; and to the
judicial branchtof gove rn erliNrougtrrthe—burtrbefs?iriglith p_12mr to interpret laws.
Because the threggreat p ."@rs have ' ai ,c).t
fitu Iona deSigd ; ordained in this
respect, "each klepart4nt tie\ ar el'it;,h \-,Wclusle cog mance of matters
c4i4,6 •-"'s here" Belgic v. Ochoa, G.R. No.
within its jurisdickn, anak supre e " 'tt
208566, November 19,
CIEZ\
CI: What is the purpos of/e,(ation.p.sa, vers
ANS: The principle otNepargbii of .po/we's rts.? .poncepts of autonomy and
independence stem from the &loth that204.0ONv rs of government must be divided to
avoid concentration of these pow irkaamne.branch; the division, it is hoped, would
avoid any single branch from lording its power over the other branches or the citizenry
(Belgica v. Ochoa, supra).
Q: When is there a violation of separation of powers?

ANS: Broadly speaking, there is a violation of the separation of powers principle when
one branch of government unduly encroaches on the domain of another.. US Supreme
Court decisions instruct that the principle of separation of powers may be violated in two
(2) ways:
1. Firstly, "one branch may interfere impermissibly with the other's performance
of its constitutionally assigned function"; and
2. Alternatively, "the doctrine may be violated when one branch assumes a
function that more properly is entrusted to another."
In other words, there is a violation of the principle when there is impermissible (a)
interference with and/or (b) assumption of another department's functions (Belgica v.
Ochoa, supra).
6
D. CHECKS AND BALANCES
Q: What is the principle of checks and balances?
ANS: This is a mechanism by which one department is allowed to resist encroachments
upon its prerogatives or to rectify mistakes or excesses committed by the other
departments (NACHURA, Outline Reviewer in Political Law (2016), p. 97) [hereinafter
NACHURA).
Q: What is the principle of the blending of powers?

ANS: These are instances when powers are not confined exclusively within one
department but are assigned to or shared by several departments (NACHURA, supra at
97). It is often necessary for certain powers to be reposed in more than one department,
so that they may better collaborate with and, in the process, check each other for the
public good (CRUZ, Philippine Political Law, supra at 135).
E.STATE IMMUNITY
Q: Discuss the principle of state #9#0.4y.
ANS: The State may not be suedNthAfitis consent (CONST., Art. XVI, Sec. 3). The
rationale behind this is that there 009111:140pal right against the authority which makes
the law on which the right deperils.(plAnent of Health v. Phil Pharmawealth, G.R.
No. 182358, February 20, 2013).., '
,„4,"' ItikWO
Q: What is the sociologi011basis of sta e immunity? - A
ANS: Practical considerStiogs dictate,itl,a, of animunity from suit in favor
of the State. OtherwiseTalt.pe Statels su able at the instalfcl 4. every other individual,
amble
government serviceec* b§4ev"drely obst -:cted and public s%fetAendangered because
of the number 9S.tgr.fits
, thdtAfrexState has tod defend agaist. Several justifications have
been offered te08-upporkthOadoptiontatIthOlcictrine in the Philippin&, but that offered in
Providence lashingOrPfkiran9e Co. V Republicr,g6the aillpi pes is "the most
acceptable exfilanatiory'$ceordi0-19 Fa er Bernk,s4kleolnizecicommentator
.. Igit,okw-- on
Constitutional La 4,,:o Vitt 11
.
A continued aefergcet the dectrirte of non-suability is not to be deplored for as
against the iricorkenierjce that ma bercaused private parties, the loss of
governmental effiwAnd the ii?bi*Ifitlehlperformance of its multifarious
functions are far neater if s '"Vrefifirdrnie • tall rifieVe were abandoned and the
availability of judcial re, 6 y were not thus restricted. With the well-known
propensity on the pa ,:tpfrts people to go to court, at the least provocation, the loss
of time and energy req ireCi to defend against law suits, in the absence of such a
basic principle that constitutes such an effective obstacle, could very well be
imagined. (Air Transportation Office v. Spouses Ramos, G.R. No. 159402,
February 23, 2011).
Q: May this principle be invoked by other states?

ANS: Yes. Immunity is enjoyed by all States as such, consonant with the public
international law principle par in parem non habet imperium that all states are sovereign
equals and cannot assert jurisdiction over one another (Minucher v. CA, GR. No.
142396, February 11, 2013). The head of State, who is deemed the personification of
the State, is inviolable, and thus enjoys-immunity from suit (NACHURA, supra at 47).
Q: What determines if the suit is against the state?

ANS: The suit is regarded as one against the state where satisfaction of the judgment
against the officials will require the state itself to perform a positive act, such as the
appropriation of the amount necessary to pay the damages awarded against them
(Department of Health v. Phil Pharmawealth, G.R. No. 169304, March 13, 2007).
7
::11fiti*ggr;u!,;.yy
6.i.-- :i.‘°•Viel:i-1.4.7,* •''. :i.'4..i-iiiE,zv.;.;.4..,-
;ti
( ..r...Eirfri
fivg:ilnilinti:liz.*4: ilx K91ve,...,4:1-v:....i?. %f:.,,...iii74:4ii,7.1..:.•
Q: May there be a waiver of state immunity? Explain.

ANS: Yes. The Constitution provides that the State may not be sued without its consent
(CONST., Art. XVI, Sec. 3). In order that a suit may lie against the State, it must give its
consent, whether express or implied (Department of Transportation and
Communications v. Spouses Abecina, G.R. No. 206484, June 29, 2016).
Q: How may the State give its express consent to be sued?

ANS: Express consent may be made through a general law or a special law. In this
jurisdiction, a general law waiving the immunity of the state from certain suits is found in
Act No. 3083, where the Philippine government "consents and submits to be sued upon
any money claim involving liability arising from contract, express or implied, which could
serve as a basis of civil action between private parties" (Republic v. NLRC, G.R. No.
120385, October 17, 1996).
Q: How may the State give its implied consent to be sued?

ANS: The State may impliedly give its..co.nsenttoJae sued: (PBSI)
1. When the State er2terp-into a Private .rontrkct, unless the contract is only
incidental to tijali,arfogrpance,of a!'gdvefrinfent, function. This concept of
restrictive th,9.orAholdtth§,t,,the.immUr&lif tp_s,sovireign is recognized only
with regard,tb,publiccteor -a acts jure imge'rii,.bat notIvitti regard to private acts
or acts juie obatiOnis (13epubledrIlidonesia Vidzon, G.R. No. 154705, June
'
26, 20031Cr). , I
' r .J e — ,; • ....._
) ifi
2. When1f ithe S,tate enters into an' operation that s, esseptially a Business
operation, uniOss the businessiOperation is only incidlyal fo the performance
rte.
of a dovarrtnpntal InctrorT5r G.1MNd.'&23139,
fcTirigtnc,, ariastre Dece rvicaMobil Philippines
v. Cdsems A , rrastra SerW60,- erV, 1966);
3. Wheg t edslate Sue a pHVaNiaTty;;cunles4 the su Dis-e- fered into only to
resisEa atm (Lii‘1 -71 ,,, Brownhe%i GA::.1Clo. fL-8 y ,„eil arc 24, t60); and
4. Whenthe-9.1)plicapeANg t a:47. o Vine. o I s e.)Imm • nity4ould serve as an
instru ent -fokpei4pkng *An volielpv ,*ken, as wh'e the State enters
and to es pog,s„essiokoka,!4'Onv tel:fro /without just compensation and
without' iriitkatingsyre4uta ex6pfilion _proceedig s (Department of
TranspoRation andkcc,,,,... rrtzQiikationg-v [Sp • useeAbecinaf supra).
L-it,N 1
7/- e State?
Q: What is the sco>btthe,coins,ertt=thatmarb
ANS: Where the State giVecfcci onsentlo e ay • ate parties either by general
or special law, it may limit theIctign_onlyiti t ortIr3letion of proceedings anterior to
the stage of execution and thal Ye - e o courts ends when the judgment is
rendered, since government funds and properties may not be seized under writs of
execution or garnishment to satisfy such judgments. Disbursements of public funds
must be covered by the corresponding appropriation as required by law (Republic v.
Villasor, G.R. No. L-30671, November 28, 1972).
Q: Do government-owned or -controlled corporations also enjoy the immunity of

the State from suit?
ANS: No. A government owned and controlled corporation has a personality of its own,
distinct and separate from that of the Government (Rayo v. Court of First Instance of
Bulacan, G.R. No. L-55273-83, December 19, 1981).
Q: Are government agencies entitled to immunity?

ANS: It depends if the agency is incorporated, the test of its suability is found in its
charter. The rule is that it is suable if its charter says so, and this is true regardless of
the functions it is performing (CRUZ, Philippine Political Law, supra at 71). However, if
the charter is silent, one must inquire into its function based on the purpose for which it
was created (Malong v. PNR, G.R. No. L-49930, August 7, 1985).
8
•
On the other hand, if it is unincorporated, then it has no separate juridical personality.

Hence, as a general rule, suits filed against it are necessarily actions against the state of
which it is part (Philippine Rock Industries, Inc. v. Board of Liquidators, G.R. No. 84992
December 15, 1989). However, the need to distinguish between an unincorporated
government agency performing governmental function and one performing proprietary
functions has arisen. The immunity has been upheld in favor of the former because its
function is governmental or incidental to such function; it has not been upheld in favor of
the latter whose function was not in pursuit of a necessary function of government but
was essentially a business (Air Transportation Office v. Spouses. David, G.R. No.
159402, February 23, 2011).
Q: Is there an exception to the rule on prohibition of garnishment of public funds?

ANS: Yes. If the funds belong to a public corporation or a government-owned or
controlled corporation which is clothed with a personality of its own, separate and
distinct from that of the government, then its funds are not exempt from garnishment.
This is so because when the governmentAnters into commercial business, it abandons
its sovereign capacity and is to be tre4tetylike any other corporation (National Housing
Authority v. Heirs of Isidro Guivelori(70.Wo. 154411, June 19, 2003).
Note: Before levy on execution 1430.0tmed, a claim for payment of the judgment
award must first be filed with lhk*Flission on Audit, which has the primary
jurisdiction to examine, audit, an4s§YlVtl i 7p981send clairppi of any sort" due from or
owing the Goyernment or.,1,: any''or,:itgrsObaisiindbtertias, , and instrumentalities,
i,,,,,,,,A
_.:,,, 1.1
including GOCCs ., RI
(Agray.CommissionoeZit,G.R.N0A67807,December,011).
4410.. 4 PA''''
I - T., /
Q: May a court dire49,1;thagarnishment 01 funds approyriale o a State university
to satisfy the uppaid bapice. of a comatruction proiject 14Jon he ground that the
funds had already been.4armarkeecr the construction pr ject‘
ANS: No. taf:iecigkapio.,E9priation by bBngress 4, ...esov .&,beigice the judgment
rendering UPALable for •datageslAuld 4
satisfied; rt§iyerepbdt such monetary
liabilities were no.Icove
t, the appro cations earmarked-ford; said project". The
Constitution strict1 bteRthat "nt mor shall be paid out of the Treasury except in
pursuance of an appropriatiori nade by la (J ive ity of the Philippines v. Dizon, G.R.
No. 171182, August 23,kA:
9
i , TED
f e
.;
z,:. wo writiailmfini..
.,arg
...' ,...r.......,_......".....—.....,,„ RIs %. n:;«
A.LEGISLATIVE POWER
Scope am/Limitations
Q: Discuss the scope of legislative power.
ANS: Legislative power is the power to propose, enact, amend, and repeal statutes
(BERNAS, The 1987 Philippine Constitution: A Commentary, (2009), p. 676)
[hereinafter BERNAS, Commentary on 1987 Philippine Constitution]. It is vested in the
Congress of the Philippines, which shall consist of a Senate and a House of
Representatives, except to the extent reserved to the people by the provisions on
initiative and referendum (CONST., Art. VI, Sec.1).
Q: What are the limitations of legislative power?

ANS: Legislative power is subject to:
1. Substantive limitations - which involve the exercise of the power itself and the
allowable subjects of legislation; and
2. Procedural limitations - which specify the manner of passing laws (BERNAS,
Commentary on 1987 Philippine Constitution, supra at 679).
9
•
Q: What are some of the substantive limitations?

ANS: The following are the substantive limitations under the Constitution:
1. No law shall be passed abridging the freedom of speech, of expression, or of
the press, or the right of the people peaceably to assemble and petition the
government for redress of grievances (CONST., Art. III, Sec. 4).
2. No law shall be made respecting an establishment of religion, or prohibiting
the free exercise thereof (CONST., Art. III, Sec. 5).
3. No law impairing the obligation of contracts shall be passed (CONST., Art. III,
Sec. 10).
4. No ex post facto law or bill of attainder shall be enacted (CONST., Art. III, Sec.
22).
5. No law shall be passed authorizing any transfer of appropriations; however,
the President, the President of the Senate, the Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, and the heads of
Constitutional Commissions may, by law, be authorized to augment any item
in the general appropriatipps.law.for teir respective offices from savings in
other items of theirpspeCtive appropriatirnm(CONST., Art. VI, Sec. 25(5)).
6. No provision octonactmkt shall be !,mbracted filltkp general appropriations bill
unless it relates siecifiCally„to-some;Palcrilarlappropriation therein. Any such
provision op'enactipeOtifiall be limited iii its Oberatich to the appropriation to
t •,.... it•
which it relatek(COSS,T.rAttrgiSeb:-25,(4V\ N
7. Prohibitib'rf ':agairra use ofTipublip money ori prokrtfjo'rk religious purposes
(CONSt., Art: l, Seb. 29(2A. ,:t.., ...‘::. 1 ‘1 4 N
8. No la larantiorTg anyltax exemption shall be plssedVithou't the concurrence of
a majprip7ofi all the embers oft Congress i(CONWAstie/, Sec. 28(4)).
9. All mpriercollectedbn driSk-41AX:18Vied f.6'06 sptecial puEposeighall be treated as
a sOcialAind and‘paid filbt,,:*--spCti purpose °nil l(O0fiST., Art.VI, Sec.
29(3),):‹1_,A (----Acc %.,-;.±.-.T.,7 4
i pf-7.)
9 i
10. CharitaW stit6trobs, churphed and pargo ales r° eon -, ents appurtenant
11 .,..-vs. :t i I : ri
thereto osgues\f( •-ps.9(1.1pr9gi cerriatbpy4id I lands, buildings, and
improementetifed wrefigtobs,IChiltadj#Or ed cation purposes shall be
exempefrom taxation Cp t.,,aptietnOece-28(3), .
11. All revers and assets, "istolyno -plot educitional institutions used
actually, directly, and clusi- e0or due tonal shall be exempt
from taxes andkb, ddiat , ' STTpArtfrX1r-4\1 43) t,
\ .."
12. No law shall bed' .4ncrea-Vgg 11.elappel ate jurisdiction of the Supreme
Court as provideelfNtlaLEVfifutioll,withint its advice and concurrence
”IFS.I.....".."
(CONST., Art.VI, Sec. 30).
13. No law granting a title of royalty or nobility shall be enacted (CONST., Art.VI,
Sec. 31).
Q: What are the procedural limitations?
ANS: The following are the procedural limitations under the Constitution:
1. Every bill passed by the Congress shall embrace only one subject, whiCh shall
be expressed in the title thereof (CONST., Art. VI, Sec. 26(1)).
2. No bill passed by either House shall become a law unless it has passed three
(3) readings on separate days, and printed copies thereof in its final form have
been distributed to its Members three days before its passage, except when
the President certifies to the necessity of its immediate enactment to meet a
public calamity or emergency (CONST., Art. VI, Sec. 26(2)).
3. A special appropriations bill shall specify the purpose for which it is intended,
and shall be supported by funds actually available as certified by the National
Treasurer, or to be raised by corresponding revenue proposed therein
(CONST., Art. VI, Sec. 25(4)).
4. All appropriation, revenue or tariff bills, bills authorizing increase of the public
debt, bills of local application, and private bills shall originate exclusively in the
10
BOO K
House of Representatives, but the Senate may propose or concur with
amendments (CONST., Art. VI, Sec. 24).
Principle of Non-Delegabdity: Exceptions
Q: What is the rule on delegation of powers?
ANS: The general rule is potestas delegata non delegari potest (power delegated
cannot further be delegated). This is based on the ethical principle that delegated power
constitutes not only a right but a duty to be performed by the delegate through the
instrumentality of his own judgment and not through the intervening mind of another
(NACHURA, supra at 101).
Q: When is delegation of powers permissible?
ANS: There is permissible delegation in the following cases: (PETAL)
1. Delegation to the People at large, examples are:
a. System of initiative and referendum (CONST., Art. VI, Sec. 32 and The
Initiative and ReferendunAct (R.A. 6735)); and .
b. Requirement of pl4fip`dire in the creation, division, merger, and
abolition of LGUs,:(4DlySZA Art. X, Sec. 10);
2. Emergency Powers of thr; ItOldq.pit (CONST., Art, VI Sea 23(2));
3. Tariff Powers of the PretrtMST., Art VI, Sea 28(2));
4. Delegation to Administrativ,4414(pAy4er of subMnate legislation); and
5. Delegation to Local Gogerrtrr Unitsa(42:tgrPOippine Political Law, supra
•46:r
at 172)..
4011>w
Q: What are the testffor valid dele-bdtiCtn?
ANS: The tests for vanderapon are: , 4
1. Compistvess test—the law. iscomplete wheri‘ sets qrth therein the policy
to be*xecuted, carried out, gr implemented by,the dilegaie; and
2. Sufficient standard test — "'sufficient, therstandard mast specify the limits
of tte del gate,st. authority, a identityVe7grjArirlider which the
.
legislative pojicy,sc4annotked o be implel a -WATAllab ada Gum Partylist
• v. PuristritqA9A: 0 16675, A rst 14, 2008).
B. HOUSES OF CO GRESS;,COMPOSITlO AND QUALIFICATIONS OF MEMBERS
Senate
Q: What is the compoation o e Senate.of the Philippines?
ANS: The Senate shalriSe‘coltiposed of 24 Senators who shall be elected at large by
the qualified voters of the Philigines, as may be provided by law (CONST., Art. VI, Sec.
2).
Q: What are the qualifications of a Senator?
ANS: The following are the qualifications of a senator: (N35-RAW-VR2)
1. Natural-born citizen of the Philippines;
2. At least 35 years of age on the day of the election;
3. Able to Read And Write;
4. Registered Voter; and
5. Resident of the Philippines for not less than 2 years immediately preceding the
day of the election (CONST., Art. VI, Sec. 3).
Q: How long is a Senator's term of office?
ANS: The term of office of the Senators shall be six (6) years and shall commence,
unless otherwise provided by law, at noon on the 30th day of June next following their
election. No Senator shall serve for more than two (2) consecutive terms. Voluntary
renunciation of office for any length of time shall not be considered as an interruption in
the continuity of his service for the full term for which he was elected (CONST., Art. VI,
Sec. 4).
11
House of Representatives
District Representatives and Questions of Apportionment
Q: What is the prescribed composition of the House of Representatives (HOR)?
ANS: The House of Representatives shall be composed of not more than 250 members
unless otherwise fixed by law, consisting of:
1. District Representatives - not less than 200 members, elected from
legislative districts apportioned among the provinces, cities and the
Metropolitan Manila area (CONST. Art. VI, Sec. 5, par. (1));
2. Party-list Representatives - shall constitute 20% of the total number of
representatives, elected through a party-list system of registered national,
regional, and sectoral parties or organizations (R.A. No. 7941, or The Party-
List System Act).
3. Sectoral Representatives - For three consecutive terms after the ratification
of this Constitution, one-half of the seats allocated to party-list representatives
shall be filled, as provided py.law „ty selection or election from the labor,
peasant, urban poo ,wirieliFenr ; 2••cuitiralucommunities, women, youth, and
such other secters as say be p ovlae by rdw,. except the religious sector
—, s4. 1
(CONST., Art.Allrgb9.,[5,ppLd - )..a.,119 ez.nembestare referred to as sectoral
represents ( VCA-Itfit4, supra a(308) 44 v ho1, were last appointed in
1995. i
ir)) i •v-
Q: What are theiqu lificatioys to becorrw,a rriember of th (OR?
ANS: A personi rnustmeet the following qUdlifications t becane mber of the HOR:
e
(N25-RAW-VR1)
1. Natuiebocnjcitizen f I es;
z,
2. At least 251 .ears of age onftt kth,e election;
3. Able(MeRa ARd-92rQe; sz;)
4. Except.the, ay' rst. epresenFati es .,e reg s erg district in which
he shkkide-e ecte
5. A Resitt of he t.9_tnw h e,s or a period of not
less tha one OA eat rr10-aiate y pre e election (CONST.,
Art. VI, Sec. 6).
SCIENA.N
,
Q: What is the termf i ik:Iffi,c elnembr-rsIcif ts
ANS: The Members of thb‘}-1 Illbe-plqctOno f 3 years which shall begin,
unless otherwise provided b at nolarfionh`,ejhirlieth day of June next following
their election. No Member of the OR'shall rve for more than 3 consecutive terms.
Voluntary renunciation of the office for any length of time shall not be considered as an
interruption in the continuity of his service for the full term for which he was elected
(CONST., Art. VI, Sec. 7).
Q: What are the rules in the apportionment of legislative districts?

ANS: The following rules govern the apportionment of legislative districts:
1. It shall be made in accordance with the number of their respective inhabitants,
and on the basis of a uniform and progressive ratio (CONST., Art. VI, Sec. 5,
par. (1)).
2. Each city with at least 250,000 inhabitants is entitled to at least 1
representative. Each province, irrespective of the number of inhabitants, is
entitled to at least one (1) representative (CONST., Art. VI, Sec. 5, par. (3)).
3. Each legislative district shall comprise, as far as practical, a contiguous,
compact, and adjacent territory (CONST., Art. VI, Sec. 5, par. (3)).
Note: The 250,000 minimum population is only applicable to the initial
apportionment of legislative districts in the cities, and nort in the subsequent
apportionment of additional districts (Mariano, Jr. v. Commission on Elections,
G.R. Nos. 118577 & 118627, March 7, 1995).
12
• -,••-fta.:,a'-,.,..;,,,a4, •)r.>•4:•''.:!•.!c••
•'-••••;• •
Party-List System
Q: What is Party-list System?
ANS: The Party-list System is a mechanism of proportional representation in the
election of representatives to the House of Representatives from national, regional, and
sectoral parties, or organizations, or coalitions thereof, registered with the COMELEC
(R.A. No. 7941, Sec. 3).
Q: What is the purpose of the Party-list System?

ANS: The purpose of the Party-list System is to enable certain Filipino citizens,
especially those belonging to marginalized and underrepresented sectors,
organizations, and parties, to be elected to the House of Representatives (Ang Bagong
Bayani-OFW Labor Party v. Commission on Elections, G.R. No. 147589, June 26,
2001).
Q: What is a political party?

ANS: A political party refers to an orgarrOp group of citizens advocating an ideology or
platform, principles and policies fwfilkgkeral conduct of government and which, as
the most immediate means of secAtOrttletedoption, regularly nominates and supports
certain of its leaders and membefitas‘tdAlates for public office. It is a national party
when its constituency is spread cixiergtiiOgeogwhical territqry of at least a majority of
the regions. It is a regional partydwhqrsktegattNgstsspApd over the geographical
territory of at least a majority„94e cries acidprovincesrabirsing the region (R.A. No.
7P41, Sec. 3 (c)). "„fr;fr A
,-..,
itt,t d
Q: What are the guidAhe:14!Lr screenmg\party-list applica ts,?
ANS: The new six-KijkpRvagrers for sc Jening party-lisepa icipants are as follows:
1. Threezdiffgrent grOuprmay,pricl ate in the p -11 syslem:
efriptiont__ 1•Rarties or organiFallom
4 tkegio•K'al?Prties‘kreganitations;
c. Sectoralzpa les gnooani4ons;
2. NationatTel jpok4organizatione'"nd regional parties or organizations do not
need to qtganize along sector.?lines and do not need • to represent any
"marginalizedrand tiderrepresen - a e •
3. Political partits ?e "an partic
ipate:::..,..' .IM-- ....,.
ecrons provided they register
under the pa "list s seem and :o no e • candidates in legislative district
elections. A li 'calarty, whether major or not; that fields candidates in
legislative distn ctions may still participate in party-list elections but only
through its sectors wing •that must separately register under the party-list
_ system. The sectoral wing is by itself an independent sectoral party and is
linked to the political party only through a coalition; • •
4. A sectoral party or organization is one whose principal advocacy pertains to
the special interest and concerns of a specific sector of the population. It may
either be one who:
a. Represents the "marginalized and underrepresented" or
i. Laborer, peasants, fisherfolk, urban poor, indigenous cultural
communities, the handicapped, veterans, and overseas
Filipinos;
b. Lacks a "well-defined political constituency"
i. Women, security guards, LPG dealers, etc.
5. A majority of the members of sectoral parties or organizations that represent
the "marginalized and underrepresented" must belong to the "marginalized and
underrepresented" sector they represent. Similarly, a majority of the members
of sectoral parties or organizations that lack "well-defined political
constituencies" must belong to the sector they represent.
13
•
4!:14'Sz
6. The nominees of sectoral parties or organizations that represent the

"marginalized and underrepresented," or that represent those who lack "well-
defined political constituencies," either must belong to their respective sectors,
or must have a track record of advocacy for their respective sectors. The
nominees of national and regional parties or organizations must be bona-fide
members of such parties or organizations; and
7. National, regional, and sectoral parties or organizations shall not be
disqualified if some of their nominees are disqualified, provided that they have
at least one nominee who remains qualified (Atong Paglaum Inc. v.
COMELEC, G.R. No. 203766, April 2, 2013).
Note: The guidelines set under the Bagong Bayani case was modified by the ruling of
the Supreme Court in Atong Paglaum Inc. v.COMELEC, supra to allow major political
parties to participate in the party-list system through their sectoral wings.
Q: What are the qualifications for a person to become a party-list nominee?

ANS: The following are the qualifiations for.e.,pezson to become a party-list nominee:
(N25-RAW-VRI-M) ..„-'
.,,,- ,,, - -. - N.,.
, -4,,
1. Natural born citizen ':: ; , j ti 1 fr'''',.„
2. At least 25 nagkof ape. rilhe,day.oLthe o, eleclioni '''''•
Note: In casyof 4 ypritli sector, he mustAtiast4be 25 but not more than 30
years old ern the ' Koph e ' e I eUtiOn . '---
3. Able to R a NA W ri te; (0, '5. \''''''''
4. A regisfere V ter; ., hi,. /L...
5. A Repent 7 the Philippines, •` a period of no fsefs)1' an one Lti year
immeocliiitelyprecedi g e •ay oo, e e ecionland
6. A bo&tafideiMembe ofItipprOor\blidifizalion which hel sTeks to represent
for a deastd9C days receding,AkiMefof the election eRrAriya 7941, Sec. 9).
<Li
x ...:"%
Q: What are thenra eters, he elRptibp,9( pary-Qt, ? 1,,..°4
ANS: There areiii-papa, etel• he pestdisreK6 he Ph ilippiri s, to wit:
1. The 2(0 allocatio S'— 0%1of 14 ..,,,tp. a mfoership of the House of
Represe@tatives einQh u Aid •e of seats allocated for party-list
representative. In theSorl party-list7 seat for every four
legislative ‘istricts seat. 4
2. The 2% thre4§4016tuaranteed.segf foq rtpl.list organization garnering
2% of the total Obt,e i Thelpthreet4 sep'shall be distributed in a first
round of seat allocalibnen5liceWat least two percent of the total
party-list votes.
3. Proportional representation — The additional seats, that is, the remaining
seats after allocation of the guaranteed seats, shall be distributed to the party-
list organizations including those that received less than 2% of the total votes.
4. The three-seat cap — Each qualified party, regardless of the number of votes
it actually obtained, is entitled only to a maximum of 3 seats (BANAT v.
Q: Discuss the constitutionality of the two-percent (2%) threshold prescribed

under R.A. 7941 for the distribution of additional party-list seats.
ANS: The Supreme Court in BANAT v. COMELEC, supra struck down as
unconstitutional the two percent threshold in the distribution of additional party-list seats
in the second clause of Section 11 par. (b) of R.A. No. 7941. The Court held that the
continued operation of the two percent threshold in the distribution of the additional
seats frustrates the attainment of the permissive ceiling that 20% of the members of the
House of Representatives shall consist of party-list representatives.
14
7, !,9'1..:',410.11;r';•K;P:Y04:1!:.:04.0gSt.5N,i';
r•-t"
Q: What is the effect of a change in affiliation of any elected party-list

representative?
ANS: Any elected party-list representative who changes his political party or sectoral
affiliation during his term of office shall forfeit his seat: Provided, that if he changes his
political party or sectoral affiliation within 6 months before an election, he shall not be
eligible for nomination as party-list representative under his new party or organization
(R.A. No. 7941, Sec. 15).
Q: What is the rule on vacancies in the seats of party-list representatives?

ANS: In case of vacancy in the seats reserved for party-list representatives, the vacancy
shall be automatically filled by the next representative from the list of nominees in the
order submitted to the COMELEC by the same party, organization, or coalition, who
shall serve for the unexpired term. If the list is exhausted, the party, organization, or
coalition concerned shall submit additional nominees (R.A. No. 7941, Sec. 16).
Q: May the COMELEC allow the substitution of nominees of party-lists for causes
other than those provided under R#11,goi
T7941?
ANS: No. The COMELEC, despitOierftas the implementing arm of the Government
in the enforcement and administration :o and regulations relative to the conduct
of an election, has neither the FhpayAr the license to expand, extend, or add
anything to the law it seeks to irniiletheAfrrillyqhe IRFaihe COMELEC issues for
that purpose should always bVreacceir4Awi bil-lellaVEtc4btinlemented, and should not
override, supplant, or mgdffylthe law. leisg:tasic that the IRF(tishould remain consistent
with the law they interat carry outiLogi.h. v. COMELEC, G. Nos. 179431-32, June
4= ,44P1 S
22, 2010).
. AOr4,..A. „,
Q: May the regftgrafion pripparty-listp cancelled g.•, nd pie • • ualifications of its
nominees beAastined'after it hatittmelproclaimedtwinpr in the elections?
ANS: Yes. Thltonstian grants„ the p)MELECje aeon o register political
4.i.pis --•,--- ..
parties, organizations, orcoalitionwind j, authon1Rwalke "'registration of the
same on legal grounds .,,frejtaid authority, the COMEE8bIa're ected in Section 6 of
R.A. No. 7941. Iritgra"SeNftle pprty-lis,,i. ominees/representatives, it is the House of
Representatives Eleetosal Tribunal (HRETpft,hal jurisdiction over contests relating to
their qualifications. Although is the art4)Ltrorg a ization that is voted for in the
elections, it is not thecoT ; 11,1anizatiogt I si s4nTiSsbe • mes a member of the House of
Representatives, but it tethe pa ' —list nominee/representative who sits as a member of
the House of Represen tItkIBC Party List v. COMELEC, G.R. No. 193256, March
22, 2011).
Q: May the party list organization remove its representative in HOR and substitute
another?
ANS: No. A party-list representative is in every sense "an elected member of the House
of Representatives.” Although the vote cast in a party-list election is a vote for a party,
such vote, in the end, would be a vote for its nominees, Who, in appropriate cases,
would eventually sit in the HOR. They have the same deliberative rights, salaries, and
emoluments (Abayon v. HRET, G.R. No. 189466, February 11, 2010). Thus, they may
only be removed either by expulsion with the concurrence of two-thirds (2/3) of all the
members of the House of Representatives (CONST., Art. VI, Sec. 16); or by the
Electoral Tribunal, either through an election protest or quo warranto proceeding
(CONST. Art. VI, Sec. 17).
15
..e , * . • • • .... ;.- ;•••• .‘ ..-"--if:G71W''
.
...
..I.
. -li..
S EDA N RED ,,
C. PRIVILEGES, INHIBITIONS, AND DISQUALIFICATIONS

Q: What are the rules on compensations of Senators and Members of HOR?
ANS: The salaries of Senators and Members of the HOR shall be determined by law.
No increase in said compensation shall take effect until after the expiration of the full
term of all the Members of the Senate and the HOR approving such increase (CONST.,
Art. VI, Sec. 10).
Q: What are the immunities granted to members of Congress?

ANS: The following are the immunities of Senators and Members of HOR:
1. Privilege from arrest — In all offenses punishable by not more than six (6)
years imprisonment, a Senator or a member of the House shall be privileged
from arrest while the Congress is in session (CONST., Art. VI, Sec. 11).
Note: It is available "while the Congress is in session", whether the session is
regular or special, or whether or not the legislator is actually attending his
session (BERNAS, Philippine Constitution Reviewer, supra at 232). "Session"
covers the entire periodofrWirciffitlaNagavening until its final adjournment
(CRUZ, Philippine Parical Lai, suprpt -dt 20=229). Members of Congress are
ui.' N. I
not exempt from deten for or crime-(PO:ye vi- llosjos, G.R. No. 132875-76,
February,"3 2900)ktupabtrigrrarthalisi 6) years of imprisonment.
2. Parliamentaryiprivjlege of spejiach,— The'Nhall,notV fb\
questioned nor be
held liaiole 141 1W4Th ri5lace foripny spe6ch\o?Zebate made in the Congress
.-? r" ..9
or in any co Tiit ereofy/d.)A 'r_
Note: tloweV 1- he can be sublecta 'to disaiplina tion by the Congress
itself Chavez v. JB0,-G.R.-No40242,-Aptil- 6, 20 )-3
lozeg.4
I str... .'• 4.',4-,
Q: What are t isites to avaiktth iOnvq-dege o paxl rate?
ANS: The folio are the. 4uisites:vadiii.yi
I 4i ce--
1. That ithe d a USt—be-Z:RiarEhile-3 •• ture or the legislative
comnbt(s6 \ and pg, f-N 4-,
,,,„.. —, I
2. That they m q be in* egiV Itr hedischarge of official duties
(Jimenlz v. Gaban .R. 6 5905, Augus7 3, 1966; CRUZ,
.A.
4:
Philippi e‘,Politica aw, 02
CIENT‘
Q: What are the prAititio ote.........2111
1 enifiers Co gress?
ANS: The following are ih al* IcatiTs W iciViAn jaroosed upon them:
1. Incompatible Office — o Merpy, I \go nffosS may hold any other office or
employment in the Gment:-...orany,4.1.16ilivision, agency, or instrumentality
ovem
thereof, including GOCCs or their subsidiaries during his term without forfeiting
his seat (CONST., Art. VI, Sec. 13); and
Note: The general rule is they cannot simultaneously hold the incompatible
office while serving their term in office. The exception is if it is shown that said
other office or employment is an extension of their legislative position, is in aid
of legislative duties, or is held by them in an ex officio capacity.
2. Forbidden Office — Neither shall he be appointed to any office which may
have been created or whose emoluments had been increased during the term
for which he was elected (CONST., Art. VI, Sec. 13).
Q: What is the effect in case members of the Congress hold incompatible office?
ANS: Forfeiture of the seat in Congress shall be automatic upon the member's
assumption of such other office deemed incompatible with his seat in Congress (Adaza
v. Pacana, G.R. No. L-68159, March 18, 1985).
16
Q: What are the parliamentary prohibitions imposed upon Members of Congress?
ANS: The Senators and Members of HOR shall NOT:
1. Personally appear as counsel before any court of justice, or before the
Electoral Tribunals, or quasi-judicial and other administrative bodies.
Aphear'ance as counsel includes signing of pleadings, but does not include
appearance pro se (Puyat v. De Guzman, Jr., G.R. No. 51122, March 25,
1982);
2. Directly or indirectly, be interested financially in any contract with, or in any
franchise or special privilege granted by the Government, or any subdivision,
agency, or instrumentality thereof, including any GOCC, or its subsidiary,
during his term; and
3. Intervene in any matter before any office of the Government for his pecuniary
benefit or where he may be called upon to act on account of his office
(CONST., Art. VI, Sec. 14).
Q: May a member of Congress who holds a business interest in a corporation

awarded a franchise during his tergifrikoke the principle of separate personalities
between him and the corporatiiiii';_asA,,,defense against the prohibition against
financial interest?
ANS: No. A member shall not •14e-..)killted financially directly or indirectly in any
contract with, or in any franchise}or itklatipsiv...kgRtgrantegby the Government during
his term (CONST., Art VI„ec.'11.34-firedifeyozah .
,.?-parate personalities is
inapplicable as the law prohlEas even ati indirect financiar infer .
Q: May Members oftr tiicctgress,practiRe their professioras‘

ANS: Yes. As to the memtterpaorthe Congess, there is no gelie I prohibition as to the
practice of theiroveassio63%cept for •ambers of the e practice of law is
constitutionallytthited 9 ONST., Art.1.71, ea 14).
‘R.
Q: What does; +44
.1Y
he phrase n any Other p ace" mead% Secitl„ , Article VI of the
Constitution?
ANS: This section a erttr is a,,copySec. 6, Clause tof Art. 1 of the Constitution
of the United States. In thatCC? ntry, the pr. visipo, as always been understood to mean
that although exempttarp prosecutio • 'ons for their words uttered in
Congress, the membeltof Co gr. s-rfie , neve h tb'ssl .be questioned in Congress
itself. Observe that "th hall the questioned in any other place" than Congress.
Furthermore, the Rules of'the ouse (Rule XVII, Sec. 7); recognize the House's power
to hold a member responsible "for words spoken indebate"
_ . (Oemetia, Jr. v. Pendatun,
G.R. No. L-17144, Octobei- 28, 1960).
D. DISCIPLINE OF MEMBERS
Q: What is the rule on disciplining Members of Congress?
ANS: Each House may determine the rules of its proceedings, punish its Members for
disorderly behavior,. and with the concurrence of 2/3 of all its members, suspend or
expel a member. A penalty of suspension, when imposed, shall not exceed 60 days
(CONST., Art. VI, Sec. 16, par. (3)).
E PROCESS OFLAW-MAKING
Q: What are the constitutional requirements for the passage of laws?
ANS: Every bill passed by the Congress shall embrace only one subject, which shall be
expressed in the title thereof (CONST., Art. VI, Sec. 26(1)). No bill passed by either
House shall become a law unless it has passed three (3) readings on separate days,
and printed copies thereof in its final form have been distributed to its Members three (3)
17
r: '-;.27.:,
f,... r
;.r-teA
‘...617.i'..'0.1:4%tY1F;"7;'"'
i•••*4 • •
cl ,.....- . • . ,:...:-:-.:1,•,;,,,,,ittw,t,.-..,;,:i.v,---04::•AttP,..vi:,,,,Y.--t• .5!-- ... - -.

days before its passage, except when the President certifies to the necessity of its
immediate enactment to meet a public calamity or emergency. Upon the last reading of
a bill, no amendment thereto shall be allowed, and the vote thereon shall be taken
immediately thereafter, and the yeas and nays entered in the Journal (CONST., Art. VI,
Sec. 26(2)).
Note: All appropriation, revenue or tariff bills, bills authorizing increase of the public
debt, bills of local application, and private bills shall originate exclusively in the House of
Representatives, but the Senate may propose or concur with amendments (CONST.,
Art. VI, Sec. 24).
Q: Discuss the process of enacting laws.

ANS: A bill is signed by its author(s) and filed with the Secretary of the House. It may
originate from either the lower or upper House, except appropriation, revenue or tariff
bills, bills authorizing increase of public debt, bills of local application, and private bills,
which shall originate exclusively from the House of Representatives (AGPALO,
Statutory Construction (2009), p. SOpreinafterA,RPALO, Statutory Construction].
1. First reading — reffiding of lie •flurtAberand title of the bill, which is then
referred to the prgtopii ltate Cow- itteeijorxit4Nnd recommendation, which
may includepieVoriducepf.public:heArings.ipecommittee will submit its
report and jeAcOfnmeOatiiin for CalendarbrAseton&Onding. (Id.)
2. Secondpading)-irealiing'cirhV till"Irpfullzith4C>amAdments proposed by
the CornmVee,'iranf, unless c'OplespereofkarOdist -12).itesl and such reading
is dispensedl rth. Tjhe bill 4-subject totdeble , pertinent motions, and
amen4ments After the amendrii 'hts shall haVe batì read, upon, the bill will
be vorecroff second rea ing. qa: i,i 1.-.4 1
3. Thir reading — su mistibn.of (he.5114s approved n second reading for a
final ck.„i
te IA, yeas anll naySglici.**;, -,?Pa /
4. Con ereticp Coliaisttee rep7,i;riektransrr • fli:;i3f tip bill atproved on third
readibrb kie FroJtjseui to thq4.9tli'eirl,,Itouse r::dancureerei. he other House
shall Nilo the sakoc,edili-p Jiihrot ouselappro es the bill without
amendments, The bil4pksspd by 'c*6 sand e same will be transmitted
i
to the Piesiden If th'e dttieNi.ose'i tro mendments, with which the
originating House sSpo / Ieel).N erenc:fwill be settled the
Conferen4tmrrfitt s.,,o b'oit ous s e sfer nce Committee's report
will have to b ono) , :St.both-liolfSeslIA d at it will be considered
le,..
passed by Congress .4., nd .here4e,q s6 Ntfte esident (Id.).
5. Authentication of bill • signiAYB th Baker and the Senate President of
the printed copy of the app o e i I, followed by the certification by the
respective secretaries of the both Houses, before it is sent to the President
(Id.).
6. President's approval or veto — transmittal of the authenticated bill to the
President. If he approves the same, he shall sign it; otherwise, he shall veto it
and return the same with his objections to the House where it originated, which
shall enter the objections at large in its Journal and proceed to reconsider it.
The President shall communicate his veto of any bill to, the House where it
originated within thirty (30) days after the date of receipt thereof; otherwise, it
shall become a law as if he had signed it (CONST., Art. VI, Sec. 27(1)).
7. Reversal of veto - If, after such reconsideration, two-thirds of all the Members
of such House shall agree to pass the bill, it shall be sent, together with the
objections, to the other House by which it shall likewise be reconsidered, and if
approved by two-thirds of all the Members of that House, it shall become a law
(CONST., Art. VI, Sec. 27(1)).
18
' • • • ' f • 4- -• • fi• ••
VOL 1.
2019
Q: Is the "no amendment on the third reading" clause applicable to the Bicameral
Conference Committee?
ANS: No. The "no-amendment rule" refers only to the procedure to be followed by each
house of Congress with regard to bills initiated in each of said respective houses, before
said bill is transmitted to the other house for its concurrence or amendment. Verily, to
construe said provision in a way as to proscribe any further changes to a bill after one
house has voted on it would lead to absurdity as this would mean that the other house
of Congress would be deprived of its constitutional power to amend or introduce
changes to said bill. Thus, Art. VI, Sec. 26 (2) of the Constitution cannot be taken to
mean that the introduction by the Bicameral Conference Committee of amendments and
modifications to disagreeing provisions in bills that have been acted upon by both
houses of Congress is prohibited (Abakada Guro Party List v. Ermita, G.R. Nos.
168056, 168207, 168461, 168463 & 168730, September 1, 2005).
Q: Are the requirements of three readings on separate days and distribution of

printed copies may be dispensed wiff%
ANS: Yes. Both the requirement of, 49$-bleedings on separate days and distribution of
printed copies thereof three (3) dAgibref0% its passage may be dispensed with upon
the certification by the Presideneq,'Ihlftessity of the bill's immediate enactment to
meet a public calamity or emergeUgcrST., Art. VI, Sec. 26 (2)).
0-4
Q: What is the extent of the peowers--0orfetelkvogrOtee?
ANS: It is within the powerfOf the Bifa ral Conference Cznmittee to include in its
report an entirely newgovision that Op y . ound either in thefIrcee bill or in the Senate
bill. And if the Comp( can ucipbs an amendment co fisting of one or two
provisions, there is rpOreepithy it ca of propose seveTI io,rovisions, collectively
considered as "Rti mendrgerifjo the nat re of a substitute" s as the amendment
is germane W he
it sublt9rof the bills'i4?e ore the Comr ttee Tole tino v. Secretary of
Finance, G.Rplar (154.,5October 30, 19 .
rsq- •
Ott
F. OUORUMANDV,OT/Ar ,IIIAOR1. /ES
Q: What is the quorum pres ribed for tIrg Houses of Congress?
ANS: A majority of afiyhe mbers of se shall constitute a quorum to do
business, but a smaller ber ay a. ..AyM9 day and may compel the
attendance of absent ,4 "such manner and under such penalties as such
House may determine piptIS Art. VI, Sec.16, par. (2)).
Note: The existence of a‘lo m is based on the proportion betweeTi- those physically
present and the tota membership of the body (BERNAS, Philippine Constitution
Reviewer, supra at 238).
, • • • •
Q: What is the difference between "majority of all the members of the House" and
"majority of the House"?
ANS: There is a difference between a majority of "all the members of the House" and a
majority of "the House", the latter requiring less number than the first. Therefore, an
absolute majority (12) of all the members of the Senate less one (23), constitutes
constitutional majority of the Senate for the purpose of a quorum (Avelino v. Cuenco,
G.R. No. L-2821 (Resolution), March 4, 1949).
Q: What is the basis in determining the existence of a quorum in the Senate?

ANS: The basis in determining the existence of a quorum in the Senate shall be the
total number of incumbent Senators who are in the country and within the coercive
jurisdiction of the State (Avelino v. Cuenco, supra). Thus, a senator who is abroad for
whatever reason is always discounted while a senator who is in the country may still be
counted even if comatose or detained because they remain within the coercive
jurisdiction of the State.
19
Note: The same principle may be applied for the determination of quorum in the House
of Representatives.
Q: How many votes constitute a "majority of ALL members"?

ANS: This refers to an "Absolute Majority" which requires the majority of all electors
regardless of the number of members present or absent during the time a question is
put to a vote, provided a quorum exists.
For example, even if only 23 Senators are present at the vote, an absolute majority
would require the concurrence of at least 13 senators or (24/2)+1. For the HOR, the
number would be 126 which is (250/2)+1.
Q: How many votes constitute "a majority of the house"?

ANS: This refers to a type of "Simple Majority" which requires the concurrence of more
than half the .electors that are within the coercive jurisdiction of the House, provided
there is a quorum.
I&oa, ; t en, a simple majority is at least 11
For example, suppose 3,S'enatO are,
which is more than half with coercive jurisdiction of the
Senate.
7cc,fe,-------77
i- --N,
t ---, \. 1/:4k appoint officers
Q: What is the nite-ofivob g as Tsgarrds thp•Congress!.pd'w
(i.e. Majority aryl Mtruni ty Letadersym each Irbuse?
ANS: The power to de grmin 'the mannelaselecting uch‘l;:t ryfficers is derivative of
the exercise of te erogative conterrecip by the Co stitutio .0.-- at.1ach House shall
choose such de hgra cers ag it ritgliye H ingegg'iry While t e Copstitution is explicit
on the manne . of ting a kpeakOrcofa e,ilbeise o Represebta04s; it is, however,
.11 iiii,, i
silent on the ey f slig4 g otherd ice s, thus isfoRpg tlp saris to the exclusive
prerogative of chlkousse2 knce, c j ,ate ytilAt.:gfarndr otri second highest
number of vo or' Speak ip carnio
I..ii 1WinatioVy' bec,ame Minority Leader
based on "long itanding, tradtn en ubit;)(Ain was° clear) overturned by the
House of Represe tativeag i ? „,....r: v„,jvdtWea . Noe227757, July 25, 2017).
G. APPROPRIAT/0 ND RE- 8 11,1E

% --t" /--.
Q: What is the power oftpRpropliption.
ANS: The power of appropna 'OnAalled purse," belongs to Congress,
subject only to the veto power o he es e t rries with it the power to specify the
project or activity to be funded under the appropriation law (Philippine Constitution
Association v. Enriquez, G.R. No. 113105, August 19, 1994).
Q: What is an appropriation law?

ANS: A statute the primary and specific purpose of which is to authorize the release of
public funds from the Treasury (NACHURA, supra at 329).
Q: Give the two (2) classifications of Appropriation Laws.

ANS: The following are the two (2) classifications of Appropriation Laws:
1. General appropriation law — passed annually, intended for the financial
operations of the entire government during one fiscal period; and
2. Special appropriation law — designed for a specific purpose (CRUZ,
Philippine Political Law, supra at 306).
Q: What are the limitations on the power to appropriate?

ANS: The Constitution, under Arts. VI, Secs. 24, 25 and 29, and Art. VII, Sec. 22
provide explicit limitations on the power to appropriate, to wit (BERNAS, Commentary
on 1987 Constitution, supra at 777):
20
1. All appropriation., revenue or tariff bills, bills authorizing increase of the public
debt, bills of local application, and"private bills shall originate exclusively in the
House of Representatives, but the Senate may propose or concur with
amendments (CONST., Art. VI, Sec. 24);
2. The Congress may not increase the appropriations recommended by the
President for the operation of the Government as specified in the budget
(CONST., Art. VI, Sec. 25(1));
3. No provision or enactment shall be embraced in the general appropriations bill
unless it relates specifically to some particular appropriation therein. Any such
provision or enactment shall be limited in its operation to the appropriation to
which it relates (CONST., Art. VI, Sec. 25(2));
4. The procedure in approving appropriations for the Congress shall strictly follow
the procedure for approving appropriations for other departments and
agencies (CONST., Art. VI, Sec. 25(3));
5. A special appropriations bill shall specify the purpose for which it is intended,
and shall be supported by fundgectually available as certified by the National
Treasurer, or to be rais,ed40.: t corresponding revenue proposed therein
(CONST., Art. VI, Sec. 2._5(0(4
6. No law shall be passedVIPIZIN any transfer of appropriations; however,
the President, the Pregidefiltrtifdie Senate, the Speaker of the House of
Representatives, the Cclieftnitla e4§uprerp.:§Court, and the heads of
Constitutional CompSionfitaMli '' . lie' .;- WI,?„ p ized to augment any item
in the general aagfopriations 'ia for their respectix offices from savings in
other items ofaeir respectiiapgropriations (CONS (CON" ‘,Art.ArtVI, Sec. 25(5));
Discretionaryffunds appropateck Aor particular oftyi s'3' hall be disbursed only
for public p_uiposel stbe suppo ed by appropgate vo , chers and subject to
such gOelirles aSmay:be pres i 1. tip
ed by law (CiON 1 ., ft VI, Sec. 25(6));
8. If, by)the eng%granyfiscaNea e Congress sh I have failed to pass the
gerCar, approirations bill for the eqqkg, fissal4 , )-the general
.,,w
appriipriations 'lac4for
i l, tho,lreck
ile ing fiscal Ire-. • •=•eemed reenacted
and shalWairi 01 force And ect until the ei
:gl. appropriations bill is
passed ktfreleeong ess (CONS Art. VI, Sec. 25(7));
9. Prohibitionog theyexpenditure it lfic money or property for religious
purposes (COIST.P:Art. VI, Sec g ,'y d-t
10. The general igpropria101 w=mus eKbase 2 Bathe budget prepared by the
President (CO ST., , ri.i ii, Sec. 22).
Q: What are the implie limititions on the power of the Congress to appropriate
public funds?
ANS: The following are the implied limitations on the said power:
1. The appropriation must be devoted to a public purpose; and
2. The sum authorized to be released must be determinate or at least
determinable (Pascual v. Secretary of Public Works and Communications,
G.R. No. L-10405, December 29, 1960).
Q: What are the requisites of a valid transfer of appropriations?

ANS: The following requisites must concur:
1. There must be a law authorizing the President, the Senate President, the
Speaker of the House of Representatives, the Chief Justice of the Supreme
Court, and the heads of Constitutional Commissions to augment any item in
the general appropriations law for their respective offices; and
2. The funds to be transferred are taken from savings in other items of their
respective appropriations (CONST., Art. VII, Sec. 25(5)).
Note: The list of those who may be authorized to transfer funds under the
above provision is exclusive (BERNAS, Commentary on 1987 Philippine
Constitution, supra at 780). Hence, neither the Chief of Staff of the Armed
21
Forces nor individual members of the Congress may not be given suct.
authority (Philippine Constitution Association v. Enriquez, supra).
Q: What is a "pork barrel"?

ANS: Pork barrel is "an appropriation of government spending meant for localized
projects and secured solely or primarily to bring money to a representative's district"
(Araullo v. Aquino Ill, G.R. Nos. 209287, 209135, 209136, 209155, 209164, 209260,
209442, 209517 & 209569, July 1, 2014).
Q: What is Pork Barrel System?

ANS: The Court defines the Pork Barrel System as the collective body of rules and
practices that govern the manner by which lump-sum, discretionary funds, primarily
intended for local projects, are utilized through the respective participations of the
Legislative and Executive branches of government, including its members (Belgica v.
Ochoa, G.R. Nos. 208566, 208493, 209251 & L-20768, November 19, 2013).
,,„.,,,...-.......,..,_
Q: Under the Pork Barrel,System,ywhat LariNhe two (2) kinds of lump-sum
i
discretionary funds? - -'' i'''' •'' , ' 1-8.„:, i t ''4•.,-•,,„ .
ANS: The Pork BarrelpySteminVolVee,tviii.(2)1kin4s,'of Itin,npum discretionary funds:
1. First, thereiirthe.Congressional Pork "Barf6( whicNs herein defined as a
kind of lump-sCipidikcotionalrfillid"wherkriVados, siieither individually or
collectivACorgariized into .comitiittee§T are "able toeeffectIvely control certain
aspects` ortlilfund's utilii- atiothhreitigh va ious ,pOst-en ctment measures
and/op racticers; an6- )1(P
2. Secop , -ere is the Pres!der ifOcTrFliyakrtel which, .!s h pin defined as a
kind pr urnp,tsum, discretiqnqry Oncl Wh ich allows thePre ident to determine
the manner bf its utilizatior1iRegallLairOchoa supra).
t‹..(1 ciA, A-zg
t.k., , ‘ \,..,..).\.OVER
eq. LEG/SLAT/VEINALIRIEk#ND „;.1
7 . G
..51 t,vL?
H.zr. ,7/FURCTI
.b :"
,,, NS
4/
Q: What are legislative'‘ or fon 1.,;,...:uuri •cs.
ANS: Legislativeltc.quinekmay ref-A, 41 i pl 5ta'tionfor re-ex mination of any law
or appropriation, o ,,.jn conrie,ptioihvilly.an. n. )legislation, odor the formulation of,
or in connection with future regidlgtt n,r6i. id-1 theTview.eor formulation of a new
legislative policy or ena,OmteqDT y:Qp.yaig,.exteqdqo ny nd all matters vested by
the Constitution in Congres,zad/or L ino the Senate, ago es of Procedure Governing
Inquiries in Aid of LegislattoMk ed 1). Lf9gliti in ul is inherent in Congress. "The
inquiry, to be within the jurisdiction f=theAebislati e body to make, must be material or
necessary to the exercise of a power in it vested by the Constitution, such as to
legislate, or to expel a Member" (Arnault v. Nazareno, G.R. No. L-3820, July 18, 1950).
Q: What is the scope of the power of legislative investigation by the Congress?

ANS: The power of legislative investigation by the Congress involves the following:
1. Power to conduct inquiry in aid of legislation in accordance with its duly
published rules of procedure;
2. Power to issue summons and notices in connection with matters subject of its
investigation or inquiry;
3. Power to punish or declare a person in contempt during or in the course of
legislative investigation; and
4. The power to determine the rules of its proceedings (Arnault v. Nazareno,
supra).
Q: What are the limitations on the power of legislative investigation of the

Congress?
ANS: The following are the limitations of said power:
1. It must be in aid of legislation;
22
t,t. i'3.1:=4ar.i:s4,1":,..,
f
2. In accordance with duly published rules of procedures; and

3. The rights of persons appearing in or affected by such inquiry shall be
respected (CONST., Art. VI, Sec. 21).
Q: How often should the rules of procedure in the conduct of legislative inquiry
be published?
ANS: The phrase "duly published rules of procedure" requires the Senate of every
Congress to publish its rules of procedure governing inquiries in aid of legislation
because every Senate is distinct from the one before it or after it. Since Senatorial
elections are held every three (3) years for one-half of the Senate's membership, the
composition of the Senate also changes by the end of each term. Each Senate may
thus enact a different set of rules as it may deem fit.
The requisite of publication of the rules is intended to satisfy the basic requirements of
due process (Garcillano v. House of Representatives Committees on Public Information,
G.R. Nos. 170338 & 179275, December 23, 2008).
Section 21, Article VI of the 1987 Copstiftibn explicitly provides that "the Senate or the
House of Representatives, or anyOt ,r4spective committees may conduct inquiries in
aid of legislation in accordance with ita:dLigipublished rules of procedure."
41,4
Q: Discuss the oversight furwtIonS:Cf:if'Con
ANS: The heads of deparents may,:uppqn their own initiatih, with the consent of the
President, or upon the,taquest of eitlfttpuse, as the rules peach house shall provide,
appear before , and 110Kard lysuctouse on anyjneter pertaining to their
departments. Written ,cittesiiiis,,ghall be s Imitted to the Preside t of the Senate or the
Speaker of theHo6se of fleptesentativese least three ,(,..$) days Etfore their scheduled
appearance. gerpella14,na' shall not% limged to the written quest ens but may cover
matters relatearergoAr thekpcuritro the StakeeNheE ubli interest so requires,
the appearanceishall betooductedril -exe 6ive session (t _A.;rftV1 Sec. 22).
ttgz ' r.ed11..SV""
Q: Discuss theVelign vp-a-vr the oversight functions of the Congress.
ANS: The Supremel Court re erred to th -o e sight function of the Congress under
Section 22, Article V as qiuestion ho 1.‘-,•,aled
_ that "Sections 21 and 22,
therefore, while close related cord' e nWiegfeach other, should not be
considered aspertaini to thegqine power of Congress. One specifically relates to the
power to conduct inquiria, s'ain 494d of legislation, the aim of which is to elicit information
that may be used for legiblati n, while the other pertains to the power to conduct a
question hour, the objective of which is to obtain information in pursuit of Congress'
oversight function"(Senate v. Ermita, G.R. No. 169777, April 20, 2006).
Q: Discuss the differences between the right of the Congress to conduct inquiry
in aid of legiglation (Sec. 21) and its oversight function (Sec. 22).
ANS: The following are the differences between the two powers of the Congress:
• Sec. 21 • Sec.22 .. •
(Right to conduCt inquiry in aid of (Oversight function of Congrets)
• • - legislation) • :.
As_ to Who may appear
Any person Only an executive department head
Oticiucts investigation •;*
Committees Entire body
23
„;;iftE,epu,
Tiv4yA4J:wrr;.r4;gi;Vi....IWA/P,;'.Pq-P't"tn=,i)!.;:,t, A,FP
As to subject matter
Any matter for the purpose of Matters related to the department only
legislation
As to purpose
Congress has the power to conduct Congress has the power to question
inquiries in aid of legislation the aim executive department heads, the objective
of which is to elicit information that of which is to obtain information in pursuit
may be used for legislation of Congress' oversight functions
• - As to attendance
Attendance is compulsory Attendance is discretionary hence it is valid
for the President to require that consent be
obtained first before subordinates appear in
.Zongress during the question hour
e
Congress can coin e_ .,Congry ssi cap otrequest the appearance
attendance of execute offe i6”
als 'orexecutive effidials4f the required consent
subject to the propef application of of the President jsnct obtained first, or if no
executive privilege. eu-CliebnserThis"gen
il i it Alk .4i„ 1
I. POWER OF/M EACI-IMENr
16 1
Q: Discuss th y,owe, of impeactgpent ol tlig,.,Dt3pgrTss. 1,....4
ANS: The .1-lotiselir epresekativeg'rph-611116v.dfie exclusive owe initiate initiate all cases
of impeachme 6 sr.,„Att. xOtqcz917,7),att!a(/)). pe.,Sed01,h II have the sole
power to try a Cie ses_oLiniPeabEimerit40 T., PArt. X , Sec. 3, par. (6)).
...... k / Aft
The President, j.cel-Pr s, epte the)Mettpek9f he,„§„ pre e su , the Members of
the Constitutions Commisskcnaqz1 kii 1 rrgns r4,- iay e rem ed from office on
impeachment fol:., and 13,.onvt "ar \ f, Cul ableiv oltion 0 the C nstitution, treason,
..."
bribery, graft and orruptik oth tgli _r_Les 6trayarrof publ* trust (CONST., Art.
XI, Sec. 2). II
Note: Noi impeachmere pro ins hall _ffitia d g'aains the same official more
than once within a pericid,to i VSV, krtcke 6c4(5)). Initiation takes place
by the act of filing of filing and ral or1/2(1 I:kV-161,01re impeachment complaint to
the House Committee on Jus ice..(5,0apLg.,4- 3- 3-165se of Representatives, G.R. No.
160261, November 10, 2003).
Q: What is the procedure of impeachment?

ANS: The simplified procedure of impeachment is as follows:
1. Filing of a complaint: This starts the proceedings for impeachment.
a. The complaint is filed either by a member of the House of
Representatives; or by any citizen upon a resolution of endorsement by
any member thereof.
2. Complaint is referred to the proper Committee:
a. The Committee conducts deliberation of the complaint that was filed.
Thereafter, the Committee should decide whether the complaint is
sufficient in form and in substance.
b. The Committee, after hearing, and by a majority vote of all its
Members, shall submit its report to the House within 60 session days
from the referral of the complaint, together with the corresponding
resolution.
c. The resolution shall be calendared for consideration by the House
within 10 session days from receipt thereof.
24
d. A vote of at least 2/3 of the Members of the House shall be necessary
either to affirm a favorable resolution with the Articles of Impeachment
of the Committee, or override its contrary resolution. The vote of each
Member shall be recorded.
3. Complaint is sent to the Senate which will try and decide cases of
impeachment:
a. If filed by at least 1/3 of all the members of the House, the same shall
constitute the Articles of Impeachment.
4. Trial and Conviction: The Senate tries the impeachment and convicts by a vote
of 2/3 of all the members of the Senate (SUAREZ, Political Law (2018), p. 810-
811) [hereinafter SUAREZ].
J. ELECTORAL TRIBUNALS
Q: What is the composition of the Electoral Tribunals?
ANS: Each ElectOral Tribunal shall be composed of nine (9) Members, three (3) of
whom shall be Justices of the Suprem0Ort to be designated by the Chief Justice, and
the remaining six (6) shall be Men*ArgiAithe Senate or the House of Representatives,
k
as the case may ;be, who shall bW.eiioaton the basis of proportional representation
from the political, parties and the Tatinoil-ganizations registered under the party-list
system represented therein. ThetsOw dstice in the Elec. oral Tribunal shall be its
Chairman (CONST. ,Art. VI, Sec.0517PW'
op ,
Q: When must the Electora Tribunals by constituted?
ANS: The Electoral Trittin*s shall beEltituted within thirty j3O) days after the Senate
and the House of RegseltRti„, ves,ghall ave been organizedith the election of the
President and the SpekertPC/ST.,
PC/ST., Art. Sec. 19).
;-'
Discuss i ndependence of thd're's ective Electoral als of the Houses
of Congress *421',413 "s;..iigvrt
ANS: The Eleatoral Tribm0 is int t of the 5,eaLo _Gongress (Angara v.
Electoral Commis t Rto. L-45081, uly 15, 1936) and its decisions may only be
reviewed by theiSup,teme Coact upon sho mg of grave abuse of discretion in a special
civil action for ceitiora file der Rule 6 997 Rules of Civil Procedure (Pena
v. House of Represent tr es Electoral,Tri of 037, March 21, 1997).
Q: What is the functiowLelectdral tribunals?

ANS: The Electoral Trinvects as the sole judge of all contests relating to the
election, returns,Jand qualifications of the respective members of each House (CONST.,
Art. VI, Sec. 17)1
Q: When does' the House of Representatives Electoral Tribunal (HRET) acquire

jurisdiction over election cases?
ANS: Once a winning candidate has been duly proclaimed, taken his oath, and
assumed office as a Member of the House of Representatives, the COMELEC's
jurisdiction over election contests relating to the candidate's election, returns, and
qualifications ends, and the HRET's own jurisdiction begins (Limkaichong v. COMELEC,
G.R. Nos. 178831-32, April 1, 2009).
Note: The taking of oath or affirmation of Members of the House of Representatives,
either collectively or individually, shall be before the Speaker in open session (Section 6,
Rule II (Membership) of the Rules of the House of Representatives; Reyes v.
Commission on ,Elections, G.R. No. 207264 (Resolution), June 25, 2013) or before the
Senate President with respect to Senators.
25
,•,...1•:•4'.iiic?,:••4•1X4F;;;11.•••••.•7•::,•!.;!;•
Q: Can a membership in the HRET be terminated because of party disloyalty?

ANS: Membership in the House Electoral Tribunal may not be terminated except for a
just cause, such as, the expiration of the member's congressional term of office, his
death, permanent disability, resignation from the political party he represents in the
tribunal, formal affiliation with another political party, or removal for other valid cause. A
member may not be expelled by the House of Representatives for "party disloyalty"
short of proof that he has formally affiliated with another political group (Bondoc v.
Pineda, G.R. No. 97710, September 26, 1991).
K. COMMISSION ON APPOINTMENTS
Q: What is the composition of the Commission on Appointments (CA)?
ANS: There shall be a CA consisting of the President of the Senate, as ex officio
Chairman, twelve (12) Senators, and twelve (12) Members of the House of
Representatives, elected by each House on the basis of proportional representation
from the political parties and parties or organizations registered under the party-list
system represented therein f,gONST:,'"147"1,/1,..Sec. 18). ([No. of Senators or
Representatives of a politicarT3arty/ Toit.a...I,)Na. of relators or Representatives] x 12
seats). ./
Note: Forthe Senate pol tical' artrmt. n7r- b
lai.c.atien:tt;lo members to be entitled
to one seat in Comsni Oil on• puigirne9ts_fkol.in ing off i ot~allowed (Guingona v.
Gonzales, G.R. 10697.ebctdber 20, :092).
ro) L„ik
ii- z&
Q: When must he CA e co sttuted?,f-:ii,
i
ANS: The'CA shall..be onsti ted_within=tl1 y (30)_dayst after te and the House
of Representattves shall havq be ftiorgaritZed_wittuthe electio resident and the
Speaker (COI ST. VI, Sec. 19
Q: DiscuSs the in dpen of-the-CA

ANS: The Co t[Ri6p is451 endelit its ployees are not
technically emp oyees C Is. mulgate its own rules of
proceedings (Pi entel J er 13, 2005).
Q: What is the fun Lion of he $CIENT \-?‘.

ANS: The CA acts ag%a legjtti ec on ut ority of the President. It
shall act on all appokitqntsis (30) session days of the
CongresS from their submisli
Q: Under the Constitution, which appointments need the concurrence of the CA?
ANS: The President shall nominate and, with the consent of the Commission on
Appointments, appoint: (HAAC)
1. Heads of executive departments (CONST., Art. VII, Sec.16);
2. Ambassadors and other public ministers and consuls (CONST., Art. VII,
Sec.16);
3. Officers of the AFP from the rank of colonel or naval captain;
4. Officers whose appointments are vested in him by the Constitution:
a. Regular members of the Judicial and Bar Council (CONST., Art. VIII,
Sec. 8, par. (2));
b. Chairmen and members of the Constitutional Commissions (CONST.,
Art. IX-B, Sec.1, par. (2)); and
c. Sectoral representatives during the three-consecutive terms after the
ratification of the Constitution (CONST., Art. VI, Sec. 5(2); CONST., Art.
XVN, Sec. 7; Quintos-Deles v. Commission on Appointments, G.R. No.
83216, September 4, 1989).
26
,
Q: What are the appointments that do not need confirmation from the
Commission on Appointments?
ANS: The following are the appointments that do not need confirmation from the
Commission:
1. Appointment of the Vice President to a Cabinet Position (CONST., Art VII,
Sec. 3);
2. Members of the Supreme Court and judges of lower courts (CONST., Art. VIII,
Sec. 9);
3. The Ombudsman and his deputies (CONST., Art. XI, Sec.9);
4. All other officers of the Government whose appointments are not otherwise
provided for by law, and those whom he may be authorized by law to appoint,
e.g.:
a. Commissioner of Customs (Sarmiento v. Mison, G.R. No. 79974,
December 17, 1987);
b. Chairman of the Commission on Human Rights (Bautista v. Salonga,
G.R. No. 86439, April 134989); and
c. Appointments and,pr9Malions in the Philippine Coast Guard (Soriano
v. Lista, G.R. No..459880))/larch 24, 2003).
k.c."-,AV.fdaa
Q: What is the;procedure for ativiihttvertts that need the confirmation of the CA?
ANS: The procedure is as follows al •
1. Nomination by the Pwidenti
2. Confirmationbytt0Cammissicinion Appointmerits;
3. Issuance of cognmission; ands 111
4. Acceptance IV the appoingelisacson v. Rome7 G.q. No. L-3081, October
14, 1949). 1"-f,
Q: Discuss the;voting rules of the Qgmmssion.
ANS: The Co ission* hall rule on all nooinations o tmerits brought before it
by a majority' ote "atits em13,4 0 ly•?members;twntit argentitl ed to vote.
The ex officio r rm? Erts h I notMte e cept to breakWrittaber matters shall be
decided by a mafooh'ty.vo eo the membe resent constituting a quorum (Rules of the
Commission on Ap pintments, Ch. Ill, Se 15
Voting by the Comminigp on any no, poh ent submitted for confirmation
shall be by viva voce; wept, upplpieques o any mem ers, the voting shall be nominal
(Rules of the COmmissioll 9n Pporntments, Ch. IV, Sec. 23).
Q: Discuss the rules on nacted nominations or appointments returned to the

President
ANS: Nominations or appointments submitted by the President of the Philippines which
are not finally acted upon at the close of the session of Congress shall be returned to
the President and, unless new nominations or appointments are made, shall not again
be considered by the Commission (Rules of the Commission on Appointments, Ch. IV,
Sec. 17).
Q: Discuss the rules on reconsideration of resolution of the Commission.

ANS: Resolution of the Commission on any nomination or appointment may be
reconsidered on written motion by any member who voted with the majority or the
prevailing side 'presented to the Chairman not later than one (1) day after the approval
of the resolution: Provided, that said motion for reconsideration be taken up on the next
plenary session of the Commission. If the majority of the members present approves
such motion foil= reconsideration, the nomination or appointment shall be reopened and
submitted anew to the Commission. A motion to reconsider the vote on any nomination
or appointment may, however, be laid on the table and which decision shall be
considered as a final disposition of such a motion for reconsideration.
27
A motion to reconsider, however, is not in order if filed during the last plenary session of
the Commission prior to an adjournment of Congress (Rules of the Commission on
Appointments, Ch. IV, Sec. 18).
Q: What are the rules on meeting of the Commission?

ANS: The Commission shall meet only while Congress is in session, at the call of its
Chairman or a majority of all its members (CONST., Art. VI, Sec. 19).
Q: What is the veto power of the member of the Commission?
ANS: Any member may move for the suspension of action by the Commission on any
nomination ,or appointment favorably recommended by a standing committee and the
Chairman shall suspend the consideration of said nomination or appointment: Provided,
that, such suspension may be taken up on the next succeeding session of the
Commission; Provided, further, that this section shall not apply to nominations or
appointments taken up by the Commission during the last session prior to a sine die
adjournment of Congress (Rules of the Commission on Appointments, Ch. IV, Sec. 20).
C .....0„,„......„,"‘„,
L. INITIATIVE AND REFEREN ,t/ •
Q: What is a people's ipt fatikre ,. k,.."
ANS: People's initiative Ts the owdrortErfieodie 4rAkse amendments to the
Constitution or to pr pose o enact le„gjslafitonougThat t9 roil called for the purpose
(R.A. No. 6735, Sec park) r' 7 I'.
IL A
Q: Is R.A. 673 suffi i nt a d adequate amend t e Co titu on thru a people's
initiative?' " 11
i
ANS: R.A. No p 5 also k own.„as„the,il1,People:s In iative nd'Oe erendum Act", is
C'1,-S k
. ' .:3 1 .e: 4,1.-0"
incomplete; inade-q-
ul e, or w nting 0..pssApalterms and con Tons sofar as initiative
on amendrherl,Iset:21
,,, e Conq lution 1 'kboribetned (4 fifiago C ELEC, G.R. No.
127325, March 19, i 97). frill 'everi-in4he ga-Minut ' 'sol on eying the motions
r-N ., ,.,.6..,
to reconsider t e(!:.
.1svi 8sal
:1 f rlrYelleie (nit bye " e 1h ) Members of the
...) vtitio I-* r • ' /./ Y
Court reiterated their p • sitio -(1
.1?k.,c2. (5Ts'or 5 -.4 [de t and ddequate to amend
the Constitution hru a eopl s " ti esol ion, Larnbino v. Comelec,
supra; Binay v. COMEL ', G. r. WI S ptem,,ber 8, 2006). The COMELEC
subsequently pron4gated o tI 444' dsoldri n No./796, setting forth the
rules and regulations I• goy& sue o 'tier on ''he. GOnstitution.
Q: What are the classes o e_ple's inliat43_

ANS: There are 3 classes of peo
-pWs.ipl
ijamo.vin :
1. Initiative on the Constitution - petition proposing amendments to the
,Constitution;
2. [Initiative on Statutes - petition proposing to enact a national legislation; and
3. Initiative on Local Legislation - petition proposing to enact a regional,
,provincial, city, municipal, or barangay law, resolution or ordinance (R.A. No.
6735, Sec. 3 (a)).
Q: What is referendum?
ANS: Referendum is the power of the electorate to approve or reject legislation through
an election called for that purpose (R.A. No. 6735, Sec. 2 (c)).
Q: What are the classes of referendum?

ANS: There are two (2) classes of referendum, to wit:
1. Referendum on Statutes - petition to approve or reject an act or law or part
thereof, passed by Congress (CONST., Art. VI, Sec. 32); and
2. Referendum on Local Laws - legal process whereby the registered voters of
the local government units may approve, amend, or reject any ordinance
enacted by the Sanggunian (LGC, Sec, 126).
28
OLITICALLA A
DAN RED BOOK
7“... •
VOL 1.
2019
III. EXECUTIVE DEPARTMENT

A. QUALIFICATIONS, ELECTION, AND TERN OF THE PRESIDENTAND VICE-
PRESIDENT
Q: What are the qualifications required of the President and Vice President?
ANS: A person must meet the following qualifications to be elected President or Vice
President:(N4O-RAW-R10)
1. Natural-born citizen of the Philippines;
2. At least 40 years of age on the day of the election;
3. Able to Read And Write; and
4. A Resident of the Philippines for a period of at least ten (10) years immediately
preceding the day of the election (CONST., Art. VII, Sec. 2).
Q: How long is the term of office of the President and Vice President?
ANS: The President and the Vice-Presitg$ shall be elected by direct vote of the people
for a term of-six (6) years which shpegsn at noon on the thirtieth (30th) day of June
next following ! the day of the elecribdpipshall end at noon of the same date six (6)
years thereafter (CONST., Art ifitiqkqp •
Note: The person having the liFs(p
higaii 0 of votes shall be proclaimed elected, but in
case two or more shall have an AirafWird$tgumbe votes one of them shall
forthwith be chosen by the votelof eo_gionVoNiktp ers of both Houses of the
or
Congress, voting separ4elp(CONST.,,A1VII, Sec. 4(5)).
+4
,.,...id
Q: Discuss the rule‘oXt: Pres ent's and Vice esident's election and
eligibility for 'peelecLig,,,,n. -, 4'
ANS: The PreSidsrAnd the Vice-Preside be elected b direct vote of the people
for a term ofOix years W6ich shallobegiMat noon on irtie day of June next
441 ..,.‘a .
following thekaN'of t az': lectioRkand s %if end at me date six years
thereafter.
Unless otherWise pro Iedtypw, gie regs ar election for President and Vice-President
shall be held on thele and Randay of M
The President shall nottbe eligible or an' o: person who has succeeded as
4.4o
President and has serVed as sou p for more than four (4) years shall be qualified for
election to the same o time.
•
No Vice-President shall serve for more than two (2) consecutive terms. Voluntary
renunciation of; the office for any length of time shall not be considered as an interruption
in the continuity of the service for the full term for which he was elected (CONST., Art.
VII, Sec. 4).
B. PRIVILEGES, INHIBITIONS AND DISQUALIFICATIONS

Q: What are the privileges afforded to the President and Vice-President?
ANS: The following are their privileges:
1. Official residence for the President; and
2. Salaries of the President and Vice-President are determined by law and not to
be decreased during his tenure (CONST., Art VII, Sec. 6).
3. Presidential immunity from suit during his tenure (Soliven v. Makasiar, G.R.
No. 82585, November 14, 1988).
4. Executive privilege (Presidential Communications Privilege) has been defined
as "the right of the President and high-level executive branch officials to
withhold information from Congress the courts, and ultimately, the public"
(Senate v. Ermita, supra).
29
Q: What is the extent of President's immunity from suit?
ANS: The President, like the judges of the courts and the members of the Legislature,
may not be personally mulcted in civil damages for the consequences of an act
encutedln the performance of his official duties.
This principle of non-liability does not mean that the chief executive may not be
personally sued at all in relation to acts which he claims to perform as such official. The
[President] is liable when he acts in a case so plainly outside of his power and authority
that he cannot be said to have exercised discretion in determining whether or not he had
the right to act.
Also, when the cases filed against the President are criminal in character. It will be
anomalo0 to hold that immunity is an inoculation from liability for unlawful acts and
omissions. The rule is that unlawful acts of public officials are not acts of the State and
the officer who acts illegally is not acting as such but stands in the same footing as any
other trespasser (Estrada v. Desierto G.R.Nos,.446710-15 & 146738, March 2, 2001).
Q: Whatare the inhibitionsee- an. di squahicafio s Imposed upon them?

ANS: The following aryitna Ibjtion and•disqua fficationsunder the law: (SEOP-CS)
1. Shall have n ndea'spin Salaries dunn ter arNCONST., Art. VII, Sec.
6);
2. Shall n xcleeiv, ai r othorArriolurr\rts from etgb ib)t ment or any other
sourcel(CON4T., A . VII, Sec. ), 4:1:
3. Shall lot hold' any other Officept,employme t, un sts rwise provided in
the Crlitutpn (CTrST,—Aff.171/ ii ec.
4. Shall nift-di ctly or indreeVt5;111 cfce o er proftrq, articipate in any
busirrssed be finaviallyin-tere*pliany c ntract w thro0i any franchise or
special privilegelt _,, ted by Ihe-gAmme n sub I pion, agency, or
instru' talk tlie;r6 includkng QpCCs r su 'sidi9es (CONST., Art.
WI, Sq . 3); V f:=1 1,- ,1%, NY
akc cy
5. HStrictl void gonflic 'of' th6 thgir office (CONST., Art. VII,
Sec. 13 • and
6. , May note point §_oaus uinity 4
o/affinity within the 4th
civil degre as Me . Z*;- issLo s, or the Office of the
'''Ombudsman, ri:ger chairmen or heads of
bureaus or office itsidiaries (CONST., Art. VII,
Sec. 13).
C POWERS OF THE PRESIDENT

Executive and Administrative Powers in General
Q: Distinguish executive power from administrative power.
ANS: EXecutive power pertains to the power to enforce and administer the laws. It shall
be vested in the President of the Philippines and exercised through the manifold offices
of the ;executive department (CONST., Art. VII, Sec. 1). On the other hand,
administr'ative power refers to the President's control over all such executive
departments, bureaus, and offices. He shall ensure that laws are faithfully executed
(CONST, Art. VII, Sec. 17).
Q: What is the power of administrative reorganization?

ANS: It is the President's continuing authority to reorganize the executive branch which
includeS the power to group or consolidate bureaus and agencies, to create and abolish
offices, to transfer functions, to create and classify functions, services, and activities,
and to standardize salaries and materials. It is effected in good faith if it is for the
purpose of economy or to make bureaucracy more efficient (MEWAP v. Executive
Secretary, G.R. No. 160093, July 31, 2007).
30
• • r•••:•::;•!;‘,
Q: Discuss the faithful execution clause.

ANS: The second sentence of Section 17, Article VII is referred to as the "take care
power" of the President and also sometimes called the "faithful execution clause.
Under this provision, the President is bound to ensure the faithful execution of laws
regardless of his belief in the legality of said laws. Until and unless a law is declared
unconstitutional, the President has a duty to execute it regardless of his doubts as to its
validity (CONST., Art. VII, Secs. 1 & 17).
Powerof Appointment
Q: Define appointment.
ANS: An appointment is the selection, by the authority vested with the power to do so,
of an individual who will be tasked to exercise the functions of a given office. It differs
from a designapon in that the latter simply means the imposition of additional duties,
usually by law, on a person already in the public service. It is also different from a
commission, which refers to the written evidence of the appointment (NACHURA, supra
at 356).
Q: What is the, nature of the pot949,Lpwint?
ANS: The power to appoint is eq'ellepAlecutive in nature, and the legislature may
not interfere with the exercise of `tili00811five power exce t in those instances when
the Constitution expressly allows4t foto&eW-Pline tel vErmita, G.R. No. 164978,
October 13, 2005).
Q: What are the limitatkon$•in the P:ipi nt's appointing. po
ANS: The folloWing are „t in th, President's po e
1. LimitationsA4theMitive po et to appoint ar lYco ed strictly against the
51.4o- ----,,--t...... -1
legislAgre. The sgagerof thejeg ature's interf enc e President's power
to grant is-MQited to th-6 po er to pre cribe ualifications to an
apitAtiveroffieningk&can ppoint in the guise of
presChbing iv lificationsAthat ffice. Neithe' ress impose on the
Preside~ir t e tyito appoipt an articular person to an office.
2. The CA ist pen Ant from Co o ress and does not legislate when it confirms
or refuses a Pkesid r tial appoint
3. The Presiden as constituticina gation to only make permanent
appointmentlithen CptireITiii session.
4. The Pre den Y ap als ake temporary appointments even when the CA is in
session (Pimen e4rmita, supra).
5. The ;President is constitutionally prohibited from making "midnight
appointments" except under certain conditions (CONST., Art VII, Sec. 15).
Q: What are the classifications of appointments?

ANS: (Please refer to the section of this book on the Law on Public Officers).
Q: What are the kinds of presidential appointments?

ANS: The following are the kinds of presidential appointments:
1. Regular presidential appointments, with or without confirmation by the
ComMission on Appointments, including "recess" or "ad interim" appointments
(CONST., Art. VII, Sec. 16).
2. Appointments made by an Acting President (CONST., Art. VII, Sec. 14);
3. Midnight appointments - appointment made by a President within 2 months
before the next presidential elections and up to the end of his term (CONST.,
Art VII, Sec. 15; see General v. Urro, G.R. No. 191560, March 29, 2011; and
Sena, v. Career Executive Servico Board, G.R. No. 192926, November 15,
2011):
31
Q: What are the appointments that can be made solely by the President?
ANS: The following are such appointments:
1. Those vested by the Constitution on the President alone;
2. Those whose appointments are not otherwise provided for by law;
3. Those whom he may be authorized by law to appoint; and
4. Those other officers lower in rank whose appointment is vested by law in the
President alone (CONST., Art. VII, Sec. 16).
Q: Can the President legally appoint officers-in-charge in ARMM?
ANS: Yes. The President shall appoint all other officers of the government whom the
President may be authorized by law to appoint (CONST., Art. VII, Sec. 16). Since the
President's authority to appoint 01Cs emanates from R.A. No. 10153, it falls under this
group of officials that the President can appoint. Thus, the assailed law rests on clear
constitutional basis (Datu Michael Abas Kida, etc. v. Senate of the Philippines, G.R. No.
196271, October 18, 2011).
Confirmation andBy-passed.9ppantmeT
Q: Which presidential 5pOntbonts rtg irc trm% s'
nfifon by the Commission on
Appointments, undertheVatig. tttiont?----
I 1,,
ANS: The President d no all)i
fiate and, with Fie onseqt, f the Commission on
Appointments, appipint.
1. Heads ofkectu qepartmsn4CON(ST., A . V14,•)Ssc
2. Ambas4adors' and other Oublidil?mirildters nd akr(duls TCONST., Art. VII,
Sec.1);
3. Officers
AD
AFP tom t e ran o co one or *q;
4. °Mc * whose appointmeiltdiTeleaek. kirc hirp by the onstitlition:
a. ar menibers
). bflifae 4191 an !Bar Co hcilIONST., Art. VIII,
Sect , p
b. er eo,ssions (CONST.,
Art. S
ectoraVep ree- nseculive terms after the
ajfficatio of th Ob T., 6,1. See6. 5(2); CONST., Art.
)6V, Sec. •Q. recervco misgon on &ointments, G.R. No.
8321 Sle becZLIt9L0„.00,"
Q: What is a by-passed apzoi ent?) ik
ANS: A by-passed appoint onelitcdtEa_gopmeen finally acted upon on the
merits by the Commission on pcintrtt- at the close of the session of
Congress. There is no final decision by the Commission on Appointments to give or
withhold its consent to the appointment as required by the Constitution (Matibag v.
Benipayo, G.R. No. 149036, April 2, 2002).
Q: What is the primary effect of a by-passed appointment?

ANS: Nominations or appointments submitted by the President of the Philippines which
are not filially acted upon at the close of the session of Congress shall be returned to
the President and, unless new nominations or appointments are made, shall not again
be considered by the Commission on Appointments (The New Rules of the Commission
on Appointments, March 7, 2017, Sec. 17).
Q: Is there a limit as to the number of times the CA can review the President's re-
appointment of a by-passed appointee?
ANS: Yes. A nomination or appointment which has been bypassed three (3) times shall
be reported out by the standing committee concerned to the commission for its
appropriate action in the next plenary session; provided that no member shall be
allowed to invoke the suspension of the consideration of the appointment in this
regard (The New Rules of the Commission on Appointments, supra at Sec. 25).
32
Midnight Appointments anc/Ad Interim Appointments
Q: What are midnight appointments?
ANS: Midnight appointments are appointments made by a President within 2 months
before the next presidential elections and up to the end of his term (CONST., Art. VII,
Sec. 15).
Q: Is the prohibition on midnight appointment absolute?

ANS: No. The President or Acting President may make temporary appointments to
executive positions when continued vacancies therein will prejudice public service or
endanger public safety (CONST., Art. VII, Sec. 15).
Q: Does the prohibition apply to the appointments made by the President in the
judiciary?
ANS: No. The prohibition on midnight appointments does not apply to appointees to the
judiciary. The fact that Section 14 and Section 16, Article VII refer only to appointments
within the Eiecutive Department rencjafibnclusive that Section 15 also applies only to
the Executive Department. The ftaTeredid not need to extend the prohibition to
appointments in the Judiciary tkaute eir establishment of the JBC and their
subjecting the nomination and ggebig tf candidates for judicial positions to the
unhurried and deliberate prior proC,esCat BC ensured %%there would no longer be
midnight appointments to the Jild.161arpt) JudigiOld Bar Council, G. R. No.
191002, March 17, 2010).
Power of Removcil
Q: What are the rules on fli!seltsidenty ower of remdvaliT
ANS: The genesp. le iliklfrom the ress power
power ff aroiniment, the President
derives the 'milled pom - of removgN(C Philippi e Po 'tical1aw, supra at 407).
Exceptions to alwar.e4those4epoin by himo&er-1) 60 %titution prescribes
certain methods for se,Iaan froerpubl ervice, al'i TMPIa
.- Kinder Section 2,
Article XI, 1987 Control
Note: In cases wheeIlie pcippr of r, mov s lodged in the President, the same may be
exercised only for causes 60 may be p,ovid- ey law, and in accordance with the
prescribed administratitwr cedure (CR ; =,•
a float Law, supra at 408). The
President may directlypisciplinejrapn
'Vm.ers-o - eery service of the Civil Service
who are appointed by he- Zaldivar, G.R. No. L-22754, December 31, 1965).
Q: Can a law vest the President with disciplinary authority over a Deputy
Ombudsman?
ANS: No. To subject the Deputy Ombudsman to discipline and removal by the
President, whose own alter egos and officials in the Executive Department are subject
to the Ombudsman's disciplinary authority, cannot but seriously place at risk the
independence of the Office of the Ombudsman itself. The Office of the Ombudsman, by
express constitutional mandate, includes its key officials, all of them tasked to support
the Ombudsman in carrying out her mandate. Unfortunately, intrusion upon the
constitutionally-granted independence is what Section 8(2) of RA No. 6770 exactly did.
By so doing, the law directly collided not only with the independence that the
Constitution guarantees to the Office of the Ombudsman, but inevitably with the
principle of checks and balances that the creation of an Ombudsman office seeks to
revitalize (Gonzales v. Office of the President, G.R. No. 196231, January 28, 2014).
33
e•;4Y.1"
Power of Control and Supervision003

Q: Distinguish control from supervision.
ANS: The power of control is the power of an officer to alter or modify or set aside what
a subordinate officer had done in the performance of his duties and to substitute the
judgment of the former for the latter. The power of supervision is defined as the power of
a superior officer to see to it that lower officers perform their functions in accordance
with law (Joelbito-onon v. Fernandez, G.R No. 139813, January 31, 2001).
Doctrine of Qualified Political Agency
Q: Discuss the doctrine of qualified political agency or the alter ego principle.
ANS: All executives and administrative organizations are adjuncts of the Executive
Department, the heads of the various executive, and, except in cases where the Chief
ExecutiVe is required by the Constitution or law to act in person or the exigencies of the
situation demand that he acts personally, the multifarious executive and administrative
functions of the Chief Executive are_vmfqrmed by and through the executive
departments, and the acts of thipSetrg nejs o Execcee departments when performed
and promulgated in the jefulk couse of O'si essNzre, unless disapproved or
reprobated by the Chier,..kExect.ee, presu tiVel the cis,, of the Chief Executive
(Carpio V. Executive Secretary)0.1RYVO. 96409, 24,!9„.92).
No e: Thus, the E"ecuky9, Setrajxy.,-wfiemactin.9 b ktforitNf t the President, may
reverse the decisiorpofr9trerdepa_ rtmenkseutalaceprVaea,pnes v. Pano, G.R.
No. L-27811, NOertkprz17, 1967). file,cita§icip of ie Capfef Svretary carries the
presumptive approval 9f the resident, ettphere is n need o ejAal the decision to
the President in)-olclef to cqmplete-eihOtion-of-adrninistri aiive remedies (Kilusang
Sayan, et al. viDdET:guez, G.R. No05439,(1anyary 13, 1992711---"
Executive Depactra
nIts andOffices\wv3
_
I t ...4
Q: Does;the Pire(sj,K ex'Vcie\ e power exec(' we departments
and offices? X N'Y
ANS: Yes. ThePresident sfIrP epartrgents, bureaus, and
offices (CONST., Art. A Se res cturingi reconfiguring, and
appointments of t Or respl, ctiv ,cffic 4 ergs.('ire that e laws be faithfully
executed (ADMINIST ATIVE-'6,0DB I ' 1 I . ,GMpte 1, Sec. 1) (hereinafter
ADM. CODE]. -et 9 - 1- kV '-
Local Government Units 1-1-1 Al 1°-
Q: Discuss the power of the Presi en o pervise local government units.
ANS: The President of the Philippines shall exercise general supervision over local
governments (CONST., Art. X, Sec. 4). The President may only interfere in the affairs
and activities of a local government unit if he or she finds that the latter had acted
contrary to law. Any directive therefore by the President or any of his or her alter egos
seeking to' alter the wisdom of a law-confirming judgment on local affairs of an LGU is a
patent nullity because it violates the principle of local autonomy and separation of
powers of the executive and legislative departments in governing municipal corporations
(Dadole v. Commission on Audit, G.R. No. 125350, December 3, 2002).
Military Powers
Q: What are the military powers vested on the President?
ANS: The President is the Commander-in-Chief of all armed forces of the Philippines,
and whenever it becomes necessary, he may call out the Armed Forces to prevent or
suppress lawless violence, invasion, or rebellion. In case of invasion or rebellion, when
the public safety requires it, he may, for a period not exceeding 60 days, suspend the
writ of habeas corpus or place the Philippines or any part thereof under martial law.
(CONST., Art. VII, Sec. 18).
34
DAN RED BQ,QI
Calling out power
Q. Discuss the calling out power of the President.
ANS: The President, as commander-in-chief of all the armed forces of the Philippines
may call out the armed forces to suppress lawless violence, invasion, or rebellion,
whenever it shall be necessary. It is the most benign of the military powers of the
president and ,is merely incidental to his authority to determine the disposition of the
armed forces and what degree of force a particular crisis demands. It is limited however
to ordinary police action necessary to maintain public order (IBP v. Zamora, G.R. No.
141284, August 15, 2000).
Declaration of martial law and suspension of the privilege of the writ of habeas
corpus; requisites and parameters of extension
Q: Discuss the power of the President to suspend the privilege of the writ of
habeas corpus or to place the Philippines, or any part thereof under martial law.
ANS: The Predident may only exercise thi„-Spower in case of actual invasion or rebellion
(Lagman v. Medialdea, G.R. No. 2.346#,Ruly 4, 2017).
Note: The words "actual" are not fpli0 ir&icle VII, Section 18 of the 1987 Constitution
which provides that The PresidentA4Wite Commander-in-Chief of all armed forces
of the Philippines and whenevertt bLeArria necessary, he may call out such armed
forces to prevent or suppress laVes6piphlelr gon or Cepllion. In case of invasion
or rebellion, when the public safety teirdirgal'hilmarferiod not exceeding sixty
(60) days, suspend thespligge of theiwr of habeas corpu; place the Philippines or
any part thereof underertiartia1 law."
1. Even when treiprds invasion or rebellion, the pOwer may not be exercised
unlesth reit,t1 bVublic safety ONST., Art V , Sec. .48, par. 1).
2. The supensionTrAhe. privilege f the writ, or, he mposition of martial law,
shallotexcee41,60 days, ufilesertvoked or e, end d bitongress (CONST.,
Art.teSe,-.48:15ar.
3. A state of ma al Pw does not is the bp&ralipweth Constitution, nor
supplahtt un,a toning of the, courts ol'Telegtive assemblies, nor
authorizeectnitrent glf jurirdiction on military courts and agencies over
civilians w ere ciltourts are a le tolfu ction nor automatically suspend the
privilege of thglwiWCONST., -11Mar„ 4).
4. The suspenstbh of the ege nt2of4beas corpus applies only to
persons judiely clhtged of rebellion or offenses inherent in or directly
connected wittlikkatan (CONST., Art. VII, Sec. 18, par. 5). Persons arrested
must be judiciallMarged within three 3 days; if not, they must be released
(CONST., Art. VII, Sec. 18, par. 6).
Note: The suspension of the privilege of the writ does not suspend right to
post bail (CONST., Art. Ill, Sec. 13) and thus by implication does not suspend
other civil and political rights.
5. The suspension of the privilege of the writ and the declaration of martial law
are subject to review and possible revocation by Congress (CONST., Art. VII,
Sec. 18, par. 1).
6. The suspension of the privilege of the writ and the declaration of martial law
are subject to review and possible nullification by Supreme Court (CONST.,
Art. VI!, Sec. 18, par. 3).
Q: Does the Congress have the power to extend martial law?

ANS: Yes. The, Congress has the prerogative to extend the martial law and the
suspension of the privilege of the writ of habeas corpus as the Constitution does not
limit the period for which it can extend the same (Lagman v. Medialdea, G.R. Nos.
243522, 243677, 243745 & 243797, February 19, 2019).
35
Q: Can the Congress extend the proclamation or suspension more than once?
ANS: Yes. Section 18, Article VII of the Constitution is indisputably silent as to how
many times the Congress, upon the initiative of the President, may extend the
proclamation of martial law or the suspension of the privilege of habeas corpus. Such
silence, however, should not be construed as a vacuum, flaw or deficiency in the
provision. While it does not specify the number of times that the Congress is allowed to
approve an extension of martial law or the suspension of the privilege of the writ of
habeas corpus, Section 18, Article VII is clear that the only limitations to the exercise of
the congressional authority to extend such proclamation or suspension are that the
extension should be upon the President's initiative; that it should be grounded on the
persistence of the invasion or rebellion and the demands of public safety; and that it is
subject to the Court's review of the sufficiency of its factual basis upon the petition of
any citizen.
Thus, whenever there is a determination that the invasion or rebellion persists and
public safety requires the extension latadiaLlaxzr of the suspension of the privilege of
the writ, the Congress may i 9xafeise it agthority, tb-g, ant such extension as may be
requested ;by the Presideateeveitif it be kljse ht lb t itial extension.
i nd,t,5 so*r17:erioc
Section 18; Article Vliid ix tt 7Thhek.e tenilibpsQf the proclamation and
suspension. Howvief,N(ctlefriy....gaventiFC'ongr ssNcaut 6 ity to decide on its
duration; thus, thegov)ispti ,fates triipt (fiat tlw-exte sio sti "for a period to be
determined, by tp Co .Tress. (If it were thOntehtion of he a ers ofithe Constitution to
limit the extension to sixty (6b) days, asg setitioners in G.R. 35. 35 theorize, they
would not have epressly ve e in e opgress e sower t uration (Lagman
v. Pimentel 111, A-Nos. 235935,'236061 2303:57t 2 6155, &ad 6, 2018).
k kft: sio al a t ority to extend
Q: What are th un'tati n on the exaglike of co
martial law? r
ANS: The,;onl umitab ns 9 res tonal auth r't to extend such
proclamation or lispen (on: T.,
1. The extension avid b
2. It' should‘7 groundad or rebellion and the
demands o tQublicpife
3. It' is subject taithettEart 'ew.of.tha su 1 ,Q its factual basis upon the
Petition of any citizen f many yie 'la pfa).
Note: At the initial declaratioribf , e Aident observed the 60-day limit
and the requirement to report to Congretrni is initial declaration as well as in the
extensions, the President's decision was based on the reports prepared by the different
specialized agencies of the Executive branch charged with external and internal security
of the whole country. These were the same reports submitted to Congress which were
deliberated on, no matter how brief the time allotment was for each of the law makers'
interpellatiOns {Lagman v. Medialdea, supra).
Q: What are the two factual bases for the extension of the proclamation of martial
law or of the suspension of the privilege of the writ of habeas corpus?
ANS: Section 18, Article VII of the 1987 Constitution requires two factual bases for the
extension of the proclamation of martial law or of the suspension of the privilege of the
writ of habeas corpus:
1. The invasion or rebellion persists; and
2. Public safety requires the extension (Lagman v. Pimentel III, supra).
36
Q: What is the extent of review by the Congress on the President's martial law and
suspension powers?
ANS: Congressional check on the President's martial law and suspension powers thus
consists of:
1. The power to review the President's proclamation of martial law or suspension
of the privilege of the writ of habeas corpus, and to revoke such proclamation
or suspension. The review is "automatic in the sense that it may be activated
by Congress itself at any time after the proclamation or suspension is made."
The Congress' decision to revoke the proclamation or suspension cannot be
set aside by the President.
2. The power to approve any extension of the proclamation or suspension, upon
the President's initiative, for such period as it may determine, if the invasion or
rebellion persists and public safety requires it (Lagman v. Pimento! III, supra).
Q: What is the extent of review by the Court as regards the President's exercise of
his military pOwers?
ANS: The COurt's power to revieAs mited to the determination of whether the
President in declaring martial law. tifell ending the privilege of the writ of habeas
corpus had sufficient factual basi review would be limited to an examination
on whether the President acted ‘Cit ounds set by the Constitution, i.e. whether
the facts in his possession prior taan of the d-laration or suspension are
sufficient for him to declare rroffial far s (spell etiV10vi ego of the writ of habeas
corpus (Lagman v. MedisIsdea, suprar r may the Court dvise or dictate its own
judgment upOli the Pdlident as to, vh ,h and how his nary powers he should
exercise in a given set factualfrarcu tances (Lagman /mantel Ill, G.R. No.
235935, February 6, 0, .8)
Note: A petitionjpfgertiorart4pgrsuant to ction 1 or Set tio rticle VIII is not the
proper tool to,,Miew AifficiencyEN t actual basi amation of martial
law or the suripiag,,EAfikprivi e9e of t rit of h a petition is sui
generis, juriscktion of vital is cci the Co 18 of Article VII
(Lagman v. Piinevl
tri
Q: Differentiate the. judicialtpower to r iciency of the factual basis of the
proclamation of marti214digoainst th es lo al ower to revoke it.
ANS: The Court may'Vrike do -9 0 en la c amation in an appropriate
proceeding filed, by angeitizen on the ground of lack of sufficient factual basis. On the
other hand, Copgress rttaX rake the proclamation or suspension, which revocation
shall not be set aside by Ilia
ia resident.
In reviewing the sufficiency of the factual basis of the proclamation or suspension, the
Court considers' only the information and data available to the President prior to or at the
time of the declaration; it is not allowed to "undertake an independent investigation
beyond the pleadings." On the other hand, Congress may take into consideration not
only data available prior to, but likewise events supervening the declaration.
In addition, the! Court's review power is passive; it is only initiated by the filing of a
petition "in an appropriate proceeding" by a citizen. On the other hand, Congress' review
mechanism is automatic in the sense that it may be activated by Congress itself at any
time after the proclamation or suspension was made (Lagman v. Medialdea, supra).
37
,":•,::;,1e=-V,,i:«.'":T•:. •
1B
Q: What'. are the limitations on the President's exercise of the martial law and
suspension powers?
ANS: Pursuant to Section 18, Article VII of the 1987 Constitution, the following are the
limitations on the President's exercise of martial law and suspension powers:
1. ;!The President may declare martial law or suspend of the privilege of the writ of
•the privilege of habeas corpus only when there is an invasion or rebellion and
public safety requires such declaration or suspension.
2. 'The President's proclamation or suspension shall be for a period not
exceeding 60 days.
3. Within 48 hours from the proclamation or suspension, the President must
'.:submit a Report in person or in writing to Congress.
4. 'The Congress, voting jointly and by a vote of at least a majority of all its
Members, can revoke the proclamation or suspension.
5. iThe President cannot set aside the Congress' revocation of his proclamation
or suspension.
6. ,`;The President cannot, by Ilimselfi,..ex.t.,,e4 his proclamation or suspension. He
should ask the Congegrapprov4
7. !,;Upon such initiative orlkquest fro frOid.eht,,the Congress, voting jointly
and by a vote •6f eegt.A.majorily of all its- Members, can extend the
proclamatigor suspension for such period it ,determine.
8. The exten5i6h4ptbefrkpolartratidirOrsuspansio all anly be approved when
the invadi,Qor-11 perigisterdyblic s recqtfir
9. 'The Stfpreme' Couri may feviectirgh&suffici ncy f he factual basis of the
proclamation or s spension „drithe extens on the an appropriate
ff
procepd, trigi ed by any ci izen.
10.;;The $tifire Courtn-C
mukjydp ateli7deci ion within 30 ays from the filing
of thl a ro riate pr ceedi„ -
11. Marty a es no suspennfie_ peration 9rrApo I
Acco 0911. he ighterOaiqs„,effech eMide of martial law. Its
i Imple bnte s mu st re tWit fan fhority is supreme
over the milita and.:Vie fclOsV protector 5 the people. They
umust abid by till- •••1ta ' olic o alue,ithe dignity of every human
person and guars tee 11 Ses si et" i?.111 n r* !fits.
12. Martial
! laOld.pes npt u la - f efilvil courts or legislative
assemblies, riotiahgairigeihe-eonfer enti Onur dl.ativon on military courts and
agencies over cittilleniiikere ci• o "'"akela e41O function.
13. . The suspension of /fte,..43tivilege htoapplies only to persons judicially
charged for rebellion or offerget—in Brent in or directly connected with
invasion.
14. Finally, during the suspension of the privilege of the writ, any person thus
arrested or detained should be judicially charged within three days, otherwise
:he should be released (Lagman v. Pimento! Ill, supra).
Note: The Constitution does not specify the number of times the Congress is allowed to
approve:'an extension of martial law or the suspension of the privilege of the writ of
habeas Corpus (Lagman v. Pimento! 111, supra). The Congress is also not constitutionally
mandated to convene in joint session except to vote jointly to revoke the President's
declaration or suspension (Padilla v. Congress, G.R. No. 231671, July 25, 2017).
Q: Is the Congress required to "meet in joint session" whenever the President

declares martial law or suspends the privilege of the writ of habeas corpus?
ANS: No. The Congress is not constitutionally mandated to convene in joint session
except to vote jointly to revoke the President's declaration or suspension. By the
language of Article VII, Section 18 of the 1987 Constitution, the Congress is only
required to vote jointly to revoke the President's proclamation of martial law and/or
38
-• •
suspension of the privilege of the writ of habeas corpus (Padilla v. Congress of the
Philippines, ,G.R. Nos. 231671 & 231694, July 25, 2017).
Executive Clemency
Q: What is'pardon?
ANS: Pardon is an act of grace which exempts an individual on whom it is bestowed
from punishment which the law inflicts for a crime he has committed. A pardon is a
deed, for the validity of which delivery is essential, and delivery is not complete without
acceptance. It can be rejected (U.S. v. Wilson, No. 90-1745, March 24, 1992).
Note: For amnesties, the grant must be concurred with by a majority of all the Members
of Congress (CONST., Art. VII, Sec. 19).
Q: What are; the classifications of pardon?

ANS: Pardon may be classified as follows:
1. Conditional pardon — in the nature of a contract between the Chief Executive
and the convicted criminal; Iv4 e pardonee's consent to the terms stipulated
in the contract, the pardol0• placed himself under the supervision of the
Chief Executive or his, who is duty bound to see to ,it that the
pardonee complies withdiqto ns of the pardon (Torres v. Gonzales, G.R.
No.'IL-76872, July 23, 147rer
2. AbSolute pardon —,p5cdoV_S:f 41,y unconditional, it is also
unrestricted in sco com le and pren tym haracter (Risos-Vidal v.
COMELEC, Ge o. 206666 J uary 21, 2015).
. 4T
Discuss the natur lef Kee paydching ower of the Pr! wit.
ANS: Except in car e& it p ment, o s otherwise provi•ed IQ the Constitution, the
President mayOrant reprieves, comm ions, and rdo s, rid remit fines and
forfeitures, afte ...convidro by final judg t. He shal also have he power to grant
amnesty withgthe .concitrr cem ity of a f the Congress
(CONST., Sect he exorcise the pardonril scretionary in the
President and mtyinoLb terfered with Congress or the Court, except only when it
exceeds the limits pvviaed foj by the Co itution (Risos-Vidal v. COMELEC, supra). In
granting the .pOwer of etIcecuffe clemency President, the Constitution does not
distinguish between crag-dr-end ad in (Ma as v. Executive Secretary,
G.R. No. 99031, October 15, 199,
Q: What is the effect of p.aarrdl

a?
ANS: Pardonjremoves the penalties and the resultant disabilities from conviction and
restores him to his civil and political rights; it makes him as if he were a new man and
gives him a new credit and capacity (SUAREZ, supra at 600).
Q: What are the limitations to the pardoning power of the President?

ANS: The following are the limitations to said power:
1. It can be granted only after conviction by final judgment (except amnesty)
(CONST., Art. VII, Sec. 19);
2. It cannot be granted in cases of impeachment (CONST., Art. VII, Sec. 19);
3. It cannot be granted in violations of election laws without the favorable
recommendation of the COMELEC (CONST., Art. IX-C, Sec. 5);
4. It cannot be granted in cases of legislative contempt or civil contempt (CRUZ,
Philippine Political Law, supra at 444-445);
5. It cannot absolve a convict from civil liability (CRUZ, Philippine Political Law,
supra at 445);
6. It cannot restore public offices forfeited (CRUZ, Philippine Political Law, supra
at 445).
39
Q: What is amnesty?
ANS: Amnesty is an act of grace by the President, concurred with by the Legislature,
usually extended to classes of persons or communities who may be guilty of political
offenses, generally before or after the institution of the criminal prosecution and
sometimes after conviction. It looks backward and abolishes and puts into oblivion the
offense ,itself that the person released by amnesty stands before the law precisely as
though he had committed no offense (Barrioquinto v. Fernandez, G.R. No. L-1278,
January 21, 1949).
Q: What are the other forms of executive clemency?
ANS: The other forms of executive clemency are the following:
1. Commutation - reduction or mitigation of the penalty (CRUZ, Philippine
Political Law, supra at 444);
2. , Reprieve - postponement of sentence to a date certain, or stay of execution
[ (CRUZ, Philippine Political Law, supra at 444);
3. , Parole - release from imprisonment, but without full restoration of liberty, as
parolee is in the cu h not in confinement (SUAREZ,
[supra at 598) andel.'
4. ; Remission ol„,tfrn oriel m>yre1plev9
ni ts the collection of fines or
the confis t pn itenroperty; or h the effect of returning
property • eej.„Ifestekin-t.h• s p oney already in public
treasury, Rapp/ e Car sti ion vie Oa at 315).
Powers Pertin
Q: Discuss thiaitIo atic •sower af VIII14sitlen CO
ANS: The Pre idintii the sale o'ralls-qf emdtibrin i s exter)'arefa ions, and its sole
represehtative wit reign nbtionsaAlen --Se ate, R. No gBaI 3, September 4,
Am. WIll /
2008).
Q: What are tli
ANS: The folio dent:
1. The po
2. The po isters, and consuls
(CONST.,
3. The power f a1111V.2.•2d
C44 inisters duly accredited
to the Philippin
1
Q: Is a treaty or internationa g into by the President valid and
binding in itself?
ANS: No. No treaty or international agreement shall be valid and effective unless
concurred with by at least 2/3 of all the Members of the Senate (CONST., Art. VII, Sec.
21).
Note: The power to ratify is vested in the President, subject to the concurrence of the
Senate. The role of the Senate, however, is limited only to giving or withholding its
consent, or concurrence, to the ratification. Hence, it is within the authority of the
President to refuse to submit a treaty to the Senate or, having secured its consent for its
ratification, refuse to ratify it (Pimentel, Jr. v. Office of the Executive Secretary, G.R. No.
158088, July 6, 2005).
Q: What are the differences between a treaty and an executive agreement?
ANS: A treaty as "an international agreement concluded between states in written form
and governed by international law, whether embodied in a single instrument or in two or
more related instruments and whatever its particular designation" (The Vienna
Convention on the Law of Treaties, Art. 2) thereinafter VCLT]. An executive agreement
is similar to a treaty, except that the former does not require legislative concurrence, is
usually less formal, and deals with a narrower range of subject matters (Bayan Muna v.
Romulo, G.R. No. 159618, February 1, 2011).
40
International, agreements involving political issues or changes of national policy and
those involving international arrangements of a permanent character usually take the
form of treaties. But international agreements embodying adjustments of detail carrying
out well-established national policies and traditions and those involving arrangements of
a more or less temporary nature usually take the form of executive agreements
(Commissioner of Customs v. Eastern Sea Trading, G.R. No. L-14279, October 31,
1961).
Q: Can the President enter into an executive agreement without the concurrence
of Senate?
ANS: Yes. The right of the Executive to enter into binding agreements without the
necessity of Subsequent Senate approval has been confirmed by long usage. From the
earliest days ,of our history, we have entered into executive agreements covering such
subjects as commercial and consular relations, most favored-nation rights, patent rights,
trademark and copyright protection, postal and navigation arrangements and the
settlement of claims. The validity of thesefhave never been seriously questioned by our
courts (Bayan Muna v. Romulo, supre)0'
-}c,
," ' -'1'' Avil
However, the President may not USraceeptit'l agreement, enter into a transaction which
is prohibited by statutes enacted 15triorAilere Under the Constitution, the main function
of the Executive is to enforce ethe i' "am .by Co —ress. He may not defeat
legislative enactments that haveacq ire .At e'-ttat grpljAy indirectly repealing the
same through an executiyAreemear peviding for Tfielieflormance of the very act
prohibited by said lawsPrinza/es v. oy,. achk. nova, G.R. No. L1397, October 22, 1963).
* Air
Q: Discuss the Presid ntereslaual po , r.
„ft #4
ANS: The Pres'den
e, r,om exectiRe power is ested, has unstated residual
, upowh
powers whiclv rg impljp.kfrom the &ap t executive ep and Ihich are necessary
for her to corfiV,IvitpleTuties ugler th nstitutio er ''6 e President are
rot limited to what are egricetsly e timer in the a !R,.,-_,.. cutive Department
...se;
and in scatteredkprovisto f th tolisti n (Mamas v. a g apus, G.R. No. 88211
(Resolution), Octo) rx2, , 1989
if.
V-71:544'11
The President is not onlys9I t ed with e traero.tn, cowers in times of emergency, but
a
is also tasked with atte ing tothelday-toWW8b ems maintaining peace and order
0•
and ensuring domestic ranqui I in times when no foreign foe appears on the horizon.
Wide discretion, withintekt nds of law, in fulfilling presidential duties in times of
peace is not in any way diminiaed by the relative want of an emergency specified in the
commander-in-chief provision (Marcos v. Manglapus, G.R. No. 88211, September 15,
1989).
D. RULES OF SUCCESSION
Q: What are the rules of succession if the vacancy occurs before the beginning of
the term of the; President?
ANS: The following rules must be observed in such case:
1. In case of death or permanent disability of the president-elect, the Vice-
President elect shall become President;
2. In case of failure to elect the president (i.e. presidential election has not been
held or non-completion of the canvass of the presidential elections), the Vice-
President shall act as the President until the president shall have been chosen
and qualified; or,
3. In case no President and Vice-President shall have been chosen and qualified,
or where both shall have died or become permanently disabled, the Senate
President, or in case of his inability, the Speaker of the House of
Representatives shall act as President until a President or a Vice-President
41
•+. 4."1:1:4
/VOL 1.
2019
shall have been chosen and qualified. Congress shall by law provide for the
manner in which one who is to act as President shall be selected until a
President or a Vice-President shall have qualified, in case of death, permanent
disability or inability of the officials mentioned herein (CONST., Art. VII, Sec.
7).
Q: What are the rules of succession if the vacancy occurs during the incumbency
of the President?
ANS: The following rules must be observed in such case:
1. In case of death, permanent disability, removal from office, or resignation of
'the President, the Vice-President shall become President to serve the
!unexpired term; or
2. In case of death, permanent disability, removal from office, or resignation of
!both the President and the Vice-President, the Senate President, or in case of
'his inability, the Speaker of the House of Representatives shall act as
'President until a PresideaLp.r.a.Vicsperesident shall have been elected and
qualified (CONST., Art4I1, Sec. 8). 'hi 7""--,.„
,h(i'l 1.4,. k...) I vi ;N
Q: What are the rilles‘ciPilsocs9,ssion.wbgn ...thew fs presidential inability to
discharge the powyzarclOstierof the PresidentV"- \
ANS: The followingtrulesOsTbe obserre-crirsuch..ca?e• )
1. When tIMD,residentransmas tbIspeenate Pres,IcLe5bane to the Speaker of
the HgtisebOepr sentativeshbjs Written leclaretkon that he is unable to
disch4fge the powers and dupgs'qf his office, theWitnd duties of his
a
officels.9
. llti discharged by twit ice-President
, i as Aetiaar tsident; or
2. 1Whq ta-rnai lority oft all 'ffiettierploeta -of) the Cabinel 11-ansit to the Senate
`',PresTIVA d to they Speak§rifiTpi0ouse of Regeser+ Ives their written
,decl4ationi at thilf:Tesidentt-unible to dj Ayge !the powers and duties of
.his o ice,ittisVieey asidentshall irprfiediatOysassulieg ! 6,cowers and duties
of the is as Acii Aesiderit e ()MST( 1T,,4II, •°,,- Sec. 1
`••& "\,,,!.1... -:.-..." \
4,, ,
ivleigka
A. JUDICIAL POWER
'90/
Q: Discuss the concept of j I pow1
)14A
ANS: Judicial power includes fff'‘eduty, ofh•et e courts of justice to settle actual
controversies involving rights which are legally demandable and enforceable, and to
determine whether or not there has been a grave abuse of discretion on the part of any
branch or instrumentality of the Government (CONST., Art. VIII, Sec. 1(2)).
Q: What,does grave abute of discretion mean?
ANS: Grave abuse of discretion," under Rule 65, has a specific meaning. It is the
arbitrary or despotic exercise of power due to passion, prejudice or personal hostility; or
the whimical, arbitrary, or capricious exercise of power that amounts to an evasion or
refusal torperform a positive duty enjoined by law or to act at all in contemplation of law.
For an act to be struck down as having been done with grave abuse of discretion, the
abuse of discretion must be patent and gross (Reyes v. Commission on Elections, G.R.
No. 207264 (Resolution), June 25, 2013).
Q: Discuss the collegial nature of the Supreme Court.

ANS: The Court, whether sitting en banc or in Division, acts as a collegial body as it
exercises judicial power through the collective action of its individual members. While
most of the Court's work is performed by its three divisions, the Court remains
one courC— single, unitary, complete, and supreme, Flowing •from this is the fact that,
42
while individual justices may dissent or only partially concur, when the Court states
what the law is, it speaks with only one voice. Any doctrine or principle of law laid down
by the court may be modified or reversed only by the Court en banc (Flight Attendants
and Stewards Association of the Philippines v. PAL, G.R. Nos. 178083, March 13,
2018).
It also means that "although the Chief Justice is primus inter pares, he cannot legally
decide a case on his own because of the Court's nature as a collegial body. Neither can
the Chief Justice, by himself, overturn the decision of the Court, whether of a division or
the en banc"! (Complaint of Mr. Aurelio lndencia Arrienda Against Justice Reynato S.
Puno et. al., A.M. No. 03-11-30-SC, June 09, 2005)
B. JUDICIAL REVIEW
Requisites
Q: Discuss the concept of judicial review and its requisites.
ANS: Judicial review is the power of tAcourts to test the validity of executive and
legislative acts in light of their confbnriity ith the Constitution. This is not an assertion
of superiority by the courts over tii,e'Oharaepartments, but merely an expression of the
supremacy of the Constitution (An aN:i0e cto ra I Commission, G.R. No. 45081, July
15, 1936). Its requisites are: (ASE...) 4
1. There must be an Actualca*.cir;c4 roye ca efor the exercise of judicial
power; . ..,00- - - . '— 4i§f
2. The person charle'riging the act rpust have the Stanggig to question the validity
of the subjeeigctRr issuance stated, heb most
4 have a personal and
subStantial irjeThest.,in the .baserspch that he has sustained, or will sustain,
.e.ztil2t) Mi.rali .
direct.•, injuvas arespit of its enftement;
3. The waion of ct Utraitionaflty [a c st be raised 1t th9 Earflest opportunity; and
4. TheAssue of—e"' constitutionality
.. mus e the veryAis m .• to of 1,0,z case' (Biraogo v.
., .??./ -.4,
PhilippineTruth2Sommasion, G.R; 0-. No. 192-9735
srtt 4010).
u. .004WE
Q: What is an actual case or controversy"
ANS: An actual aft? co-thoversc invdiVes a conflict of legal rights, an assertion of
opposite legal clairtisii, suggptible of j arsi esolution as distinguished from a
hypothetical or]. abstracAperenceir ciisp rri,
_ stle. a contrariety of legal. rights
that can be interpretedj4d enfordatiVi e •asIs of xi law and jurisprudence. The
Court can deCide the% stiOality of an act or treaty only when a proper case
between oppoSing-parties=`somitted for judicial determination (The Province of North
Cotabato et al.; v. The Government of the Republic of the Philippines Peace Panel on
Ancestral DoMain, supra).
Political Question Doctrine
Q: Discuss the political question doctrine.
ANS: The term; "political question" connotes what it means in ordinary parlance, namely,
a question of policy. It refers to those questions which, under the Constitution, are to be
decided by the people in their sovereign capacity, or in regard to which full discretionary
authority has been delegated to the legislature or executive branch of the Government.
It is concerned with issues dependent upon the wisdom, not legality, of a particular
measure (Taiiada v. Cuenco, G.R. No. L-10520, February 28, 1965).
Q: Is there any limitation to the application of the political question doctrine?

ANS: Yes. The scope of the political question doctrine has been limited by Art. VIII, Sec.
1, Par. 2 of the Constitution particularly the portion which vests in the judiciary the power
"to determine whether or not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government".
43
Moot Questions
Q: Discuss the concept of moot questions and its rules.
ANS: A moot and academic case is one that ceases to present a justiciable controversy
by virtue of supervening events, so that a declaration thereon would be of no practical
use or value (Deutsche Bank AG v. Court of Appeals, G.R. No. 193065, February 27,
2012). The moot and academic principle however is not a magical formula that can
automatically dissuade the courts from resolving a case. Courts will decide cases,
otherwise moot and academic, if: (GEC-R)
1. .i There is a Grave violation of the Constitution;
2. i There is an Exceptional character of the situation and the paramount public
interest is involved;
3. The constitutional issue raised requires formation of Controlling principles to
guide the bench, the bar, and the public; or
4. The case is capable of Repetition yet evading review (Navarro v. Executive
Secretary Ermita, G.R. No. 180050, April 12, 2011).
Operative Fact Doctrine „,4°.'PP j 1.4,
Q: What,is the operative
,go k. .ctrae2,.., • I „..\
ANS: Under the operative
, factidoctrine, while a Igw,kree6gnized as unconstitutional, its
effects, prior to its,drealatati of Lillityrrgay,be„,,Left ttgdip,tuybekas a matter of equity
and fair :play. In fabtNeelivoca ion of the;:operativefacNlostrIrieAts an admission that
the law is uncoltittlfighd (L ague ifiCilliq oNhe Ph lippAik ert COMELEC, G.R. No.
176951, April 2 , 2010) d"
Note: In ,keeping-w.jtt the d mands--ofequityr•thc Coy rt caNipiQy the operative fact
doctrine to actieckconseq4ncesdhat riel'Aultedlcom ' e reliartrdot only on a law or
executive act ihich
t quasi-legisla inlYiaribut so on db „ cjgjali§
k or orders of the
executive braiic w\ Ich wet later are/ (Hacie a Lui§ita 14 v. Presidential
Agrarian Reform Coet cif, W'n'a .R:-N ,7"--411917-No ‘6. r 221 )1
kU ) \\,, \\
G SAFEGUARDSOFJCIDICI 1..' . DEEIE :47. E
A 0),
'X "'1,.5' ''s... '
Q: What are the ,safeguards of d ial 'gep
%
ANS: The safeguards of judieZI i
1. The Supreme Coup is% o s . aT0e
d,iDd, riot be abolished by the
legislature; \ -(n
2. ' Members of the SuzdaiCourttarg rebxal impeachment (CONST., Art.
Xl, Sec. 2), or a patio' 'for qthiliv.arPa t may be filed to oust an ineligible
public official for acts or~"dor ' V committed prior to or at the time of
appointment (Republic v. Sereno, G.R. No. 237428, May 11, 2018);
3. The SC cannot be deprived of its constitutionally-conferred original and
appellate jurisdiction except through constitutional amendment.
4. The SC's appellate jurisdiction may not be increased without its advice or
'concurrence (CONST., Art. VI, Sec. 30);
5. The SC has administrative supervision over all inferior courts and personnel
(CONST., Art. VIII, Sec. 6);
6. The SC has exclusive power to discipline judges/justices of inferior courts;
7. Members of the judiciary enjoy security of tenure (CONST., Art. VIII, Sec. 2,
.par. (2));
8. Members of the judiciary may not be designated to any agency performing
quasi-judicial or administrative functions (CONST., Art. VIII, Sec. 12);
9. Judiciary enjoys fiscal autonomy (CONST., Art. VIII, Sec. 3);
10. Non-diminution of salary (CONST, Art. VIII, Sec. 10);
11. SC alone may initiate and promulgate the Rules of Court (CONST., Art. VIII,
Sec. 5(5). The authority to to promulgate rules on pleading, practice, and
procedure is exclusive and one of the safeguards of institutional independence
(Estipona v. Lobrigo, G.R. No. 226679, August 15, 2017);
44
12. SC alone may order temporary detail of judges; and
13. SC! can appoint all officials and employees of the Judiciary (CONST., Art. VIII,
Sea. 5(6); NACHURA, supra at 310-311).
Judicial and Bar Council

Composition
Q: What is the composition of the Judicial and Bar Council (JBC)?
ANS: The JBC is composed of the following:
1. Chief Justice as ex officio Chairman;
2. Sedretary of Justice as ex officio member;
3. Representative of the Congress as ex officio member;
4. Representative of the Integrated Bar;
5. PrOfessor of law;
6. Retired Member of the Supreme Court; and
7. Representative of the private sector (CONST., Art VIII, Sec. 8, par. (1)).
Note: In ChaVez v. Judicial and Bar .0glitil (G.R. No. 20224, April 16, 2013), the SC
ruled that only one (1) member frOrif :fhg;30,iicameral Congress may sit in the JBC. The
member ex officio may come either ftojtAkr Senator or the HoR, but not both. The
Court based its rule on the "unmi6104.4'1§,tior of Article VIII, Section 8(1r to treat each
ex officio member as representind-oritt OOpo-eaal branctmf government. According
to Fr. Bernas the real reason ttf!aW 4provisig‘Astor ulated for a unicameral
Congress and no change was made' en the finardPdis on was for a bicameral
Congress. In Oracticeeretwo housOtiQq work out a wa •sharing representation
(BERNAS, Philippine elms lution Reviewer supra at 355)
:,
I , ?pie"
Q: Whoa ppoint.24he regqa_rdrxembers 9 the council?
ANS: The regdirmernbeii of the CektnciLhall be app rated by the President with the
consent of thetairnmisfre—tof Appointme gp,YCONSTAI, . ,VII,
, 8(2 ).
'Or '''''' div
Powers ci stz
Q: What are the pO vbrs aridlfunctfons qf he JBC?
ANS: The CdUncil s a l have s the principal' • cti of recommending appointees to the
judiciary. It may exerci è,Vt r functio_gna . • _ es __WW,Supreme Court may assign
to it (CONST.; Art. VIII ec. 845 nal . recomtimi appointees to the Office of
the Ombudsman and hikfive (5180puties (CONST., Art. XI, Sec. 9).
Note: The independenralrac er of a constitutional body does not remove it from the
jurisdiction of the SupremTtffirt. The Court's general supervision over the JBC is in
line with its constitutionally bestowed discretion to assign additional functions and duties
to the JBC (Villanueva v. JBC, G.R. No. 211833, April 7, 2015).
Q: What positions require the screening and nomination by the JBC?

ANS: The positions that require the screening and nomination by the JBC are the
Justices of the Supreme Court, Court of Appeals, Court of Tax Appeals, and the
Sandiganbayan, the judges of the lower courts (CONST., Art. VIII, Sec. 9) and the
Ombudsman and his deputies (CONST., Art. Xl, Sec. 9).
Q: Does the Supreme Court have supervisory power over the JBC?
ANS: Yes. The supervisory authority of the Court over the JBC covers the overseeing of
compliance with its rules. It is the power of oversight, or the authority to see that
subordinate officers perform their duties. It ensures that the laws and the rules
governing the; conduct of a government entity are observed and complied with.
However, the Supreme Court may not prescribe its own manner of execution of the act.
It has no discretion on this matter except to see to it that the rules are followed
(Jardaleza v. Sereno, G.R. No. 213181, August 19, 2014),
45
VOL 1.
RE. 2 019
FiscalAutonomy
Q: What is the scope of the Judiciary's grant of fiscal autonomy?
ANS: It means that appropriations for the Judiciary may not be reduced by the
legislature below the amount appropriated for the previous year and, after approval,
shall be automatically and regularly released (CONST., Art. VIII, Sec. 3).
D. QUALIFICATIONS OF MEMBERS OF THE JUDICIARY

Q: What are the qualifications for Chief Justice and Associate Justices of the
SupreMe Court?
ANS: The following qualifications must be met for a person to be Chief Justice or
Associated Justice of the Supreme Court: (N-40-15-CIPI)
1. Natural-born citizen;
2. ' At least 40 years old;
3. 15 years or more as a judge of a lower court or has been engaged in the
practice of law in the Philippinesloahe same period; and
4. A person of proy.eno' amp9tencegrOgrity, Probity, and Independence
(CONST., Art. V(IIrSeciS7r
7). 1,..) \
Q: What are the qualjho.atioop,for the PresidhiNV ice al Associate Justices of

the Courtof AppesalsN),,..--. , ----
ANS: The same 94eiciationsps those ptc'xideq<7for Justic 9fiae Supreme Court must
be satisfied for peTscdseepng As
Presidinl Justice or sociate Justice of
the Court-of Appeals *NSA, Art. VIII, ,8.-P.6::7).
r".37P., r:111
Q: What are fileiquahficatiorls forRegiOnakTiTalCoterrt Jud e's'?
ANS: The follakinutialifications mOSCbeAet-la-r-a person to Ile. 'anal Trial Court
Judge: (C-35-pet(341
1. Citizep oft Phil
4\ih
M irn
2. At lea35 etrs o
het
3. Has bAen eng4ged Cat e a W-10 yeart ractice of I in the Philippines
or has 1/2Id public ofire,e/i requiljrfg admission to the practice
of law even nsqlesr q A• l . lg. ,29, Sec.'. 5); and
4. ' A person of prove Co peteNd rag ri , Prob' and Independence
(CONSTI, A V114/30-. , ar.4)
Q: What are the qualificatio /or MeMcAan nicipal, and Municipal Circuit
Trial Court Judges?
ANS: The following qualifications must be satisfied for Metropolitan, Municipal, or
Municipal Circuit Trial Court Judges: (C-30-5-CIPI)
1. ',Citizen of the Philippines;
2. At least 30 years old;
3. 1Has been engaged for at least 5 years in the practice of law in the Philippines
or has held public office in the Philippines requiring admission to the practice
of law as an indispensable requisite (B.P. Blg. 129, Sec. 26); and
4 A person of proven Competence, Integrity, Probity and Independence
(CONSTI, Art. VIII, Sec. 7, par. (3)).
Q: What is the procedure for appointments in the Judiciary?

ANS: Appointments to the Judiciary are made through the following:
1. The President appoints from among a list of at least 3 nominees prepared by
the Judicial and Bar Council for every vacancy; or
2. For lower courts, President shall issue the appointment 90 days from
submission of the list (CONST., Art. VIII, Sec. 9.).
46
Note: Any vacancy in the Supreme Court shall be filled within ninety (90) days from the occurrence thereof (CONST.,
Art. VIII, Sec. 4(1)).
E. WORKINGS OF THE SUPREME COURT
En Banc and Division Cases
Q: Discuss how the Supreme Court decides cases en banc.
ANS: All decisions and actions in Court en banc cases shall be made upon the concurrence of the majority of the
Members of the Court who actually took part in the deliberation on the issues or issues involved and voted on them
(The Internal Rules of the Supreme Court, A.M. 10-4-20-SC, May 4, 2010). The following cases are to be heard and
decided en banc:
1. All cases involving the constitutionality of a treaty, international, or executive agreement, or law (CONST., Art.
VIII, Sec 4, par. (2));
2. Cases involving the constitutionality, applications, or operation of presidential decrees, proclamations, orders,
instructions, ordinances, and other regulations (CONST., Art. VIII, Sec. 4, par. (2));
3. Cases heard by a division when the required majority in the division is not obtained (CONSTI., Art. VIII, Sec.
4, par. (3));
4. Cases where the SC modifies or reverses a doctrine or principle of law previously laid down either en banc or
in division (CONST,. Art. VIII, Sec. 4, par. (3));
5. Administrative cases where the vote is for the dismissal of a judge of a lower court or otherwise to discipline
such one (CONST., Art. VIII, Sec. 11); and
6. Election contests for President and Vice-President (CONST., Art. VIII, Sec. 4, par. (7)).
Q: Is a decision decided by all justices sitting en banc valid when there was no quorum during deliberations?
ANS: No. When the SC sits en banc, cases are decided by the concurrence of a majority of the Members who actually
took part in the deliberations on the issues in the case and voted thereon, provided there is quorum (The Internal Rules
of the SC, supra). If there was no quorum during the deliberations, even if there was quorum when the case was
decided, the quorum requirement during the deliberations was not satisfied.
Q: How are cases or matters decided or resolved by the divisions of the SC?
ANS: There are now three divisions of the Supreme Court with five (5) members each. Cases or matters heard by a
division shall be decided or resolved with the concurrence of a majority of the members who actually took part in the
deliberations on the issues in the case and voted thereon, and in no case, without the concurrence of at least three of
such members. When the required number is not obtained, the case shall be decided en banc (CONST., Art. VIII, Sec.
4, par. (3)).
Note: “Cases” are “decided”, while “matters” are “resolved”, applying the rule of reddendo singula singulis. On the basis
of this distinction, only “cases” are referred to the Supreme Court en banc for decision whenever the required number
of votes cannot be obtained (Fortich v. Corona, G.R. No. 131457, August 19, 1999).
Procedural Rule-Making
Q: Discuss the rule-making power of the Supreme Court
ANS: The Supreme Court has the power to promulgate rules concerning: protection and enforcement of constitutional
rights; pleading, practice and procedures in all courts; admissions to the practice of law; Integrated Bar of the
Philippines; and legal assistance to the underprivileged (CONST., Art. VIII, Sec. 5, par. (5)).
47
Note: The rule-making power of the Supreme Court is no longer shared with the
Congress, much less with the Executive (Echegaray v. Secretary of Justice, G.R. No.
132601, January 19, 1999). Thus, for instance, the payment of legal fees is a vital
component of the rules promulgated by the Supreme Court concerning pleading,
practice, and procedure. It cannot be validly annulled, changed, or modified by the
Congress (Baguio Market Vendors v. Judge Cabato-Cortes, G.R. No. 165922, February
26, 2010).
Q: What are the limitations to the rule-making power of the SC?

ANS: The following are the limitations imposed by law on the rule-making power of the
Supreme Court:
1. The rules must provide a simplified and inexpensive procedure for speedy
disposition of cases;
2. The rules must be uniform for all courts in the same grade; and
3. The rules shall not diminish, increase, or modify substantive rights (CONST.,
Art. VIII, Sec. 5, par. (5)).
"
X
AdministrativeSupervisidicover.LowerCourtsi
Q: Discuss the powerl'Ad irlistratii7MVP/Wron bf•the C.
ANS: The power of dm'ni eratitigstsemisi. of theSC irly,s he following:
1. Adminis isitirroverAll courts ndllitpersop el thereof (CONST.,
Art. VI , c ). he Stpreme Cet en bakfgfidl ave the power to
discipline jud s of tower courts their distill' 691 pox a vote of a majority
of thefmegbdrs whEactually_to- artin_th delibe atid,ritn the issues and
votectiftfLeot (con/sr.- 40.yrt))111
2. The Ociw?Lt hear b the SC.eirt, pi/a, of admipistratin casesWincluding:
a. .,[ii!smIssa I judge; bffiraroaimplol f th riathi ry;
DikEiarm t,c4f1 wyersP—c- , •
c. ose Lik'del-SaNdi (4 year; or
d. e 10;1500pet : hf/f. alter f the fnendment and/or
larifica -11!/ ous upr,
f\ 09--aurtRules a d Resolutions, Bar
Utter 2 MarP„
Or' "nalandA e/ICPte sdicffo

Q: What is the original jarigaicroli of the ?
ANS: The Supreme CourNha n
cercia41.brjarisdiction over cases affecting
ambassadors, other public minister d=ctiffsuls, and over petitions for certiorari,
prohibition, mandamus, quo warranto, and habeas corpus (CONST., Art. VIII, Sec. 5(1)).
The Supreme Court may also review the sufficiency of the factual basis of the
proclamation of martial law or the suspension of the privilege of the writ of habeas
corpus or the extension thereof (CONST., Art. VII, Sec. 18(3)). Sitting en banc, it is also
the sole jUdge of all contests relating to the election, returns and qualifications of the
President Or Vice-President (CONST., Art. VII, Sec. 4).
Q: What is the appellate jurisdiction of the Supreme Court?

ANS: The Supreme Court shall have the power to review, revise, reverse, modify, or
affirm on appeal or certiorari, as the law or the Rules of Court may provide, final
judgments and orders of loiwer courts in:
1. All cases in which the constitutionality or validity of any treaty, international or
executive agreement, law, presidential decree, proclamation, order,
instruction, ordinance, or regulation is in question;
2. All cases involving the legality of any tax, impost, assessment, or toll, or any
penalty imposed in relation thereto;
48
3. All Cases in which the jurisdiction of any lower court is in issue;
4. All'criminal cases in which the penalty imposed is reclusion perpetua or higher;
5. All cases in which only an error or question of law is involved (CONST., Art.
VIII, Sec. 5(2)).
Q: Can the Congress pass a law increasing the appellate jurisdiction of the
Supreme Court?
ANS: No. The Constitution provides that "no law shall be passed increasing the
appellate juriSdiction of the Supreme Court as provided in this Constitution without its
advice and concurrence" (CONST., Art. VI, Sec. 30). This provision is intended to give
the Supreme Court a measure of control over cases placed under its appellate
jurisdiction. For the indiscriminate enactment of legislation enlarging its appellate
jurisdiction can unnecessarily burden the Court and thereby undermine its essential
function of expounding the law in its most profound national aspects (First Lepanto
Ceramics Inc., v. CA, G.R. No. 110571, October 7, 1994).
'. 4
Q: Discuss the formal requirementeavalid ir decision.
ANS: No decision shall be rendered:by anyLcourt without expressing therein clearly and
distinctly the facts and the law on ;..ittii-610.00.ased.
' '
•.' 11W.
No-petition for'review or motion forret% itiog a deciAti
l of the court shall be
refused due course or denied witliotIttajip aRgda' y,sisfttiirefor (CONST., Art VIII,
•qt...
Sec. 14). ' tt:
,,
''grfr'
.A0,4
qz . A .:mz- • <
A judgment (*.final ordwA4rminingihe Jrits of the caseashalVe in writing personally
and directly preparedJI4j9dge, statingr: early and distisica thkfacts and the law on
which it is bas4fianed britiiip:and filed the clerk of ou : (RULES OF COURT,
Rule 36, Sec.e , ,,'
W„ .., . . cs
The judgment:thust be write , in tkbAticia Gnguage, rw,najm,„.
I
,A7v-0 ..y
..4%,„ .4-1,
,
irectly prepared
by the judge andtsignetWitm arid Oa tain clearly arid%stinctly a statement of
the facts proved oVrfiTited*, the accuse and the law upon which the judgment is
based (RULES OF COURT,73Ule 120, Se 1,
F1A--.
4,1,m4
A
9310116:keentilMt0.64,„
A. COMMON PROVISIONS
Q: What are the independent constitutional commissions under the law?
ANS: The following are the independent constitutional commissions:
1. Civil Service Commission (CSC);
2. Commission on Elections (COMELEC); and
3. Commission on Audit (COA) (CONST., Art. IX-A, Sec. 1).
Q: What are the prohibitions and inhibitions imposed upon members of a

Constitutional Commission?
ANS: No member of a Constitutional Commission shall, during his tenure:
1. Hold any other office or employment;
2. Engage in the practice of any profession;
3. Engage in the active management or control of any business, which in any
way, may be affected by the functions of his office;
49
•
.. • ::• 1:!Ir 1 1
4. Be financially interested, directly or indirectly, in any contract, with, or in any

franchise or privilege granted by the Government, any of its subdivisions,
agencies, or instrumentalities, including GOCCs or their subsidiaries (CONST.,
Art. IX-A, Sec. 2)
Q: Discuss the procedural rule-making power of the Constitutional Commissions

and its limitation.
ANS: Each Commission en banc may promulgate its own rules concerning pleadings
and practice before it or before any of its offices. Such rules however shall not diminish,
increase, or modify substantive rights (CONST., Art. IX-A, Sec. 6).
Q: What is the scope of the grant of fiscal autonomy on Constitutional

Commissions?
ANS: The Constitutional Commissions are entitled to automatic and regular release of
funds (CONST., Art. IX-A, Sec. 5). The "no report, no release" policy of the Commission
on Audit may not be validly enforceci„againskatices vested with fiscal autonomy for
whom appropriations must be,..àutorn.sticglly Ireleke (Civil Service Commission v.
Departinent of Budget and, ana0.Tentk9,R. ,INLI 589 1)quly 22, 2005)
NI 1_ ,..0400,,,,,.......,,
.. _14' ii .„.. ''.7,,
Q: How, should cass•,or pi4tters be decided the Constitutional

Commissions? / ,
....0-
ANS: Each ComrI ni_s:pn shalldecide-by
d Vinajg,rity vote Of a ,i6INmbers any case or
matter brought eforel io (wiin sixt ,(601:.-daVis from the ate of submission for
decision or res lution. castor mattec, ik,:dcemed su mitte .Trfaaision or resolution
upon the filing ribb' ast plep in, g, 6Fre ,ipr memoran uir9s41 b. the rules of the
Commission o t,•.
he CommibsionOlfyGPA/Sri'Art. c. 7)
ki 1- -.;'ni,
..-01'4 :•;70-1.1D: , 1-1----..
B. POWERS A CiFt1 Flo, r THE'&C;COMEL:Eaan
••,..)
Civil Service ctruci.lion>&C)\ ;`'(,.q, ln ....
,.,•,9--
Q: What are thetfuncti
‘•* ' 1 ns an.4-
j:0 kver 1 1;c:o t ,/
ANS: The functio - s of th‘ CSC 'es`be he Government are
the following:
1. To establis i carepr eq. -1ET‘I) ,
2. , To adopt measures mote=morP , e ntegrity, responsiveness,
progressivenesazi di esy ii tip vl e ce
3. ' To strengthen the m.g'lit d re a d's sj st
4. ' To integrate all human reso r es evelopment programs for all levels and
ranks; and
5. To institutionalize a management climate conducive to public accountability
(CONST., Art. IX-B, Sec. 3).
Commission on Elections (COMELEC)

Q: What are the functions and powers of the COMELEC?
ANS: The functions and powers of the COMELEC are the following:
1. Enforce and administer all laws and regulations relative to the conduct of an
election, plebiscite, initiative, referendum or recall;
2. Exclusive original jurisdiction over all contests relating to the election, returns
and qualifications of all elective regional, provincial, and city officials.
3. Exclusive appellate jurisdiction over all contests involving elective municipal
officials decided by RTC or involving elective barangay officials decided by the
MTC. Decisions, final orders, or rulings of the Commission on election
contests involving elective municipal and barangay offices shall be final,
executory and unappealable;
50
VOL 1.
2019
1,
4. Decide, save those involving the right to vote, all questions affecting elections,
including determination of the number and location of polling places,
appointment of election officials and inspectors, and registration of voters;
5. Deputize with the concurrence of the President, law enforcement agencies and
instrumentalities for the exclusive purpose of ensuring free, orderly, honest,
peaceful, and credible elections;
NOte: The Commission has no authority to discipline them and can only
recommend the disciplinary action to the President.
6. Register, after sufficient publication, political parties, organizations or coalitions
which must present their platform or program of government;
7. File, upon a verified complaint, or on its own initiative, petitions in court for the
inClusion or exclusion of voters; investigate and, where appropriate, prosecute
cases of violations of election laws;
8. Recommend to Congress effective measures to minimize election spending,
including limitation of places where propaganda materials shall be posted, and
to1prevent and penalize all forms of election frauds, offenses, malpractices,
and nuisance candidates;, WIt
9. ReCommend to the PresiderOlL e removal of any officer or employee it has
deputized, or the impoSftib,W.00 other disciplinary action, for violation or
disregard of, or disobedience;to order, or decision; and
10. Submit to the Presidentandii3OppkevrigmprehtftVve report on the conduct
of each election, plebiSbite,"InitTeliWretNift*ecall (CONST. Art 1X-C,
SOC. 2). 51-.4
Note: No pardon, amnesty4arg e, or suspensionh for violation of
i
elebtion laws,04, and reguirts shall be grarlte by the President without
thelavorablqleccAmendition ofhdCommissio ,'(00A/ST., Art. IX-C, Sec. 5).
• `qt
.Commission On-Audit (COA)
Q: What areine'powers,and duty of th_pfp0A?
ANS: The pArs and. ties thApA the followin
1. To exalilitieargftint all foursgovernment revenue;
2. To examirtnd aNiit all fdims overnment expenditures;
3. To settle go esnmegPaccounts; a d
4. To define theXpre and. o u iting procedures;
5. To :promulgaTe, accounting an. auditing ru es "including those for the
preVention rnld digeliowance of irregular, unnecessary, excessive,
extravagant, oReq,6cionable expenditures; and
6. To decide administrative cases involving expenditure of public funds (CONST.,
Art. IX-D, Sec. 2).
Note: The Auditor General's (COA) function of auditing expenditures of funds pertaining
to the Government is limited to a determination of whether there is a law appropriating
funds for a given purpose, and whether payment therefor has been authorized by the
officials of the bureau. Even if the contract is unwise, he has no discretion to disapprove
payment (Guevarra v. Gimenez, -G.R. No. L-17115, November 30, 1962).
C COMPOSITION AND QUALIFICATIONS OF MEMBERS

Q: What is the composition of the CSC and the qualifications of its members?
ANS: The civil service shall be administered by the CSC composed of a Chairman and
two (2) Commissioners who shall be: (N35-CaCa)
1. Natural-born citizens of the Philippines;
2. At least thirty-five (35) years of age, at the time of their appointment;
3. With proven Capacity for public administration; and
4. Must not have been Candidates for any elective position in the elections
immediately preceding their appointment (CONST., Art. IX-B, Sec. 1).
51
'VOL 1.
2019
Q: What is the composition of the COMELEC and the qualifications of its

members?
ANS: There shall be a Commission of Elections composed of a Chairman and six (6)
Commissioners who shall be: (N35-CoCa)
1. Natural-born citizens of the Philippines;
2. At least thirty-five (35) years of age, at the time of their appointment;
3. Holders of a College degree; and
4. Must not have been Candidates for any elective position in the immediately
preceding elections.
Note: A majority of the COMELEC, including the Chairman, shall be Members of the
Philippine Bar who have been engaged in the practice of law for at least ten (10) years
(CONST, Art. IX-C, Sec. 1).
Q: What is the composition of the COA and the qualifications of its members?
ANS: There shall be a Commission on Audit composed of a Chairman and two (2)
Commissioners, who shall be: (N35-CP,M31.04g)
1. Natural-born citizenspflhe Phi ipp ne
2. At least thirty-five ear 35 o ag 6fteir appointment;
3. Certified PubliC:cieq. ts--with.4ipt 4,64 ten years of auditing
experienceAr-meTbiers of the Philippinel3are hq,sty, been engaged in the
practice or 64,11 atleast-ten=gars;.aq,P, ,,,-C:-
4. ,Must ndr p CanCiatic for-.any in the elections
immedjatelj pfecedi g theitippoRtmght.
Note: At no ti shall II M bers of thb%,Commissio belo'Ktilh same profession
(CONST., Art. 1).
rem?
—
Q: What is th concept of "ne re-apmi rirttit!I in tir Constitutional Commission?
ANS: The pr-011 31 eappointhie
: comer o three
three constitutional
commissions. onstitutop ibit•sdkrei5 for two
reasons. The t f?1- thos who have been
previously appoi f fhb' Ts, d forpss tha seven years. The
second is to ens th fee/Conspfutional ommissions do not
serve beyond the
i s)
Plainly, the prohibitioN4prp ent-is-in en totsrstie that there will be no
reappointment of any kin tihd othe h pr)ibion on temporary or acting
appointments is intended fd even n -...rclornvention of the prohibition on
reappointment that may result in an pdititde s total term of office exceeding seven
years. The evils sought to be avoided by the twin prohibitions are very specific —
reappointment of any kind and exceeding one's term in office beyond the maximum
period of seven years.
To repeat, there is no doubt whatsoever that the prohibition in Section 1 (2) of Article IX-
D applies to "any reappointment of any kind," including promotional appointments from
Commissioner to Chairman.
To sum up, the Court restates its ruling on Sec. 1 (2), Art. IX (D) of the Constitution:
1. The appointment of members of any of the three constitutional commissions,
after the expiration of the uneven terms of office of the first set of
commissioners, shall always be for a fixed term of seven (7) years; an
appointment for a lesser period is void and unconstitutional.
The appointing authority cannot validly shorten the full term of seven (7) years
in case of the expiration of the term as this will result in the distortion of the
rotational system prescribed by the Constitution.
52
2. Appointments to vacancies resulting from certain causes (death, resignation,
disability or impeachment) shall only be for the unexpired portion of the term of
the predecessor, but such appointments cannot be less than the unexpired
portion as this will likewise disrupt the staggering of terms laid down under
Sec. 1 (2), Art. IX (D).
3. Members of the Commission, e.g., COA, COMELEC or CSC, who were
appointed for a full term of seven years and who served the entire period, are
barred from reappointment to any position in the Commission. Corollary, the
first appointees in the Commission under the Constitution are also covered by
the prohibition against reappointment.
4. A 'Commissioner who resigns after serving in the Commission for less than
seven years is eligible for an appointment to the position of Chairman for the
unexpired portion of the term of the departing chairman. Such appointment is
not covered by the ban on reappointment, provided that the aggregate period
of the length of service as commissioner and the unexpired period of the term
of the predecessor will not ex.wd seven (7) years and provided further that
the vacancy in the posifiorabffiChairman resulted from death, resignation,
disability or removal by irtipeagfinnt. The Court clarifies that "reappointment"
found in Sec. 1 (2), Art. p.<•:(D),:jjaia_ps a movement to one and the same office
(Commissioner to Conlin'4jqrjAr Chairman to Chairman). On the other
hand, an appointment invqiiiti7gFe_mympent to elilifferent position or office
(Commissioner to Chairrnafi).?iroura tolstirtire?avneWappointment and, hence,
not:in the stricaggrsense, T';'#reappointment barred a5 der the Constitution.
5. Any:membeathe Corm-rags* cannot be app ed or designated in a
temporary orlaltinb capacity (Funa v. Villar, G.R. pro, 19791, April24, 2012).
D. PROHIBITED OFFICES ANDJNTERESTS

•
Q: What aiefathe prollipited offices nd interests provide by law for the
412 u--.F
Constitutiona4eommispons?
ANS: No member of st rooRtutional
gz,1 om ssion shall, ure: (OPAF)
1. Hold ariP.01 , .e oftL
ce or employ ent;
2. Engage inlie pracrCe of any Profession;
3. Engage in thlA ActiP managementr-a dk4,__ ontrol of any business which in any
way may be affe-dft bypesluneffo s, rhigr- csand
4. Be Financialranteresedirectly or in irect y, in any contract with, or in any
franchise or Ilvileavgi-anted by the government, any of its subdivisions,
agenCies or inselantalities, including .government-owned and controlled
corporations or their subsidiaries (CONST., Art. IX-A, Sec. 2).
E REVIEWOFFINAL ORDERS, RESOLUTIONS, AND DECISIONS

Q: How may the judgments or final orders of constitutional bodies be reviewed?
ANS: Judgments or final orders of the Civil Service Commission may be appealed to the
Court of Appeals within 15 days from. notice thereof (RULES OF COURT, Rule 43, Sec.
1).
Judgments and final orders or resolutions of the Commission on Elections and the
Commission on Audit may be brought by the aggrieved party to the Supreme Court on
certiorari under Rule 65 (RULES OF COURT, Rule 64, Sec. 2). A decision, order or
resolution of a division of the COMELEC must be reviewed by the COMELEC en banc
via a motion for reconsideration before the final en banc decision may be brought to the
Supreme Court on certiorari. The pre-requisite filing of a motion for reconsideration is
mandatory (Ambit, Jr. v. Commission on Elections, G.R. No. 143398, October 25,.2000).
53
DAN,RED :BOO
Q: DiScuss the rules pertaining to the exercise of the COMELEC of its quasi-
judicial powers.
ANS: The COMELEC's exercise of its quasi-judicial powers is subject to the following
rules (CONST., Article IX-C, Sec. 3):
1. All election cases, including pre-proclamation controversies, shall be decided
by the COMELEC in division; and
2. The motion for reconsideration shall be decided by the COMELEC en banc.
Generally, only decisions en banc may be brought to the Supreme Court by
certiorari under Rule 65 (Reyes v. RTC, G.R. No. 108886, May 5, 1995). The
Supreme Court has no power to review on certiorari an interlocutory order or
even a final resolution issued by a Division of the COMELEC (Ambil v.
COMELEC, supra). However, the exception to this rule is that the Supreme
Court may take cognizance of a petition for certiorari under Rule 64 to review
, an interlocutory order issued by a Division of the COMELEC on the ground of
' the issuance being made without jurisdiction or in excess of jurisdiction or with
grave abuse of discretiona ounting4Q.ack or excess of jurisdiction when it
does not appear to specilcally pro ided.eder the COMELEC Rules of
Procedure that; m er is bn~e tvt heICOMfLEC en banc may sit and
consider, or DkisiOr )jjauthorizetotacisrfrth members of the Division
unanimously ot4t2erffler to the CONIELC` e \ anc. Of necessity, the
• aggrievedrpa an 91*rectlyle
—pla-the Couktf,,_ cat* the COMELEC en
bane is st proper forir irrwl4ch th ''Ama te,-4ntteming the assailed
er can be revieqtd 44agas . C MELE(\G.R. No. 194139,
interlooll
JanuaL 12). u 6'
:ika. 7
Q: WhUt isc e A toran unsenctto dr,,tri.6 Supreme ourt ver actions or
Pczass.s.
proceedings e Compai ,71.1a1
ANS: The ce isdiRtiA \aflhe_Sirp eine_Courth1
/41ted.tp decisions rendered in
actions or proc tak4( kiz . an; fittjahe dikrpIss* Firtlht exercise of their
adjudicatory or uasi-j , dicii. On ort - It .db-02`-qc er to purely xecutive powers.
Hence, question arisingqrom for 'nstruction of voting booths
can be brought bey ore the "al co upra).
A. FUNDAMENTAL POWERS OFTHE-SITAT

Q: What are the inherent powers of the state?
ANS: The inherent powers of the state are police power, power of eminent domain,
and the power of taxation. They are considered inherent because they are incidents of
sovereignty and do not depend on any law or the Constitution to be recognized or
enforced (SUAREZ, supra at 36). They are supposed to co-exist with the State. The
moment the State comes into being, it is deemed invested with these three powers as
its innate attributes (CRUZ, Constitutional Law (2015) p.80) (hereinafter, CRUZ,
Constitutional Law].
Q: What is the nature and basis of Police Power?

ANS: Police power has been properly characterized as the most essential, insistent,
and the least limitable of all powers, extending as it does to all the great public needs
(Ermita-Malate Hotel and Motel Operators Ass'n., Inc. v. City Mayor of Manila, G.R. No.
L-24693,, July 31, 1967). It is based on the Latin maxims salus populi est suprema lex
(the welfare of the people is the supreme law) and sic utere tuo ut alienum non laedas
(so use your property as not to injure the property of others) (Gerochi v. DOE, G.R. No.
159796, July 17, 2007).
54
DAN..
/VOL 1.
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Q: What are!the requisites for the valid exercise of police power?

ANS: The requisites for the lawful exercise of police power are lawful subject and lawful
means.
1. LaWful subject means that the power will be exercised to promote the interests
of the public in general, as distinguished from those of a particular class.
2. Lawful means mandates that the means employed are reasonably necessary
for' the accomplishment of the purpose and not unduly oppressive on
individuals (Planters Products, Inc. v. Fertiphil Corporation, G.R. No. 156278,
March 29, 2004).
Q: What is the nature and basis of the power of Eminent Domain?

ANS: Also called the power of expropriation, eminent domain is described as "the
highest and most exact idea of property remaining in the government” that may be
acquired for some public purpose through a method in the nature of a forced purchase
by the State (Heirs of Mariano vs City of Naga, G.R. No. 197743, MarCh 12, 2018). It is
based on the necessity of the property for.. ublic use.
Q: What are the requisites for thq4licl'Oercise of the power of eminent domain?
ANS: The requisites for the valiW!r4e''" poflthe power of eminent domain are the
following: (NTP2-JD)
1. There is a public Necessity` 0/49f, TheO'rellano Law Colleges Inc.,
G.R.No. L-2929, Febrydiy
2. It must involveikeleking of..:Th% property by the 'gdkernment, whether actual
(RePUblic v.4tra. De Castello!- G.R. No, L-2062& August 15, 1974) or
constructive , ,t(onal Power C r oration v. Heirs of T acabangkit Sangkay,
828,Augt.gt 14, 20 q;
16,,,,,
3. What ,i;iterlren mt1s bp Private roperty, except money and choses in action
(Rediglic v. G.R. Nett-1141, January427, 1969);
4. ThelATifig,aikiMe for Public us Reyes, ekak, Zip!) ousing Authority,
G.R:kto. 147511ranuaa20, 20A);
5. The -Ovv,Qpr .th.elprivaffIropg must be paid compensation for the
propertyl'eW/d. bnd
6. Due procags trust 66 observed ;
:theAapg
iii,_ of the property (CONST., Art. Ill,
Seal).
Q: What is the, nature -d baSti4of the power of the state to Tax?

ANS: Taxes are the e doAproportional contributions from persons and property,
levied by the State by virt s sovereignty for the support of government and for all
public needs (CRUZ, Constitutional Law).
The power to tax is inherent in the State in order to raise revenues to defray the
expenses of the government or for any public purpose (SUAREZ, Political Law, supra at
36). Tax-es are the nation's lifeblood through which the government agencies continue to
operate and with which the State discharges its functions for the welfare of its
constituents (Secretary of Finance v. Oro, G.R. No. 156946, July 15, 2009).
Q: What are the requisites for the valid exercise of the power of taxation?
ANS: There are no absolute requisites for the exercise of the power of taxation but its
exercise is subject to inherent and Constitutional limitations. The following are the
inherent limitations: (SPINE)
1. Situs of Taxation; it can only be exercised over subjects within the Philippine
territory (National Development Company v. CIR, G.R. No. L-53961, June 30,
1987);
2 It must be exercised for a Public purpose (Planters Products, Inc. v. Fertiphil
Corp., G.R. No. 166006, March 14, 2008);
55
3. The exercise of the power must recognize International comity in taxing foreign
subjects (Air Canada v. CIR, G.R. No. 169507, January 11, 2016);
4. Non-delegability of power. It is a power which only the Congress generally
exercises except in cases of valid delegation (Marc Donnelly and Associates,
Inc. v. Agregado, G.R. No. L-4510, May 31, 1954); and
5. Exemption of government from taxation (Mactan Cebu International Airport
Authority v. Marcos, G.R. No. 120082, September 11, 1996).
B. PRIVATE ACTS AND THE BILL OF RIGHTS

Q: May, an act of a private individual, allegedly in violation of another person's
constitutional rights, be invoked against the State?
ANS: As a general rule, no. In the absence of governmental interference, the liberties
guaranteed by the Constitution cannot be invoked against the State (People v. Marti,
G.R. NO, 81561, January 18, 1991).
The exception is that the right.tolirirarrrciM unication may be invoked against

private persons. The onlyycep ign toelprcAbpop- iFotke Constitution is if there is a
"lawful order [from a]ecovrty ub *ctsbfety Ordti\ - ,requires otherwise, as
;4C
prescribed by law." A y ittoJat orr of this pro ision xenders the evidence obtained
inadmissible "for at ul-pos. in any.proceedin " (Ztiluatd)V2' Court of Appeals, G.R.
No.107383, Febru 0, 1(96 f"---
fi\\
Q: Cana viola on of e Bil of Right9Aponsidere augh of action against
private indivi uhis '`
ANS: Yes. Th tiol tion of nelswn,sli,Nitignej right against lefesearch and seizure
can be the b r the re very Rf4ie'tge‘Undeof Article i gelation to Article
2219(6) and f t Ne 'vil Code4h xbqs no d, , b_t—Jt is not e en necessary that
the defendant finder.4 is A ;toe hottldliayecte&wi( bacliaith, otherwise, it
would defeat as ai pur whicEisl itre)eff 6h-fa •rot ctior jgf individual rights
(Silahis IntematiKal HoKv. o t GF nia-16 ebru ry 20, 2006).
C RIGHTS TO LIFE,tk‘BERT
\.
Q: What does 'life' der t OG S I ,seYmea
ANS: Life connotes th ysittrerg9 fore, it is not permissible
for the government to depnvQ i dividt al, fA ba- ohis body, and this is true even
e`bi
if it be as punishment for the orb L Id ce the enjoyment by the individual
of all the God-given faculties that can ma e is life worth living (CRUZ, Constitutional
Law, supra at 208-209).
Q: What does `liberty' under the due process clause mean?

ANS: Liberty is the freedom to do right and never wrong; it is ever guided by reason and
the upright and honorable conscience of the individual. Liberty is not unbridled license; it
is liberty regulated by law (CRUZ, Constitutional Law, supra at 210). Justice Malcolm
defined it as. "the right to exist and the right to be free from arbitrary restraint or
servitude. It is not merely freedom from physical restraint but it is also the right of man to
-enjoy his facilities, subject only to such restraint as are necessary for the common
welfare" (City of Manila v. Laguio, G.R. No. 118127, April 12, 2005).
Q: What does 'property' under the due process clause mean?

ANS: Property is anything that can come under the right of ownership and be the
subject of the contract, and includes all things—real, personal, tangible and intangible—
that are within the commerce of man (CRUZ, Constitutional Law, supra at 211-212).
56
Q: What does due process mean?
ANS: In American jurisprudence, the due process requirement entails the opportunity to
be heard at a meaningful time and in a meaningful manner. Likewise, it was
characterized with fluidity in that it negates any concept of inflexible procedures
universally applicable to every imaginable situation.
In our jurisdiction, the constitutional guarantee of due process is not limited to an exact
definition. It is flexible in that it depends on the circumstances and varies with the
subject matter and the necessities of the situation (Saunar v. Ermita, G.R. No. 186502,
December 13; 2017).
Procedural end Substantive Due Process

Q: What are the two aspects of due process? Discuss each.
ANS: The aspects of due process are substantive due process and procedural due
process. Substantive due process refes.0.;(8 the intrinsic validity of a law that interferes
with a person's life, liberty, or prOpAity4jghts. On the other hand, procedural due
process means compliance with tlie4Pr4Clures or steps, even periods, prescribed by
the statute, in. conformity with thagt4 and fair play and without arbitrariness on the
part of those Who are called upon tbattrittplesIL(Republic Kt,Sandiganbayan, G.R. No.
152514, November 18, 2003). Avals,"2.
Q: What are ffie requi MA of substibti4 due.process?
ANS: The requisites oreubstantive dagreacess are: e
1. The' intereststo a,publib in general, as distinguistied from those of a
particulalafis ,ibfir-require th 'ntervention ofThe
I
ttare• and
v
2. The' 4friploymerif means ich are reasonably , ecessary for the
~-4 o
acc94-
i, lishmalef the purpose ai d not undul oppr ssive on individuals (City
of Mara t7LaAsup
Q: What are ,the reas of opli ion of procedural due process in this
jurisdiction? •
ANS: The two areas ofCprocc,slyral due prg, the following:
1. Procedural dmproaessA? judiala, . -e el:I El Banco Espariol v. Faience,
G.R. No. L-11290,11/1.5rch 26, 1918); and
2. Procedural, datprocel in administrative proceedings (Ang Tibay v. Court of
Industrial Relato ik No. 46496, February 27, 1940).
Q: What are the minimum requirements of procedural due process in judicial

proceedings?,
ANS: The minimum requirements of procedural due process in judicial proceedings are:
(ICJHJ)
1. There must be an Impartial and Competent court or tribunal clothed with
judicial power to hear and determine the matter before it.
2. Jurisdiction must be lawfully acquired over the person of the parties and/or
over the property which is the subject matter of the case.
3. The parties must be given an opportunity to be Heard, adduce evidence, and
cross-examine counter-evidence.
4. A proper Judgement must be rendered upon lawful hearing (CRUZ,
Constitutional Law, supra at 222).
57
Q: What are the minimum requirements of procedural due process ii•
administrative proceedings?
ANS: The minimum. requirements of procedural due process in administrative
proceedings are: (RESS-BAK)
1., Right to a hearing;
2. • Tribunal must consider Evidence presented;
3. ; Evidence must be Substantial;
4.1: Decision must be Supported by law and fact;
5.; Decision must be Based on evidence adduced at the hearing or at least
• contained in the records and disclosed to parties;
Board or judge must Act on its or his own independent consideration of facts
and law of the case, and not simply accept the view of the subordinate in
arriving at a decision; and
Decision must be rendered in such a manner that parties to controversy can
Know various issues involved and the reason for the decision rendered (Ang
Tibay v. CIR, supra).
1 r
Q: What are the minimum requirements .4. yrckectUr I due process in school
disciplinary proceedipdsn .1.
ANS: The minimumeectuiremerits of procedural'due•-prodem in school disciplinary
<iv • • \y
proceedings: (IA1E1) A ‘k.
t 1' The students- must pe Infocin4 in -yyriting 'of he,nature and cause of any
• accusation agg•inst tpem; J /..'L r
2. That ey shdll have the right:to.Answer th charge6 gat st them with the
assis 5,-eo couns:erit.desired/%,
; They shail-b Informad eff-451"eler(dka'Oin them;
4. , The shallgh ve the leght tcitafIduC4:EVidence n their oWn.bihsalf; and
5. The fcleky r#TA be dulY'+.4:661dered b In estigating committee or
'offici fdisignatW„b t epsc ock‘aut he,alt and decide the
case Aterfe De\ FI .R. IN1 99327, May 27,
1993).
Q: What are the di and procedural due

process?
ANS: The differences procedural due process
are the following:
. Substantive Procedural
...As to the nature
Requires that the law itself, not merely Method or manner by which the law is
the procedure by which the law would enforced
be enforced, is fair, reasonable, and
just
As to who must cOMply with the requirement ...• •
Directed to the lawmakers Addressed to those who adjudicate
' As to the'reqirenients.to Corniilied itvit
Implies fundamental notions of Right to be notified and heard

fairness and justice
58
Void-for-Vagueness Doctrine
Q: What is the void-for-vagueness doctrine?
ANS: A statute or act may be said to be vague when it lacks comprehensible standards
that men of Common intelligence must necessarily guess at its meaning and differ in its
application. In such instance, the statute is repugnant to the Constitution in two (2)
respects — it violates due process for failure to accord persons fair notice of what
conduct to avoid; and, it leaves law enforcers unbridled discretion in carrying out its
provisions and becomes an arbitrary flexing of the Government muscle (Estrada v.
Sandiganbayan, G.R. No. 148560, November 19, 2001).
Q: When is the void-for-vagueness doctrine applied?

ANS: A statute establishing a criminal offense must define the offense with sufficient
definiteness 1 that persons of ordinary intelligence can understand what conduct is
prohibited by the statute. It can only be invoked against that specie of legislation that is
utterly vague, on its face, i.e., that which cannot be clarified either by a saving clause or
by construction (Estrada v. Sandiganbqyat supra).
The doctrines of strict scrutiny.o,yiq feadth, and vagueness are analytical tools
developed fOr testing "on their faCeS!Kka es in free speech. They cannot be made to
do service when what is involec011A criminal statute (Southern Hemispherb
Engagement i Network, Inc. v Atitre0 co 4cil, G
, 4R04 Nos. 178552, 178554,
178581, 178890, 179157, 179461, OctOlier 5, 2010)Mtiait
,. 00--
Q: What is the ea-
,, overbr ,A
)1
dth. doctrine?'
ANS: By its nature, tWomrbreadth.et-doc e has to nece; said lapply a facial type of
invalidation in orde5v,t&ploribas of prote:ted speech, igevitablAalmost always under
situations not 'betre theVifitl, thatart impermissiblysvIlept by the substantially
overbroad re, on. A .. r
14‘,At4,4
The most distinctive feaKe of themerbr with techniq eVap mar s an exception to
some of the usual .0
-1,- *, 9 P?
Ny.., !Dation. Ordinarily, a particular litigant claims
that a statute is li ken' s itutianal as appligidto him or her; if the litigant prevails, the
1.1: ,.
courts carve away theKuncOltitutional a $ats:44p law by invalidating its improper
applications on a casetk—ase basavirKgy_ftfe''.d„,. . :1 olysis, those rules give way;
challenges are permitted to reisAgrefights o irs pa ies; and the court invalidates the
entire statute !"on its tae," • npnnerely "as applied for" so that the overbroad law
becomes unenforceable' 61 44 properly authorized court construes it more narrowly.
The factor that motivates courts to depart from the normal adjudicatory rules is the
concern with the "chilling;" deterrent effect of the overbrod statute on third parties not
courageous enough to bring suit. The Court assumes that an overbroad law's "very
existence may cause others not before the court to refrain from constitutionally
protected speech or expression." An overbreadth ruling is designed to remove that
deterrent effect on the speech of those third parties.
In the more recent case of Spouses Imbong v. Ochoa, Jr., 86 it was opined that "facial
challenges can only be raised on the basis of overbreadth and not on vagueness.
Southern Hemisphere demonstrated how vagueness relates to violations of due process
rights, whereas facial challenges are raised on the basis of overbreadth and limited to
the realm of freedom of expression" (Samahan ng mga Progresibong Kabataan v.
Quezon City, G.R. No. 225442, August 8, 2017).
59
... ,-0;fr,..i.4::).=.1..:-.1!Zr4;.1.;
''''''•fil '''' • ' "','!...-'..:,:: • , ;! ,.k
i -,, .
'
•.2V'S'iriff.• • ‘ :::,.,,k4-:44.%4.1,*: ...MR:Y.:U.7i.
tf, 'L..4.,-:,,i'l•e4:4
Hierarchy of Rights
Q: Are the Constitutional rights provided under the 1987 Constitution of the same
weight and value?
ANS: No. The primacy of human rights over property rights is recognized because these
freedoms are delicate and vulnerable, as well as supremely precious in our society and
the threat of sanctions may deter their exercise almost as potently as the actual
application 'of sanctions. Further, human rights are imprescriptible (Philippine Blooming
Mills Employees Organization v. Phil. Blooming Mills Co. Inc., G.R. No. L-31195, June
5, 1973).
The freedom of expression ranks higher than property rights in the hierarchy of
constitutional rights (Salonga v. Pano, G.R. No. L-59524, February 18, 1985). Also,
religious freedom, although not unlimited, is a fundamental personal right and
liberty, and has a preferred position in the hierarchy of values (Victoriano v. Elizalde
Rope Workers' Union, G.R. No. L-25246, September 12, 1974).
..,_ AO
D. EQUAL PROTECTION ,,,,,P'''Z 1

Requisites' or Valid ClaseficatrJA, . k.--'
-I ir -`\ ) ''-,.1
::0'"--:-̀''.1:.1- .
Q: What are the recKsites for/a alid classifica loti7
ANS: The,raquisiteifaiyalidassifiCatiTirare:-(S&GE)K. <'\
1. Such clakfficatiorrests upop StOtarltial digtinOlionp;
2. It Applis
. eqllry to all meM I b.ersilf
. thg.sametlas4
.„
3. It Gprmanelo thekurposes of;trie, law; and
. .
4. It is not !Ijailt9,d to gxis t-TP
u -Odirlr(Sp uses Iry _la of , Ochoa, Jr., ,G.R.
Nas.112048q, 204934, '20957,00103r. 205003, 205-(1431 t 05138, 205478,
205491, 205720, 20f355, 2041,113,..,29i7:1;72 & 07563, prilf, 2014).
Rational Basi Strict-Sc 7, n

) )
Q: What are the Ihre\ e -q determine the
reasonableness of claNificafien
ANS: The tests o
1. R6tional basis test
2. Intermediat crutiry-te
3. Stit is
crutiny esf(SaelanC7 ifiga abataan v. Quezon City,
supra
Q: What is,the rational basis test in relati to the equal protection clause?
ANS: The, rational basis test is described as adopting a 'deferential' attitude towards
legislative classifications. This 'deference' comes from the recognition that classification
is often an unavoidable element of the task of legislation which under the separation of
powers embodied in our Constitution, is primarily the prerogative of Congress (Central
Bank Employees Association Inc. v. Bangko Sentral ng Pilipinas, G.R. No. 148208,
December 15, 2004). It applies to legislative classifications in general, such as those
pertaining to economic or social legislation (White Light Corporation v. City of Manila,
G.R. No, 122846, January 20, 2009).
Q: What is the strict scrutiny test in relation to the classification under the equal
protection Clause?
ANS: A legislative classification which impermissibly interferes with the exercise of a
fundamental right or operates to the peculiar disadvantage of a suspect class is
presumed unconstitutional, and the burden is upon the government to prove that the
classification is necessary to achieve a compelling state interest and that it is the least
restrictive means to protect such interest (Serrano v. Gallant Maritime Services Inc.,
G.R. No. 167614, March 24, 2009). In terms of judicial review of statutes or ordinances,
60
K.
strict scrutiny refers to the standard for determining the quality and the amount of
governmental interest brought to justify the, regulation of fundamental freedoms. Strict
scrutiny is used today to test the validity of laws dealing with the regulation of speech,
gender, or race as well as other fundamental rights as expansion from its earlier
applications to equal protection (White Light Corporation v. City of Manila, supra).
Q: What is the intermediate scrutiny test in relation to the equal protection

clause?
ANS: It is used as a test for evaluating classifications based on gender and legitimacy
The government must show that the challenged classification serves an important state
interest and that the classification is at least substantially related to serving that interest
(Biraogo v. Philippine Truth Commission, G.R. No. 192935, December 7, 2010). Under
intermediate review, governmental interest is extensively examined and the availability
of less restrictive measures is considered (White Light Corporation v. City of Manila,
supra).
E SEARCHES AND SEIZURES

Q: Who may invoke the right agOiriptareeasonable searches and seizures?
ANS: The right against unreasonObWaOs and seizure are available to all persons,
natural or juridical, including aligh06.1, nfight against unreasonable searches and
seizure is perSonal and may 10 irMeiro 1`7byttie peAon entitled to it (CRUZ
Constitutional Law, supra at 287):The,111 ‘algeizt3frog be contested only by the
party whose rights have-lfgh impaired F hereby. Thus, thefebjection to an unlawful
search and seizure caǹnol be availed;;tofbb third parties (Stoll! '/ v. Diokno, G.R. No. L-
19550, June 19, 1967)
451
Q: What is theViliv ot,Sea cwt es and eizures?
ANS: Searcheeand nizuiPes are noFittal nreasonable unl orized by a validly
issued searc*Ara,,altrarrantof arrest Thus, t Monde rotection given by
the search air" seizure tItuse Mat een perso pe must stand the
protective authority ofinestrate7lothe ith power to i stre-e efuse to issue search
warrants or warrarg—farrekt Peopja v. ta, G.R. No. 120915, April 3, 1998).
Q: What items may bisj.410ct to searc
ANS: The following arbject to__ Aa
1. Property subj ct of thipafense;
2. Property stole‘mbezzled and other proceeds,or fruits of the offense; and
3. Property used orttire-riled to be used as the means of committing an offense
(RULES OF COURT, RULE 126, Sec. 2).
A person lawfully arrested may be searched for dangerous weapons or anything which
may have been used or constitute proof in the commission of an offense without a
search warrant (RULES OF COURT, RULE 126, Sec. 13).
Requisites for a Valid Warrant
Q: What are the requisites for the issuance of a valid search warrant and warrant
of arrest?
ANS: The requisites for the issuance of a valid warrant are: (PJ-EO-KD)
1. A determination of Probable cause;
2. The determination of probable cause.was made personally by a Judge;
3. The determination by the judge was based on an Examination under Oath or
affirmation of the complainant and the witnesses he may produce;
4. The complainant and/or witnesses testified to facts within their personal
Knowledge; and
5. The warrant issued must particularly Describe the place to be searched or the
persons or things to be seized (CONST., Art. Ill, Sec. 2).
61
• • - - -.:,••••• ck 21'..4.:cit;‘,-, 1/::S-W'r::*P•
.."'e4ki!,zei:KIV.1;14.1MV1 ,,t ;;•,:v• -, e—„a _, *•4 V.W•'-'=.j:* ..•
„WY, ' ' • --,- ' • ,
- ... •i• ''''•-•A
_,
. ,,;-'- • -, • ,-1,1••••„ .•, L„..,
,,,,i3-,........„
,,,i-v,., ,:ih, •,,,,,,,„..•-•:,;,:,,,•,.„...,:.,....., 16.,f.-!.i,,,.9...,,th.•„;„•••-•-•.-..,
....
Q: What is probable cause?

ANS: Probable cause, as a condition for the issuance of a search warrant, exists when
there are facts and circumstances that would lead a reasonably prudent man to believe
that an offense has been committed and that the objects sought in connection with that
offense are in the place to be searched (Sy Tan v. Sy Tiong Gue, G.R. No. 174570,
February 22, 2010).
Q: Is probable cause for the issuance of a search warrant and a warrant of arrest
the same?
ANS: No. They differ as follows:
•
Search Warrant • Warrant of Arrest •
Probable Cause
Such facts and circumstances which Such facts and circumstances which
would lead a reasonably discreet. and. _v ould lead a reasonably discreet and
prudent man to believe th,aVan offelpel pru Mt, man to believe that an offense
has been committed agdfhat the%.objdqs) /has been committed by the person
sought in connectiorykith off9pseare,- s.Qugittro,be arrested (Webb v. De
in the, place so9ght,taAefesearched Leon, G'.R. 121234, August 23,
(Burgos v. Chief761"-Vaeg,Re,NO77- -1995).
64261'Decembk26h1984) r, .)(
If= n
1 i
Q: What are the7quisites for-the-perkonal-determinatio (ofprobable A cause by
the judge in tlielisvAnce o sea k.olyw.90:4121?-p--y- 1,---4. I
1inmi‘ the re uisitelASOWICAg
ANS: The follinf )......_
1. • The judge mks before igpifte"the wfacre,r1, persona ly examine the
com ainadt an itneseriTh-the- ..,„/ if rcii-)f Se rc, kg .questions and
a nsweigi 't1 n ,i...--...)
,,
.!; L.,
2. The eRamination mu +alibi dati-i f / "`••
3. The exkninatiA,rnuf riti' g•
4. The complainanNnd on facts personally
Known tol em; an
5. The judge m st ( svfn
vod tements of the complainant
and the witnesses-eggir mitted (RULES OF COURT,
Rule 126, Sec. 5).
Q: Are the enumerated requisites the same for both the issuance of a search
warrant and a warrant of arrest?
ANS: No.
earChlilliyrint VI/arrant of Arrest
In the issuance of a warrant of arrest, In the issuance of a search warrant,

the judge need not personally examine there must be probable cause, which is
the complainant and the witnesses he to be determined personally by the
may produce. It is sufficient that he judge, after examination under oath or
either: affirmation of the complainant and the
1. Personally evaluate the report and witnesses he may produce, and
the supporting documents particularly describing the place to be
submitted by the prosecutor searched and the persons or things to
regarding the existence of probable be seized.
cause and, on the basis thereof,
issue a warrant of arrest; or
62
2. If on the basis thereof he finds no The probable cause must be in
probable cause, he may disregard connection with one specific offense,
the ftscal's report and require the and the judge must, before issuing the
submission of supporting affidavits warrant, personally examine in the
of witnesses to aid him in arriving at form of searching questions and
a conclusion as to the existence of answers, in writing and under oath, the
probable cause (Soliven v. complainant and any witness he may
Makasiar, G.R. No. 82585, produce, on facts personally known to
November 14, 1988).003 them and attach to the record their
sworn statements together with any
affidavits submitted (Prudente v. Judge
Dayrit, G.R. No. 82870, December 14,
1989).
Q: How particular must the descriptA be in a search warrant in order to be

valid?
opA .
ANS: A search warrant may be..sakaaticularly
1 94 - describe the things to be seized
when the description therein is aY,:tgpat ice* the circumstances will ordinarily allow; or
when the description .expresses aleoncIAL_ Rofa.ct — not oflaw — by which the warrant
officer may be guided in makingdietit,WddtAzurA;All en the things described
are limited to those which440direcifleOtion to lh'Pc3frenIe for which the warrant is
being issued*ache & "z, G.R. No. L-32 f9, February 27, 1971).
Are
STA •
Q: Is a "scatter-shot- 'anint" valid?
ANS: hscatter-shots is iss arot formore that one specific offense, is void,
because it violateethe constitifibrial4equrpment that tyre diust be particularity of the
things to be.seized and' and pikeslo be searc ed (L., on Pambasen v. People;
et a, G.R. eor81
,: 103*124, 1. 995)
044-7
Q: Is a "general4',Tan,P
ANS: No. A generaqvarrant, hich is a s rch or arrest warrant that is not particular as
to the person to be arrested4 the prope e- ized, is void. It is one that allows the
seizure of one thing unlear--- warrantde_ng gives the officer executing
the warrant the discretitgover affitems to take (Vallejo v. Court of Appeals, G.R. No.
156413, April 14, 2004:
Warrantless Searches an • Seizures

Q: In what instances are warrantless searches valid?
ANS: Warrantless searches are valid in the following circumstances: (CIM-CAB- .
SCAPE)
1. Consented warrantless search— When right has been voluntarily and
intelligently waived (People v. Omaweng, G.R. No. 99050, September 2,
1992);
2. Incident to a lawful arrest— A person caught in flagrante delicto and lawfully
arrested may be searched, provided that the search is contemporaneous to
the arrest and within permissible area of search (RULES OF COURT, RULE
126, Sec. 13) or the place within the immediate control of the person being
arrested (Espano v. Court of Appeals, G.R. No. 120431, April 1, 1998). It is
essential that a valid arrest must precede the search; the process cannot be
reversed (People v. Chua Ho San, G.R. No. 128222, June 17, 1999);
3. Searches of Moving vehicles — Searches of vehicles, vessels, or aircraft for

violation of fishery, immigration, and customs laws (People v. Go, G.R. No.
1144639, September 12, 200.3). Searches and seizures without warrant of
63
I ivessels and aircraft for violation of customs laws have been traditional
exception to the constitutional requirement because the vessel can be quickly
:moved out of the locality or jurisdiction in which the search must be sought
before the warrant could be secured (Hizon v. Court of Appeals, G.R.
No.119619, December 13, 1996);
4. ' Customs search - Allowed when persons exercising police authority under the
customs law effect search and seizure in the enforcement of customs law.
Custom searches however are not available in dwelling places (Dela Cruz v.
iPeople, G.R. No. 209387 January 11, 2016);
5. pBody checks in Airports - Holders and his hand-carried luggage(s) are subject
to search for, and seizure of, prohibited materials or substance. Holder
'refusing to be searched shall not be allowed to board the aircraft which shall
'constitute a part of the contract between the passenger and the air carrier
(R. A. No. 6235, Sec. 9);
6. Inspection of Buildings and other premises for the enforcement of fire,
sanitary, and building j2guiations_Cya/eroso v. CA, G.R. No. 164815,
September 3, 2009
7. When there is A;‘ enuitie reason p-an 44r1 k" in the light of the police
officer's exude ce Oilgrounding conclitionyto arrant a belief that the
person sto, ped has• cor-Sealed weapons (ifIglacatAc. Court of Appeals, G.R.
No. 12354 ,"'Deze bPer11,4997);11-. -^
‘
8. Visual sAchl gat Geckpointg--)(Vattponte v. oreetk a -G.R. No. 83988,
Septe7ber '9,1989 ; JN 4. A.
9. Conduct of 'Aerial target zoniiiP, and "sat ration dii4p the exercise of
Militabit—owets of t le-dident Villa, `1? Nb. 80508, January
30, 1P90.);- 1
10. Where mohLited a des aroil 49piew (People Huai G.R. No. 197788,
Feb 67.1/12420
11. Doctr ef rcumstan that under such
urgentaddlkexig(1:c \ of 0 ould be lawfully
dispensed withl Peokti):0-G July 6, 1994).
Q: What are the aements.4(151: rrp,n't 4s.searc of artic es in plain view?

ANS: The followingIT the q,leTnepits:-(JIA)
1. The executinNeAfornentooffic6 q"ta no Justification for an initial
intrusion or othecwiseiptoperly,i0 om which he can view a
particular order;
2. The officer must discover ion hating evidence Inadvertently without .•
conducting a search; and
3. It must be immediately apparent to the police that the items they Observe may
be evidence of a crime, contraband, or otherwise subject to seizure (United
Laboratories, Inc. v. )sip, G.R. No. 163858, June 28, 2005).
Q: What are the requisites of a valid regular checkpoint?

ANS: The following are the requisites of a valid checkpoint: (PLV)
1. It,must be warranted by the exigencies of Public order;
2. It must be conducted in a way Least intrusive to motorists; and
3. The inspection of the vehicle is limited to a Visual search (Abenes v. CA, G.R.
No. 156320, February 14, 2007).
Q: In what instances are warrantless arrests valid?

ANS: Warrantless arrests are valid under the following circumstances: (ICH-BED-DE)
1. When caught Intlagrante delicto - When person to be arrested has committed,
is actually committing, or is attempting to commit an offense (RULES OF
COURT, Rule 113, Sec. 5 (a));
64
a
•)
-4
2. In Cases of Continuing offense — membership in organizations like NPA is a

continuing offense, thus, a person guilty thereof can be arrested anytime under
the in flagrante delicto principle (Urni/ v. Ramos, G.R. No. 79731, July 9,
1990);
3. DoCtrine of Hot Pursuit — When an offense has just been committed and the
arrestor has probable cause to believe, based on personal knowledge of facts
or circumstances, that the person to be arrested has committed the crime;
4. BOndsmen may arrest the accused, or upon written authority endorsed on a
certified copy of the undertaking, cause him to be arrested by a police officer
or, any other person of suitable age and discretion (RULES OF COURT, RULE
114; Sec. 23, par. (1));
5. If a person lawfully arrested Escapes or is rescued, any person may
immediately pursue or retake him without a warrant at any time and in any
place within the Philippines (RULES OF COURT, RULE 113, Sec. 13);
6. When a person to be arrested has escaped Detention facility (RULES OF
COURT, RULE 113, Sec. 5 (c));*,
7. If the accused released orL4011#ttempts to Depart from the Philippines without
permission of the court w es6 talcase is pending (RULES OF COURT, RULE
114, Sec. 23, par. (2)); T1
8. DoCtrine of Exigent CirdiAc ailiars
o under such urgency and exigency of the
1
moment where a searckvitcra t- ould;lbe lawfu IMispensed with (People v.
vot
De' Gracia,supra).-0 '1
I
Administrative Arrestse
,to--
.,
Att, A
Q: When may administrative officials iskue warrants of arrest
arre
ANS: Generally, grOla .jug has the lower to issu • a .1va .ant after the proper
procedure hasfieen duly taltetA'The exceptions are the f low9g:
1. Theltommistioner of Immlragcl and Depcfrtatioh ma issue warrants to
carrVirdt-azfitiPtirrlinhoLa v o ation, ei 4> xe e or legislative
officer or agen4uly authorize .r the pur ok,,j .... 4„. udge De la Rosa,
G.R. Nos 912221 May 1'91). In such case-,determination of probable
cause aslt tfersto% under Arti le II, Section 1, par. 3 of the Constitution, is
not Inecessary'-1 (14.
-
-Pey vs. De ,fr; tiago, G.R. No. 82544, June 28,
19e8);
2. Warrant of a est mae issue. sy a.minis ra ive authorities only for the
purpOse of cauyiQg A tad final finding of a violation of law and not for the sole
purpose of inOktig5tion or prosecution. It may be issued only after the
proCeeding has .ten place as when there is already a final decision of the
administrative authorities (Vivo v. Montesa, G.R. No. L-24576, July 29, 1968).
Evidence Obtained Through Purely Mechanical Acts

Q: What areevidence obtained through purely mechanical acts?
ANS: Acts where the accused was made to undergo which was not meant to unearth
undisclosed 'facts but to ascertain physical attributes determinable by simple
observation. This includes requiring the accused to submit to a test to extract virus from
his body, or compelling him to expectorate morphine from his mouth, or making her
submit to pregnancy test, or a footprint test, or requiring him to take part in a police
lineup (People v. Olvis, G.R. L-71092, September 30, 1987). The constitutional right of
an accused,' against self-incrimination proscribes the use of physical or moral
compulsion to extort communications from the accused and not the inclusion of his body
in evidence when it may be material. Purely mechanical acts are not included in the
prohibition as' the accused does not thereby speak his guilt (Dela Cruz v. People, G.R.
No. 200748, July 23, 2014).
65
Q: Is handwriting considered as a purely mechanical act?
ANS: No. Writing is something more than moving the body, or the hand, or the fingers;
writing is not a purely mechanical and attention. The production of handwriting is more
serious than that of compelling the production of documents or chattels, because here
the witness is compelled to write and create, by means of act of writing, evidence which
does not exist, and which may identify him as the falsifier (Beltran v. Samson G.R. No.
32025, September 23, 1929).
Q: Is drug testing a purely mechanical act?

ANS: Yes. However drug test in R.A. 9165, Sec 15 does not cover persons
apprehended or arrested for any unlawful act, but only for unlawful acts listed under
R.A. 9165, Article II i.e. importation, sale, trading, administration, dispensation, delivery,
distribution, and transportation, etc. Also, cases where non-testimonial compulsion has
been allowed reveal, however, that the pieces of evidence obtained were all material to
the principal cause of the arrest. In the instant case, a urine sample could not be
material to' the charge of extortion:ligncer,the,...cLug test was a violation of accused right
to privacy and right against sellAncrimin tio ( er-Dru4 v. People, supra).
ty.
F. PRIVACY OF COMM , IP SANOGORRE PONDENCE
•4"
Q: What is the ngti t c.
ANS: It is the riglt o Re'i filgAtm unlrante xploita 'on k fie's person or from
intrusion into ones r,p
te activities su2 Vqyas to calm dmitation to a person's
ordinary sensibilities (S, cial kistice Save v. Dangettus DergstBoercl, G.R. 157870,
November' 3, goo8,1., he rig t-to-privagfpUhe-righ f an kalictu I. to be free from
unwarranted RIO or to live,Althq,oqiupw9ontA interf renc6 by the public in
matters in whip the ublic is of necesillitoricerneP. Simpl, atAtZt • e right to privacy
is "the right to be lo` one" e v. I orres,LG(R. No. 1 85, J ly 23, 998).
Private and mm rn aions

Q: What .spebic pr teal rticle III of the
Constitution?
ANS: The privac of comnvi (Iv •n1,-rice sha be inviolable except
upon lawfill order o the coyrtor kt .- •soiilety' orde requires otherwise as
prescribed by law.
Q: What factors must the c con;t

)
....14,.. -11„Leot 1
at there is a violation of the
right to priVacy of communications
ANS: In evaluating a claim for violation of the right to privacy, a court must determine
whether a person has exhibited a reasonable expectation of privacy and, if, so, whether
that expectation has been violated by unreasonable government intrusion (In the Matter
of the Petition for Issuance of Writ of Habeas Corpus of Camilo L Sabio, G.R. No.
174340, October 17, 2006).
Q: What are the different categories of privacy?

ANS: In Whalen v. Roe, the United States Supreme Court classified privacy into two
categories:
1. Decisional privacy - involves the right to independence in making certain
important decisions.
2. Informational privacy - refers to the interest in avoiding disclosure of
personal matters. It is the right to informational privacy that those who oppose
gOvernment collection or recording of traffic data in real-time seek to protect.
Informational privacy has two aspects:

a. The right not to have private information disclosed, and
66
VOL 1.
2019
The right to live freely without surveillance and intrusion (Disini, Jr. v.
h Secretary of Justice, G.R. Nos. 203335, 203299, 203306, 203359,
203378, 203391, 203407, 203440, 203453, 203454, 203469, 203501,
203509, 203515 & 203518, February 18, 2014).
Q: What are the tests in determining whether or not a matter is entitled to the right
to privacy? 1,
ANS: In determining whether or not a matter is entitled to the right to privacy, this Court
has laid down a two-fold test:
1. The first is a subjective test, where one claiming the right must have an actual
or legitimate expectation of privacy over a certain matter.
2. The second is an objective test, where his or her expectation of privacy must
be one society is prepared to accept as objectively reasonable (Disini, Jr. v.
Secretary of Justice, supra).
Q: What is the "reasonable expectatimiof privacy" test which used to determine

whether there is a violation of the rigtitiO privacy?
ANS: The reasonableness of a perOdri'Srx
,- ,,;,,? :,•-,, ectation of privacy depends on a two-part
test: a
1. Whether, by his condtke 'dividual has exhibited an expectation of
privacy; and ,
.
2. This; expectation is cop`Thatitpie -recogI.KOzwa so n a ble (Ople v. Torres,
supra) . .
0
441 0 ,'
k
Customs, community norms, andpraOfej imay, therefore, Iiinbt r extend an individual's
"reasonable expectatV .e., . of privacy" ence, the reason b ness of a person's
expectation of privacy,musebeiatermine -on a case-to-Ise asjp since it depends on
the factual cirCurrAncesig ounding th ase (Spouses Hing tr7 Choachuy, Sr., G.R.
No. 179736, Jt(p)lieF.26, 2013). N.
rit e
w.i
, ,,, • ' 4'4, cii, ,,.
Q: What is the tovecia Abe right mo t. to p ivacy ofrtaV i and
correspondence Z.:
ANS: The protectfOton5n; a y sho,- Id no e confined to his house or residence as it
may extend to, Placetwpere ng has the rigi o exude the public or deny them access.
It therefore covers pla4A,0ations, or ei" ua.09,5Wth an individual considers as
private. And as long as'"his rightilisligeb nizeVbofer6tP, other individuals may not
infringe on his right to Kt acy °uses Bill and Victoria Hing v. Choachuy, supra).
Q: Is there an expectation of privacy in social networking environment?

ANS: Yes. The Court, by developing what may be viewed as the Philippine model of the
writ of habeas data, in effect, recognized that, generally speaking, having an expectation
of informational privacy is not necessarily incompatible with engaging in cyberspace
activities, including those that occur in online social network (OSN).
Facebook extends its users an avenue to make the availability of their Facebook
activities reflect their choice as to "when and to what extent to disclose facts about
[themselves] — and to put others in the position of receiving such confidences."
It is through the availability of said privacy tools that many OSN users are said to have a
subjective expectation that only those to whom they grant access to their profile will view
the information they post or upload thereto.
This, however, does not mean that any Facebook user automatically has a protected
expectation of privacy in all of his or her Facebook activities.
67
Before one can have an expectation of privacy in his or her OSN activity, it is first
necessary that said user manifest the intention to keep certain posts private, through the
employment of measures to prevent access thereto or to limit its visibility. And this
intention can materialize in cyberspace through the utilization of the OSN's privacy tools.
In other, words, utilization of these privacy tools is the manifestation, in cyber world, of
the users invocation of his or her right to informational privacy (Vivares v. St. Theresa's
College; G.R. No. 202666, September 29, 2014)
Q: What objects of communication are covered by the guarantee?

ANS: The constitutional protection to privacy or communication and correspondence
includes tangible and intangible objects (SUAREZ, Political Law, supra at 274).
Examples:
Tangible objects - include letters, telegrams, signals, cables, telephone, client's file
and, other documents.
Intangible objects - under the Anti-Wiretapping Law, it is illegal for any person, not
authorized by all the parties to owprivate,communication, to secretly record such
communication by meauyorra-pe To der (kasinipkz v. Court of Appeals, G.R. No.
93833, September 28,, 1995
....-"----
Q: What is the scoe,atof the, tiViretapping La :
ANS: The law pr9hibit ;an oerson76676thng-Nttuirj:,A by II the parties to any
' .1.--- ,-3- It
private communioatio -o spokenword, word, tctap,qny wire oR9131Aoy using any other
1 e t
device or arrangeme 06 secretly overhear -} In
• ?er
cept, r record
A
suckcommunication or
spoken ,Word b using, de 'ice comni.41s,‘ known a a chat ' o % or dictagraph or
dictaphone or STRiett lkie o ape recor• er, or ow_ eve otheleIse -, deribed" (R.A. No.
4200, Sec. 1).
,..,..}
Q: Is the use o theisaid s\''':1.
abtls2 11-ys'p1171L
rof hib*
ANS: NO. The ea:Tf) \'''‘‘Waipli:st er any civil, criminal
investig6tion o ,,tribl'o offe s ' ''IrtSei cl 00, shall not be
;.,_?„, .c.,- „,.
,
.
.
covered by the 0\ ohibitidn (R. • A..„4
They may be perm tted onl may be issued under

the following conditiNs:
1. The constitagna4eli turnients-fo of a warrant should be
complied with; a-d-d.,
2. That said authority'th 'bee ktive_Ojy or 60 days (R.A. 4200, Sec. 3; .
SUAREZ, Political Law, sup t'27-4)7-
intrusion. When Allowed,. Exclusionary Rule
Q: May the right to privacy of communication and correspondence be validly
violated?
ANS: Yes, upon lawful order of the court or when public safety or order requires
otherwise as prescribed by law (CONST, Art. Ill, Sec. 3(a).
A limited intrusion into a person's privacy has long been regarded as permissible where
that person is a public figure and the information sought to be elicited from him or to be
published about him constitutes matters of a public character. The right of privacy
cannot be invoked to resist publication and dissemination of matters of public interest
(Ayer Productions PTY. Ltd. v. Capulong, G.R. No. L-82380, Apri129, 1988).
Q: What is the exclusionary rule?

ANS: Any evidence obtained in violation of this [right to privacy] or the preceding section
[right against unreasonable searches and seizures] shall be inadmissible for any
purpose in any proceeding (CONST, Art. Ill, Sec. 3, Par. (2)).
68
Any communication or spoken word, or the existence, contents, substance, purport,
effect or meaning of the same or any part thereof, or any information therein contained,
obtained or secured by any person in violation of the preceding sections of this Act shall
not be admissible in evidence in any judicial, quasi-judicial, legislative or administrative
hearing or investigation (R.A. 4200, Sec. 4).
G. FREEDOM OF SPEECH AND EXPRESS/ON

Q: What is the basis of the freedom of speech and expression?
ANS: No law shall be passed abridging the freedom of speech, of expression, or of the
press, or the lpght of the people peaceably to assemble and petition the government for
redress of grievances (CONST., Art. Ill, Sec. 4).
Q: What are the elements of freedom of expression?

ANS: The elements of freedom of expression are:
1.Freedom from previous restraint; and
2. Freedom from subsequent p4Ohment (CRUZ, Constitutional Law, supra at
482). .e,1,..:: '
at
Prior Restraint find SubsequentPunishmant
Q: What is prior restraint? ?!' T
h. /?k‘ . 61
ANS: Prior restraint refers to Okla 4gpvp ornenWspes on the press or other
forms of expression in adosfee of 'Lida publicatioWorlidistAmination. Freedom from
prior restraint is largelytteedom from .government censorshipjsgf publications, whatever
the form of censorstr, and regdrforkof Whether it is
tded by the executive,
legislative, or judicial b - Prat of the Over ent (Chavez v. nzales, G.R. Na 168338,
February 15 2008 . li •,,h,ew
'
•
Q: Is the freedom from prior restraint a • olute?
ANS: No, Thkfcllowin maybe sbWect to or restratAMPE D.,)
A:4 . '" i.:,.
1. Movies, teleyopg, and ,,r4o b oadcast cerigo s en/ of its access 'to
numratx 6ogofildli includiftb the young who mus be insulated from the
prejLidicialtraffects 4 f • urifirotoe ed speech (Soriano v. Laguardia, G.R.
No. 164785, April 22009);
2. PornOgraphykoneho v. al,
3. False or mislead i;Si"ing co ercia emen Soriano v. Laguardia, supra.);
4. Advocacy ofoti Ilinewla less action (Soriano v. Laguardia, supra);
5. Danger to nati trturity (Chavez v. Gonzales, supra).
Sub judice rule — restriction of comments and disclosures pertaining to judicial

proceedings to avoid prejudging the issue, influencing the court, or obstructing
the administration of justice (Romero ll v. Estrada, G.R. No. 174105, April 2,
2009).
Q: What does freedom from subsequent punishment mean?
ANS: It refers to freedom from any punishment as a consequence of or in connection
with a speech, ,Utterance, or writing (SUAREZ, Political Law, supra at 282). Subsequent
punishment is the imposition of liability to the individual exercising his freedom. It may
be in any forni, such as penal, civil or administrative penalty (Concurring Opinion, J.
Sandoval-Gutierrez, Soriano v. Laguardia, supra).
I.
The mere prohibition of government interference before words are spoken is not an
adequate protection of the freedom of expression if the government could arbitrarily
punish after the words have been spoken. The threat of subsequent punishment itself
would operate' as a very effective prior restraint (Dissenting opinion of J. Carpio, Soriano
v. Laguardia, supra; SUAREZ, Political Law, supra at 282).
69
'VOL 1.
2019
Content-Based and Content-Neutral Regulations

Q: Are all forms of prior restraint on speech invalid?
ANS: No. Although prior restraints on speech are generally invalid, there are those
which may be permitted under the Constitution) if the restraint to be imposed meets the
burden of proof necessary to uphold its validity. This burden of proof depends on
whether the restraint is in the form of content-based regulations or content-neutral
regulations (Chavez v. Gonzales, supra).
Q: What are the differences between content-based and content-neutral?

ANS: Content-based regulations and content-neutral regulations can be distinguished in
this manner:
Content-Based Regulations Content-Neutral Regulations
The restriction is based on the subject It is concerned with the incidents of the
matter „of the utterance or peech—.-..speech or one that merely controls the
(CRUZ, Constitutional La vVesgupra t time,151acc., or manner of the expression
482). Restraint is aimers,49:_he message,, itkitibird pidces without any restraint on
or idea of the expr ssion (~Omer~a~vkc4nte i.;oNt e expression (CRUZ,
COMELEC, G.R. O. 13223 March Constitutional e. supra at 482).
31, 1998).
/es
Test for Validity of, Regulation : •
i I X s r)
Stiict Crutillfyi:...Saepch cotent_ma_ 'llatermediate Ap.proackO'Brien Test:
regulatd oily „torfdrther a conrigellind ,i1 reg4tiont is justified if:
public. interes in aiway that diiet„n)o lit -airs
a:iris within the;co.f_t, tional power of
impair ,speet or& than-ip abs8idtply-p0he gdfir melin;r—
necessary o rther Al \ interest---::b...it-fu , rt, ,,,,,o ,t or substantial
(Primicias v. edrol l G.R.'' . L-1 0, ri,,gov RI nt i -ie—t;'
'
January 27, 1 48). cl;•cat14 rnne bt inte est is unrelated
ession/ free expression;
Clear , and p esent ang r e_st,....,..-
Congress may event ... p& d:i es pct,rp, dent re riction on alleged
when the words us 4 ar -' qm tf,sp ech and expression is
circumstances and ar" shs h r 111117- aater an is essential to the
as to create a clear and e_ s n dangalv[ efi e of that interest (Social
that they will bring about the sTibsta*l_,,„,,Wefflher Stations, Inc. v. COMELEC,
evils (Roque, Jr. v. Armed Forces of the G.R. No. 147571, May 5, 2001).
Philippines Chief of Staff, G.R. No.
214986, February 15, 2017).
Facia/ Challenges and the Overbreadth Doctrine

Q: What is the concept of 'facial challenge'?
ANS: A facial challenge is an exception to the rule that only persons who are directly
affected by a statute have legal standing to assail the same. This is only applicable to
statutes involving free speech, impeached on the grounds of overbreadth or vagueness.
The facial challenge principle is a challenge against the constitutionality of a statute that
is filed where the petitioner claims no actual violation of his own rights under the
assailed statute, but relies instead on the potential violation of his or other persons'
rights (Spouses Romualdez v. Commission on Elections, G.R. No. 167011, April 30,
2008).
70
ZVOL 1.
2019
Q: What is the overbreadth doctrine?

ANS: The overbreadth doctrine is a ground to declare a statute void when it offends the
constitutional principle that a governmental purpose to control or prevent activities
constitutionally subject to state regulations may not be achieved by means which sweep
unnecessarily broadly and thereby invade the area of protected freedoms (Adiong v.
COMELEC, G.R. No. 103956, March 31, 1992).
Dangerous Tendency, Balancing of Interests, and Clear and Present Danger Tests
Q: What are the tests for valid government interference to freedom of

expression?
ANS: The tests used in this jurisdiction for valid government interference are:
1. Clear and Present Danger Test — when words are used in such circumstance
and of such nature as to create a clear and present danger that will bring
about the substantive evil that the State has a right to prevent (Roque, Jr. v.
Armed Forces of the Philippines,ief of Staff, supra):
a. Clear — causal conned= with the danger of the substantive evil
arising from the utterbricesmestioned; and
b. Present — time 'elementr identified with imminent and immediate
danger; the dandertfito,0 only be probable, but very likely inevitable
(Gonzales v. COMEL,EC,v :P.,NckL-27833,,,Vril 18, 1969).
2. Dangerous Tendency TeStt 41020,1ferkdRreAetia dangerous tendency of
an evil which the gtatb has a right to preverif(Catansag v. Fernandez G.R.
No. L-8974, ostabgr 18, 1957), 03
3. Balancing or interest TedIL-,iiled as a standard 'phen the court needs to
balance confli&irtg,sociaVvalufs and individu01 Atellests, and requires a
sFt. tf
conscious;-atid defqkd consideration of the interplay of tnterest observable in
a giverii.%pe (SUAitZ sup1a at 289). When a
paitiqjAr cond4pt is regulated in thp interest ottpubli§ order, : and the regulation
fn arriffaigat, conditional [Vital abillabnyetiMP
reSeiffil ,, -Fen, the duty of the
courts is to deter me which ofibese two conflIcungginterests demand the
,
greater protegiohl Ryder ttS circumstances presented (Chavez v. Gonzales,
G.R.No.1
• •„„, 7a338 Februaoi 15, 408).
;t5,
L
.1
0
State Regulation of Di event Types,oftelasSOlegaym
Q: What is the state redulatio pr broadcast media?

ANS: BroadCast and ra dji)>mil i a are subject to dual regulation. First, by procuring a
legislative franchise and se4aMii, by registering and being subject to the regulations set
by the National Telecommunications Commission. The scarcity of radio frequencies
made it necessary for the government to step in and allocate frequencies to competing
broadcasters. In undertaking that function, the government is impelled to adjudge which
of the competing applicants are worthy of frequency allocation. It is through that role that
it becomes legally viable for the government to impose its own values and goals through
a regulatory regime that extends beyond the assignation of frequencies, notwithstanding
the free expression guarantees enjoyed by broadcasters (Divinagracia v. Consolidated
Broadcasting System, Inc., G.R. No. 162272, April 7, 2009).
Q: Is the print media subject to the same regulation as the broadcast media?
ANS: No. Because of the physical limitations (in radio waves) of the broadcast
spectrum, the government must, of necessity, allocate broadcast frequencies to those
wishing to use them. There is no similar justification for government allocation and
regulation of the print media (Divinagracia v. Consolidated Broadcasting System, Inc.,
supra).
71
All forms of communication are entitled to the broad protection of the freedom of
expression clause. The test for limitations on freedom of expression continues to be the
clear and present danger test. Necessarily, however, the freedom of television and radio
broadcasting is somewhat lesser in scope than the freedom accorded to newspaper and
print media (Eastern Broadcasting Corp. v. Dans, Jr., G.R. No. L-59329, July 19, 1985).
Commercial Speech
Q: What is a commercial speech?
ANS: Commercial speech is a speech that proposes an economic transaction (Separate
Opinion of J. Puno, Pharmaceutical and Health Care Association v. Duque Ill, G.R. No.
173034, October 9, 2007). Advertisement of goods or of services is an example
(BERNAS, Philippine Constitution Reviewer, supra at 68). Commercial speech does not
enjoy the same protection as political speech in the hierarchy of our constitutional
values. However, any regulation of truthful and non-misleading commercial speech must
still have a legitimate government purpose (Disini, Jr. v. Secretary of Justice, G.R. Nos.
203335, 203299, 203306, 20339,a03378:20334 203407, 203440, 203453, 203454,
203469, 203501, 203509, 29351 5 & 20f518 F.:p br-04:'1i6,‘,2014).
..,,.-.., N. kJ 11: 61 r N.
Q: What are the rs isitIsp;ctiffirreratal.speeckv-tO cRj::: the constitutional
-w.,,,, r ,c,
rotection? tai:...---
enar fer,:\
,..
ii,;,tc:t:
ANS: The comm speec •., ul a0 1:14ity , d not be misleading".
ITrivf
Next, the asse 11 rust b aap a t alk If both of these
requirements a met, irmus next be dArmined wh ther Ngi staOlregulation directly
advances the g, veglintal intecesLassgq.di_and..whe 1 er it is gi't Thine extensive than
is necessary t fserlb that inte est,esint, 1 4 v,..Sporeta of Juttiperd ra).
Un roteted
H ecrej
i --c,4 \"kr
-j-lei
Q: What are ubpjgte ) H
ANS: UnprotecIit)eUZ-pl ch i
1. 1 Obsce ity (Gonzale v\ s. 9, 2007);
2. False r.k miskadin and Health Care
Associatrov.v. Di.7442, sbp
,,..17 AT \
3. , Advocacy b,,,,„7 i.v, • ..„sterrNBroa Casting Corp. v. Dans,
stern
' supra); -01.)
4. , Danger to nations ni (Eas,leffr ikarp.s
l I giCorp. v. Dans, supra); and
5. 1 Libel (REVISED PEN ODE,M1.253k
I
Q: What is an obscene material?
ANS: Those which deals with sex in a manner appealing to prurient interest. The test is,
whether to the average person, applying contemporary community standards, the
dominant theme of the material taken as a whole appeal to prurient interest (Gonzalez v.
Katigbak, supra).
Q: Whatis libel?
ANS: It is the public and malicious imputation of crime, or of a vice or defect, real or
imaginary, or any act, omission, condition, status, or circumstance tending to cause the
dishonor, discredit, or contempt of a natural or juridical persons, •or to blacken the
memory of one who is dead (REVISED PENAL CODE, Art. 353).
The elements are: (IPIM)

1. Imputation of a discreditable act or a condition to another;
2. Publication of the imputation;
3. Identity of the person defamed; and
4. Existence of Malice (Daez v. Court of Appeals, G.R. No. L-47971, October 31,
1990).
72
Q: What is the presumption of malice in libel?
ANS: Every defamatory imputation is presumed to be malicious, even if it be true, if no good intention and justifiable
motive for making it is shown, except in the following cases:
1. A private communication made by any person to another in the performance of any legal, moral or social duty.
2. A fair and true report, may in good faith, without any comments or remarks, of any judicial, legislative, or other
proceedings which are not confidential nature, or of any statement, or of any other act performed by public officers in
the exercise of their functions (REVISED PENAL CODE, Art. 354).
Q: When is the malice presumed from defamatory statement?
ANS: The presumed malice rule embodied in Article 354 of the Revised Penal Code provides a presumption of malice
in every defamatory imputation, except under certain instances. Under this rule, the defamatory statement would still
be considered as malicious even if it were true, unless the accused proves that it was made with good and justifiable
intentions (Disini Jr. v. Secretary of Justice, GR Nos. 203335, 203299, 203306, 3203359, 203378. 203391, 203407,
203440, 203453,203454,203469, 203501,203509,203515, & 203518, February 18, 2014).
Q: What is the doctrine of fair comment?
ANS: It means that while in general every discreditable imputation publicly made is deemed false, because every man
is presumed innocent until his guilt is judicially proved, and every false imputation is deemed malicious, nevertheless,
when the discreditable imputation is directed against a public person in his public capacity, it is not necessarily
actionable. Fair commentaries on matters of public interest are privileged and constitute a valid defense in an action
for libel or slander. (Borjal v. Court of Appeals G.R. No 126466, January 14, 1999).
H. Freedom of Religion
Q: What is the basic provision of the Constitution on religion?
ANS: No law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof. The free
exercise and enjoyment of religious profession and worship, without discrimination or preference, shall forever be
allowed. No religious test shall be required for the exercise of civil or political rights (CONST., Art II , Sec. 5).
Q: What freedom of religion is guaranteed by the Constitution?
ANS: Religious freedom and not mere religious toleration (Aglipay v. Ruiz, GR No L-45459, March 13, 1937).
Q: What are the views on the concept of freedom of religion?
ANS: The approaches are of the following:
1. Strict separationist- This approach erects an absolute barrier to formal interdependence of religion and state.
Religious institutions could not receive aid, whether direct or indirect, from the state. Nor could the state adjust its
secular programs to alleviate burdens the programs placed on believers. ( Estrada v Escritor, A.N. No. p-02-1651, June
22, 2006).
2. Strict neutrality- not hostile to religion, it is strict in holding that religion may not be used as a basis for classification
for purposes of governmental action, whether the action confers rights or privileges or imposes duties or obligations.
Only secular criteria may be the basis of government action. It does not permit, much less require, accommodation of
secular programs to religious belief. ( Estrada v Escritor, A.N. No. p-02-1651, June 22, 2006).
3. Benevolent neutrality- believes that with respect to these governmental actions, accommodation of religion may
be allowed, not to promote the government's favored form of religion, but to allow individuals and groups to exercise
their religion without hindrance. This is what we apply in our
73
I• ii
jurisdiction, as the intent of the framers was to adopt a benevolent neutrality
approach in interpreting the religious clauses in the Philippine constitutions
and the enforcement of this intent is the goal of construing the constitution
(Estrada v. Escritor, supra).
Non-Establishment and Free Exercise Clause
Q: What are the three principal parts of Art. III, Sec. 5 of the Constitution?
ANS: The three principal parts of Section 5 are:
1.1;I Non-establishment clause;
2. :''Free exercise clause; and
3. • Non-religious test clause (SUAREZ, Political Law, supra at 297).
IV
Q: Whatis the non-establishment clause?
ANS: NoIli.law shall be made respecting an establishment of religion, or prohibiting the
free exercise thereof (CONST., Art. Ill, Sec. 5). The non-establishment clause means
that the 'State cannot set up a chylpbo.nowass laws which aid one religion, aid all
religions 'or prefer one religiopoVeranother' n9-73reatnar influence a person to go to or
remain away from churVppinkis wilgr fpr 'hip toprpfess a belief or disbelief in
any relibiOn, etc. (EversOn( B IrdigEducation 30,(1..I- ,, 1946).
1:Its1 \
C
The nan;'• -establishmen
? cla e calls-forgeVernmei:h t.k. lity ii religious matters to
..1.,
uphold voluntaris a- d id bleeding intarifaithidisse sio Ica v. Escritor, supra).
[ ,:, / lc 4 A,
As a general ru e, the fc laus prohibits ttfoiAgovernmen from up s rights, authority,
funds, and resPrrees behin -an-activifythat-is-esse tially 1-i int•insically religious
(ALBANO, Pork Law Revi ewer-4014,0,25510e inafter 113X j. However, the
t. ,-.. •;- .
following are e d exceptions topa.non n;asjablis ment cl 4,,s_e4 he Constitution:
1.1 !i 'Articl Slc.1 (-23 salary of:stgloUs offic ' )golernme t institutions;
2. ! Article VI„ectio • rg V-=tmcpx 0,tiorrof)•• 11roft prpp nd
3. i Articlbt ,A. ;( ,
ti .- Obl,, iolott fisd -uctiten.
, '••• '
.....:.-./
Q: What is the free exercise clans
ANS: The free ehrcise a erifo ipto s psoffession nd worship, without
discrimination or prekeren liaecr(c.,2NS , Art. III, Sec. 5). The
basis ie:the respect fo(tik bilay,,ajbaArtrati c -ratence. g Under this part of
religiosi freedom •guarete,, tate is pr interfering with the outside
manifestation
, 1
of one's belieran
- tth Spero . Ochoa, supra).
I
Q: What are the two aspects of the free exercise clause?

ANS: The aspects of freedom of religious belief and worship are:
1. *Freedom to believe - absolute as long as it is confined in the realm of
thought; and
2. ' ,Freedom to act on one's belief - subject to regulation where the belief is
translated into external acts that affect the public welfare (Iglesia ni Cristo v.
I CA, G.R. No. 119673, July 26, 1996).
Benevolent Neutrality and Conscientious Objectors
Q: What's benevolent neutrality?
ANS: Eidnevolent neutrality believes that with respect to these governmental actions,
accommodation of religion may be allowed, not to promote the government's favored
form of religion, but to allow individuals and groups to exercise their religion without
hindrance. This is what we apply in our jurisdiction, as the intent of the framers was to
adopt a benevolent neutrality approach in interpreting the religious clauses in the
Philippine constitutions and the enforcement of this intent is the goal of construing the
constitution (Estrada v. Escritor, supra).
74
Q: What is the conscientious objector test?
ANS: Once the medical practitioner, against his will, refers a patient seeking information
on modern Lreproductive health products, services, procedures and methods, his
conscience is immediately burdened as he has been compelled to perform an act
against his beliefs (Spouses lmbong v. Ochoa, Jr., supra).
Lemon and Compelling State Interest Tests

Q: What is the lemon test?
ANS: We apply the lemon test to determine the constitutionality of laws challenged for
violating theirlOn-establishment clause:
1. ThelOatute has a secular legislative purpose;
2. itsOrincipal or primary effect is one that neither advances nor inhibits religion;
and,11
3. It does not foster an excessive government entanglement with religion (Lemon
v. Kurtzman, 403 U.S. 602, 1971 adopted by the SC in Estrada v. Escritor,
suPra).
Q: What is the compelling stateMerktest?

ANS: When ',law of general applidApplAinges religious exercise, albeit incidentally,
the state interest sought to be Amateerfalst be so paramount and compelling as to
fi• •
override the iffee exercise claim,(E6M7/451 gito of Srperintendent of School of
Cebu, G.R. Nol 95770, Marcig,199%1
This test invOlies a thi0-s ep proces,p)4 dying inquiry of 4,,urts, to wit:

1. Has the stalite, or govefnment action create aiburden on the free
ofgligignfL The codres often look into t sincerity of the religious
exerCise_,
beliebb7rwithou-tliittifing t e truth of the D•
2. Is therea sufficiently compellipg state interest to 'ustify this infringement
of rellgtouszlibe ? 4Injhis iby, the •v =,n1 en "bs; stablish that its
_ -4$0.
purposes areAlt ate tore sti, and that theagi
3. tiAWedticac teving?its legitimate purposes used the least intrusive
means p8Tilble so that the free exercise is not infringed any more than
‘4,1,
necessary to acNve the ledifi oal of the state? - The analysis
reqUites the itateft0 t.at4 hicti it is achieving its legitimate
state:Objectiv'' s the leastAR rusive means strgaa v. Escritor, supra).
L LIBERTY OFABODE A aft' G T TO TRAVEL

Q: What is the!Constitutional basis of the liberty of abode and right to travel?
ANS: The liberty of abode and of changing the same within the limits prescribed by law
shall not be impaired except upon lawful order of the court. Neither shall the right to
travel be impeired except in the interest of national security, public safety, or public
health, as maybe provided by law (CONST., Art. III, Sec. 6).
Scope and Limitations

Q: What rights are covered by the liberty of abode and right to travel?
ANS: The rightsicovered are the right to choose a person's abode and the right to travel
both domesticplly and internationally (BERNAS, Philippine Constitution Reviewer, supra
at 93).
Q: How are the rights to liberty of abode and right to travel limited?
ANS: The libettypf abode may be limited only upon lawful order of a court, whereas, the
right to travel may be limited by administrative authorities as may be provided by law in
the interest of national security, public safety, or public health (CONST., Art. III, Sec. 6).
75
VOL i.
DAN RED.E 2019
Article 111, Section 6 of the Constitution should by no means be construed as delimiting

the inherent power of the Courts to use all means necessary to carry out their orders
into effect in criminal cases pending before them. A court has the power to prohibit a
person admitted to bail from leaving the Philippines. This is a necessary consequence of
the nature and function of a bail bond. The condition imposed upon an accused to make
himself available at all times whenever the Court requires his presence operates as a
valid restriction of his right to travel (Manotoc v. CA, G.R. No. L-62100, May 30, 1986).
Q: What activities are covered by the right to travel?

ANS: The right to travel includes the following:
1. Right to travel from the Philippines to other countries or
2. Right to travel within the Philippines (Marcos v. Manglapus, supra).
Watch-List and Hold Departure Orders

Q: What is a Hold Departure Order4HDOXL
ANS: A Hold Departure OrdeLcjsrafl order ijsulqy,t. e President, Secretary of Justice
or the proper Regional TriOsCoulilcomnt ing thp Biureatk?! Immigration to prevent the
departure for abroad 4-iFilipihKgti_...„
d/or _lied narye, d iti e„..re i q, b y including them in the
Bureau's Hold Cepa/0 e Lis;JD dThpartmenretteuVal\ro. Weries of 1998).
i ..„„..,....----lr-----...,,„
Q: Can the DOJ iss e.a atch-List '-Oepa ur er?
ANS: No. The i bfl :, i aveimay corny Ale, idpaired t?y a ha concerns national
security, public safety r pu lic health.Mere is no I w pa th RI providing for the
authority of th Sec etary of astice- to -the-exe ise o e r t to travel, in the
interest of 'patis rid spcurity, p bliksRety, on kublisOleal DOJ MU a [No. 41] is not a
law. It isial, compulsorl requireknent that"-theren exiting la 4, part ete and sufficient
in itself, confeirifilltle >cp-FOsed a •n'. to the o—c me9 age ey to promulgate
rules. Omits me, ti-ieD0J, • ,,, -• being,eon ned to execution
of laws Oenuin W./ de‘imai0 No. 1,97V . Au , 018). "
Re .
, i 1 VP u ...,
Q: Who May iss e a Hold Depa - 9 r er ..,
ANS: A hCld departure order ma bksh .- b
1. "fhe Regionil Trial UNA- ,tre a 39-97 or
Note: SC Circula EP tecijung.19r1 9 I set e authority to issue hold
, departure orde` ol e Vegiovl "(MC ,he MeTC, MTC, MTCC and
[ INICTC have no aut ri4jo issuNbInlep e orders in criminal cases (A.M.
No. 99-9-141- MTCC, No-elnber.-2gprd
2. (3,̀y the RTC sitting as a Family Court pursuant to A.M. No. 02-11-12-SC.
Note: In which case, the court, motu proprio or upon application under oath,
May issue ex-parte a hold departure order, addressed to the Bureau of
Immigration and Deportation, directing it not to allow the departure of the child
from the Philippines without the permission of the court while the petition for
legal separation, annulment or declaration of nullity is going on.
iF
J. RIGHT TO INFORMATION
Q: Is the right to information a self-executing right?
ANS: YeC,I!Article III, Section 7 and Article II, Section 28 are self-executing. They supply
the rules; '1?,y means of which the right to information may be enjoyed by concurrently
guaranteeirig the right and mandating the duty to afford access to sources of public
information. Hence, the fundamental right therein recognized may be asserted by the
people upon the ratification of the constitution without need for any ancillary act of the
Legislatyre (Legaspi v. Civil Service Commission, G.R. No. 72119, May 29, 1987).
76 •
Q: What is covered by the right to information?
ANS: The people's right to information is limited to "matters of public concern," and is
further "subjeCt to such limitations as may be provided by law." Similarly, the State's
policy of full ;disclosure is limited to "transactions involving public interest," and is
"subject to reasonable conditions prescribed by law"(Valmonte v. Belmonte, G.R. No.
74930, FebrUarit 13, 1989).
Q: What are the requisites for the successful invocation of the right to public
information?
ANS: To invoke the right to public information, it must be shown that:
1. The information sought must be a matter of public interest and concern; and
2. The information sought must not be among those excluded by law ((Valmonte
v. Belmonte, supra).
Note: These are political rights available to citizens only (BERNAS, Philippine
Constitution Reviewer, supra at 93).
Q: What are "matters of public orgithrt

ANS: "Public concern" like "publiqyteMI,is a term that eludes exact definition. Both
terms embraCe a broad spectrurnymptors4 which the public may want to know, either
because theSe directly affect their lives , or simply because such matters naturally
arouse the interest of an ordinarỳ C.,ittjainittistinal analysis it is for the courts to
determine in a case by case)14iasiSblieffTeFithetiratte'ci.1 issue is of interest or
importance, as it relates o•OOSffects the Ablic (Echegaray v. Secretary of Justice, G.R.
No. 132601, October 1.2 1998).
Q: Does the right to information on matters of public concern and the right to
access to offiear recorcipta ry with i .the right to Compel f e public officer in
custody of HI eecord,turepare tliksa e?
ANS: No. AlirgwasAiatare opepInd made the public, this is
sufficient compilance with' the la "7,17he car stitution daes, and them a right to
compel custodians of tiff coif ecor sa,
'to p are lists., abs a s mmaries and the like
in their desire! to ere formqtion 6f matters of public concern (Valmonte v.
Belmonte, supth).
Scope and Limitation

Q: What is the'cope the ri ht to information?
ANS: The right of the Iplg-kto information on matters of public concern shall be
recognized. Access to official records; and to documents, and papers, pertaining to
official acts, transactions, or decisions, as well as to government research data used as
basis for policy;development, shall be afforded the citizen, subject to such limitation as
may be provided by law (CONST. Ait. Ill, Sec. 7).
Q: Is the right to information absolute?

ANS: No. The rIght to information is not available in the following instances: (NTCO)
1. National security matters and intelligence information;
2. Trade Secrets and banking transactions;
1 Criminal matters; and
4. ifithe confidential information which include diplomatic correspondence,
cloSed door Cabinet meetings and executive sessions of either Houses of
Congress, and the internal deliberations of the Supreme Court (Chavez v.
PCGG, G.R. No. 130716, December 9, 1998).
77
1!;
Q: What is the policy of transparency with regard to access of court records?
ANS: In'line with the public's constitutional right to information, the Court has adopted a
policy, of transparency with respect to documents in its possession or custody,
necessary to maintain the integrity of its sworn duty to adjudicate justiciable disputes.
This policy, in terms of Court Rules, is embodied in Section 11, Rule 136 of the Rules of
Court,! which states that "The clerk shall prepare, for any person demanding the same, a
copy certified under the seal of the court of any paper, record, order, judgment, or entry
in his office, proper to be certified, for the fees prescribed by these rules".
.!!!
I I
The rule; grants access to court records to any person, subject to payment of fees and
compliance with rules; it is not necessary that the request be made by a party to the
case. This grant, however, is subject to the limitations the laws and the Court's own
rules prOvide (In re Production of Court Records and Documents and the Attendance of
Court Officials & Employees, Notice, February 14, 2012).
!,
Q: Diaiiss the rules on the co fklentiality ...,,,,,, of records and proceedings of the
SupreMe Court.
3 h. I 7" ''' ''''''
ANS: ; ,' In the Judiciary, ,4 4ifivilepes a ai Is c rd s IN f official records "create a
! , ...4. '' Nki.. A 1
hierarchy of rights the -cprotect;ocertainckoen lab- relationships over and
above; the public's evrdepiewl .riabd" or "right to eve m_p\rikiilvidence." Accordingly,
certain;!informatiop aNalned '17144firtrreef-cas,e,s efore the Supreme Court are
‘ik
considered con? 14a der exe pt frkt disclosure,. \
i, I
r• 1
SpecifiCally, the i Intern Rule of the Sup' rhe Court / SC) p e disclosure of
1! i I The r sult he ra e of cases,
2i4 !!:! .The tciforta to n 4.7 411-reZtii
; urt on eac se included
11! in thq aped a of the spurt% k.,}Igen'd
3; '! The d eliber, vtion o e Membrs-r•-•-ln court si ns in cases and matters
!I t pendi t'l e it „, SC ,._
rt(cf.
Rule 7, Section tof the SC ec 1 a the, isa, Lof the, affie o cases shall only be
available to the parties a d the ••, . , Linfes6 the ases valve bar matters,
administrative case and cnnac.._akais . liiirOpe Renalty of liferimprisonment, which
are treated with stria confidealitt—4,2r an . ,:-tra-ffle rult are not disclosed even
to the parties themselve f
!' ..
Rule ;18, Section 2 of the IRS rodidet t t*the actions taken in each case
in the Court's agenda, which are note y e Chief Justice or the Division Chairman,
are :also to be treated with strict confidentiality. Only after the official
release of the resolution embodying the Court action may that action be made available
to the !public. A resolution is considered officially released once the envelope containing
its final, copy, addressed to the parties, has been transmitted to the process server for
personal service or to the mailing section of the Judicial Records Office.
Court !deliberations are traditionally recognized as privileged communication (In re

ProduCtibn of Court Records and Documents and the Attendance of Court Officials &
Employees, supra).
Publication of Laws anc/ Regulations

Q: What right is enforced and protected by the requirement of publication of laws
and regUlations?
ANS: , What is enforced is the right to due process in relation to the conclusive
presuMption that every person knows the law under Article 3 of the Civil Code. It is no
less important to remember that Section 7 of the pill of Rights recognizes the right of the
i r
78
I
people to information on matters of public concern," and this certainly applies to, among
others, and indeed especially, the legislative enactments of the government (Tanada v.
Tuvera, G.R. No. L-63915, December 29, 1986).
K. RIGHT OF ASSOCIATION
Q: What are the,two notions comprehended under the right of association?
ANS: The right Comprehends at least two broad notions: (1) liberty or freedom, i.e., the
absence of legel restraint, whereby an employee may act for himself without being
prevented by aw; and (2) power, whereby an employee may, as he pleases, join or
refrain from joining an association (Victorian v. Elizalde Rope Workers' Union, supra).
Note: The right to associate also guarantees the right not to join an association (Sta.
Clara Homeowners Assoc. v. Gaston, G.R. No. 141961, January 23, 2002).
.
Q: Does the right of government employees to organize include the right to form
unions and the to strike?
ANS: The majority L view is to the eff,pAthat the right of government employees to
organize include the right to forrn4j.crix put not the right to strike and to engage in
similar activities (SSS Employees*OpMn v. Court of Appeals, G.R. No. 85279, July
28, 1989). ThiS.,is affirmed by AOltIK,BASection 2, par. 5 of the 1987 Constitution
which states that "the right to Olfiotailriatio shall not be denied to government
employees." f-r it•i'V
i, 1/4
:i,-r
_...,,, fffI, of
•"'
.441p.„--
Q: Are the rules ogeompulsory 1BP membershipi\ embers of the Bar in
violation of the, i'ight Wassociate?A,
ANS: No. The int'egratioll'ithAphilippinkar is dictated b, ooverriding
• considerations of
public interestianciL ,,ptiEricee.fare to suchAn extent as Mor constitutionally and
legally justifiesp#Festrictigns-ffrat iregrallin imposes uron e peponal interests and
personal con pence dgklividu21 lawjtergD11 legislatioA dire ting Ole integration of the
Bar have beefnifcsrfnlyftd universallPslistaine camise of the police
power over an irnportarttv ofesslci In Re"• Marcia! E ritarro. 1928 August 3,
1978). :114,
i!
L.EMINENT DOM.41 et,
:
Q: What is the 'POweR 'eminent.ftillialm
. , .1 t• .. , Ao,.
ANS: It is the !power qyhe Sateyto forc bly take private property for public use upon
payment of just COmpensRlio r BERNAS, Philippine Constitution Reviewer, supra at 98).
11 4
Concept of Public Use
Q: What is pubfiC use?
ANS: For condeInnation purposes, 'public use' is one which confers some benefit or
advantage to the public; it is not confined to actual use by public. It is measured in terms
of right of public to use propOsed facilities for which condemnation is sought and, as
long as public ha's right to use, whether exercised by one or many members of public, a
'public advantage' or 'public benefit' accrues sufficient to constitute a public use.
(Manosca v. Court of Appeals,,G.R. No. 106440, January 29, 1996).
i
i I
Q: What 'is thxpansive
e concept of public use?
ANS: Public use, as an eminent domain concept, has now acquired an expansive
meaning to inCi4de any use that is of "usefulness, utility, or advantage, or what is
productive of general benefit of the public." (Vda. De Ouano v. Republic, G.R. No.
168770, February 9, 2011).
,.1
, • .4'!
79
. • .
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';SEDAN RED VOL 1.
2019
Just Compensation
Q: What is just compensation?
ANS: Just compensation is the full and fair equivalent of the property taken from its
owner by: the expropriator. The measure is not the taker's gain, but the owner's loss
(Republic v. Kabacan, Inc. et. al., G.R. No. 185124, January 25, 2012). It embraces not
only the correct determination of the amount to be paid to the owners of the land, but
also the. payment of the land within a reasonable time from its taking (Estate of Salud
Jimenez PEZA, G.R. No. 137285, January 26, 2001).
Q: How is just compensation computed in cases of partial expropriation?

ANS: The formula for determination of just compensation is consequential damage to
the prop'e'rty not taken minus consequential benefits to the property taken plus the fair
marketivalue of the property i.e. [(Consequential Damage — Consequential Benefits) +
FMV]. However, in no case shall the owner be deprived of the fair market value of his
property (RULES OF COURT, RULE 67, Sec. 6).
R.A. 7160 provides thatamt thoetolbelpajd forllek xpropriated property shall be

determined by the properocourt bpse_d on the WV;( h6e e of taking of the property.
/ )
Q: Is everything cotnrien915,1d? ,
ANS: No.' It may beNloApensable if3h_e justified eknder the police power
(SUAREZ Politi sup 'at 3207) fik
zi 1 4.A\
Ex-ro., i'ertion -Lochov (..11

11111
Q: Is thelPoweret4f3ropri te Lca:OLGovernme (LGUsp•
ANS: NO:pefciire LG,I s can e erciseIttfa.41t4cirne II/ must 'st,c9rIferring the power
upon it. The conakps bef r LGU kdrcise en) Ott do ain drd:
1. That er at) ems or7tli e_exerciseY,211 he rigVdeminent domain;
and
2. '(That t e righOqi au is Vet n ke,re) acc rding ith the law (City of
Manila China Co rt f tad No 4355, ctober 31, 1919).
Q: What are the requisites o l tLZCta_O

/ egis
r o er of'eminent domain?
ANS: The requisites aethq-l ic0At :DEJA:MDT
1. ' The LGU throuffhts execKtiyp c e,,,rsuant to an ordinance;
2. !For Public use, or131E4( ose, oiNkkifate‘l ie benefit of the poor and the
landless;
3. Payment of Just compensation, pursuant to the provisions of the constitution
and pertinent laws;
4. :" here must be a valid and definite Offer that has been previously made to the
;Owner;
5. 'Such offer was Not accepted;
6. Provided, that the LGU may immediately take possession of the property upon
filing of the expropriation proceedings and upon making a Deposit with the
,proper court of at least 15% of the fair market value of the property; and
Provided finally, that the amount to be paid for the expropriated property shall
be determined by the proper court, based on the fair market value at the Time
Of taking of the property (R.A. 7160, Sec. 19).
Q: May the courts inquire into the public character of the necessity of the taking?
ANS: It depends. If the discretion is exercised by the Congress, it is a political question,
hence, the courts may not inquire into such. However, if it is only delegated power, we
must diStinguish between grant of special authority and grant of general authority. If it is
a grant of specific authority, it is also not a justiciable question. If it is a grant of general
80
EDAN RED BO(
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2019
k
authority, it is a justiciable question that may be addressed to the courts (City of Manila
v. Chinese Community of Manila, supra).
Necessity does not mean an absolute need but only a reasonable or practical necessity,
such as would combine the greatest benefit to the public with the least inconvenience
and expense to the condemning party and the property owner consistent with such
benefit (Cityf cf Manila v. The Arellano Law Colleges Inc., G.R. No. L-2929, February 28,
1950).
Q: Is the property owner entitled to recover physical possession of the property

expropriated if the just compensation is not paid?
ANS: As a rule, "non-payment of just compensation (in an expropriation proceedings)
does not entitle the private landowners to recover possession of the expropriated lots."
As an exception: the courts held that recovery of possession may be had when property
has been wrongfully taken or is wrongful,Iy retained by one claiming to act under the
power of eminent domain or whera,a4tighfful entry is made and the party condemning
refuses to pay the compensation INOt);„,0 s been assessed or agreed upon; or fails or
refuses tizr have the compensatOnOse sed and paid (Republic v. Lim, G.R. No.
161656 (ResOlution), June 29, 2005:
M. NON-IMPAIRMENT OF CONTRAL", TS gi
•,t1.64-
6
Q: What is the scopeptithe non-impair tent clause?
ANS: The term • contraip refers to ar,raiNful agreement or,tp °tray or property rights,
whether realpr persoNn9ible..or intangible. The agreementk may be executed or
executory. pTheparrIgar: private Rqrsons only, rAtur,a1 oartificial, or private
persons on tte4ne hand and the goxernifrient or its agicie4 on other hand. But it
does not co 6F,Iicense'Aand marriage' colt/acts (CRUZ, Censtitu nal Law, supra at
575).
t __
Q: What is' the eitec thmon-im airrse t clause?
ANS: The non-impetkment olguse renders. ull and void a law which changes the terms
of a legal icontractweearties,
bellp eit . b' time or mode of performance, or
imposes new condition dispuss; mssed, or .authorizes for its
satisfaction something%fferen iforfilhat provide in it terms (Lepanto Consolidated
Mining v. WMC Resources Intl1P6r. Ltd., G.R. No. 162331, November 20, 2006).
Q: Are all laws impairing contracts invalid?

ANS: No. To Mall within the prohibition, the change must not only impair the obligation of
the existing 'pontract, but the impairment must be substantial. Moreover, the law must
effect a change in the rights of the parties with reference to each other, and not with
respect to hoh-parties (Philippine Rural Electric Cooperatives Association v. Secretary
of DILG, G.:R.: No. 143076, June 10, 2003).
Q: Is the non-impairment clause absolute?

ANS: No. The exceptions to the non-impairment clause are the valid exercise of the
inherent pciwers of the state — police power, eminent domain, and taxation (NACHURA,
supra at 17'072).
In every contract, there is an implied reservation that it is subject to the police power of
the State (Ortigas& Co. v. Feati Bank and Trust Co., G.R. No. L-24670, December 14,
1979).
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iii
N. FREE ACCESS TO COURTS AND ADEQUATE LEGAL ASSISTANCE
Q. Whai is the basis of this right?003
ANS: The basis is the free access clause embodied in Art. III, Sec. 11 of the
Constitution. A move to remove the provision on free access from the Constitution on
the ground that it was already covered by the equal protection clause was defeated by
the desire to give constitutional stature to such specific protection of the poor (In Re:
Query of Mr. Roger Prioreschi, AM No. 09-6-9 SC, August 19, 2009).
Q: Who is an indigent party?

ANS: An indigent party is one who is authorized by the court td prosecute his action or
deferie as an indigent upon an ex parte application and hearing showing that he has no
money or property sufficient and available for food, shelter and basic necessities for
himself and his family (RULES OF COURT, RULE 3, Sec. 21).
Q. Are 'Corporations working for indigent people covered by the Constitutional

provision?
ANS: No. Only a natureValri; yik,i iganImayibei•70g rdzd as an indigent litigant. A
corporation being a juridical-persenthas he/ o kit c uiregnd possess property of all
a
kinds as. well as inc obli at'onsan ring•-,. vil ntl.ocrigiinal actions. Second,
exemption may be 6ro,2e,to, use pacti5ularly by'bdr•RwaOns,,and entities bent on
circumventing the eL onpayinfent of fegs. Also, the Slitinf\compliance with the
documentation r9 ir0e6ts ay prepe t,44., tiqEconsImin 'a—n'oVw steful for the courts
(In Re: Query orMr. Ryer P oreschi, suP119). —
,,.,--:.• ,,.,,,
O. cusrOpIAL., iy. __FriGAnomgenl, •,7r.../
Q: Whit is custodiallinvesti ation; , ' ; inli
ANS: Custodi 119./.ssItigakio— i questiOn ci itiated 4.a enforcement officer after a
person ihas be n,take yi,
info %%Arise tied oyhistfre6dom of action in
any significant vtraY( • Iran „001 J 4 rs, 1,966). It include the
practice Of issui g an 1 risliv ' esti Ated in ,tonnection with an
offense, he is s pectedkvo pr udice to' the liability of the
inviting officer for 4b. violate ar. (2)).
Q: What are the righ isog nder.eusto ra (nvtligation?

ANS: The rights are: (I2S 6Q.11-tWV)f,
1. Right to be Informe s rightit'obAain dent and right to independent and
competent counsel;
2. Right to be Informed that if he waives his right to remain silent, anything he
says can and will be used against him;
3. Right to remain Silent;
4. 'Right to have competent and independent Counsel preferably of his own
choice;
5. Right to be provided with Counsel, if he cannot afford the services of one;
6. No Torture, force, violence, threat, intimidation or any other means which
Vitiate the free will shall be used against him;
7. ' iSecret Detention places, solitary, incommunicado, or other similar forms of
detention are prohibited;
8. Confessions or admissions obtained in violation of these rights are
inadmissible as evidence (CONST., Art. III, Sec. 12);
9. The custodial investigation Report shall be reduced to writing by the
investigating officer and read and adequately explained to him by his counsel
or by the assisting counsel provided by the investigating officer in the language
or dialect known to such arrested to detained person, before such report is
signed or thumbmarked, otherwise such investigation report shall be null and
void;
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1
10. Anyi Extrajudicial confession made by a person arrested detained or under
custodial investigation shall be in writing and signed by such person in the
presence of his counsel or in the Iatters absence, upon a valid waiver, and in
the presence of any of the parents, elder brother and sisters, his spouse, the
municipal mayor, municipal judge, district school supervisor, or priest or
minister of the gospel chosen by him; otherwise such extrajudicial confession
shall 'be inadmissible as evidence in any proceeding;
11. Any Waiver by a person arrested or detained under the provision of Article 125
of the Revised Penal Code, or under custodial investigation shall be in writing
and signed by such person in the presence of his counsel, otherwise the
waiver shall be null and void; and
12. Anyverson arrested or detained or under custodial investigation shall be
alloWed Visits by or conferences with any member of his immediate family, or
any medical doctor or priest or religious minister chosen by him or any
member of his immediate family or by his counsel, or by any NGO duly
accredited by the CHR or by any! international non-governmental organization
duly accredited by,the OfficeV b President (RA. 7438, Sec 2).
Q: What is meant by "competeriPi "‘

-•.**e.s;;Vetit,.,
endent counsel"?
ANS: It is a counsel who is willingjo filly, safeguard the constitutional rights of the
accused, as'iStinguished from one 40124,1 4,wely be ggi9g as routine, peremptory
and meaningless recital of thejnalvicru'ept-bnstitutiotalcrighpireopie v. Deniega, G.R.
s
No. 103499,December 29105).
Q: When does- an investigation beg n?

. ,44..
--. , ,-.
ANS: When it is no lozgerlgenerai inquitVnto an unsolved opine but starts to focus on
a particular ji,ersark a stpg,t,.i.e., whetohe police investigator starts interrogating or
exacting a confession from the susrect idtonnect wit fan alleged offense (People v.
Macam G.R.(M. •-91dr42, Noyember a.,1994).
r -- 1,-
11-41
1
Q; What is a spovtaneouestateMer?
ANS: They are thifteI f at e not plicitejthrough questioning by the authorities, but
given in an OdinerSartenne -whereby appeJlant ally admitted having committed the
ed res on custoniAlinv s 'gallon don
crime. Constitutional pic,... ot apply to spontaneous
statements (Aballe v. Pei*, G.F3, 61ran: ardli457-21990
Q: Is police line-up pai-c4tetatodial investigation?

ANS: As a general rule,lideis not part of custodial investigation. This is because
during a police line-up, the process has not yet shifted from the investigatory to the
accusatory and it is usually, the witness or the complainant who is interrogated and who
gives a statement in the course of the line-up (People v. Amestuzo G.R. No. 104383,
July 12, 2001). However, when the accused having been the focus of attention by the
police after he had been pointed to by a witness as the possible perpetrator of the crime,
he was already under custodial investigation when these out-of-court identifications
were conducted (People v. Escordial, G.R. No. 138934-35, January 16, 2002).
P. RIGHTS OF 7,7-/EACCUSED
Q: What are the rights of the accused?
ANS: The rights of the accused are:
1. The right to due process;
2. The right to presumption of innocence;
3. The right to be heard;
4. The right to assistance of counsel;
5. The: right to be informed;
6. The right to speedy, impartial, and public trial;
83
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BEDAN:R
7. The right of confrontation;
8. The right to compulsory process;
9. The right against trial in absentia; and
10. The right to bail (CONST., Art. Iii, Secs. 13-14).
Q: What are the elements of due process as applied to criminal proceedings?

ANS: The,elements of due process as applied to criminal proceedings are as follows:
1. The accused has been heard in a court of competent jurisdiction;
2. The accused is proceeded against under the orderly processes of law;
3. The accused has been given notice and an opportunity to be heard; and
4. The judgment awarded within the authority of a constitutional law (Mejia v.
Pamaran, G.R. Nos. 56741-42, (April 15, 1988).
Q: What is the right to presumption of innocence?

ANS: The right means that in a criminal case, the accused is entitled to an acquittal,
unless hi 'guilt is shown beyond reasonable„doubt. Proof beyond reasonable doubt
does not mean such a degre:9A root-excludiRgessibility of error, produces absolute
certainly Moral certainly/a y)krequi ed qf-‘ atidearep of proof which produces
conviction!in an unprejudl - idd ul,c-s—Oa,com eire4{33, Sec. 2).
Q: Discuss the ri bflicsusedIcTOptard

.1";\
sksted by counsel.
ANS: The'right to froc%eds f omttle fii,ndame tal &pi _,,Oloj due process
which basically earls; t a 'Jerson ust*e heard be ore b i g condemned. The right
to counsel: ems • e more thar4just the prOlhpe of a la o kroom or the mere
propounding o s, d que bons and cibnctions.,. e fight a smes on active
involvernierit b the-la yer in rirrike5diriNse4fOidula ffial f he case, his
bearingwrist tl W. iiiind of the baditkpguttlie acc sed, hi been ell-versed on
the case and is k-agwing't fundamerafpr_Ocedure es sential la s nd existing
jurisprudence. erselyt ut\ entand;r y_decist Neda assistance and
dix .
not a simple pe ( actor rep 1G Nod 20420, April 21,
czg
1999).
The right of
. the amused to pip, p. ro eedi has/ever been subject to
1 2La,>of9
waiver (Flores v. Rk G.R7 e,,_ - 61/7_,.1/ differentiated with the
waiver of counsel in cul diktsWation).
1 ,
Q: Discuss the right of the a ct Set fi d*of the nature and cause of the
f21p
accusafoin against him.
ANS: The, rationale behind this constitutional guarantee are:
1. First, to furnish the accused with the description of the charge against him as
will enable him to make his defense;
2. Second, to avail himself of his conviction or acquittal, for protection against a
further prosecution for the same cause; and
3. Third, to inform the court of the facts alleged, so that it may decide whether
they are sufficient in law to support a conviction, if one should be had (People
Monteron, G.R.'No. 130709, March 6, 2002).
An information must state:
1. The name of the accused;
2. The designation given to the offense by the statute;
3. A statement of the acts or omissions so- complained of as constituting the
offense;
4. The name of the offended party;
5. The approximate time and date of the commission of the offense; and
6. The place where the offense has been committed (People v. Quitlong, G.R.
No. 121562, July 10, 1998).
84
Ii
Q: Discuss acused's right to speedy, impartial, and public trial.
ANS:
1. Speedy trial - The right to a speedy trial means one free from vexatious,
capricious and oppressive delays, its salutary objective being to assure that an
innocent person may be free from the anxiety and expense of a court litigation
or, ifi Otherwise, of having his guilt determined within the shortest possible time
compatible with the presentation and consideration of whatever legitimate
defense he may interpose.
The in the event of a non-observance of this right is by habeas corpus

I
if the 'accused were restrained of his liberty, or by certiorari, prohibition, or
manOmus for the final dismissal of the case (Acebedo y Dalman v.
Sarmiento, G.R. No. L-28025, December 16, 1970).
I
At 911/rate, whether or not one has been denied speedy trial is not susceptible
to precise quantification. At 13%1, the constitutional right of speedy trial is
relatiVe, consistent wit 44bnable delays, taking into account the
circumstances of each crega ' v. Ver, G.R. No. L-62810, July 25, 1983)
2. ImpOial trial - Due pace,We ices no less than the cold neutrality of an
impartial judge. 1 BolstelinV4V2quirement, we have added that the judge
must not only be impartial 641*§tals.omrr tolbe impartial, to give added
I 4' yv
j cr-.1,-, . nvco.
assurance to the parties tka s ecisioderjust (People v. Opida y
Quiambao, G.F3, OF1.-46272 J ne 13, 1986).
3. PublicTrial n accuseVhas. a right to a public 'al but it is a right that
belongs to hisnk, 'Ore than dRe else, where s f or liberty can be held
critically in baignce. _vpliblic trigraims to ensure a he 's fairly dealt with and
would flotfte- unjiatlyp,condemn and that his fights ar not compromised in
1 , ,y,- w
secLemonclaves of long agog A blic trial is of sy ony ous with publicized
trial onjv ji-xlMs that the co doors us. -be 0 e Y.o ose who wish to
comesit in the availae'ek se conduc d i , - Vin decorum and
obserVe0 elfWI ocest(Pere Estrada, A. el. o. 01-4-03-SC, June 29,
200'1).,,
i!I': A )
Q: Discuss the accused' of cony,_.on tio
ANS: The rig'htdf conf dPtation 9Atbf' eraWeal lIT riOcross-examine complainant
and witnessela,'OACH IV, su Nat 258).
Q: Discuss the right to co ^ pu sory process of an accused.

ANS: The right to compulsory process of an accused pertains to his right to secure the
attendance of witnesses and the production of evidence (id.).
ii
Q: Discussaqcused's right against trial in absentia.
ANS: Trial n,,absentia
i is mandatory upon the court whenever the accused has been
arraigned, notified of date/s of hearing, and his absence is unjustified (NACHURA, supra
at 259). The purpose of this rule is to speed up the disposition of criminal cases, trial of
which could inrthe past be indefinitely deferred, and many times completely abandoned,
because of die defendant's escape (People v. Agbulos, G.R. No. 73875, May 18, 1993).
Q: What is bail?
ANS: Bail is !the security given for the release of a person in custody of the law,
furnished by him or a bondsman, to guarantee his appearance before any court as
required undehthe conditions hereinafter specified (RULES OF COURT, Rule 114, Sec.
1).
85
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All persons, ,except those charged with offenses punishable by reclusion perpetua when
evidence of guilt is strong, shall, before conviction, be bailable by sufficient sureties, or
be released on recognizance as may be provided by law. The right to bail shall not be
impaired even when the privilege of the writ of habeas corpus is suspended. Excessive
bail shall not be required (CONST., Art. Ill, Sec. 13).
Q: What are • the different kinds of bail?

ANS: Bail May be granted as a matter of right or of discretion.
1. Bail is a matter of right - (1) all criminal cases within the competence of the
MeTC, MTC, or MCTC because these courts have no jurisdiction to try capital
offenses, or offenses punishable with reclusion perpetua or life imprisonment
c
and (2) prior to conviction by the RTC for any offense not punishable by death,
reclusion perpetua, or life imprisonment, or even prior to conviction for an
offense punishable by death, reclusion perpetua, or life imprisonment when
evidence of guilt is not strong.
2. Bail is a matter of discretiog,,,(1).upon conviction by the RTC of an offense
not punishable by geatrFeclui sion perpefOaq.
11ife imprisonment; or (2) if the
RTC has imposed a pkialty of itnp oh 'en Needing six years, provided
none of the circu,,044 numeratep ra"g aph 3 of Section 5, Rule
114 is presp-'4't as'Iplfd s:
a. Tp.it 'fi'41,4ecidivigt— , q-07§Preci al delinquent, or has
)tedrthe'crimeaggFAvatefrbN cikutp -e of reiteration;
b. kef hat previbuslkescgped frpm T g co finement, evaded
sente Ee, or iolated thp4cO ditions of his ba t q.1 valid justification;
1
i, . c. e coknmiff66:1 ense w e un ersER ation, parole, or
(.7.1.?".."
I ond- Iona! p&rdo`fif4 -2.
d. al athe circ mstafic0Tio -12kOase i dicate aro ability of flight if
i
epkd il; or :.—r.:(
atNer due ri4 tile m holffe crime during the
ndekcy o PP -Ai EY/OP /
ayarY, G.R. No. 213847,
ugust. 8, 2
Q: When a hearing mend tor.y_OR

ANS: FOr purposes of, admis,si to-bailt f wb ether or not evidence of
guilt is istrong in criralqpI4QA n Iving.-eg ss(or offenses punishable
with reclusion perpetua oN* itoksonmTnglitli e"-discretion of the trial court.
such ;discretion may bee cised 6Whf-te
But such eating called to ascertain the
degree of the accused for the sf whether or not he should be granted
provisionq liberty. Therefore, that bail cannot be allowed when its grant is a matter of
discretion on the part of the trial court unless there has been a hearing with notice to the
Prosecution.
The hearing, which may be either summary or otherwise, in the discretion of the court,
should PiLimarily determine whether or not the evidence of guilt against the accused is
strong (Ekile v. Sandiganbayan, supra).
I I
Q: In le olving bail applications of the accused who is charged with a capital
offensedor an offense punishable by reclusion perpetua or life imprisonment,
what gbidelines should be complied with by the trial judge?
ANS: Ikesolving bail applications of the accused who is charged with a capital offense,
or an offense punishable by reclusion perpetua or life imprisonment, the trial judge is
expectedto comply with the following guidelines outlined in Cortes v. Catral, to wit:
In all cases, whether bail is a matter of right or of discretion, notify the
prosecutor of the hearing of the application for bail or require him to submit his
recommendation (RULES OF COURT, Rule 114, Sec. 18);
86
2. Where bail is a matter of discretion, conduct a hearing of the application for
bail regardless of whether or not the prosecution refuses to present evidence
to show that the guilt of the accused is strong for the purpose of enabling the
court to exercise its sound discretion; (RULES OF COURT, Rule 114, Secs. 7
and 8)
3. Decide whether the guilt of the accused is strong based on the summary of
evidence of the prosecution;
4. If the guilt of the accused is not strong, discharge the accused upon the
approval of the bailbond (RULES OF COURT, Rule 114, Sec. 9). Otherwise,
petition should be denied (Enrile v. Sandiganbayan, supra).
Q: May a prospective extraditee be granted bail?
ANS: Yes. If bail can be granted in deportation cases, we see no justification why it
should not also be allowed in extradition cases. After all, both are administrative
proceedings where the innocence or guilt of the person detained is not in issue.
While our extradition law, Presidentiaippecree (P.D.) No. 1069 (The Philippine
Extradition Law) does not provide fqraeglant of bail to an extraditee, however, there is
no provision prohibiting him or h9t fInftli g a motion for bail, a right to due process
under the Constitution (Govemrhebt01 ,, aq ongkong Special Administrative Region v.
Olalia, Jr, G.q.i"pio. 153675, April 9,
,
i;•.,
'
O. RIGHT
. TO SPEDVDISPOSI.
, ,Tiairic*:,raiSES Legaa '
Q: What is the concent41F. t, seedy dispolition of cases?
4
ANS: The concept islelatiye or flexf '01 mere mathemp ri reckoning of the time
involved is not iufficieLi6PeculW regard (mist be taken of the facts and circumstance
peculiar to each casehe fo !Ming facto must be consierered i:
1. The 199:.941 of de 04,t w' It
2. Theonon foRtile delay \
3. The essertionpfare 'tpaa,sert ch rig htt OM=
'Vim . .
4. The ;prejudicsca ca sed tAlpe del y (Dela Pe ep banbayan, G.R. No.
144542,k-June 29,-K
001).
Q: What is th'e rig& .to speedy dispositi n-of,ca es?

ANS: All persons shat a 1 ' 0.1e rtght to LRRASIon of their cases before all
judicial, quasiijUqicial, it drninistttiVer'B d eaNST.19VI III, Sec 16).
,I;
Q: When is the Tight tosevergy • isposition violated?
ANS: When the proceed attended by vexatious, capricious and oppressive
delays; or even without cause or justifiable motive, a long period of time is allowed to
elapse without the party having his case tried (Gonzales v. Sandiganbayan, G.R. No.
94750, July 16, 1991).
1
Q: Is the rightto speedy disposition the same with the right to speedy trial?
ANS: No. While. the rationale for both rights is the same, the right to speedy trial may
only be invoked in criminal prosecutions against courts of law. The right to speedy
disposition of1C,Aes, however, may be invoked before any tribunal, whether judicial or
quasi-judicial. What is important is that the accused may already be prejudiced by the
proceeding fqr the right to speedy disposition of cases to be invoked (Cagang v.
Sandiganbayari,IG.R. Nos. 206438, 206458 & 210141-42, July 31, 2018).
, IL
Q: When is a fcase , considered initiated?
ANS: Upon eth filing of a formal complaint prior to a conduct of a preliminary
investigation. The period taken for fact finding investigations prior to the ling of the
formal complaint shall not be included in the determination of whether there has been
inordinate delay (Cagang v. Sandiganbayan, Fifth Division, supra).
87
r
Q: When is the right to speedy disposition waived?
ANS: It is waived when in the following cases:
1. :1 The respondent or the accused must file the appropriate motion upon the
lapse of the statutory or procedural periods. Otherwise, they are deemed In
heve waived their right to speedy disposition of cases.
2. The failure of the respondent to invoke the right even when or she has already
suffered or will suffer the consequences of delay constitutes a valid waiver of
that right.
3. Unreasonable actions by the accused, includes delaying tactics like failing to
appear despite summons, filing needless motions against interlocutory actions,
or requesting unnecessary postponements that will prevent courts or tribunals
to properly adjudicate the case (Cagang v. Sandiganbayan, supra).
R. RIGHT AGAINST SELF INCRIMINATION

Q: What the scope of the right against self-incrimination?
ANS: The; prohibition against sorripenTriten-40,,,d. criminal court to be a witness
against himself is a prohibilion`lgainstthe , eise,}of)ohrtcalcr moral compulsion in order
to extort communications filtr),, It IS-riot-6'gal tolexclOe the accused' body as
evidence, when it and bey aterplyelh178EilffitioTZ 1;gird'iply,‘ prohibition against any
process intended toig rom the defenda 's own lips, again%khis will, an admission
of his guilt (UnitedtStatest a eng, G.ff„No. 70 1pfep ember77 1912).
4/k
,.
Q: In whatcasis is t righ against seprcriminati n ap riCaptel.
ANS: The right age' stself-i criminationilgrapplicabl of one iectiniinal proceedings,
but also ;iniall nt psplcee,ddg,,iiiciudin civil a ,fforfeignd administrative
or legisle0e i vesti may129,0e,tirfielji,ndronl , by the ggep (when called to
testify) but als o' Y pss *homy-fan° mai' ating question is addressed
(SUARE'z; Po/ re , )9t-328).
e•N
S. RIGHTAGAI STDO BL
--\
Q: What is the coostitutival adi oti...411dinstidouble j opardy?
ANS: No person Atli be twice p tree ? isirient for e same offense. If an
arrp.
act is punished by Naw a9 fr viotion agii ittal under either shall
constitute a bar to anoth rfr&cu -for.theAsard' n dc - 6T., Art. 114 Sec. 21).
Q: What is' double jeopardy

ANS: When an accused is acquittecMToriVi e , or the case against him is dismissed
or otherwise terminated without his express consent, by a court of competent
jurisdiction,' upon a valid complaint or information, or when a formal charge sufficient in
form and .substance to sustain a conviction and after the accused had pleaded to the
charge, the conviction or acquittal of the accused or the dismissal of the case shall be a
bar to another prosecution for the same offense (RULES OF COURT, RULE 117, Sec.
1.
7).
Q: What are the requisites for double jeopardy?

ANS: The requisites are: (V-CPA)
1. Valid complaint or information;
2. Filed before a Competent court;
3. To which defendant has Pleaded; and
4. Defendant was previously Acquitted or convicted or the case is dismissed or
otherwise terminated without his express consent (People v. Ylagan, G.R. No.
L- 38443, November 25, 1933).
88
Q: What is the rule with respect to dismissal of a case with express consent of the
accused.
ANS: The rule is that a dismissal with the express consent or upon motion of the
accused does not result in double jeopardy.
However, this rule is subject to two exceptions, namely, (1) if the dismissal is based on
insufficiency of evidence or (2) on the denial of the right to speedy trial. A dismissal
upon demurrer tdt evidence falls under the first exception. Since such dismissal is based
on the merits, it'amounts to an acquittal.
Q: Discuss appeal in judgments of acquittal as covered by the right against

double jeopardy.
ANS: The right against double jeopardy can be invoked if:
1. The accused is charged with the same offense in two separate pending cases,
Or
2. The accused is prosecuted aneydor the same offense after he had been
convicted or acquitted of suptiliffense, or
3. The prosecution appeals#8,g4idgment in the same case.
The last is based on Section 2, Rule`: j21' ,_o a e Rules of Court which provides that "any
party may appeal from a final,judgietjpaexce t if t 0.-accused would be placed
thereby in double jeopardy." gyfmandadd, -e -OneteI Section 7, Rule 117,
the courts are barred froa-Oertainingsuc, appeal as it see n inquiry into the merits
of the dismissal (philipfilbe Savings Ba Spouses Benno R. No. 151912,
September 26, 2005). A / '
T. IN VOL UNTARERVIT-11950.
- -41,
Q: What is In 9juntarrservitude?
..41,A14. s ..
ANS: Involunta , serVitude- s theigro
,,nditio here o force, coercion,
or imprisonments and, aiusl hiviiiit, to or for mit re he is paid or not
(Aclaracion v. GIMaitanGc . No.i1.91 May 26, 1975).
. riatao - ?
A trk
Q: What are the,,rules n i 15-' luntaty self . -ir
ANS: The general rule volunt .. - b tjapAll
e exist. The exceptions are:
(PAND-COW)
1. Posse comitats - of ligationof the individual to assist in the protection of the
peace and goiA420g,r) of his community (U.S. v. Pompeya, G.R. No. 10255,
August 6, 1915);
2. Appellate courts may compel a former court stenographer to transcribe
stenographic notes. That prerogative is ancillary or incidental to its appellate
jurisdiction and is part of its inherent powers which are necessary to the
ordinal-Sir and efficient exercise of its jurisdiction and essential to the due
administration of justice (In the Matter of the Petition For Habeas Corpus of
Segifredo Aclaracion, G.R. No. L-39115, May 26, 1975);
3. Naval enlistment (Robertson v. Baldwin, G.R. No. 334, January 25, 1897);
4. Service, in Defense of the State (CONST., Art. II, Sec. 4);
5. As punishment for a Crime whereof one has been duly convicted (CONST.,
Art. ill, Sec. 18, par. (2));
6. Obligation of children to Obey their parents as long as they are under their
parent41 authority (FAMILY CODE, Art. 211, Par. (2)).
7. Return to Work order in industries affected with public interest (Kaisahan ng
Mangagawasa Kahoy v. Gotamco Sawmills, G.R. No. L-1573, March 29,
1948).
89
1LI
U. RIGHT1AGAINST EXCESSIVE FINES, AND CRUEL AND INHUMAN
PUNISHMENTS
Q: When is a fine considered excessive?
ANS: For a penalty to be considered obnoxious to the Constitution, it needs to be more
than merely being harsh, excessive, out of proportion, or severe. To come under the
prohibition, the penalty must be flagrantly and plainly oppressive or so disproportionate
to the offense committed as to shock the moral sense of all reasonable persons as to
what is right and proper under the circumstances(Repub/ic v. N. Dela Mercedes & Sons,
Inc., G.R. No. 201501, January 22, 2018).
Q: What factors are considered in assessing whether a form of punishment is

excesiVe and should be prohibited?
ANS: -I-b violate the constitutional guarantee, penalty must be flagrant and plainly
oppreve, disproportionate to the nature of the offense, as to shock the senses of the
community Neither fines nor imprisonment constitute in themselves cruel and unusual
punishment (Republic v. N. Dela es sr.! c., supra).
,
V NON-IMPRISONMEN i RCk15:7'S r N
Th 'IIk'_er 6‘''''
f
Q: What are NOT valicrca pss t f)
. or imprisonmen tb prstitution?
ANS: The followingfare - tvali ugg7tir 'infirison e LIktier he Constitution:
11'. Debt -4e-civilro tgatiovarib;ing ,crom a don't act ilIcludes even debts
obtained thfbd fra d since no/Aitin'6ion is ?pade he Constitution; and
yle of P ll Tax - a4gpe Ric sum I ivied 6n a • person belonging
2: , Non-I:fey...L
to a te am lass IthoutLega o. to property or oc plop (e.g. Community
Tax) ., Art.) l, S'e°8140). tf-.7 .4::
<, ror
fri-v I _'•
a_ ,z)
Q: Hes , B.P. cin C cks:'Law trkihreTe he constitutional
inhibition agai el for deb ? In
ANS: No. The m h fiena„ , . Big. 22 is theact of making
and issuing a w rthless dr\a's\cli ilia noretl upon is presentation for
payment It is notpe no fln‘bliga Virt, hie ifie law unishes. The law is
. N. •
not intended or designed to c.._ _, p ,c9 a /his eb t. Th thrust of the law is to
prohibit, under pain o enal 9 -tie.....;-4 e-ma i leos4 ecks and putting them
in circul6tion. Because f stdeltteriocrs-e sgo ubIrc interest, the practice is
proscrib4d by the laW. ThdtkeptIslishesittiplArto a offense against property, but
an offense against public oreerozand•VA-Ma7ff e , G.R. No. L-63419, L-66839-42,
71654,74524-25, 75122-49, 758127 -67, 75789, December 18, 1986).
1
W EX POST FACTO LAWS AND BILLS OF ATTAINDER
Q: What are the kinds of ex post facto laws?
ANS: The kinds of ex post facto laws are: (CB-PRRP)
1 Laws which make an act Criminal which was not so before its passage;
2. , Laws which aggravate the penalty for a crime committed Before its passage;
3. i Laws which,inflict a greater or more severe Penalty for the same offense;
4. `Laws whichI alter the legal Rules of evidence and allowing the receipt of less or
, f different testimony than what the law required at the time of commission, in
order to convict accused;
i Laws which assume to regulate civil Rights and remedies' only, but in effect
imposes a penalty of deprivation of right for something which when done was
lawful; and
6. , Laws which deprive the accused of some lawful Protection to which he had
been entitled, such as protection of a former conviction or acquittal, or a
proclamation of amnesty (Salvador v, Ma pa, Jr., G.R. No. 135080, March 6,
'1987).
90
POLITICAL LAW
N RED BOOS VOL 1.
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Q: What are ithe characteristics of ex post facto laws?

ANS: The ci haracteristics.of ex post facto laws are:
1. Pertinent to criminal matters;
2. Retroactive; and.
3. Prejudicial to the accused (NACHURA, Political Law Reviewer, supra at 230).
Q: What is of attainder?
ANS: A bilk of attainder is a legislative act that inflicts punishment without trial
•I
(Cummings,,v. Missouri, 4 Wall 277). In more modern terms, a bill of attainder is
essentially a. "usurpation of judicial power by a legislative body. It envisages and effects
the imposit on of a penalty the deprivation of life or liberty or property not by the ordinary
processes of judicial trial, but by legislative fiat (Bureau of Customs Employees
Association vi Teves, G.R. No. 181704, December 6, 2011, citing J. Feliciano).
X WRITS OPHABEAS CORPUS, KALIKASAN, HABEAS DATA, AND AMPARO

.1 -
Q: What is the writ of habeas corpus?..
ANS: The of habeas corpus .10.Nrilt issued by the court directed to a person
detaining another, commanding hitAipjoAuce the body of the prisoner at designated
time and place, with the day and C'14.044 capture and detention, to do, to submit to,
and to receive whatever the courttirj, e-;a-ytiarding the writ shall consider in his behalf
(NACHURA; Political Law Revievi(Or, lerit
•
Q: What is, the scope of theAvrit of hibeas corpus?
ANS: The writ of habeas- tr shall 41 to the following ses:
1. Medal confin7.4 emenror deteritiom y which any per, so it. deprived of his liberty;
2. 0
odyof any imrson is withbeld
When rigljtful c.C Oa, ron\the person entitled
theretal(RULES eeCOURT; RULE 102, Sec. f.
1.61V
Q: Does theViriit isstre olily4for Kkysica actualVffaTOofWpirs—on?
ANS: The iliOrt,y,of Andrffividu*tay q
restored byr ass corpus where he is
subjected tO.physical restrail such as ar ary detention.
4200
PsychologiCalicomp sion so owerful as ,lacera5.,p_erson at the mercy of another may
be a ground .for the issti*gap-f the writ, 0,c,,V7Aft2Vost to founded or groundless
fear, to erroneous beill the eLigignea'brarrimagina*Ptiver of an impostor to cause
harm if not 'blindly
, oba,'ed, topfy other psychological element that may curtail the
mental facility? of choice ***hampered exercise of the will (Caunca v. Salazar, G.R.
No. L-2690,', January 1, 19219). This is to be distinguished from mere moral restraint,
which is not Sufficient as a ground to issue the writ.
I
Q: What 4rel the grounds for the issuance of the writ of habeas corpus after
judgment of conviction?
ANS: The groOnds for issuance of the writ of habeas corpus are:
1. Daplivation of a constitutional right resulting in a restraint of a person; or
2. The court has no jurisdiction to'impose the sentence; or
3. An excessive penalty has been imposed, in which case the sentence is void as
to such excess (Feria v. Court of Appeals, G.R. No. 122954, February 14,
200).
Q: What are the implications when the privilege of the writ is suspended?
ANS: The 'suspension of the privilege of the writ means that during the period of
suspension,e ;onc the officer making the return shows to the court that the person
detained is being detained for an offense covered by the suspension, the court may not
inquire any further. The writ, in any case, may still issue as a matter of course because it
is not the writ itself but only its privilege may be suspended (CRUZ, Constitutional Law, •
supra at 623).
91
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Q: Does the suspension of the privilege of the writ also suspend the right of the
accused to bail?
ANS: No. Pursuant to Art. Ill, Sec. 13 of the Constitution, after the filing of the
information, in granting bail in proper cases, the court does not determine the legality of
his prior detention which has already been superseded by a detention under judicial
process, but merely proceeds with and carries into effect its jurisdiction over the criminal
case and grants a right guaranteed by the Constitution (Nava v. Gatmaitan, G.R. No. L-
4855,1 0ctober 11, 1951).
Q: What is the writ of amparo?

ANS: [Cis a remedy available to any person whose right to life, liberty, and security is
violated;or threatened with a violation by an unlawful act or omission of a public official
or eniplOyee, or of a private individual or entity acting under the directions of or with
suppOrt or acquiescence of the state (Rule on the Writ of Amparo, A.M. No. 07-9-12-SC,
Sec. 1).
Q: What is the purpose of the of qmgaroi?,.

ANS: 1The writ of arnparsoservepoth 'Oralive roles in addressing the
problem` of extrajudicia14killAl nid,lenforced.diegeaancei$,,,,ft is preventive in that it
break$ the expectali6p).901mpunity in the commission optVesee offenses, and it is
curative'in that it4facilita4apth,subs'eliTnrptinistazenMrpe petrators by inevitably
leading to subsequetinvestigation .:andaCliordRodnguez vog capagal-Arroyo, G.R.
No. 191805, Notinler, 20'11).
•
Jr
Q: When may hi-e—Wriiof a paro e issdel ,
ci)
ANS: For the p rotect .e writ itof avo).911)strie allegation anfl proof that the persons
subject there ,timissing are nor*,I,Ccight4i mus 1 also b Isholvg and proved by
substantial evadeett that l e disaiiiretradce wa riel out py, or with the
authorization, sppRort,vor dcg cence-of ithe,State
lqi .,i.ey.4, i o oliti-thkortjanization, followed
by a refusal to 5Fkriocvledg ' eLos, Ly-A9fo on 16 faetr whereabouts of
said missing perkons, with th anti rh--Zof reirt(v them frail.' the otection of the law
%.
for a prolonged period oNtime. iitt t 6 eptioneyin an amparo case has the
burden of proving\by subslaztia e, cei; epdisunsable e ‘ment of government
participation (Navia : ardicp,_G.,Q 76,19 012
-(9/1,,
Q: What is the writ of habeasktifa?
ANS: The writ of habeas catalvi,La rea lgyPa\f0 1ableg any person whose right to
privacy in life, liberty, or security is vibTatedi v-nhtened by an unlawful act or omission
of a public official or employee, or of a private individual or entity engaged in the
gathering', collecting, or storing of data or information regarding the person, family,
home, and correspondence of the aggrieved party (Rule on the Writ of Habeas Data, A.
M. No. 08-1-16-sc, Sec. 1). In order for the privilege of the writ to be granted, there ,
must exist a'nexus between the right to privacy on the one hand, and the right to life,
liberty or security on the other (Gamboa v. Chan, supra).
Q: What is the writ of kalikasan?

ANS: The writ of kalikasan is a remedy available to a natural or juridical person, or
entity authorized by law, people's organization, non-governmental organization, or any
public interest group accredited by or registered with any government agency, on behalf
of persons whose constitutional right to a balanced and healthful ecology is violated, or
threatened with violation by an unlawful act or omission of a public official or employee,
or private individual or entity, involving environmental damage of such magnitude as to
prejudice the life, health or property of inhabitants in two or more cities or provinces
(Rules of Procedure for Environmental Cases, A.M. No. 09-6-8-SC, Sec.1, Rule 7, Part
Ill).
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VII. CITIZENSHIP
, ,
A. WHO ARE FILIPINO CITIZENS
Q: Under the Constitution, who are considered Filipino citizens?
ANS: The following are citizens of the Philippines: (CiFaBoN)
1. Those who are Citizens of the Philippines at the time of the adoption of this
Constitution;
2. Those whose Fathers or mothers are citizens of the Philippines;
3. ThOse Born before January 17, 1973, of Filipino mothers, who elect Philippine
citizenship upon reaching the age of majority; and
4. Those who are Naturalized in accordance with law (CONST., Art. IV, Sec. 1).
Hi .
Foundlingsl,': as a matter of law, are natural-born citizens (Poe-Llamanzares v.
COMELEC,:G.R. No. 221697, March 8, 2016).
i _,..
B. MODES OACOUIRING
h CITIZENS,/JP
, .5,....- 11
Q: What arethe modes .of acquirimeltizenship?
ANS: The ttiades of acquiring citiOnlhAra‘,
1. J.,0 sanguinis .-- acquisition Anship on the basis of blood relationship;
2. j0; soli - acquiSition.ofeitreAlTRattelaasis of:Ace of birth; and
3. Naturalization .- thejOgalkddOoka'cloptilIgTalikaltent'iand v..14.,,,, clothing him with the
i:. .64 o
privilege of a nOv,etbrn citizen.
. 49"
Q: What models is/aewapplicable
zeal, ;at ,n•ilt%hilippines?
"
ANS: The.P' 'Philippine
i laws:lgettgrally folio,j the rule of jup sang'uinis and provides for
..A4-, ,=,,i,v, .
naturalization (BEARNAS, aethasppine ConsNution Reviewe7, Apra at 182). This means
'aV" .9' i.dgl, os
_ P.
that if a child i,1,46orn (either
. unaer the 19 t or 1973 Coistituuon), nd either his father
or mother ispEilipin5. 74tizen at the ti e of his birth the.Pchild a Filipino citizen
regardless Ofirplgc—e'otiblth otlicte the ilippines :s§-trFT , is,Law, supra at
357).
Q: What is the Ca Ain Rule
lg
ANS: The 'Car= Rule pr ides Unde 5 Constitution, those born in the
Philippines who, befordtne adoRgozet: e 511,0 nstitution, had been elected to
public office in, the Philip. ines re considered Filipino citizens (NACHURA, Political Law
Reviewer, supra at 286)-
C LOSS AND RE-ACOUISIT ON OF PHILIPPINE CITIZENSHIP .

Q: What are the causes for the loss of Philippine citizenship?
ANS: The causes are: (CON -FAR)
1. Candellation of certificate of naturalization
2. SubsCribing to an Oath of allegiance to the constitution or laws of a foreign
country upon attaining twenty-one (21) years of age except that a Filipino may
not divest himself of Philippine citizenship in any manner while the Republic of
the Philippines is at war with any country;
3. Naturalization in a foreign country;
4. .1--laving been declared by Final judgment;
5. Rendering service to or accepting commission in the Armed forces of a foreign
country;
6. Express Renunciation of citizenship (expatriation); and
Note: An application for, and the holding of, an alien certificate of registration
is not an act constituting renunciation of Philippine citizenship. For
renunciation to effectively result in loss of citizenship, the same must be
express (Vilando v. House of Representatives Electoral Tribunal, et.al, G.R.
Nos. 192147 & 192149, August 23, 2011).
93
I1 I! may Philippine citizenship be reacquired?
Q: Howi
ANS:, Philippine citizenship may be reacquired by: (NCR)
1.,!f By Naturalization under R.A. 9225, otherwise known as Citizenship Retention
,,1 and—Re-Acquisition Act of 2003;
2.H' By direct act of Congress (CONST., Art. IV, Sec. 3);or
3. By Repatriation under R.A. 8171
R.A. No. 8171 otherwise known as "An Act Providing for the Repatriation of Filipino
Women Who Have Lost Their Philippine Citizenship by Marriage to Aliens and of
Natural-Born Filipinos is an act providing for the repatriation of:
1 'li Filipino women who have lost their Philippine citizenship by marriage to aliens;
i land
2. 1 1 Natural-born Filipinos who have lost their Philippine citizenship on account of
j 1« political or economic necessity.
Q: Hoiivl is repatriation effected?
ANS: Repatriation shall be effected• bylersifig.the,,raecessary oath of allegiance to the
Republic, of the Philippines encrregistrati9n In the prokeRcivil registry, and in the Bureau
of Immigration. The Bureau .of friirpigration shall' thereupon cancel the pertinent alien
certificate of registratipri and issde„theTrifirEate.oktderfifeatiorkas Filipino citizen to the
lis
repatriated citizen (9.'ii: 63 Sec. as aalepd.e4by PX,...8114'Sec. 2).
''4.,,, r f.,....,..'"."-
,,,, .. f.
Q:What
'at the efW/of repatriation? A , A \ , i\
ANS: Repatriation r'e.Nfs in tie I recOveryipf 06 original netbnality. This means that a
naturalized Filitlip2 wip lost his citizenAlip., will be ristorek(91his prior status as a
naturalized Filipinoitizen.
c On the other iia' d, l:)!wa origin?Ily„,a,ntural-born citizen
before he lostiliii-Philippine ?pitizèktlij0; 1:i'6.;'1:qii4e restored ti)' his - olmer status as a
natural''-born i iikrZ(Bengzo 'tv. HRETera-Crtiii G.Ri o. 142840r ay 7, 2001).
,., 4.1.121_•-:.,
:' '
e-,, th-e—draffiuftilegiaric U ..f>1
Q: What is thJieffect:of tak.' eriR,A,9225?
ANS: Upon takinftlhe Itath'bf51glancV,Itollti,ke9d. . 6 f thefPhilill, pkes:
1. ,Paturakborn Ntizen ;. io 1.16 111 hifiksirle o have lot their Philippine
..a'
citizens ,yip by re son 'Nat rail& io,Q,/as cipzens of a foreign country are
deemed to have ib.-4acquir6 11) g citizens and
2. .! Natural-bolkl,citizerAo IN- ill' .g--Who,edltsrthe effectivity of the said RA,
, .,'citizens of a fo eign Eden baketairreirPhiripiirfercitizenship (Sec. 3).
.... )
ISNI
Q: Discus the concept o tiW tive chz4tAhi und r R.A. 9225.
ANS: The derivative citizenshinde9225" means that the unmarried child,
whether legitimate, illegitimate or adopted, below eighteen (18) years of age, of those
who re-acquire Philippine citizenship upon effectivity of this Act shall be deemed
citizenship of the Philippines.
D. DUAL' CITIZENSHIP AND DUAL ALLEGIANCE
Q: Distinguish between dual citizenship and dual allegiance.
ANS: Dual citizenship arises when as a result of concurrent application of the different
laws of two or more states, a person is simultaneously considered a national by the said
states. On the other hand, dual allegiance refers to the situation in which a person
simultane6usly owes, by some positive act, loyalty to two or more states (Mercado v.
Manzatici,G.R. No. 135083, May 26, 1999).
Q: In what instances may there be dual citizens?
ANS: Dual citizens are the following:
1.'Those born of Filipino fathers and/or mothers in foreign countries which follow
the principle of jus soli;
2. ; Those born in the Philippines of Filipino mothers and alien fathers if by the
laws of their fathers' country such children are citizens of that country; and
94
3. Those who marry aliens if by the laws of the latter’s country the former are considered citizens, unless by their act
or omission they are deemed to have renounced Philippine citizenship (Mercado v. Manzano, supra).
Q: Are dual citizens automatically eligible to run for elective office?
ANS: No. Dual citizens who are desiring to run for elective public office in the Philippines shall be required to: (QRO)
1. Meet the Qualifications for holding such public office as required by the Constitution and existing laws;
2. Make a personal and sworn Renunciation of any and all foreign citizenship before any public officers
authorized to administer an oath at the time of the filing of the certificate of candidacy; and
3. Take the Oath of allegiance prescribed in Sec. 3 of R.A. No. 9225 (Cordora v. COMELEC, G.R. No. 176947,
February 19, 2009).
In other words, there are two steps that must be taken after meeting the qualifications for such public office, i.e. swear
the oath of allegiance to the Republic and make a personal and sworn renunciation of any and all foreign citizenship.
E. FOUNDLINGS
Q: Who is a foundling?
ANS: “Foundling” is defined as” a deserted or abandoned infant or child whose parents, guardian or relatives are
unknown; or a child committed to an orphanage or charitable or similar institution with unknown facts of birth and
parentage and registered in the Civil Register as a “foundling.” (Poe-Llamanzares v. Commission on Elections, supra).
Q: Is a foundling a natural born citizen?
ANS: Yes. Under the following grounds:
1. Under the 1934 constitutional deliberations the cases of children born of unknown parentage are few and far
in between that the constitution need not refer to them and that under international law the principle that
children or people born in a country of unknown parents are citizens n this nation is recognized;
2. Under the equal protection and social justice clause;
3. Under the following constitutional provisions:
a. The state values the dignity of every human person and guarantees full respect for human rights
(CONST., Art. II, Sec. 11);
b. Congress shall give highest priority to the enactment of measure that protect and enhance the right of all
people to human dignity, reduce social, economic, and political inequalities (CONST., Art. XIII, Sec. 1);
and
c. The State shall defend right of children to assistance, including prodder care and nutrition, special
protection from all forms of neglect, abuse, cruelty, exploitation and other conditions prejudicial to their
development (CONST., Art. XV, Sec. 3 Par. (2)).
4. Under Domestic law on adoption also support the principle that foundlings are Filipinos. These laws do not
provide that adoption confers citizenship upon the adoptee. Rather, the adoptee must be Filipino in the first
place to be adopted.
5. Under international law. Namely:
a. The Universal Declaration of Human, Article 15:
i. Everyone has the right to nationality.
ii. No one shall be arbitrarily deprived of his nationality nor denied the right to change his
nationality.
b. UN Convention on the rights of the Child, Article 7:
i. The child shall be registered immediately after birth and shall have the right from birth to a
name, the right to acquire a
95
DAN VOL 1.
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:I
:
nationality and as far as possible, the right to know and be
cared for by his or her parents.
c. International Covenant on Civil and Political Rights, Article 24:
ii.1 Every child has the right to acquire a nationality.
d. 1930 Hague convention on Certain Question Relating to the Conflicts
of Nationality Laws, Article 14:
"A child whose parents are both unknown shall have the nationality of
the Country of birth."
e. 1961, United Nations Convention on the Reduction of Statelessness,
Article 2:
H
"A foundling found in the territory of a Contracting State shall, in the
absence of proof to the contrary, be considered to have been born
withia the territory of parents possession the nationality of that State."
(Poeq_lamanzares v. COMELEC, supra).
I I 41:
A. GENERAL PRINCIPLES s. 7 Ns
Q: Whatis pu blic od i'
ice?)
ANS: Public officeKseqt, autharm dr---
y, an. duty,"-created d csr,i red by law, by which
for a giVen perio ,,6i el-fixed/by la r enduri: g at the plea's-TO-ego the creating power,
an indiviClual is fiveste Twith tome portitaf the soveleignVilarloy of the state to be
exercised by If octil ben fiLof_the_bl. ' olitic..(Ee ande VS to. Tomas, G.R. No.
//64/6 :Marc 7.e196). ‘T, :,„, 11 _,7 , •
11
Q: What are t iiiacterisAtes ofkipAm9ffibe?
ANS: PUblic o ice lbef0 cterizedles-fal ows:
1.i ,ift is iiir Officeir CONST., Art. XI,
2.i ; It is no-,a prope by the ue process clause

(CONS? , Art. II ,
sti ___,
3. It is not a xiitable az, Siff, rtioli, Sec. 26%
4. It is outside e corn sf cr,, -n--1 sloe e e,s ;eject of a valid contract;
Otherwise, the °ni t 1p,vcnchleRt/Z727,..!elL fPublic Officers (2007), p.6-
ii7) (hereinafter,4 Z, LIktv of MI cepfficas):
44i V__
i ...-..
Q: What are the elements of pub 1 ice?,-."-
-
ANS: The elements of a public office are as follows: (LD-DIP)
1. t it must be created by Law or by authority of law;
2. l ' It must possess a Delegation of a portion of the sovereign powers of
government, to be exercised for the benefit of the public;
3. , The powers conferred and the duties to be discharged must be Defined,
directly or impliedly, by the legislature or through legislative authority;
4. The duties must be performed Independently and without control of a superior
power other than the laws unless they be those of an inferior or subordinate
j office created or authorized by the legislature, and by it placed under the
general control of a superior office or body;
5. It must have some Permanence and continuity and not be only temporary or
,occasional (CRUZ, Law of Public Officers, supra at 4-5).
1
Q: Who is a public officer?
ANS: Generally, a public officer is an individual invested with a public office (SUAREZ,
supra at 900). In particular:
1. Under the ADMINISTRATIVE CODE, Sec. 2, when it is used with reference to
a person having to do a particular act or perform a particular function in the
H 96
• -•
DAN RE - VOL 1.
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exercise of goyernmental power, it includes any government employee, agent,

,or body having to do the act or exercise that function;
2. Cinder the REVISED PENAL CODE, Art. 203, it refers to any person who, by
direct provision of law, popular election, or appointment by competent
authority, takes part in the performance of public functions in the Government
of the Philippine Islands, or performs in said Government or in any of its
bIranches, public duties as an employee, agent, or subordinate official, of any
rank or class; and
3. Under the ANTI-GRAFT AND CORRUPT PRACTICES ACT, otherwise known
as R.A. 3019,1 it includes elective and appointive officials, and employees,
oermanent or 'temporary, whether in the classified, unclassified, or exempt
service receiving compensation, even nominal, from the government (R.A.
3019, Sec. 2, par. (b)).
Q: What makes a publiC officer different from a public employee?

ANS: Thef most important characteristic which distinguishes an office from an
4qvn
employment or contract is that the creation and conferring of an office involves a
delegation: to the individual of soryieiAt .j e sovereign functions of government, to be
exercised by him for the benefit ofliffelriti Athat some portion of the sovereignty of the
Ng=0, 1 .
country, either legislative, executive,o 41 rcial, attaches, for the time being, to be
exercised for the public benefit _powers conferAd are of this nature, the
individualliS1not a public officer, (LaugIlDesietO
,,,,„ .. , - , -.044.0.(04/5368
-1,.„, April 1Z 2002).
'
1. L,,4-5/'''
Q: Is a UPH student
r _ .1,
regelitl public officer?
,8.:',..tf0
ANS: Yes: The 8oarezof Regents perfogns functions si ila to those .ofa board of
: attN. n • 9,
trustees of a non-stock ,Sy mandate of la , atmember of the Board
.ew.-4.•
of Regents'
RegentaIlis considered. ate: officer nd is within Vie contemplation of P.D. No.
1606, the, I statdir defirliiiig :the jurisdiXon of the San tgan%ayan (Serena vs.
SancliganbaYrp,G.R.04162059, JanD a 2, 2008
-,...„-0-.10-7-
• %
, IL,
B MODES pFACQUIRINq-•41TLEMPUBL GOFF/CB
i' e .g.
Q: What are the mode Of 694quirint titl Ito public office?
ANS: The modes 4,acqUirit title to pub ffic- are by election and by appointment
(NACHURA, supra at 540)A• ,.4. -
[[[ -stry_LtEM
Q: Distinguish electioalfrom .peointment.
ANS: EleCtion is a choit40,§ by the enfranchised citizenry through the exercise of
suffrage (SUAREZ, supra14908); while appointment is a selection, made by the
authority vested with such power, of an individual who is to exercise the functions of a
given office, (Binamira v. Garrucho, G.R. No. 92008, July 30, 1990).
Ii
Q: What is the nature of an appointment?
ANS: An appointment is essentially a discretionary power and must be performed by the
officer in whOm it is vested according to his best lights, the only condition being that the
appointee 'should possess the qualifications required by law. If he does, then the
appointment cannot be faulted on the ground that there are others better qualified who
should have been preferred (Luego v. Civil Service Commission, G.R. No. L-69137,
August 5, 1966).
Q: What are the requisites of a valid appointmeht?

ANS: Theeq'uisites of a valid appointment are: (V-PACQuA)
1. The position is Vacant;
2. The appointing authority must be vested with the Power to Appoint at the time
appCintment is made;
3. The. appointment has been approved by the CSC (or Confirmed by
Commission on Appointments);
97
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d The appointee should possess all the Qualifications including appropriate civil
service eligibility and none of the disqualifications;
. The appointpe Accepts the appointment by taking the oath and entering into
1. discharge of duty (Garces v. Court of Appeals, G.R. No. 114795, July 17,
1996).
Q: HoW is appointment effected?

ANS: The appointment process depends on whether it is a regular appointment or an
appointMent which does not require confirmation.
1. For regular appointments, the steps are the following:
a. Nomination by the President;
b. Confirmation by the Commission on Appointments;
c. Issuance of the commission; and
d. Acceptance by the appointee.
2.1,1For appointment which does not require confirmation, the steps are the
following: .
a. Appointment bypthe apppin mg a thorq;
b. Issuance.p4e Pqmmisbio ; tc:1
c. Accer}yrice'by pappprffe_e,„ ' n
., Where the appoint effNeg the careenerxrVof til)‘Civil Service, in addition
to the forAbinQ.tt e attestatiorrrn-the-Civi %Sese' ' mmission is required
(NACHURA‘ (-', 544)..n ..5(.. .7.
it 4. ,A.,
Q: What is a commission? ,Q.'-'.,
ANS: It is the fprif'ial7e('fdenc -of-the-aperointrfient-Porpuz v.416 Appeals, G.R. No.
123989, Janua 998). Nr-'4'.--:, 111114-:''Z'z'
Q: What is t eci'ifrth tees ibiiiiiied

- --... for a not followed or
completed?
ANS: is longiettle'd 'n th ere the power of
appointrnpnt is bsolu ermine upon, no further
consent or approyal is vide of t e appointment, the
commission, may issua at heda sent or onfirmation of some
other officpr or bodh requi e iss or t e appointment may be
complete only when ``s c er..c_onftrmatr t irred. In either case, the
appointme,nt becomes, co etuNinen jpsitka
performed. Until the process rite can claim no vested right in
the office nor invoke security of tenu
A public official or employee who assumed office under an incomplete appointment is

merely aide facto officer for the duration of his occupancy of the office for the reason
that he assumed office under color of a known appointment which is void by reason of
some defect or irregularity in its exercise (Corpuz v. Court of Appeals, supra).
Q: Can an appointment be revoked by the appointing authority?

ANS: Yes, but only when the appointment is temporary. Temporary appointments are
extended those who may not possess the requisite qualifications or eligibility and is
revocable'at will, without the necessity of just cause or valid investigation provided that
such appointment shall not exceed twelve (12) months (P.D. 807, otherwise known as
the Civil Service Decree; Sec. 25, par.(b)).
Q: DistiUguish appointment from designation.

ANS: An appointment is the selection by the proper authority of an individual who is to
exercise'he powers and functions of a given office, while designation merely connotes
an impoition of additional duties, usually by lawi upon a person already in the public
service by virtue of an earlier appointment. There being no appointment issued,
! !!
98
. • . • •y '; • . •
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designation' does not entitle the officer designated to receive the salary of the position
(Dimaandalrv. Commission on Audit, G.R. No. 122197, June 26, 1998).
C. KINDS OF APPOINTMENT
Q: What are the kinds of appointment?
ANS: Appointments can be classified either as:
1. Asto enjoymentof security of tenure:
a. Permanent; or
b. Temporary; and
2. As to when the appointment takes effect:
a. Regular; Or
b. Ad Interim (NACHURA, pp. 541-543).
Q: To wheal' are permanent appointments issued?
ANS: A permanent appointment shall be issued to a person who meets all the
requirements for the position to which, he is being appointed, including the appropriate
eligibility prescribed, in accordance i'gthAthe provisions of law, rules, and standards
promulgated in pursuance thereofltfA0VODE, Book V, Title I, Sub. A, Chap. 5, Sec.
27, par. (1)).
Q: To whom are temporary appoinfpletss-ded?

ANS: In the'absence of appraoPriatve,jjgib i e'earne necessary in the public
interest to fill, a vacancv.Attemporart a ointment shall%ssued to a person who
4'007
meets all the require eats; for the pofitiplp to which he is pedn9 appointed except the
appropriate;ciVil servicap4bility: Provided That such terppor appointment shall not
exceed twelve monthObiphePapPointee-nay be replaced °oiler if a qualified civil
service eligible becomes altailable (ADM. IC DE, Book V7 Title I, Sub. A, Chap. 5, Sec.
27, par. (2)).4
[ cr tviev)
Q: What is.thOilierence etwee perr nent andlemp_o pdmtees as to the
enjoyment of securibtpenure?
ANS: Permanent arpoinfeaspannoV e reoved without cause. On the other hand, one
who holds atemporaryappOyitment has enure of office; his employment can
be terminated: at the plelasuref8f the appoint er there being no need to show that
the termination, is for cause (Ongeoeffid rdsi G.R. No. 184219, January
30, 2012). It is also AVidedAtIper the law that a temporary appointment shall not
exceed twelVe ponths34d4e appointee may be replaced sooner if a qualified civil
service eligib' &becomes a4laBle (ADM. CODE, Book V, Title I, Sub. A, Chap. 5, Sec.
27, par. (2)).
Q: What is the effect if a permanent appointee accepts a position in a temporary
acting capaCity?
ANS: When a permanent appointee accepts a temporary appointment, he is effectively
divested of security of tenure.,A temporary appointment does not give the appointee any
definite tenure of office but makes it dependent upon the pleasure of the appointing
power. Thus, .the matter of converting such a temporary appointment to a permanent
one is addressed to the sound discretion of the appointing authority (Romualdez v. Civil
Service Comth*ion, G.R. Nos. 94878-94881, May 15, 1991).
Q: Does the subsequent acquisition of appropriate civil service eligibility ipso
facto convertithe temporary appointment into a permanent one?
ANS: No. Mere acquisition of the appropriate civil service eligibility by a temporary
appointee will not ipso facto convert the temporary appointinent into a permanent one. A
new appointment, not merely reinstatement, is necessary. But even then, he cannot
compel the appointing officer to reappoint him for the power to appoint is in essence
discretionary (Maturan v. Maglana, No. L-52091, March 29, 1982).
99
VOL 1.
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Q: 111/1
4 4o are regular appointees?
ANS: Regular appOintees are those appointed by the President while the Congress is in
session after the domination is confirmed by the Commission on Appointments, and
continues until the end of the term (NACHURA, supra at 543).
Q: Who are ad interim appointees?

ANS: Ad interim appointees are those appointed by the President while the Congress is
not in session. The President shall have the power to make appointments during the
recess" of the Congress, whether voluntary or compulsory, but such appointments shall
be effective only until disapproved by the Commission on Appointments or until the next
adjoOrnment of the Congress (CONST., Article VII, Sec. 16, Par. (2)).
Q: When is the confirmation of the Commission on Appointments required?

ANS': "The following appointees require the confirmation of the Commission on
Appointments:
Heads of Executive Depart
2.' AmbassadOrs, or otlor>Publiclprtiste? ti,C,2nsuls;
6.1 Officers of the Mired cces pr th k 'f Olonel
• or Naval Captain; and
b:! Other office "kfiae e&ointments ar v est 'n the President in the
Constitutio 60N-#,Afficle VII, Sec. 1
st4s1
Q: What are thei kappoigting2proces, s fo regulrippeintments?
ANS: For regular appoi me Is, it shall cAnpl5ilthe fo\I owIN Peps‘ (1) Nomination by
the President; Confi matio 3) Issuance of the
commission; a ecepta t 544).
Q: What are t .e steps in the ppointwiprqs for ad inte "imadpointments?

ANS: E3ecauserit# ri ap intments-ddiacit require tion i be effective, it is
effected when tIleffq owi eps are-c m lipd via nt by appointing
I
authority; (2) Is dafic'elof th n; to y thd ppointee. (Id.).
I
Q: Is ad interim Appoint e snt 1dèrev"
g
ANS: Yes, becaukit take ca o longs( be withdrawn by the
President once the% pointee as ffice. e Id that it is subject to
confirmation by the mfg,-a)op tr-Appoin e d s not alter its permanent
character. The Constitu itkelf mak appointment permanent in
character by making effectiveiiii40.41.4 e b e Commission on Appointments
or unt'l the next adjournment of Co es Mgrig;v. v. Benipayo, G.R. No. 149036, April
2, 2002).
Q: What is a by-passed appointee?

ANS: A by-passed appointment is one that has not been finally acted upon on the
merits by the Commtssion on Appointments at the close of the session of Congress
(Matibag v. Benipayo,Isupra).
Q: In what instance can the President reappoint the by-passed appointee?

ANS: An' ad interim appointment may be by-passed because of lack of time or failure of
the Corrimission on Appointments to act upon it. There is no final decision by the
Commission on Appointments to give or withhold its consent to the appointment as
required by the Constitution. Absent such decision, the President is free to renew the ad
interim, appointment of 'a by-passed appointee. A by-passed ad interim appointment can
be rev ved by a new appointment because there is no final disapproval under Section
16, Article VII of the Constitution, and such new appointment will not result in the
appointee serving beyond the fixed term (Matibag v. Benipayo, supra).
100
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2 019
Q: In what instance reappointment by the President prohibited?

ANS: ReappOintment of a by-passed appointee is prohibited:
1. In case the ad interim appointee was disapproved; and
2. In case the appointee has previously served a term of less than seven years,
and a vacancy arises from death or resignation.
Note: The disapproval is a final decision of the Commission on Appointenents in the
exercise of, its checking power on the appointing authority of the President. Since the
Constitution does not prov de for any appeal from such decision, the disapproval is final
and binding on the appointee as well as on the appointing power (Matibag v. Benipayo,
supra).
Q: What is the purpose of an acting appointment?

ANS: The essence of an appointment in an acting capacity is its temporary:nature. It is
a stop-gap measure intended to fill an office for a limited time until the appointment of a
permanent,OCcupant to the office (Pimentel v. Ermita, G.R. No. 164978, ,October 13,
2005). •
Q: Can the`
ePi-esident issue an actillgi,ap ointment?
ANS: Yesi :The President may der designate an officer already in the
-o-s-it;AoloA
government service or any other competemperson to perform the functions of an office
in the executive branch, apPointmehtirldi 4
is-vested in hi kbylaw, when::.
q1,7
- ÷'Wat
1. The iofficer regularlyaPPoiritet t *trid'office.:0950 to perform his duties by
reason of illnessr,4brence orA other cause; or A
2. There exists4Wancy (E. X29 Book 114 Chap. Vb. Sc17).
Note: Alth4Ugh there at distinction` tween an appointmnt and a designation
(Binamira v Garrucho G.Ray.o.v92008, Jetty 30, 1990), it o applied the case of
Pimento! v.prmitaaich,faeld the Present's power to issue a! acting appointment.
The reason isWcause he code alloattan ther comp tint Arsoms o be "designated".
1
Q: What is the diffe a ce beeon d intaijkaOppin m nts and acting
appointments?
ANS: The differen re as allows:
: ,Ad Interim AppointmentI Acting Appointment

1 Arp.................
Both of ew are effective upon acceptance.
,:,
Extended only during " "ecess of May be extended any time there is a
Congress vacancy
Submitted to the Commission on Not submitted to the Commission on

Appointments for confirmation or Appointments.
rejection
, ..
Acting appointments are a way of
temporarily filling important n offices.
However, if abused, acting appointments
can also be a way of circumventing the
need for confirmation by the Commission
on Appointments. . ,
(Pimento! v. Ermita, supra).
101
i),‘: 2:41 ••
D. ELIGIBILITY AND QUALIFICATION REQUIREMENTS

Q: What is eligibility?
ANS: Eligibility is the state or quality of being legally fit or qualified to be chosen.
Eligibility, to an office should be construed as of a continuing nature and must exist at the
commencement of the term and during occupancy of the office (Aguila v. Genato, G.R.
No. L-55151, March 17, 1981).
Q: WhO are "eligibles"?

ANS: Eligibles are persons who obtain a passing grade in a civil service examination or
is granted a civil service eligibility and whose names are entered in the register of
eligible from which appointments must be made (ADM. CODE, Book V, Title 1, Chap.1,
Sec. 5, par. (8)).
Q: How are qualifications for public office understood?

ANS: Qualifications for public office may be understood either as:
1. .Endowments, qualiti,.sor--%1 “whcmake an individual eligible for
-1 tbri,iz
• public office, e.g. citizen hip, o
ir
2. The act of entp-ring..nt 411e perfe man , or th;l'inktions of public office, e.g.
taking the o tfi crioffi (NAVFMrgttpr(zt, 5,33).
, Nu ''sr
Q: Who Prescrib9s, 4 ifica ttiffice ions fdi ?‘„<
ANS: Qualificatits e pjescribia by ke nstitu ion'bri statute. If the same are
prescribed by t e Co itutiott, the quali 9 tiorts are peci Ivenprnerated and the
legislatiire can ot-iEqp se additional-qudi sons.-If-th quail tictheare prescribed by
law, it must d soin uch a detaVsnal nw, er_ss not to le me-ah • discretion to the
appointing po er eking chieTO tire Arson o be a oin . Moreover, the
qualifidation pres t bib mus SU R at 912).
c'D
dhch
Q: What are th tions' ) qualifications?
ANS: The limitations o the\ alifications are as
follows:
1.' The leg! ature ualifications prescribed in an
exclusive anner b
2. The legislat rkrhg, ,pre
, s; and
3. The qualificationttnVe re ern which they are prescribed
(CRUZ, Law of
Q: When should the appointee possess the qualifications to the office?

ANS: The reckoning point in determining the qualifications of an appointee is the date of
issuance of the appointment and not the date of its approval by the CSC or the date of
resolution of the protest against it (Civil Service Commission v. De la Cruz, G.R. No.
158737, August 31, 2004).
Q: Is an oath of office a qualifying requirement for a public office?

ANS: Yes. Only when the public officer has satisfied this prerequisite can his right to
enter into the position be considered plenary and complete. Until then, he has no right at
all, and for as long as he has not qualified, the holdover officer is the rightful occupant
(Lecaroz v. Sandiganbayan, G.R. No. 130872, March 25, 1999).
Note: Article IX-B, Section 4 of the Constitution requires all public officers and
employees to take an oath or affirmation to uphold and defend the Constitution. Article
VII, Section 5 (insofar as the President or the Acting President is concerned) and Article
XV, Section 5, par. 1 (all members of the armed forces) also requires taking of an oath.
102
E. D/SABILITIES AND /NHIB/TIONS OF PUBL/C OFFICERS
'
Q: What are the grounds for disqualification to hold public office under the
ConstitutiOn7
ANS: The diOualifications under the Constitution are as follows:
1. Np candidate who lost in an election shall, within one year after the election,
be.appointed to any office in the Government (CONST., Art. IX-8, Sec. 6);
2. NO elective official shall be eligible for appointment or designation in any
capacity to any public office or position during his tenure (CONST., Art. IX-8,
Seca 7, par. (1));
3. Unless
„ I. otherwise allowed by law or by the primary functions of his position, no
appointive official shall hold any other position in the Government (CONST.,
Art IX-8, Sec. 7, par. (2));
4. The President, Vice-President, the Members of the Cabinet, and their deputies
or assistants shall not, unless otherwise provided in the Constitution, hold any
other office or employment durin iftttheir tenure (CONST., Art. VII, Sec. 13);
5. NO Senator or Member of the, '‘use of Representatives may hold any other
office or employment ir4.0';.0,vemment, or any subdivision, agency, or
instrumentality thereof, incli0 ovemment-owned
? or controlled corporations
or their subsidiaries, duggpf without forfeiting his seal Neither shall he
belappointed to any officele 0 ihe y have been created nor the emoluments
thereof increased during411-re5term or Neil:J. 1elected (CONST., Art. VI,
4,445-4to
Sec. ;13);
6. The ,Memberstf, he Supreat ourt and of other courtsea established by law
shall t not bt designatedd ny agency pe orTing quasi-judicial or
adrhinistrativOrilon (CO ST. rt. VIII, Sec. I;
Exception: he member of the Supreme• out is designated to an
ElectesOlfribunalli.e:;15res" ent Electoral Tribunall(AST.,
4
Art. VII, Sec.4,
pai*JeSengt..bElectoral Trib anal or Hous of Representatives Electoral
311rt. le,f4
Tribtai (6017Sit4: acalin a T ONNIectoral Tribunal,
G.R.TIo. 1904,81 overobe' 23, 10). Pr
7. No MAb. .efacqeGenstitutional ammission shall, during his tenure, hold any
othar offierOr ewployrifent ONST., Art. IX-A, Sec. 2). The same
disqualified° apple's to the 0 Dnilatapn and his deputies (CONST., Art. XI,
Sec. 8); &e,.h-440:***
8. The Ombuds an or hislDeputies s a not De qualified to run for any office in
the election i ediattl isucceeding their cessation from office (CONST., Art.
XI, Sec. 11);
9. Members of Consti, utional Commissions, the Ombudsman and his Deputies
must not have been candidates for any elective position in the elections
preceding their appointment (CONST., Art. IX-8, Sec. 1; CONST., Art. IX-C,
Sec. 1; CONST., Art. IX-D, Sec. 1; CONST., Art. XI, Sec. 8);
10. Members of Constitutional Commissions the Ombudsman and his Deputies
are appointed to a term of seven (7) years, without reappointment (CONST.,
Art. iX-8, Sec. 1, par. (2); CONST., Art. IX-C, Sec. 1, par. (2); CONST., Art. IX-
D, Sac, 1, par. (2); and CONST., Art. XI, Sec. 11);
11. An iMpeached official may be disqualified from holding any office (CONST.,
Art. XI,' Sec. 3, par. (7)); and
12. Sponses and relatives by consanguinity or affinity within the fourth (4th) civil
degree of the President shall not during his tenure be appointed as Members
of the Constitutional Commissions, Office of the Ombudsman, Secretaries,
Undersecretaries, chairmen or heads of bureaus or offices (CONST., Art. VII,
Sec. ,13).
103
VOL 1.
•
2019
Q: Is the prohibition on concurrent appointments under Section 13, Article VII of

the Constitution applicable on temporary appointments?
ANS: Yes. The provision plainly indicates the intent of the framers of the Constitution to
impose b stricter prohibition on the President and the Members of the Cabinet in so far
as holding other offices or employments in the Government or in government-owned or
government-controlled corporations was concerned. The Constitution makes no
reference to the nature of the appointment or designation. The prohibition against dual
or multiple offices being held by one official must be construed as • to apply to all
appointments or designations, whether permanent or temporary (Funa v. Agra, GR. No.
191644, February 19, 2013).
'
Q: What are the exceptions to the prohibition against holding dual or multiple
offices or; employment under Section 13, Art. VII of the Constitution?
ANS: The following are the exceptions:
1. Unless otherwise allowed by the Constitution- this phrase must be given a
literal interpretation to ref wanly...to,those particular instances cited in the
Constitution, to wit: Ahe" ice-Preildent • ing appointed as a member of the
A
Cabinet under Segfion par. 2 Artic II; ,ortacting as President in those
instances pr,,,o‘fidOnde?"5.ection ar, . (i) arid, (3) Article VII; and the
#.= --a . :
Secretary 9frJuVice,being ex-officio mem r of the JO col and Bar Council by
virtue of Sea's— 81 icleTEP,TaTd-----.,,„,
2. ' When efefoise in ah ex-ockiAlpacity- thepr ibitit 'against holding dual
or multiple :( ices or enfiloyrqentztlinder LSection, 10Article VII of the
Cons ution ust n t, howeverA6Tonstrueds apNyinDo)posts occupied by
the e'C—tiv offici Is specified 'i, erein with° ' t'addifipplAcrpensation in an
#. . :-.,...T.a.._ II .,9
ex-o 10-capacity q provilled-b ,diak'cit'fi'd'as
. -•-.
equirecqby thp primary functions
of s doffibEal's office (Cite' betties{• • nion The Ekboutive ,Secretary, G.R.
No. 389V,iFeb 2, /99i 11- s?,) ft ii
t...) „4
r in
Q: What are th 5rihibf ion on, ttbli,, Pthe Constit on?
ANS: The follovkg are e innMti syo undlthe C stitution:
1. The Prkident, ice-13 'S ati embers, an their deputies and
assistant shall not_ d 14.a rl'ec ly,er indirep practice any other
profession,particigat 'n *rle-si rbrancially interested in any
4 .40
contract withIlle29els . ey-s -stQcVy, vid conflict of interest in the
conduct of their akce NST.N41/. gu, 469)P,'
2. As to Senators or firft of th' WIESua,gfoMpresentatives:
a. They may not hold an tre-M:Mce or employment in the Government
during his term without forfeiting his seat (CONST., Art. VI, Sec. 13);
b. They shall not be appointed to any office which may have been created
nor the emoluments thereof increased during the term for which he was
elected (CONST., Art. VI, Sec. 13), also known as the forbidden office
(Zandueta v. De La Costa, G.R. No. L-46267, November 28, 1938);
c. They may not personally appear as counsel before any court of justice
or before the Electoral Tribunal, or quasi-judicial and other
administrative bodies (CONST., Art. VI, Sec. 14);
d They shall not directly or indirectly, be interested financially in any
contract with, or in any franchise or special privilege granted by the
Government, during his term of office (CONST., Art. VI, Sec. 14);
1 I
3. No Member of the Constitutional Commission shall, during his tenure, hold any
other office or employment. Neither shall he engage in the practice of any
i 'profession or in the active management or control of business which in any
way may be affected by the functions of his office, nor shall he be financially
interested, directly or indirectly, in any contract with, or in any franchise or
special privilege granted by the Government, during his term of office
104
•1
(CpNST., Art. IX-A, Sec. 2). This inhibition applies as well to the Ombudsman
and his Deputies (CONST., Art. XI, Sec. 8); and
4. NO officer or employee in the civil service shall engage, directly or indirectly, in
any electioneering or partisan political campaign (CONST., Art. IX-B, Sec. 2,
par. (4)). 003
1
l•
p rtisan political campaigning?
Q: What is a
ANS: Partisan political campaigning is the active support for or affiliation with the cause
of a politicaliparty or candidate. This would include, among others, being a candidate for
any elective pffice or delegate to any political convention, being an officer or member of
any political, l,, committee, party or organization, delivering speeches, canvassing or
soliciting votesior political support or contributions for any political party or candidate or,
in general, becoming actively identified with the success or failure of any candidate/s for
election to pOiic office (CIVIL SERVICE RULES, Rule XVIII, Sec. 14).
i
Q: Is conviction by final judgment gpded to be considered as fugitive from
justice as remoired by Sec. 40 of ttl oal Government Code?
ANS: No. Fugitive from justibe apfirds no my to those covered by final judgment and
who absconds'Io evade punishment 4,-,also to one, where a valid criminal information
is already filed and he absconded4O &Ai risdiction (Marquez Jr. v. COMELEC, G.R.
No. 112882, April 18, 1995).
f f
(
Q: What is neotism?
p
ANS: NepotiSm is fay 'riti mdtowardsal ves by the appoin authority. The Supreme •
Court said that' nepo se wise one RerniciQUS evil impeding' civil service and the
sepneWIL-iea form
efficiency of !its, per, corruption (do/cos . People, G.R. Nos.
174730-37, Fetar9, 20erLE,
,.
.a- / ,
Otis l'Ef&wrier -"K-:,5—A.
ANS: The ik'd:rninistrati~ie . odof 194 prohibi S - _ L „ min the national
government made 'n a or e , rela Ives wi the third (3r . 4 i l e of consanguinity or
affinity of eitner th,coa poin i,.9 authority,: commending authority, chief of bureau or
office, or persons erergisingittimediate s o over the appointee. Exempted from
this rule are persons Tern aNcl in a coe „„__ is - _Roc.i_ty, teachers, physicians, and
members of tfte1Armed15 .-orces ( ()WOODTratIFTWIWRChap. 7, Sec. 59).
i•
In the case of local gov ,r! en , however, the Local Government Code of 1991 says
that nepotism! exists wherT-arAppointment is made within the fourth (4th) degree of
consanguiniVor, affinity of the appointing or recommending authority (R.A. 7160, Sec.
79).
The Constitution also prohibits the spouse and relatives by consanguinity or affinity
within the foUrth (4th) civil degree of the President during his tenure from being
appointed as Members of the Constitutional Commissions, or the Office of the
Ombudsman, or as Secretaries, Undersecretaries, chairmen or heads of bureaus or
offices, including' government-owned or controlled corporations (CONST., Art. VII, Sec.
13).
F. RIGHTS ANbLIABILITIES OF PUBLIC OFFICERS

Q: What are the rights of public officers?
ANS: The rights of public officers are:
1. Right to office (Paredes v. Abad, G.R. Nos. L-36927-28, April 15, 1974);
2. Right to salary (CRUZ, Law on Public Officers, supra at 190-191);
3. Right to self-organization (CONST., Art. Ill, Sec. 8);
4. Right td vacation leave and sick leave with pay (LGC, Sec. 81);
105
VOL 1.
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Right to retirement pay (GSIS v. CSC, G.R. Nos. 98395-102449, June 19,
1995); and
6 Right not to be removed or suspended except for cause provided by law (DE
LEON, Philippine Constitutional Law (2012), p. 179).
Q: Defipe. right to office.

ANS: Right to office is the just and legal claim to exercise powers and responsibilities of
the publicoffice to which one has been validly elected or appointed (NACHURA, supra
at 573).!
Q: Diff4rentiate term from tenure.
ANS: Terin is the time during which the officer may claim to hold the office as a matter
of right:arid fixes the interval after which the several incumbents shall succeed one
another'. ;On the other hand, tenure represents the term during which the
incumbent actually holds office (Valle Verde Country Club Inc. v. Africa, G.R. No.
1519691, September 4, 2009).
Q: Wha.t is the holdover d9cfrirkrITZI' s
ANS: The concept of holFrover„Wilen ap liedtt&le pubrc off cer, implies that the office
has a fixed term and the fikcuIribentsfr o irironro ucc eding term. It is usually
provided by law th4t e3;g1gaeit2Lappniatesifo fix term shall remain in office
not only' for t12,04 term but-lTntil thgir suaesso av been elected and
qualified. Flowevpr;44 e doespotibecane vailent g expiration of the
incumbent's ter if th reds no successoWected and ualifi‘ purne it (Lecaroz v.
Sandiganbaya vt:'s
Q: Wh th purpose of t e hol h'``•

ov.e'r 'cre .7*41
c rine
ANS: This rule an by tiiittriqgkOPYibus i; quirem public policy, for
without it theri m eq I•- — ' ere_from ":1 ilure t or a refusal or
neglect* quality; 5 ffic Id be mc Valid t bb is s %rely suspended.
Otherwise stated, e p rpo §. •re- en vajiipt; e goiernm pending the time
when thelsuccasor ma ,b c ba se i duc erfi ' . offic (Gofer a v. Valencia, 227
SCRA 728, November 11, 993). ,-,
Q: What is the lega asis I, rg t I.

7VciIPL) tcers?
ANS: The basis for thatri9 iglislig f-pubr e egs egal title to the office and
the fact that the law attach' cdmp4,nsatil CHURA, supra at 573).
Q: Can public officers claim addition 'ral or ex officio positions?

ANS: No The ex officio position being actually and in legal contemplation part of the
principal office, it follows that the official concerned has no right to receive additional
comperisation for his services in said position. The reason is that these services are
already paid for and covered by the compensation attached to his principal office
(Philippine Economic Zone Authority v. Commission on Audit, G.R. No: 189767, July 3,
2012).1
Q: What are the constitutional provisions relating to the salary of public officers?
ANS: title constitutional provisions relating to the salary of public officers are the
following: (SALED)
1. Standardization of compensation (CONST., Art. IX-B, Sec. 5) as implemented
by R.A. No. 6758;
2. .Additional, double, or indirect compensation are prohibited, unless specifically
authorized by law (CONST., Art. IX-B, Sec. 8);
3. Salaries of the President and Vice-President shall be fixed by Law and shall
not be decreased during their tenure. No increase shall take effect until after
the expiration of the term of the incumbent during which such increase was
approved (CONST., Art. VII, Sec. 6);
106
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••••••••..
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1
4. No increase in the salaries of members of Congress shall take effect until after
the Expiration of the full term of the Members of the Senate and the House of
Representatives who approved the increase (CONST., Art. VI, Sec. 10);
5. The salary of members of the Judiciary shall not be Decreased during their
continuance in office (CONST., Art. VIII, Sec. 10).
Note: The salary of a public officer cannot, by garnishment, attachment, or order of
execution, be seized. Public-policy also prohibits the assignment of unearned salaries or
fees (Direct& of the Bureau of Printing and the Executive Secretary v. Francisco, G.R.
No. L-31337, December 20, 1973).
Q: What is the next-in-rank rule?

ANS: The next-in-rank rule provides that if there is a vacancy in a government that
ought to be 'filled-up by promotion, the person holding the position next thereto should
be first considered (ADM. CODE, Book V, Title I, Subtitle A, Chapter 5, Sec. 21, pars.
(2) and (3)). It applies only where a vacancy is to be filled by promotion, a process which
denotes a scalar ascent of an officer toknpther position higher either in rank or salary
(Abila v. Civil Service Commission, ;G,R; N6. 92573, June 3, 1991).
Q: Who is considered as next-i0

ANS: An employee is next-in-raqi is appointed on a permanent basis to a
position preViously determined toebe-449,Grnrko1u
kttptthe vacancy proposed to be filled,
provided he ;meets the requisites foR•tiVihtmengtO fie.tOnt position as previously
determined by ,the appolgqiYauthority'a d approved y he • ivil Service Commission
(P.D. 807, Art. VIII, Se0f9,
,$1, ear.
1riftv
Q: Is the next-In-ran ulelabsolute?
..+40 .
ANS: No. The:yopporntingvatnority may &mote an employe wko is not next-in-rank
but who posSeSies superior , qualificationg nd compet6ce s corgpared to a next-in-
rank emploY% ChtLoor4 merely_ meet lb minimu,Ktqurre imen'tWor the position
(Resolution
. No.. 83-343 Se z• 4, prrW2), uant ection 9, par (b)
and Section 19). ocgte • u•
The next-in-rank rule erel pvides that 'per next-in-rank would be the first to be
considered for the vaca cyge is only enaed.to erential consideration but it does
not immediately followk at onlydgsr6013 o ot . Ithe rule does not grant him a
vested right the offi0`. Neitprdoes it impose a ministerial duty on the appointing
power to promote him Sa thgo, Jr. v. Civil Service Commission, G.R. No. 81467,
October 27, 1989).
Q: What is the legal basis for the right of public officers to vacation and sick leave
with pay?
ANS: The following are the legal basis for the right of public officers to vacation and sick
leave with pay:
1. GoVernment officers and employees are now entitled to commutation of all
leave;credits without limitation and regardless of the period when the credits
were earned, provided the claimant was in the service as of January 9, 1986
(Office of the President Memo Circular No. 54, March 24, 1988); and
2. EleCtiVe local officials shall be entitled to the same leave privileges as those
enjoyed by appointive local officials, including the cumulation and commutation
thereof (LGC, Sec. 81).
I
Q: What is retirement pay?
ANS: Retirement pay is the benefit given to government employees to reward them for
giving the best years of their lives in the service of their country (GSIS v. CSC,
G.R. Nos. 99395-102449, June 19, 1995).
107
Q: Cana public officer be liable for injuries caused to another as a consequence
of his official acts?
ANS: Generally, the public officer is not liable for injuries sustained by another as
consequence of official acts done within the scope of his authority, except as otherwise
provided by law, to wit:'
1. Statutory liability under the Civil Code (Arts. 27, 32, and 34);
2. When there is a clear showing of bad faith, malice, or negligence (ADM.
CODE, Book 1, Chapter 9, Section 38);
3. Criminal liability under the Revised Penal Code (Arts. 203 to 212, Arts. 213 to
216, Arts. 217 to 222, and Arts. 223-245);
4. Liability on contracts entered into without or in excess of authority (Melchor v.
Commission on Audit, G.R. No. 95398, August 16, 1991); and
5. Liability for tort (Mendoza v. De Leon, G.R. No. L-9596, February 11, 1916).
Note: In matters of tort, the same will not be imputable to the public officer if it
is shown that he acted within the limits of his authority without the attendance
of bad faith (CRUZ, Law olgublic.Offrw, supra at 258).
.,_'''' . 'a %,...
Q: What is the three-fold liab ili ty rule?t
ANS: A public officer maVbe'subfact toavi
t\..7 ,:( and
,srimina.,
--,\. . . . .
adikinistrative actions. This is
e . i ,- w------ -
known asthe three-fold. liabtyjuld. The dismissal of prf ad lqistrative case does not
necessarily bar the'filipg) ofP'a criminalnprosecution fore1,-1 game acts (Tecson v.
Sandiganbayan, G.kr,14304.5, Novernper 16 1§.99.
if
Q: If the duty pf the p6
blic, - it;\
Iofficer is 9re ii
minis
..
— erial, what.1c~an be invoked to
render him lialoile..of his acts,
' i ''''
it noRfea4ce.,f94neg ect or
ANS: First heicarfsle liable for o perform an act
which is the rcer;s1 legal o iig;100.461drforiff. Se ond, he can be held liable for
misfeasance oEyilure to_u§ t thatilgs—teloyare, s fik..and Ililigede required in the
performance o offidi dJ 4t-h se-ca elliable-f i "-We ante n doing, through
ignorarFe, ina entfa, or 1^- cep acKw
c lona ha 4.,,b e a perform (REYES,
i 1 L , j Aar 20
The Revised Pena1 Cod n4ijn
i
' fibtabl,.„,,f4e. wron ful acts or omissions of
Q: Can a public4, officer be\ t-ie
another public officer? SC \.N A'
ANS: Yes. Generalk,a he 'd of, , _ e rtrne or Avsuptrigrofficer shall not be civilly
liable fOr : the wrongfAacfs,9rnians-rof-'d05-crellige , or misfeasance of his
subordinates. However, hItcan belield lib tk.
Wt. Th,Ar ctually authorized by written
order the specific act or mis-Candue
r ctmi :!21.0.ssLof DM. CODE, Book 1, Chapter 9,
.,,..
np
Sec. 38, par. (3)). •
Q: Is the principle of command responsibility applicable in the Philippine setting?
ANS: Yes. Command responsibility pertains to the "responsibility of commanders for
crimes committed by subordinate members of the armed forces or other persons subject
to their] control in international wars or domestic conflict" Although originally used for
ascertaining criminal complicity, the command responsibility doctrine has also found
application in civil cases for human rights abuses. The command responsibility doctrine
now constitutes a principle of international law or customary international law in
accordance with the incorporation clause of the Constitution (Rodriguez v. Arroyo, G.R.
No. 191805, November 15, 2011).
Q: Can a subordinate officer be held liable for willful or negligent acts even if he
acted under orders?
ANS: Yes. The Administrative Code provides that "No subordinate officer or employee
shall be civilly liable for acts done by him in good faith in the performance of his duties.
However, he shall be liable for willful or negligent acts done by him which are contrary to
law, morals, public policy and good customs even if he acted under orders or
instructions of his superiors" (ADM. CODE, Book 1, Chapter 9, Sec. 39).
108
G. DE FACTO vs. DE JURE OFFICERS
Q: Who is a de jure public officer?
ANS: A de jure public officer is one who is deemed, in all respects, legally appointed
and qualified and whose term of office has not expired (Topacio v. Ong, G.R. No.
179895, December 28, 2008).
Q: Who is aide facto public officer?

ANS: An officer de facto is one who has the reputation or appearance of being the
officer he assumed to be but who, in fact, under the law, has no right or title to the office
he assumes tohold. He is distinguished from a mere usurper or intruder by the fact that
the former holds by some color of right or title while the latter intrudes upon the office
and assum4 to exercise its functions without either the legal title or color of right to
such office (Coflilla v. Martinez, G.R. No. L-14569, November 23, 1960).
Q: What are 'Ithe requisites to be considered a de facto officer?

ANS: The following are the requisites ito4considered as de facto officer: (VAC)
1. A Validly existing public dice`
2. Actbal physical possessiktMcgoffice in good faith; and
3. Color'of title to office rONatiFigL acquiescence by the public (Tuanda v.
Sandiganbayan, G.R. Na41115,1,...0c 9ober 17, 19 .5).
I
. ,,,.#
0
x.
Q: Distinguish a de facto Officer from'a e jure officer
ANS: A de jUrelofficerrtitle
%, to ark) ge, although he m trot yet be in possession
of the office. Aide fac(p officer is ong ti has possessio office under color of
authority (CRUZ„ supra 4.1g21,,Howeve the de facto o r subject to the same
liabilities impCseds,fte cipPre officer ill e discharge f officia duties, in addition to
whatever specialNamaggslMt may due from im geca se of his unlawful
assumption office (Glidilla v. Martine1 ).
W ...-Asafe2
Q: Are acts Odiormei,d_iby de facto off c r consider
ANS: The laWfilltap de facto offs , so far as the rights of third person are
concerned are, if ' ne with' the ecope nd by the apparent authority of the office,
considered valid and 13ding,as if he wer r le• ally elected and qualified for the
office and in full posse orrtereof a *I* - -No. 199032, November 19,
2014).
Q: Distinguish'a de fac offiter from a usurper.

ANS: The acts of a usurper are entirely void (CRUZ, supra at 53). On the other hand,
the actions ofia'de facto officer are valid insofar as third persons are concerned and the
general public relied on said acts. It is the color of authority, not the color of title that
distinguishes an officer de facto from a usurper. It means that the authority to hold office
is by some election or appointment, however irregular or informal (Civil Service
Commission v. Joson, G.R. No. 154674, May 27, 2004).
Q: Is a de facto officer entitled to salary and other compensation for services

actually rendered?
ANS: Generally, no. The rightful incumbent may recover from a de facto officer the
salary received by the latter during the time of wrongful tenure even though the latter is
in good faith and under color of title (Monroy v. Court of Appeals, G.R. No; L-23258, July
1, 1967).
Exception: When there is no de jure officer, the de facto officer is entitled to salaries
for the period when he actually discharged functions in good faith (Civil Liberties Union
v. Exec. Sec., G.R. No. 83896, February 22, 1991).
109
VOL 1.
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1 I
, 1 ,
Q: What is the proper remedy to unseat a de facto officer?
ANS:;The proper remedy is to institute a quo warranto proceeding under Rule 66 of the
Rules of Court. The title to a public office may not be contested except directly
through quo warranto proceedings within one year from the disposition from office. It
cannot be assailed 'collaterally, even through mandamus or a motion to annul or set
aside I order (Topacio v. Associate Justice of the Sandiganbayan, G.R. No. 179895,
DeceMber 18, 2008).
H. TERMINATION OF OFFICIAL RELATION

Q: What are the moldes of termination of official relation of a public officer?
ANS: The following are the modes of separating a public officer from his office: (FIRE-
CA3 WD)
11. Forfeiture - Divesture of the public office through a positive act.
For example, any person holding a public appointive office or position,
including active members of the Armed Forces of the Philippines, and officers
and emplOyees in gdyerrinfeliff6Vriech,or controlled corporations without
i "T la ' 1.1.
i , original charter, s.palrbje con9derrd)rpsp f9cto.resigned from his office upon
the filing of hij,lertificale,..of candy dadkj (9mtpuk ELECTION CODE, Sec.
166); Anothef,eiknpiels,,rigruZIRfitinA fgrelbriZektizenship (Maquiling v.
COMELEX•Apt pp:A 954.,9_,,Arilit.,1,5,.2013)-4k, ."<\
2. Impeachment -fit ts--th extraorclinary'inepris,\of Le oving a high official
(CRUZIshipea(3113; A -$
ii4 \ vn \
3. Recap It is akiethod of removetsiyhete the peopleVier, Ise, their suffrage and
expreps--theirirossto .confidenc9fle-public.o cer (Of? ?Political Law, supra
at 3401 .fecall p ocee.dings‘ CA9, tal5e,plac withirlenreb from the date of
the IdCal o 'pals' as,,umptioreolfgfrce.-alid within a yeiclqf re a regular local
electilorefek, Sece4 (b)j k,,,,,u,,...? -
, . a I nde a public officer's
4 • Expiration4. T4l- When-therterm-of-o
relatiAMOIT ce- aut:tiatiolktel d ess e hold over rule
.ff
, appliet. 'The term 4-'0,,:k cgiTy'vhalg5s; ill, ly confidentral position expires
when he ,appieintin -'p e(,,,..t rmi qtp. s position because of loss of
confidence.': It is not tre ed, s. re_ Qvakor ismiSfal (Inglis v. Mutuc, G.R. No.
L-20390, Algvembe 0 IEN1i.L' . 11/2,
Conviction AR Cuirlie e con 1 io of .p blyofdficer of a crime that carries
with it the perialWe 9srpetu nlyoti trkVbtra }absolute disqualification shall
have the effect ohepivitig hi 1pABliNffic'e (REVISED PENAL CODE,
Art. 30); ''''''''w........
..„,.... -
Abandonment - It means an absolute relinquishment of the office with no
intent to return and is not attended with the formalities observed in resignation.
If an employee who is on leave without pay for any reason fails to return to
duty at the. expiration of one year from the effective date of such leave, he
shall be considered automatically separated from the service (REVISED CIVIL
SERVICE RULES, Rule XVI, Sec. 33);
Acceptance of an incompatible office - Incompatibility exists when the
character or nature of offices are such that one person shoUld not hold both
because of the contrariety and antagonism which would result in the attempt to
faithfully and impartially disCharge the duties of one toward the incumbent of
the other. Acceptance of the incompatible office automatically vacates the first,
even if title to the second office should subsequently be annulled (CRUZ, Law
of Public Officers, supra at 303);
Abolition of Office - An office created by law may be abolished by the
Constitution or by law. A constitutionally-created office may only be abolished
' by the Constitution;
110
Note: The power of Congress to abolish an office has certain restrictions:
a. It must be exercised in good faith (Dario v. Mison, G.R. No. 81954, August 8, 1989).
b. A law reorganizing the judiciary must not undermine the security of tenure of the judges (CONST., Art. VIII,
Sec. 2).
Note: An officer may not raise security of tenure as a defense because if there is no office, it follows that there is no
tenure (De La Llana v. Alba, G.R. No. L-57883, March 12, 1982).
9. Resignation – It is the formal method of renunciation, coupled with the physical act of relinquishing the office (CRUZ,
Law of Public Officers, supra at 290);
a. In order to be valid, a resignation must comply with three requisites:
i. It must be voluntary;
ii. It must be tendered to the proper officer who must accept it (Gamboa v. CA, G.R. No. L-38068, September
30, 1981); and
iii. It must comply with the formal requirements laid down by law, if any (U.S v. Neri Abejuela, G.R No. L-
4636, November 14, 1908).
b. A resignation that has been accepted cannot be withdrawn. However, when the resignation has not yet been
accepted it may be withdrawn.
Exception: When the resignation was tendered by mistake, or through force, or any vice of consent, it may still be
withdrawn even though it was already accepted (CRUZ, Law of Public Officers, supra at 293).
c. A courtesy resignation does not comply with the element of voluntariness (Ortiz v. Comelec, G.R No. 78957,
June 28, 1988).
10. Removal – the forcible and permanent separation of an officer for his office before the expiration of his term (Ingles
v. Mutuc, G.R. No. L-20390, November 29, 1960);
11. Reaching the Age Limit – Upon reaching the mandatory age, an officer is deemed to be separated from his office
automatically (NACHURA, supra at 585);
12. Death – A public office is personal and not a property that passes on to the heirs (Poe v. Macapagal-Arroyo, P.E.T.
Case No. 002, March 29, 2005)
Q: Is it necessary to hold a trial-type proceeding in order to remove a public officer?
ANS: We must distinguish between removal of appointive officers and elective officers.
1. For appointive officials – a trial-type proceeding is not necessary. However, it is essential that they were given
an opportunity to be heard (Samalio v. Court of Appeals, G.R. No. 140079, March 31, 2005).
2. For elective officials – it is necessary to hold a trial-type hearing. An erring elective local official has rights akin
to the constitutional rights of an accused. These rights are essentially part of procedural due process.
The local elective official has:
a. The right to appear and defend himself in person or by counsel;
b. The right to confront and cross-examine the witnesses against him; and
c. The right to compulsory attendance of witness and the production of documentary evidence (Joson v.
Executive Secretary, G.R No. 131255, May 20, 1998).
111
VOLE.
D: 2019
L THE C/ V/L SERVICE

Q: Who are covered by the civil service rules?
ANS: The service rules embrace the personnel of all branches, subdivisions,
instrumentalities and agencies of the government, including government-owned or
controlled corporations (GOCC) with original charters (CONST., Art. IX-B, Sec. 2, par.
(1)).
Q: What is the test to determine whether a GOCC is with or without original

charters?
ANS: If a GOCC was created by special law, it is with original charter (e.g. DBP, Land
Bank, PaSO, PAGCOR, and GSIS). If a GOCC was incorporated pursuant to the
general corporation law, it is without original charter (Trade Unions of the Philippines v.
National Housing Authority, G.R. No. L-49677, May 4, 1989).
Q: What ,governs personnel matters of government-owned and controlled

corporations without original c arteii? 7..-.,„,,,,,,,_
ANS: Personnel of govern en owned or ciitrpll 'd corporations with an original charter
f • ,,
are subject to the Civil...S-6M eirlie.s, while the er °rifle Otthose incorporated under
the general corporation law " e"0--d5g7ecrty e Lat?OrNode (National Service
Corporatio0 v. NLRO, -V*820,.iyetwriber 29, 1986p
8
'
4-,
Q: May the Depa .Teit of Labor e4rcilef jurisdic over cases involving
employers' norpally 7vered by the CiOipervice La
ANS: Yes.' W en-a, overn ent-entit4iLis-unde the tie re enters into a
contract eg 7 .1 'tlf a securi it
aRency...prikjaral gency jt-tdcpmes an indirect
employer of th secu. ty guards orltiegriitols>,‘ such a situat~otf el said government
entity will be axe e byrth Labor boderabVthe DeiM ent Labor for the liabilities
for the wage of El inel‘irg •Ay---hirede—Foyee !file es Development
Authority v. t@sera)1Labo .,-f?' 'I tion milisio 4' 4,8 5, September 4,
li \ --,,
1992).
Q: Doesthe Supreme CoKt ha isci ina court personnel for

acts done prior to e lattePs,tr
ANS: Yes,, except if e jurisdiction over a court
employee belongs to -St:10rjie cr rep); whether the offense was
committed ibefore or after em Invent t4p6, owever, if the court personnel
subjected himself to the discipliFiaty. act[osLanother court or tribunal exercising quasi-
judicial funCtions to secure an affirmative relief, he may not afterwards deny that same
jurisdictiOn;to escape a penalty (Ampong v. Civil Service Commission, G.R. No. 167916,
August 26)2008).
Q: What are the classes of positions under the civil service?

ANS: Under Executive Order No. 292, or the Administrative Code of 1987, civil service
position0 are currently classified into either 1) career service and 2) non-career service
positione (Civil Service Commission v. Javier, G.R. No. 173264, February 22, 2008).
112
'VOL 1.
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2019
Q: Distinguish the career service from the non-career service.

ANS: They,may be distinguished as follows:
Career Service Non-career Service
Nature
Career service is characterized by entrance Non-career service is characterized
based on, merit and fitness to be determined, by entrance on bases other than
as far ' as practicable, by competitive those of the usual tests utilized for
examinations or based on highly technical the career service. Their tenure is
qualificafions. There is opportunity for limited to the period specified by
advancement to higher career positions and law, or which is coterminous with
security of tenure. that of the appointing authority of
subject to his pleasure, or which is
limited to the duration of a
particular project for which purpose
the employment was made.
Positions Included
The Career. Service shall includ,e1 The Non-Career Service shall
1. Open Career positions for appoi, include:
which prior qualification in an' a l,Electlek officials and their
examination is required;14 kAWirdl or confidential staff;
2. Closed. Career pofiilions which 2. Deparrent
t Heads and other
scientific. or higfteochnical official' f Cabinet rank who
these include theofaepty and,, ca hol sitrs at the pleasure
staff of ;stateallegesteA universit President and their
and sole?' ific"Pind teel-thital positio - pejson .1 or confidential staff(s);
scientifiC ,yrresear institutions 3. Chair tan d members of
shall eSta "lish,rarr aintal g,their ISS.0 boards with
merit sySie s; *A. fiaErnf office and their
--- ,.,..1,
3. Positions!, in'#h,,e,~C ecutive Se personal or confidential staff;
ry,
namely, , Urkte ec re Ass 4. Contractual personnel or those
Secretary, Bureau Di actor, Assis whose employment in the
Bureau Director Regiona Di ctLemment is in accordance
Assistant, Regio Direct.„qtri; Cl i its a special contract to
Department Servi and Fier officers of undertake a specific work or
equiva ent rank as NA p identified by job, requiring special or
the Career Executive SenAce Board, all of technical skills not available in
whom are appointed by the President; the employing agency, to be
4. Career officers, other than those in the accomplished within a specific
Career Executive
6 Service, who are period, which in no case shall
appointed by the President, such as the exceed one year, and performs
Foreign Service Officers in the or accomplishes the specific
Department of Foreign Affairs; work or job, under his own
'5. Commissioned officers and enlisted men responsibility with a minimum
of the Arnied Forces which shall maintain of direction and supervision
a separate merit system; from the hiring agency; and
6. Personnel of government-owned or 5. Emergency and seasonal
controlled corporations, whether personnel (R.A. 7160, Sec. 6).
performing governmental or proprietary
functions,1 who do not fall under the non-
career service; and
7. Permanent laborers, whether skilled,
•semi-skilled, or unskilled (R.A. 7160, Sec.
5).
113
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I
Q: How are appointments in the civil service made?003
ANS: It depends as to the nature of position, whether for competitive or non-competitive
positions
1. 'Appointments to competitive positions are made according to merit and
fitness to be determined, as far as practicable, by competitive examinations.
2. Non-competitive positions, on the other hand, do not have to take into
[account merit and fitness by competitive examinations. Instead, appointments
are made in accordance with highly technical or confidential qualifications.
;These positions included those described by the Constitution as policy-
Idetermining, primarily confidential, or highly technical (DE LEON, Philippine
I COnstitutional Law (2012), supra at 723).
Q: What iS,"a policy-determining position?

ANS: A Ipolicy-determining position is one where the officer lays down principal or
fundamental guidelines or rules, or formulates a method of action for government or any
of its subdivisions (NACHURA, supraaL335)..,
0,... .n
IT
Q: Whatis a primarily con icKurttial posItym
A..,,,„.s.
Tom'
f ). ,ih„
ANS: A primarily confislentgViiiijmenotes.not only copmence in the aptitude of the
appointee' for the dupeti,ofthe;pfge but primarily closetintiwqSkwhich insures freedom
g„, anpeportifiprvithout4hMassrNt or freedom from
of discussion, de.),egdtiopt
misgivings'of be9,00slo personal tusr-9-t cofidential matte —lof state (Civil Service
CommisSion v. Davie . No. 17326/4, siciPrafi'l
.
(2
Q: Whafis ,' a highlYxtTchnicql post ion'. iii .., )„„.....4
ANS: A highly technipl position ieillisait which'-rAtiire, possesion xi technical skill or
training in '0 su re e r Super or dedreei:(J'AeltURA, sir ra at 330.
1 cA _„
-,,,,, im, •
.
/
Q: What is, the fie,,temirbW. detor ticl ssArng Si ion o icy-determining,
primarily Contheritiallor hi hjylzchma r",,,,A,7,
ANS: It is the nature of Ii po§iflp 1 at-fin 11Y.1e s w- ether ajposition is primarily
confidential po1iN deterrn(Qing xectttive pro tuncennents can be
no more than initiakieternninAtjo 0 in casef conflict. Such initial
determin0tiOn through, execpe oetAlat I reclose judicial review
-Piller() V.' HechanovekG.R: ,96yas cited in Civil Service
CommisSion v. Pililla Walgr --rs nth- 5, 2013).
,
Q: Can the, Civil Service Commissio
oil me the nature of the appointment of a
public officer?
ANS: No. The Civil Service Commission is not empowered to determine the kind or
nature of the appointment extended by the appointing officer, its authority being limited
to approVing or reviewing the appointment in the light of the requirements of the Civil
Service Law. When the appointee is qualified and has satisfied other legal requirements,
the CommiSsion has no choice but to attest to the appointment in accordance with the
Civil SerViCe Laws (Luego v. CSC, G.R. No. L- 69137, August 5, 1986).
Q: Can the Civil Service Commission revoke an appointment on the ground that
another employee is better qualified?
ANS: No The CSC cannot revoke an appointment on the ground that another employee
is better qualified; its authority being limited to approving or renewing an appointment in
the light of the requisites of the law governing the Civil Service (Aquino v. CSC, G.R.
No. 92403, April 22, 1992).
114
' •••
VOL 1.
2019
11,
Q: Can thi6Civil Service Commission convert a temporary appointMent into a
,•
permanent One?
ANS: No. The,;,, CSC cannot convert a temporary appointment into a permanent one. It
may however approve as ,temporary an appointment intended to be permanent where
the appointee does not yet possess the requisite eligibility (Province of Camarines Sur
v. CA, G.F2 'No. 104639, JUly 14, 1995).
J. PERSONNEL, ACTIONS -'

Q: What is!e'personnel action?
ANS: A personnel action .involves the movement or progress of personnel in the civil
service. There are seven personnel actions, to wit: (TAP-D2Re3S)
1. Transfer;
!C•
2. Apccintment through certification;
Promotion;
3. --I ,;
4. Detail;
5. Demotion;
6. Reinstatement;
7. ReeMployment; • -•:;i:•44.i
8. ReaSsignment (ADM. COrigie V, Title I-A, Section 26); and
9. Seapndment (CSC MBLIOILAILD CIRCULAR N.O. 15, series of 1999, Rule
III,!.*ction 6, par (c); .CRUZ-Mg
,.l• 4: .061 Q ce ;Supra at 106).:
11
Q:Whatistiinsfer
AV.4"
ANS: A movement frcim ore positiolpifr nother which is Hof vivalent rank, level, or •
salary withorUtibreak ipFeryice ipyolving t issuance of anarintment (ADM. CODE,
Book V TitlaipA, Section 20Pgr. (3)).
H ' 101 '''''.
L.,‘‘. %
Q: What is app,,,,omtmetiktbrough certifica ion?
ANS: An apAiffrnenelhSobgh cbdificatiop,o a pogitr e ice, except as
herein otherWikprovipegAall belssuedito a person Mb selected from a list
of qualified: Pergtkojlifk,ed by tire commission from an appropriate register of
eligibles, andIWho nieets Lplall •te
iothef req (cements of the position.
H 4
All such persons must se •• e a probajima ienrjd . i onths following their original
appointment .and shallitndergoOftioroug c aracter investigation in order to acquire
permanent civil serviceptatu. A probationer may be dropped from the service for
unsatisfactory !conduct BAfe., t of capacity any time before the expiration of the
probationary.Ceriod: Provided, That such action is appealable to the Commission.
(ADM. CODE:Book V, Title 141, Section 26, par. (1)).
rl.
Q: What is kOrnotion? .. •
ANS: A promPtion is a movement from one position to another with an increase in
duties and responsibilitieS.. as authorized by law and usually accompanied by an
increase in 016y4: The movement may be from one department or agency to another or
from one organizational unit to another in the same department or agency (ADM.
CODE, Book. V.Title I-A, Section 26, par. (2)).
Q: What is demotion?
ANS: A dernCtiCn is defined as the movement from one position to another involving the
issuance of an appointment with diminution in duties, responsibilities, status, or rank
which may or"May . not involve reduction in salary (CRUZ, The Law of Public Officers-
(2007), p.106). ,-;!
11' '
115
VOL 1.
2019
•
Q: What is detail?
ANS: 'A detail is the movement of an employee from one agency to another without the
issuance of an appointment and shall be allowed, only for a limited period in the case of
employees occupying professional, technical and scientific positions. If the employee
believes that there is no justification for the detail, he may appeal his case to the
Commission. Pending appeal, the decision to detail the employee shall be executory
unlesS 'otherwise ordered by the Commission (ADM. CODE, Book V, Title I-A, Section
26, par: (6)).
Q: What is secondment?
ANS: Secondment is the movement of an employee from one department or agency to
another'Which is temporary in nature and which may or may not require the issuance of
an apPointment but may either involve reduction or increase in compensation (CSC
MEMORANDUM CIRCULAR NO. 15, Series of 1999, Rule Ill, Sec. 6, par. (c)).
Q: Who may be reassigned?

ANS: An employee may be re sigfrelpiniteiiorganizational unit to another in the
same 'agency; provided, ttja supp, reaspig m t;'shpirliot involve a reduction in rank,
status ,Or salary (ADM. CDR BTok,-V, TY1 Sec,lion26, par. (7)).
Q: WhO May be rei ted?

ANS: 1/6kny persoi i
vil bee permanently ap o position in the career
service end whops; -Ugh o deliriquejlp iyrkh-liscolduat eee s9parated therefrom,
may be, reinstatefd to,a osition in the sarp9evel for w 'ch h is-qua (ADM. CODE,
Book v, Title I- ,pS n 26,1 ar.4_4))
1,,,e10.21
Q: WHO may be re-eipploye ? Win.
ANS: ;Names
!N F fergOnS have positions in the
career service and-iiho tion in force or
reorganization,pqfrie en loyment shall be
made (ADM. CODE, I33ok
Q: Whatis the a o tornati eversto / .0

le3
ANS: The rule occ rs when ereQseqi_ rirdkrb °Ions simultaneously submitted to
the CSC for approve nd th, bnaOlssid rsapigtovei ppIntment of a person to a
higheriPosition. The e -c 1s v lidate-th -rorlopon Dtfiose in the lower position
and automatically revert t to trkir tract* les. Before a public official or
emploYee can be automaticall s_9424:1!)11-1(laue osition, there must be:
1. ; IA series of promotions;
2.1 All appointments are simultaneously submitted to the CSC for approval; and
3. , The CSC disapproves the appointment of a person proposed to • a higher
position (Divinagracia v. Sto. Tomas, G.R. No. 110954, May 31, 1995).
K. ACCOUNTABILITYOFPUBLICOFFICERS
Discipline
Grounds
Q: What are the grounds for disciplinary actions of elective local officials?
ANS: Arrelective local official may be disciplined, suspended, or removed from office on
any of the following grounds: (D-CDO-A15F0)
1. , 'Disloyalty to the Republic of the Philippines;
22 Culpable violation of the Constitution;
3.' Dishonesty, oppression, misconduct in office, gross negligence, or dereliction
of duty;
4. Commission of any Offense involving moral turpitude or an offense punishable
by at least prision mayor;
116
5. Abuse of authority;
6. UnaUthorized absence for fifteen (15) consecutive working days, except in the
case of members of the sangguniang panlalawigan, sangguniang panlungsod,
sangguniang bayan, and sangguniang barangay;
7. Application for, or acquisition of, Foreign citizenship or residence or the status
of an immigrant of another country; and
8. Such Other grounds as may be provided in this Code and other laws (R.A.
7160, Sec. 60).
1,
Jurisdiction
Q: Who may "remove an elective local official?
ANS: An elective local official may be removed from office on the grounds enumerated
above by order of the proper court (R.A. 7160, Sec. 60, par. (2)).
Q: Where shall the verified complaint against an elective official be filed?

ANS: A verified complaint against any.e.frihg local elective official shall be prepared as
follows:
.
1. A complaint against any:pipe-We icial of a province, a highly urbanized city,
an independent compon0.00 ge component city shall be filed before the
Office of the President; Vi
411._
2. A complaint against anyielegy,%,offiAlAa mi.mifiality shall be filed before
the sangguniang pan.laTawiaPP se dreigtartMbe appealed to the Office
of the PresidenWeli'd
3. A cOMplainteainst any e beti barangay offici all be filed before the
sangguniangranAingsod,..dt sangguniang baya ernedwhosei decision
shall be finals diegettory (R.Aks7160, Sec. 61).
irA
Lo 17TZeN.F.
Dismissal. PrentiveSuspension, ReinsfotementandBac ISataries
40 1%
Q: What is preventivesi.fspenski ?
ANS: Preventive measure whezelet:56 icer or employee is
temporarily prOVen P.airigrintrrcisip'g throwers and responsibilities of his office or
position pending'in eptigatior&of any alleg d misfeasance or malfeasance committed by
the person suspended PaffiaVton NL 44rOTIRo.„146779, , January 23, 2006).
z it
Q: What is thepUrpos,e.tof a prpentive suspension?
ANS: It is a measure intinVeditotnable the disciplining authority to investigate charges
against respondent by prgi.Ofth the latter from using his position or office to influence
witnesses, to intimidate them, or to tamper with the records which may be vital in the
prosecution oftne case against him (Gloria v. Court of Appeals, G.R. No. 131012, April
21, 1999).
Q: Can preventive suspension be imposed without any notice and hearing?

ANS: Yes. Since preventive suspension is not a penalty, it may be imposed without any
notice and hearing. It is merely a preliminary step in an administrative investigation and
is not the final cletermination of the guilt of the officer concerned (Garcia v. Mojica, G.R.
No. 139043, September 10, 1999).
Q: Distinguish the kinds of preventive suspension of civil service employees who

are charged with offenses punishable by removal or suspension.
ANS: There are two kinds of preventive suspension on civil service employees, to wit:
1. Preventive suspension pending investigation — it is a means to enable the
disciplining authority to conduct an unhampered investigation. It does not
entitle the public officer to back wages due for the period of suspension even if
found innocent of the charges unless suspension is unjustified
117
2. 1Preventive suspension pending appeal - punitive in character. If exonerated,
he should be reinstated with full pay for the period of suspension pending
appeal (ADM. CODE, Book V, Title I-A, Secs. 47, par. (4) and 51).
Q: Distinguish between the provisions of the Revised Administrative Code, the

Ombudrnan Act, the Anti-Graft and Corrupt Practices Act, and the Local
Government Code regarding preventive suspension.
ANS: The distinctions are as follows:
Who has the • •. ..•

'What-are the • ‘• How long will
authority to
grounds for • prOventive
• impose ••
preventive suspension last?
preventive
suspension?
suspension?
The proper ,„Ervgazilive It shall not exceed 90

disciplining authorifr i s tui p eii glom,,,, may days. When the
may prevytivelVsi k be imPosted•bPthe administrative case
k. , A. .1( ..,4
suspen01 6nrm l'.4'. , „„,11 gler a iviplinin,g \ against the officer or
suborqjnate4c,,erliir authc;ffi,,,.(4/DA4., 'employee under
m
e ogee under his,- --c-9DE,.. Bocikis,AIN prtventive suspension
a oritNendra-n,, T/tle
.4. t. i' '
(-6, Seb- )51):', tot finally decided
in e tintion, f the j-j the disciplining
charge gainr such taigto0ty within the
diflper r employee— penori of ninety (90)
involys: 1 --, ••• Mrs fter the date of
a. ,DjshonesV; susp_e sion of the
. Under I- ii"..' aopress oc resp8 ent who is not
i
E.°. 292, r reve ,, presidential
?`"\.1
s. 1987 . %-(-; Miscon ct appotee, the
• (Revised b. Neglect i respondent shall be
. Adm. perfatnan aut • atically
Code) duty; aft reinstated in the
A
d. qhere aj ervice (ADM. CODE,
renonsr o Book V, Title I-A, Sec.
belielf t 52).
respondent,,
guilty of the
charges which
would warrant
his removal from
the service
(ADM. CODE,
Book V, Title I-A,
Sec. 51).
Preventive Preventive Any single suspension

suspension may be suspension may of a local elective
•
Under . imposed at any time: be imposed by: official shall not
••• R.A. No„ a. After the issues a. The President, exceed 60 days. In
716Q are joined; if the the event that several
b. When the respondent is administrative cases
•- .(LAC) • an elective are filed against an
evidence of guilt
is strong; and official of a elective official, he
•rovince, a cannot be
118
2- .F"1) Fip;
c. Given the highly preventively

gravity of the urbanized or suspended for more
offense, there an than ninety (90) days
is great independent within a single year on
probability that component the same ground or
the continuance city; grounds existing and
in office of the b. The governor, known at the time of
respondent if the the first suspension
could influence respondent is (LGC, Sec.63, par.
the witnesses an elective (b)).
or pose a threat official of a
to the safety component
and integrity of city or
• the records and municipality;
other evidence or
• (LGC, Sec. 63, c. The mayor, if
par. (b)). the
respondent is
'ian elective
114bfficial of the
• 't' ba a .14,
It..-440 g pa t•
--(LG C S ec •.4 1
• ...—a, , 63, par. (a . ; 1,
...:=2-4,-- , .11
Any =public officer:: '••7-Tt. e / 4 shall not exceed 90
against 'whom any Sandiganbayan ..„., ; days. This is a
. :',Ati -
criminal rikseoution tiAs the authorp ' product of case law.
:'3
rider
ftmformatica
t",ctrAk •
"valid, ti
under p?-6/
a order
...,, entive
the
4
The law itself does not
say 0 days. It was
•
Under
tthis-ACrortindehhe
/ - iv
stgpensio d , Atcovti after the
'provisions„ •t1-.4,1 int ifr,, mbent p ic i?..giu 1 IV S er v I c e Decree,
13.A. No. . . ? cil.J
RevisedtPerial Codi offibial charged which was later
.3019. (The
on'tliiS'ery ik6endin6 lkith violation of incorporated in the
••• Anti- 4 I-- .
in court, shall be tre 9aisions of Administrative Code.
:Graft and N,,:. .w ,F..
Corrupt
suspended'at ' from
„,,..,. f•ift
. ,:e'
, riblirogr
,,..,,..,.. ...
,,,,ga
r . This was done
office R.A.36.1.9 30f9 (Santiago v. because the
:01"ractices •
Sec. 13)3 ‘o
i. ' ' Sandiganbayan, Constitution abhors
t• • Act) • . 4
••.- G.R. No. 128055, indefinite suspension
.:q
April 18, 2001; (R.A. 3019, Sec. 13;
•
R.A. 3019, Sec. Bolastig v.
13). Sandiganbayan, G.R.
No. 110503, August4,
1994).
' The Ombudsman or Preventive The preventive
, his Deputy may suspension may suspension shall
• , preventively suspend be imposed by the continue until the case
-.-..” Under any officer or Ombudsman or is terminated by the
•'::.R.A. No.... employee under his his Deputy (R.A. Office of the
?:6770 (The ,authority pending an 6770, Sec. 24). Ombudsman but shall
:..,OniPilds-, investigation, if in his not be longer than six
. Map Act judgment the (6) months, without
..: of 1989) evidence of guilt is pay, except when the
•:.j strong, and(a) the delay in the
charge against such disposition of the case
:••. officer or employee by the Office of the
119
involves dishonesty, Ombudsman is due to
oppression or grave the fault, negligence
misconduct or or petition of the
neglect in the respondent, in which
performance of duty; case the period of
(b) the charges such delay shall not
would, warrant be counted in
removal from the computing the period
service; or (c) the of suspension herein
respondent's provided" (R.A. 6770,
continued stay in Sec. 24).
office may prejudice
the case filed against
him" (R.A. 6770,
Sec. 24 .
Q: Discuss the validity of a iriTefinite- stirspensiornv,•

ANS: Indefinite suspensio e.ar rot valigjIneftectith9 preventive suspension will be
the penalty itself withodAffiring,of,guilt.afteCklife hearing, to the express
mandate of the Corlerittition;,apethe Civil Service lawf(taxpb,v.k Sandiganbayan, G.R.
No. L-65848, May24;t19:8,,IrtheAaW-66—giradefini.03(4,V;entiAsuspension because
the indefiniteness th0 constitutional •gparantreNrkdptliq due process and
equal prOtection lauset fas vpll as the riglit of-public officers end employees to security
of tenure (Bac i v 0 ice o the President G.R. Nos. 1886811 201130 March 8,
2017).
. •••,'
Q: Can the 0 budivianITRpse rirexe4,17.re,euspen, ion in grirnhial cases?
ANS: No—It i th&cpurt . te the aliiiinircase 1.ty d that has the authority to
impose OrevengI ...I spen Tursuaptgtd1 Section '-16S njetheigcal or prosecutor
nor the Ombud n (Lucian -v vin_cian tiotie G. Nd L-30//6 June 20, 1969).
\ l5
C:C "1I s
Any public offilt again who. i Of° ecSon undey a valid information
under this Act or u der the prgyi 12423f1WIR ,3e1:1 iflenal Cody-con bribery is pending
, qi
in court shall be sus ende orq,,,e8 . eobe trqicled by final judgment, he
' all retirementr ti beriefits-untl
shall lose Awl 1
- 4'11f he is acquitted, he shall
be entitled .toreinstattkud,9.'ithe s"Ngie be efts which he failed to receive
during suspension, unless inlhe.rntlesittipjatrgtive proceedings have been filed
against him (R.A. 3019, Sec. 13).
Q: Cana preventive suspension be imposed on a local elective official within 90

days prior to a local election?
ANS: Np. Under the Local Government Code, no investigation shall be held within
ninety (90) days immediately prior to any local election, and no preventive suspension
shall beiimposed within the said period. If preventive suspension has been imposed
prior to Ithe 90-day period immediately preceding local election, it shall be deemed
automatically lifted upon the start of aforesaid period. (R.A. 7160, Sec. 62, par. (c)).
Q: Is preventive suspension under the Anti-Graft and Corrupt Practices Act

mandatory?
ANS: Yes. The firmly entrenched doctrine is that under Section 13 of the Anti-Graft and
Corrupt ; Practices Law, the suspension of a public officer is mandatory after a
determihation has been made of the validity of the information in a pre-suspension
hearing conducted for that purpose (Segovia v. Sandiganbayan, G.R. No. 124067,
March 27, 1998).
120
'VOL 1.
2019
Q: Can the Sandiganbayan impose preventive suspension against a Senator of

the Republic of the Philippines?
ANS: Yes. Republic Act No. 3019 does not exclude from its coverage the members of
Congress.i.The order of suspension prescribed by the R.A. No. 3019 is distinct from the
suspensioi,-i imposed by the Congress to discipline its own ranks under Article VI,
Section 16,(3) of the Constitution. The former is not a penalty but a preventive measure
whereas the latter is a punitive measure imposed by the Senate or the House of
Representatives, as the case may be, upon an erring member (Santiago v.
Sandiganbeyan, G.R. No. 128055, April 18, 2001).
Q: May a public officer be entitled to compensation for the period of his

preventive suspension?
ANS: Yes, he may claim compensation under certain conditions:
1. FOr •those suspended under the Administrative Code —In case of preventive
suspension pending appeal, he may claim his salary only if he is found
innocent of the charges wl-tiO caused the suspension and when the
suspension is unjustified (q$.63'itCruz, G.R. No. 187858, August 9, 2011).
2. Fof those suspended unaer1h0Aocal Government Code — The respondent
official preventively suMeAtrigf om office shall receive no salary or
compensation during such stiVeqlon; but upon subsequent exoneration and
reinstatement, he shall ief.:We 11,0g or co4pensation including such
emoluments accruing cli.irin610 ;7,eiiepefigiOURfAr—Pf60, Sec 64),
, vo:o
-,e1V
Q: Is an illegally dprrlissed government employee e fled to back pay and
benefits? , ,e„..X Av latgr
p( • A
ANS: Yes. An illegajtvlismi,edgovernrrent employee who is later ordered reinstated
is entitled to baeoNagespgd.other moktary benefit tIta time of his illegal
dismissal up toigis reinstatement, beaushe is consid notNaving left his office
and should It ivv,,ai4 mparable com ensatio e. o 's reinstatement
(Gabriel v. Dpnlogo, G.R. 9. 8749,>Sep ber 17,`19
e y ..w
Q: Does the "no t. , no pay" Rolicy ply to a public officer who was illegally
dismissed but lateow o'- '
.
ANS: No. The reinstated aRloyee canno a
. ,:are•i .4.•.1. ateo
io0
or inability to work or to render
any service from the tire wasailfefaVffismis8e
Jao
po ,, - time of reinstatement. The
policy, of "no work, no r4 " can otibe appl'ed for such.distressing state of affairs was not
of his own making or lila 4 Verily, to withhold back salaries and other benefits during
his illegal dismissal woUltf d to naught the constitutional guarantee of security of
tenure for thOse in the civil service (Constantino-David v. Pangandaman-Gania, G.R.
No. 156039, August 14, 2003).
Condonation Doctrine
Q: What is the Doctrine of Condonation?
ANS: The rule is that a public official cannot be removed for administrative misconduct
committed during a prior term, since his re-election to office operates a condonation of
the officer's previous misconduct to the extent of cutting off the right to remove him
therefor (Salalima v. Guingona, G.R. Nos. 117589-92, May 22, 1996). When the people
have elected a man to office, it must be assumed that they did this with knowledge of his
life and character, and that they disregarded or forgave his fault or misconduct, if he had
been guilty of any (Aguinaldo v. Santos, G.R. No. 94115, August 21, 1992).
Q: Is the Doctrine of Condonation still applicable?

ANS: No. The condonation doctrine — which connotes this same sense of complete
extinguishment of liability as will be herein elaborated upon — is not based on statutory
law. It is a jurisprudential creation that originated from the 1959 case of Pascual v. Hon.
121
2019
Provincial Board of Nueva Ecija, which was therefore decided under the 193L,
Constitution. To begin with, the concept of public office is a public trust and the corollary
requirement of accountability to the people at all times, as mandated under the 1987
Constitution, is plainly inconsistent with the idea that an elective local official's
administrative liability for a misconduct committed during a prior term can be wiped off
by the fact that he was elected to a second term of office, or even another elective post
(Carpio-Morales v. Court of Appeals, G.R. Nos. 217126-27, November 10, 2015).
Impeachment
Q: What is impeachment?
ANS: Impeachment refers to the power of Congress to remove a public official for
serious crimes or misconduct as provided in the Constitution (Corona v. Senate of the
Philippines, G.R. No. 200242, July 17, 2012).
6 6
CIONho may be removed by impeachment? (PV-SCO)
ANS: The following are the impeac able,officers_:,
1. President; -,,.,„
2. Vice-President/ 1 I ?• **--•,
.: _ N
3. Members of thg Sup f e7Qourtr---,,',, 4 I .,,d' '"•=,.,
4. Members of the Commissi&is; Afid ,,,`'. \
Ombuds aritCONST itla 78-0:672):----..N2 ,tk6,
'
, , 11:21 A 7 7 li. N •e.
Q: What are the gro his fo mpeachmept?:A.
i %
ANS:The grouckls for ynpeaq ment are:::(9TBP) 1
1. CulpiViolbtion ofitre-goligtitUrn;
2. Treason-i / 1 - -, . lY1 . - t,-„,
1 '' 11111 -\. g."'
raft, and corruptio.neqlrgo, ,, .,, crim
3. Brib
, 4. Betr e ',brio ka :
@ , (co/4T, ..0 Xl, Se .B. )
6.̀.
.)% c::q I. ./9/43/ i"'rl
Q: !Can impeal cApr ce , irg Oan 4zgi pe chable offi er be lodged at
any time durinksaid otficeKsIrk reN :1.ì!:2 Se!" if i
ANS: No. It is dukject to Illse on \i - p.
.12 liV „Le. ,pab theyOnstitut • n, no impeachment
proCeedings shall be initiatd ag in #111 rre`'6Ncial ore than lice within a period of
one year (CONST., \ 1 . XI, Sy a 1 \ rl 13- 0' ,,,..„
f 0,--$ '''''
Q: What does the phra einitiateAhe imp9a9hrq6 Htr6,.. c edings' mean?
ANS: The initiation 'starts eit4-e filingine0aMitit which must be accompanied
with an action to set the comp1011t---rno,ving-1.refels to the filing of the impeachment
complaint coupled with Congress' taking initial action of said complaint. The initial
action taken by the House on the complaint is the referral of the complaint to the
Committee on Juttice (Francisco v. House of Representatives, G.R. No. 160261,
November 10, 2003).
Q: What is the process of impeaching an impeachable officer?
ANS:
1. The House of Representatives shall have the exclusive power to initiate all
• cases of impeachment.
A verified complaint for impeachment may be filed by any Member of the
House of Representatives or by any citizen upon a resolution of endorsement
by any Member thereof, which shall be included in the Order of Business
within ten session days and referred to the proper Committee within three
session days thereafter. The Committee, after hearing, and by a majority vote
of all its Members, shall submit its report to the House within sixty session
days from such referral, together with the corresponding resolution. The
resolution shall be calendared for consideration by the House within ten
session days from receipt thereof.
122
3. A vote of at least one-third of all the Members of the House shall be necessary
either to affirm a favorable resolution with the Articles of Impeachment of the
COMmittee, or override its contrary resolution. The vote of each Member shall
be recorded.
4. case the verified complaint or resolution of impeachment is filed by at least
oriOhird of all the Members of the House, the same shall constitute the
Affidles of Impeachment, and trial by the Senate shall forthwith proceed.
5. No impeachment proceedings shall be initiated against the same official more
thanonce within alperiod of one year.
6. The Senate shall have the sole power to try and decide all cases of
impeachment. When sitting for that purpose, the Senators shall be on oath or
affirthation. When the President of the Philippines is on trial, the Chief Justice
of the Supreme ,Court shall preside, but shall not vote. No person shall be
convicted without the concurrence of two-thirds of all the Members of the
Senate.
7. Judgment in cases of impeachgant shall not extend further than removal from
office and disqualificatiopAVId any office under the Republic of the
Philippines, but the party'Eated shall nevertheless be liable and subject to
prosecution, trial,:and plAilS,Ordpccording to law.
8. The Congress shall proi)uf41 on impeachment to effectively carry
out purpose of this sectfol V 1 0 .654vIrt. X/, Seel 3)
Q: Will a disbarment case filed against an impeachable officer, who is also a

member of the Bar, Winer?
ANS: Yes. The Cou s..aSsumption. of jurisdiction over 4 n aqion for quo warranto
involving a person who` odlitoth'erwise bean impeachable ocial had it not been for a
disqualificatiOn; *stfiti violP9„.of the co constitutional prcvisio,p that impeachment
cases shall b clusiyoly tried and Ere.pi by the Se ate. An action for quo warranto
tests the right, par0%,occi.tpy a pu positio isz„ eT IO assailing
eding
the title to a 'R ollo office?'1;de issge4o b esolved b '.4KM,Ifirl' ether or not the
defendant is legally tiffr e 'ng a osition which'Ineinto the questions of
whether defendant ,a4egally appcinted as legally qualified and has complete legal
title to the office. If d'ef ndantts found to .notmqualified and without any authority, the
relief that the Court g nt§gilthe ouste elusion of the defendant from office
(Republic v. Sereno, G No. 237 28P - '*20Th
Q: May the Supreme Co ot ;• the decision of the impeachment court?

ANS: Yes. Under the exiferoced jurisdiction of the court, the court may exercise its
power of judieial, review in order to determine whether the impeachment court acted with
grave abuse of discretion amounting to lack or excess of jurisdiction (Francisco v.
House of RePre6entatives, G.R. No. 160261, November 10, 2003).
Ombudsman (CONST.. Art. Xi Secs. 5 to M. in relation to R.A. No. 6770 or otherwise

known as 'THE OMBUDS14ANACT OF 1989'9
Functions
Q: What are the functions of the Ombudsman?
ANS: The fol owing are the functions of the Ombudsman:
1. Investigate on its own, or on complaint by any person, any act or omission of
any public official, employee, office or agency, when such act or omission
appeas to be illegal, unjust, improper, or inefficient (CONST., Art. XI, Sec.13,
par. (1)). It has primary jurisdiction over cases cognizable by the
Sandiganbayan and, in the exercise of this primary jurisdiction, it may take
over at any stage, from any investigatory agency of Government, the
investigation of such cases (R.A. 6770, Sec. 15, par. (1));
123
D'BOOK
Request any government agency for assistance and information necessary in
the discharge of its responsibilities, and to examine, if necessary, pertinent
records and documents (CONST., Art. XI, Sec.13, par. (5));
Publicize !atters covered by its investigation when circumstances so warrant
and with due prudence (CONST., Art. XI, Sec.13, par. (6));
4. Determine 'the causes of inefficiency, red tape, mismanagement, fraud, and
corruption in the Government and make recommendations for their elimination
and the observance of high standards of ethics and efficiency. (CONST., Art.
XI, Sec.13,I par. (7)); and
Investigate and initiate the proper action for the recovery of ill-gotten and/or
unexplained wealth amassed after February 25, 1986 and the prosecution of
the parties involved therein (R.A. 6770, Sec. 15, par. (11)).
1
Q: What are the pdWers of the Ombudsman?
ANS TheI, following, are the powers of the Ombudsman under R.A. 6770 and the
Constitution: ,t 1, „.,,,,„.........."..!.., .
1.,'' Direct, upon compla, inorat its ow insfalice any public official or employee of
. I.the Governrnerlrorantlubdi isi n,iggilcy-oriWrumentality thereof, as well
1. ' as of any Over -eilt-9Whe jOr. - rolleal . cocp9Atign with original charter, to
j, perform angx any
-expe Avra or duty requi ed-by laVpr to stop, prevent, and
, I correct apf,a114e,,er i proprietrin-theAz r ai r 6\duties (CONST., Art.
T XI, Sec.,IrparN2)); . 4 .
a7 ). V A
2. Direct Ifief,-4e-t co • cerne_ to ta, s appropnite action agaknst a public official
or employee fault and recomffpgd his rem val, 'ayskperiAn, demotion, fine,
' ! tens re 'or- tign7arrd-L=risure-compli ce thereilq 1CONST., Art. XI,
Sea 41(3)); -• ..Irk,
L si.
Itl -,e,
' NI e ,,4b.7
1,,,,'
3. . Dire th, .,4 fficer c ncern 4-• !rftian -dppropdriate case,a 1 5 subject to such
limit lidlik.p4 m e. provided , to fqr (5 it ith c p es of documents
relati grtffontr4s\lirtrans. ct om,enterd 4.0)0 b Ice involving the
r. 1: disbuk emeilkor u pt.!blig,Ittii 020319• les, at) rep any irregularity to
the Co misSid on "forggpp °On" 6" crfi (CGNST., rt. XI, Sec.13, par.
(4));
Promulgate its ru evf pmcis such otO r powers or perform
such funcN s or du es_a F.-1N v0,2, (CONST., Art. XI, Sec.13,
5.
par (8));
Administer 4 oat is
---
subpopnrlaA4tipPi j, a duces tecum, and take
testimony in any iri% ation bip..*15/1-1 Aging the power to examine and
have access to bank acco net s (R.A. No. 6770, Sec. 15, par. (8));
6 Punish for contempt in accordance with the Rules of Court and under the
same procedure and with the same penalties provided therein (R.A. No. 6770,
Sec. 15, par. (9)).;
Delegate to, the Deputies, or its investigators or representatives such authority
or duty as shall ensure the effective exercise or performance of the powers,
functions, and duties herein or hereinafter provided (R.A. No. 6770, Sec. 15,
par. (10)); and
Preventively suspend any officer or employee under his authority pending an
investigation until the case is terminated by the Office of the Ombudsman but
'not more than six (6) months, without pay (R.A. No. 6770, Sec. 24).
Q: Can ,the Ombudsman prosecute cases outside of the jurisdiction of the

Sandiganbayan?
ANS: Ye's. It can prosecute cases before the regular courts. The Ombudsman is so
empow,ered under R.A: No. 6770 and is granted an active role in the enforcement of
anti-graft and corruption laws. Recognizing the importance of this power, the Supreme
Court does not wish to derogate it by limiting it to cases within the jurisdiction of the
Sandiganbayan (Uy v. Sandiganbayan, G.R. Nos. 105965-70, March 20, 2001).
124
VOL i.
•
2019
!,
Q: How, are administrative cases initiated before the Ombudsman?
ANS: There are three ways of initiating an administrative case:
1. i On 1 the basis of! a complaint originally filed as a criminal action or a grievance
,complaint or request for assistance;
2. An administratiVe proceeding may also be Ordered by the Ombudsman or the
!respective DePuty Ombudsman on his initiative; or
3. !By' a written complaint under oath accompanied by affidavits of witnesses and
other evidence in support of the charge. Such complaint shall be accompanied
by a Certificate ;of Non-Forum Shopping duly subscribed and sworn to by the
icomplainant or his counsel (RULES OF PROCEDURE OF THE OFFICE OF
THE OMBUDSMAN, Rule III, Sec. 3).
Q: May the 'Ombudsman' act on an anonymous complaint?
ANS: Yes, the Office of the Ombudsman shall receive complaints from any source in
whatever form concerniqg an official act or omission (R.A. No. 6770, Sec. 26, par. (2)).
i I
Q: Can the: Ombudsman file criminal charges against judges for crimes arising
from his administrative duties, nOtikihstanding the power of administrative
supervision of the Supreme Court overlysdges?
ANS: The Ombudsman must defer ectidnititi said complaint and refer the same to the
Supreme `Court for determination wbetneasaid Judge or court employee had acted
within the eCope of their administratWares4tfaceda . I f, :, t*i
v.ffiaquez, G.R. Na 102781,
April 22,1993). :1 ' • r ' ; i
,..
, dso: -:
....qn:! : :r9mtests 1 itt,
Q: May the Ombu le c pel a pLthlic officer to prodUcetdocuments necessary
for an investigationii, p o t trat the same is confidential in nature?
ANS: The'Ombudsmail!c4t9onipel the Oduction of theldorrnfnts. A governmental
privilege against. disc stip, secrets is 9ptweIghecl by the need of the
Ombudsman411he docwifents are necessary in orde, to dprry 'tut the duty of the
OmbudsmenWathe "protector of the peb e (Almonte:v vig I Vasquaz,G.R. No. 95637,
, , j• -4,
May 23, 1995) 4:„-.1 1cn,
1 1 a- '4-
Q: May theQourtsgitglier'alwith the in tigatory powers of the Ombudsman?
ANS: Yes.' The couFts maY interfere with • vestigatory powers of the Ombudsman
through the following: ,.
1. By affording itateOtionJoliezTah !tut-brie o the accused;
2. When necessW for tArderly administration of justice or to avoid oppression
or multiplicity 0%0R;
3. When there is a prejtidicial question which is sub judice;
4. When the acts of the officer are without or in excess of authority;
5. Where the prosecution is under an invalid law, ordinance or regulation;
6. when double jeciperdy is clearly apparent;
7. Where the court has no jurisdiction over the offense;
8. Where it is a case of persecution rather than prosecution;
9. Where the ch4ges are manifestly false and motivated by the lust for
vengeance;
10. Where there is dearly no prima facie case against the accused and a motion
to quash on that ground has been denied; and
11. When preliminary injunction has been issued by the Supreme Court to prevent
the threatened unlawful arrest of petitioners (Cabahug v. People of the
Philippines, G.R. No. 132816. February 5, 2002).
125
1
Judicial Review in Administrative Proceedings
I . I
Q: Does the Constitution provide for the mode of reviewing decisions of the
Ombudsman in adrriinistrative proceedings?
ANS, There I
is no provision in the Constitution about the review of the Ombudsman
decision in administrative proceedings by the courts of justice unlike in the case of
Constitutional Commissions (CRUZ, Law of Public Officers, supra at 364-365).
t'
Q: When Section' 27 of R.A. No. 6770 provided that the decisions of the
Ombudsman may ,be appealed to the SC on certiorari under Rule 45, was the
Constitution violated?
ANS:' Yes, Section 27 of R.A. No.6770 violated Section 30 of Article VI of the
Constitution, which provides that "No law shall be passed increasing the appellate
jurisdiction of the Supreme Court as provided in this Constitution without its advice and
concurrence" (Cruz v. People of the Philippines, G.R. No. 110436, June 27, 1994).
i 1
Q: W ht
h is at the proper mode oGreviewing.decisions of the Ombudsman in
admitrative proCeedingsj‹- 1 T ""kt,
ANS: The proper mode 1§,t, h
ct,file ar„Iketition_for1 r' iiewsrndpR,,
7 -. ,ule 43 of the Rules of Court
with the Fourt of Appeals vthin,15'cjays.from-,notipe:ofjudgrnent (Enemecio v. Office of
the Ombudsman,G...1 No. * 7 -,,7,31: January 13,2604).,0---
i ),
"V ----'-", AA
Q: Is 1 the , above of-the,Ornbudsman's-(pronI in administrative
i. -.;% %
proceedings abAoluter .: /;i:‘,
ANS: No. Anyorder,1 irective, or decision:; e pe altyl public censure or
reprimand, su ptfflio of Tritibre-thArlirie—riTak h's salVy all be final and
unappea able .1t1:41o. 6770 Sde:::7 27),Bic,a,u6:4,-Of the absen e of1ha right to appeal,
fl 1 ID . , . . t
the only ,available. remedy int suctucas.epr+jq,;alpetition for c ttiorarr under Rule 65.
(RULES OF a) R. r Uk565 Sec. 1.).:;..2:2 ':"'" J
i,
Judicial Re vie ',Re al ProC• din 5--',t
tL lk \-:"<ov,,, 1,id ,„
Q: Whatris the remedy,of atriag rtve 0 en th/Ombilsman has found
sufficient cause t9 indiabim in/a: rimiplita
ANS: It depends. Ighel Om Ns d
r? ' ' zTete7T- ntriAtio obable ause was tainted with
grave Obuse of discrbtiOn, a it o-rack-or-ece s oflucis fiction, the party may file
a petition' for certiorad,Ho IN? , th-ere-wat no se of discretion, then the
aggrieved party has nO rem0y,94sLtil the remedy of an aggrieved
party in Case the OrnbudsmaThfouzg Ju icreht)b use to indict him in criminal or non-
administrative cases.The I Supreme -CM- cannot supply such deficiency if none has
been provided in the law (Tirol v. Sandiganbayan, G. R. No. 135913, November 4,
1999). ! I
i J
Office of the Special Prosecutor
1 I
Q: How,are
_ special prosecutors of the Ombudsman appointed?
ANS: The Ombudsman and his Deputies, including the Special Prosecutor, shall be
appointed by the President from a list of at least twenty-one (21) nominees prepared by
the Judicial and Bar Council, and from a list of three (3) nominees for each vacancy
thereafter, which shall be filled within three (3) months after it occurs, each of which list
shall be pUblished in a newspaper of general circulation(R.A. 6670, Sec. 4).
Q: What are the qualifiCations of a special prosecutor?

ANS: The' Ombudsman and his Deputies, including the Special Prosecutor, shall be:
(N40-RIEIC10)
1. Natural born citizens of the Philippines,
2. at least forty (40) years old,
3. Of Recognized probity and independence,
126
VOL 1.
2019
1
, ,
,1. " membersTOf the Philippine Bar, and
5. j must not haye been Candidates for any elective national or local office in the
immediately 'preceding election whether regular or special.
.'' The Ombudsman must have, for ten (1p) years or more, been a judge or
, engaged in the practice of law in the Philippines (R.A. 6670, Sec. 5).
,. . 1
Q: What arethe prohibitions for a special prosecutor?

ANS: trio Ombudsrriah, his Deputies and the Special Prosecutor shall not, during their
tenure; i 1
• r'
1
12:
, Hold any other office or employment;
2.' 1 Directly or indirectly practice any other profession, participate in any business,
lor be finanCially interested in any contract with, or in any franchise, or special
• •
1, privilege granted by the government or any subdivisibn, agency or
;,..instrumentality thereof;
3. !lave a conflict of interest in the conduct of their office;
4. Be qualified to run for any office in the election immediately following their
cessation from office; and.
5. i.. Be allowed 'tci appear ortiactice before the Ombudsman for two (2) years
owing
foll their dessationlfrAM.:04:t
',•
No spouse or relative, by consang:u.ih,'i.,' ortffia.‘
t& ., within the fourth civil degree and no
law, buain4ss or profeational.p.attnerilWqratiaTeNifftWOMNdsman, his Deputies or
Special 1:)i.Osecutor wit ti vona (1) ytar preceding the app,, djntment may appear as
counsel Orl,agent on a ratter pendjUgApjore the Office of re'cOmbudsman or transact
business: directly or in eptistherewithl
., ,. ril.6670, Sec 9). ,,;' 1, .7c
P
Q: Whatipee the ROwers,of,41 9,0ffice ofIthe Special Prdsecutot?
ANS: Under supe :,•ision of theOmbVisman, thepficet shall have the following
powers: :', I,1.•Or
4, ,s,,,, , , 1,i,,,,.., 4iffq.
"11,,, 174741-170-W
1. 'To conduct preliminary. .w. 1 Vestig lion and prbaecuteerifruer cases within the
jurisdicti oft Ogndiga wayarac
2. ;TO enter c taliea tlazgainipg agee ments; and
3. To perfora such her duties .., signed
,...-...a,.. to it by the Ombudsman (R.A.
'S 6 70,Sec. 11 ' rie4). .1,
7:t
The Sandiganbayan
Q: What are the powers 0 1. ,fi
e` Sandiganbayan?
ANS: As a 'judicial body it is granted the power to hear and decide cases. The
Sandiganbayan shall exercise original jurisdiction in all cases involving:
1. Violations of R.A. No. 3019, as amended, otherwise known as the Anti-Graft
and Corruption practices Act, and R.A. No. 1379, and Chapter II, Section 2,
Title VII of the Revised Penal Code, where one or more of the accused are
officials occupying the following positions in the government, whether in a
permanent, acting or interim capacity, at the time of the commission of the
offense:
a. Officials of the executive branch occupying the positions of regional
director and higher, otherwise classified as Grade "27" and higher of
the ComPensation and Position Classification Act of 1989 (Republic Act
No.6758), specifically including:
i. Provincial governors, vice-governors, members of the
Sangguniang Panlalawigan, and provincial treasurers,
assessors, engineers, and other provincial department heads;
ii. City mayors, vice-mayors, members of the Sangguniang
Panlungsod, city treasurer, assessors, engineers, and other city
department heads;
127
'VOL 1.
2019
Officials of the diplomatic service occupying the position of

consul and higher;
iv. Philippine army and air force colonels, naval captains, and all
' officers of higher rank;
Officers of the Philippine National Police while occupying the
position of provincial director and those holding the rank of
senior superintendent or higher;
vi. City and provincial prosecutors and their assistants, and officials
and prosecutors in the Office of the Ombudsman and special
prosecutor;
v .Presidents, directors or trustees, or managers of government-
owned or controlled corporations, state universities or
educational institutions or foundations;
b. Members of Congress and officials thereof classified as Grade "27" and
up under the Compensation and Position Classification Act of 1989;
C. Members of the judlpiacy.witbout prejudice to the provisions of the
Constitution;
d. Chairine and
T
emb rs 9 Goribti?tional Commissions, without
N. 1 .N,
prejticre4OThe roG ionsq)f e Constiutiont and
• .1- N.
e. All ot er n'Atie a and local officia s-GO sifie ,as Grade "27" and higher
uvfer.tkte. Reatiofi, nd-Posit'on GIa sifica~i n Act of 1989.
. Other offeftes rfe onieseherer \sjmple • .U.• dd with other crimes
'committeFI*6Y/ e p blic officials.z. ndlmplo ees ntion‘d in subsection of
this s n to their bfriOi and
3. Civil inal cases tie.poi suan o a d in c nectIn with Executive
Orde 2, 14 t/Cf.f44.1SSed-ifil:9'86 .D. 16' e 4).
Sc
fill • •
Note: The S ndigd ;van all e4rOF i-#clUsive appella iction over final
judgments, rap-54 or or s of RT,C-4 'ether in xer • ise heir own original
jurisdiction or 00. 'pelf iction ed://j-4B 6 Sec. 4).
lg verned
All other rsubor inate plo an hall o by the
1 Sandjg
provisions, of th ervic o anbayan may, by
resolution ;en bang' ' 06, Se 12).
Q: Will a pre-suspens a ba an against a member of

Congress' charged with opt offhat House of Congress to
punish 'ts' member for disor e ift—uspension or expulsion?
ANS: The Suspension is valid. Section . 3019 allows the suspension of officers
charged, wIth violating the Anti-Graft and Corrupt practices act It does not violate the
Constitution. The suspension referred to in the Constitution is a punitive measure that is
imposed upon determination by the Senate or the House of Representatives, as the
case may be, upon an erring member. It is quite distinct from the suspension spoken of
in Section 13 of R.A. 3019, which is not a penalty but a preliminary, preventive measure,
prescind ng from the fact that the latter is not being imposed on petitioner for
misbehavicir as a Member of the House of Representatives (Defensor-Santiago v.
Sandiganbayan, G.R. NO. 128055, April 18, 2001).
Q: What is the scope of Sandiganbayan's jurisdiction?

ANS: The !Sandiganbayan shall exercise exclusive original jurisdiction in all cases
involving I
1. Violations of Anti-Graft and Corrupt Practices Act, R.A. No. 1379, and Chapter
11,1 Section 2, Title VII, Book II of the RPC, where one or more of the accused
are officials occupying the following positions in the government, whether in a
permanent, acting or interim capacity, at the time of the commission of the
offense:
128
1
OfficialS of the executive branch occupying the positions of regional
director;' and higher, otherwise classified as Grade '27' and higher,
specifically including:
i. Provincial governors, vice-governors, members of the
sangguniang panlalawigan, and provincial treasurers,
assessors, engineers, and other provincial department heads:
ii. City mayors, vice-mayors, members of the sangguniang
panlungsod, city treasurers, assessors, engineers, and other
city department heads;
iii. Officials of the diplomatic service occupying the position of
consul and higher;
iv. Philippine army and air force colonels, naval captains, and all
officers of higher rank;
v. Officers of the Philippine National Police while occupying the
pbsition of provincial director and those holding the rank of
senior superintendent and higher;
vi. City and prov; crapprosecutors and their assistants, and officials
and prosedti ors •.04 - he Office of the Ombudsman and special
prosecutor;-, .
vii. ,Presidents: G, Ors.jor trustees, or managers of government-
ovned or te cpriledstai roratiop state universities or
'educational
• , :- in i.
ihttitbOirsiVig:ttt2Vris:T
.-...'' I.
c. Members0Congress‘-art? officials thereor classified as Grade 27' and
higher
-44,:
: 7•.
g
4'
Members171,erf the juoioiarAwithout prejud eltrkthe provisions of the
pr . .A, .4,
C 0 nOtUt(0.4pg 0
1 i ''
CtieriFrnenlarid•,members ,- f the Consti tional dommissions, without
rejudiipAso the provigipn f the Constit tiongand‘ •
f. l'All&yefi.- 42,,,tionalkand loca fficials cla edlL s-G. rage4.27' and higher.
2. pale offenses bofelontes whetor simple .ritilf R6Oith other crimes
committed b Oblict) cialsNd employees WEfired in subsection a. of
this sect9j!trwele ia, to thAir o
3. Civil and cnnal rrtiv ages filed pu ant,to,end in connection with PO Nos. 1, 2,
14 and 14-A, ssi.jean 1986.
prbvided, Th fhe RTGISIFig hae-e Vieloilginal jurisdiction where the
ihfOrmation:
f. f
a. does notAbnany damage to the government or any bribery; or .
F b.alleges ,0.4-nlete to the government or bribery arising from.the same or
closely 'related transactions or acts in an amount not exceeding One
million pesos (P1,000,000.00).
.,•
In cases where none of the accused are occupying positions corresponding to
Salary Grade '27' or higher, or military and PNP officers mentioned above,
exclusive original` urisdiction thereof shall be vested in the proper RTC, MeTC,
MTC, and MCTC, as the case may be, pursuant to their respective
jurisdictions as provided in BP Blg. 129, as amended.
The Sandiganbayan shall exercise exclusive appellate jurisdiction over final

juldgments, resolutions or orders of RTC whether in the exercise of their own
original jurisdiction or of their appellate jurisdiction as herein provided.
1
The Sandiganbayan shall have exclusive original jurisdiction over petitions for
the issuance of the writs of mandamus, prohibition, certiorari, habeas corpus,
injunctions, and other ancillary writs and processes in aid of its appellate
jurisdiction and over petitions of similar nature, including quo warranto, arising
i.
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AN RED BO i r VOL 1.
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or that may arise in cases filed or which may be filed under EO Nos. 1, 2, 14
and 14-A, issued in 1986: Provided, That the jurisdiction over these petitions
shall not be exclusive of the Supreme Court (R.A. No. 10660, Sec. 2).
IX. ADMINISTRATIVE LAW

A. GENERAL PRINCIPLES
Q: What is the Government of the Republic of the Philippines?
ANS:' It refers to thp corporate governmental entity through which the functions of the
government are exercised throughout the Philippines including the various arms through
which, political authority is made effective in the Philippines, whether pertaining to the
autonomous regions; the provincial, city, municipal or barangay subdivisions or other
forms of local goveMment (ADMINISTRATIVE CODE, Sec. 2, par. (1), [hereinafter
ADM:, CODE].
Q: What is a governinerpagentx?
ANS :A government] ageqcy piers' tog=any..o51 vaft5ps units of the Government,
including departments,' libip us, offices, instrumeritalitieS, overnment-owned or
contrOpd corpor04,4fidirO al-goVeTrneilt-units'Zi t‹cati] unit therein (ADM.
CODE, Sec. 2, p§}-41))1 / ]-).0 "zw*
--7],(1.,
,,. if. itt'i.
Q: Wtiat' are thltwo tirpes o governmel#1gencies?
(f)
ANS: IA poverrtner,agency ay either IA ...]]
.0* I
t' L A ne ionali
4gency, refeiliriVell a'',IinitAf t e Nati government (ADM.
!J CODF,_gpe. 2, par. )
1
4- A local cy, )11.g ti.:
1-AELTdovern it 1 tinct unit therein.
r (ADIATAS
I '„'
Q: What are fide die rent subchvisioni of the National
GoverriMent? .1
ANS: The differen ational en iOke - of the Natio/Government are:
1:' . Departmen t i __
lrQ6), , ....,0:1,4
"\i ty ,
2':' • Bureaus; • N
,
3 •!. ,Offices;
_
k: Instrumentalities;
a. RegUlatory agencies,
b. Chartered institutions; and
c. Government owned and controlled corporations (ADM. CODE, Sec. 2).
Q: What is a department?
ANS: A department refers to an executive department created by law (ADM. CODE,
Sec.2, par. (7)).
Q: What is a bureau?
ANS: A Bureau is a principal subdivision or unit of any department (ADM. CODE, Sec.
2, par. (8)).
Q: What is an office?
ANS: An office refers, within the framework of government organization, to any major
functional unit of a department or bureau, including regional offices. It also refers to any
position,' held or occupied by individual persons, whose functions are defined by law or
regulatian° (ADM. CODE, Sec. 2, par. (9)).
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I 1
Q: Whatis an instrumentality?
ANS: Iristtumentalities are national agencies not integrated within the department
framework; vested with, special functions or jurisdiction by law, endowed with some if not
all corpOrdte powers, administering special funds, and enjoying operational autonomy
usually through a charter. The term includes regulatory agencies, chartered institutions,
and government-owned or controlled corporations (ADM. CODE, Sec. 2, par. (10)).
i
Q: Whatis a regulatory agency?
ANS: A 'regulatory agency is an instrumentality expressly vested with jurisdiction to
regulate,i'administer or. adjudicate matters affecting substantial rights and interest of
private persons, the principal powers of which are exercised by a collective body, such
as a commission, board or council (ADM. CODE, Sec. 2, par. (11)).
L i
.
Q: What is a chartered institution?
ANS: A chartered institution is an instrumentality organized or operating under a special
charter, and vested by law with functionpArelating to specific constitutional policies or
objectiv4 This term includes state uijiVerVies and colleges and the monetary authority
of the State f(ADM. CODE, Sec. 2, par. (14)t
,,ki
Q: What is a government-owned ortitikkiled
Pe corporation?
.. ,_-• 044
ANS: A government-owned or confroli4atorpdration is any• agency organized as a
,-41-3.-on*Theil,p,
v..... •,.,n
stock or non-stock corpoation,
, .. vesteV:Vitiptunctions felatedlto ,r›-it public needs, whether
governmental or proprietary iii nature, andowned by the government directly or through
its instrumentalities, either
"Ter wholly oi - 'here applicable,s‘in the case of stock
corporations to the extent of at least -6-16/0--If its capital stock ARM. CODE, Sec. 2, par.
I
(13V- c4,1' io
, ,. .
--,-4 I 1 \
..40:
Q: What is a,,:ivinistralr law? I.
ANS: AdrriinidtrdtivCawligta branch of pub is law underlIch-the ekevtive department
rtf,- - . t4 . a ,,,.,.....: P-„z"-&4v?tw .
of the governrgent, actirig ;iry quastivislap ,e or quasi4Rat- pacity, interferes with
the conduCt 1 of Ve in vi forihe p ose of prorditing- he well-being of the
communitONACHTArOulii e Reieweion Political Law (2016), p. 493) (hereinafter
gl.
NACHURA].
r
...,,,..0
, .-v
, ,...t,
Q: What are the kindstsourcesofialimimstratre4aivs?
ANS: The following aretekinclecf administrative laws:
iv v
1. Statutes
,
setting Lip
: admin
administrative
istrative authorities;
2. Decisions of courtsiinterpreting the charters of administrative bodies;
3. RPles, regulatio4 and orders of such administrative bodies made in the
settlement of controversies arising in their particular acts; and
4. Determinations, decisions and orders of the administrative bodies in the
settlement of controversies arising in their respective fields (NACHURA, supra
a6493).
Q: Distinguish administration as a function and administration as an institution.

ANS: AdmiPistration is understood in two (2) different senses:
1. AS a function: it is the execution, in non-judicial matters, of the law or the will
of the State as expressed by competent authority;
2. Aa anc institution:; it is the group or aggregate of persons who actually run the
government during,their prescribed terms of office (NACHURA, supra at 493).
l' .1
Q: What are the two (2) kinds of administration as a function?
ANS: The two kinds of administration as a function are:
1. Internal Administration — includes the legal structure or organization of public
administration and the legal aspects of each institutional activity;
131
External lAdministration — concerned with the problems of administrative
regulations or the exercise of power for carrying out the ends for which such
powers were delegated (SUAREZ, Political Law Reviewer (2018), p. 914
[hereinafter SUAREZ].
Q: What is adminiitrative power?

ANS: AdministratiVe power is concerned with the work of applying policies and
enforcIng orders as determined by proper governmental organs. It enables the President
to fix a uniform standard of administrative efficiency and check the official conduct of his
agent. To this endj he can issue administrative orders, rules, and regulations (Ople v.
Torres G.R. No. 127685, July 23, 1998).
Torres
:1
: I
Q: What is an administrative order?
ANS: An administrative order is an ordinance issued by the President which relates to
specific aspects in the administrative operation of government. It must be in harmony
with Ethe law and should be for the ssate.purp.o_ se of implementing the law and carrying
out thelegislative policy (Ople efo7res, su ra) --.. .
I. I I
B. POWERS : OFADMINIS E` GENE/E.
Z
Q: What is an admijni t ati e. gepsy2.---_,..... , ,,
ANS: An adminislr gems a bat?, other thafi tie-court and the legislature,
endowed with quAsfal gtivland qpsi-iliciarpowey foritifelptirPose of enabling it to
i za ,.. zn.s.
carryout laws e truste o it f r enforcemel or execution (Al 6 13 supra at 494).
"(1
: I1
Q: What are t e wars of dmi42%tratii, ageees?
i
ANS:1Adminis f gencieA havZ'ijite-sGebi§ alive o rule-mayagjoowers and quasi-
.s
judiciel `power ad misty tiye ai:IfuttijOardpowers Raft omriadnications, Inc. v.
NationaTelec cat) 0 '0 FRIVISSiOR f08 gus 2, 2003).
414,
Q: Distknguish uasi- §Rjua
ANS: Quasi-le slat:We po the ower o make rules and
regulations which results withi the confines of the
granting' statute an e doctn parabilji of powers.
I ,e1the power to hear and
Quas lydicial, or ad i
determine questions of fac o„.. rch th liat is to apply and to decide in
accordance with the standards IMU.41 a i self in enforcing and administering
the same law (Srhart Communications, Inc. v. National Telecommunications
Commission, supra).
1
Q: Whyl is the distinction between quasi-legislative and quasi-judicial powers
important?
ANS: The distinction is important because the remedy that may be availed of by an
aggrieve0 party is different in each case. Acts of administrative agencies in the exercise
of quasi judicial powers can be assailed by a petition for certiorari under Sec. 1, RULE
65 of theRules of Court, or a petition for prohibition under Sec. Z RULE 65 of the Rules
of Court by a higher court. In such cases, the aggrieved party is expected to exhaust
availableladministrative remedies as a general rule.
On the other hand, a petition for prohibition is not the proper remedy to assail an IRR
issued inIthe exercise of a quasi-legislative function. The remedy is an ordinary action
for null fication with the RTC. Also, in questioning the validity or constitutionality of a rule
or regulation issued by an administrative agency, a party need not exhaust
administrative remedies before going to court. (Holy Spirit Home Owners Association v.
Defensor; G.R. No. 163980, August 3, 2006). .
132
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Quasi-Legislative (Rule MakinglaRLer

Q: Whatiisthe quasi-legislative power of administrative agencies?
ANS: Quasi-legislative power, or the rule-making power, also sometimes referred to as
the power of subordinate', legislation, is the power to make rules and regulations which
results in delegated legislation that is within the confines of the granting statute and the
doctrine -Of pon-delegability and separability of powers (Smart Communications, Inc. v.
National Telecommunications Commission, supra).
t, I
Q. What is required for a valid exercise of the power of subordinate legislation?
ANS: All that is required, is that the regulation be germane to the objectives and
purposes ,of the law; that the regulation does not contradict but conforms with the
standards prescribed by law (Public Schools District Supervisors Association v. Hon.
Edilberto de Jesus, G.R. No. 157286, June 16, 2006).
Kinds of Administrative Rules and Regulations

Q: What arethe kinds of administratilqules and regulations?
ANS: An administrative regulationrra -be,classified as either a legislative rule or an
interpretatiye rule.
1. Legislative rulea are designed implement a primary legislation by providing
the details thereof. They :Opal( 1Nplepent existi g law imposing general
extra-statutory obligations <p Ifaritt'ititiOtakpk properly delegated by
CoPgress and Zed S changrin xisting law—0114c. , which affects individual
rights and obligations. Whatkis employed is not he discretion to determine
whai the law halrbe, as ftislexclusively vested On \the legislature, but the
discretion„„akoRe,hcke,e" law sIgll be enforced, (SUAREZ, supra at 935).
Legislative.iru esire fgr,ther class:bed into conti gent andisupplementary rules
(Rep. v. Drugrna er's Laporafories, Inc. a d Tarram dic, Inc., G.R. No.
1908 March
Me ulilirerrieiltary 'rules ar ose Inter'

nd "tera$ exprOvh
b.n Conti geTtrules Are
based on t e existenc
- rt
details of the law
only genera ' R g ; supra at 60).
se issued by an administrative authority
ain facts or things upon which the
A IPA
enforcc,rperx.. .of the law de ejos ;dam
2. Interpretativeriles are,gintel iriterpre , clarify, or explain existing
statutory regt(etions triter which the administrative body operates. Their
purpose or ogject jeits merely to construe the statute being administered and
purpOrt to do noWeithan interpret the statute (Tanada v. Tuvera, G.R. No. L-
63915, April 24, 1985). They constitute the administrator's construction of
statutes they are valid if they construe the statute correctly. If not, they are
subject to judicial review (SUAREZ, supra at 935).
• I
Requisites for,Validity 1
Q: What are ithe requisites for the validity of an administrative rule or regulation?
ANS: There are settled and inflexible requisites for administrative rules and regulations
to be valid, namely: (ASAR)
1. Thai the rules and regulations must have been issued on the Authority of law;
2. Tha't the rules and regulations must be within the Scope and purview of the
principal law;
3. That said rules and regulations must be Reasonable; and promulgated in
AccOrdance with the prescribed procedure, to wit: publication, notice and
hearing (Executive Secretary v. Southwing Heavy Industries, G.R. No.
164171, February 20, 2006).
133
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I i
Q: What are the , requisites for the validity of an administrative rule or regulation
with penal sanctions?
ANS: The requisites are the following: (ASAR-P2)
fr That the r'ules and regulations must have been issued on the Authority of law;
12. That the rules and regulations must be within the Scope and purview of the
i principal lw;
1, ;3, That sak rules and regulations must be Reasonable; and promulgated in
[
Accordance with the prescribed procedure, to wit: publication, notice and
hearing
The law rhust itself declare as Punishable the violation of the administrative
rule or regulation; and
5. The law should define or fix the Penalty for the violation of the administrative
[
rule or regulation (Executive Secretary v. Southwing Heavy Industries, supra).
'Nc'ite: Prior notice, hearing and publication are not required for interpretative or
internal rule (Republic v. Drugmaker's Laboratories, Inc., supra).
1
I
Q: What is the basis of an adffili cy.,:s authority to issue rules and
regulations?
ANS: The power to issue-CD ue egulatione.osteitep kgranted by the charter of
the adrninistrative bAppr‘43 _.,,t law it is supp7iSe4 ro "Ice. Hence, any and all
administrative regyaticilf- bsTel by-theaTrarstrattregf0 sibkild not be contrary to
the said, charter cirkiv-t/h t"Crlates ttAm,Vid iFt theI sholicdgbe ill conformity with the
standards presc `bedib, w C RUZ, EawtifdPublic Offiders,uir— a at820).
j.._' ! „4",
Q: What does `Wiffitg the s lope and puo,iew of the )aw" man? t .4
ANS:!Tne po e- f-afiminist tivtjallItoloW6Ig kili e rules in the plementation of
a statute is necessarily limite to whdy0q11ded for n the le islatt enactment. The
implementing T k4 d tions of...`tikii canny the .1 or expand its
,, t,
coverage, as Ste& in the legislature.
Howel'(er, ad s their poe'r of subordinate
legislation, to i tthe rya in tye statut6 by "filling in" the
details1 (Public Sc ools Di& 'of b rsb A aid v. De Jesus/supra).
r I
i f
Q: What is the tandar administrative rules or
regulatiOns? I, -(s6
ANS: What is "reasonabl • MY libjec to xa Anitip or scientific formulation. No
all-embrOcing test of reason I ess ext t Afar %-oetermination rests upon human
judgmentlapplied to the facts and circ m s of each particular case The standard of
reasonableness means that administrative rules must:
1.t Involve public welfare;
2.i' The method employed must be reasonably related to the purpose of the rule;
!I, not be arbitrary; and
3. ! Declare the legislative policy (Mirasol v. Department of Public Works and
Highways, G.R. No. 158793, June 8, 2006).
Q: What 'is the rule on notice and hearing of administrative rules? When is it
required?
ANS: Generally, notice ;and hearing is not required. However, it is essential when: (FS2)
1. i The legislature itself requires it and mandates that the regulation shall be
' biased on certain Facts as determined at an appropriate investigation;
2. ' The regulation is a Settlement of a controversy between specific parties or
administrative 'adjudication; and
3. t The administrative rule is in the nature of Subordinate legislation designed to
implement a law by providing its details (CIR v. Court of Appeals, G.R. No.
119761, August 29, 1996).
134
Q: Is publicatioln required for the validity of administrative rules and regulations?
ANS: Yes. Fq„Ocedural due process demands that administrative rules and regulations
be published in order to be effective (Tanada v. Tuvera, supra). When the administrative
rule goes beyond merely providing for the means that can facilitate or render least
cumbersome VI; implementation of the law but substantially increases the burden of
t,
those govemedot behooveS :,the agency to accord at least to those directly affected a
chance to bes heard, and thereafter to be duly informed, before that new issuance is
given the force and effect oflew (Republic v. Drugmaker's Laboratories, Inc., supra).
Q: Is the publication requirement absolute?

ANS: No. There!are three (3) exceptions to the publication requirement: (I')
1. When the issuance; is an Interpretative regulation because it needs nothing
further than its bare issuance for it gives no real consequence more than what
the law itself has already prescribed." It "adds nothing to the law" and "does
not affect the substantial rights of any person" (Id.).
2. When the regulation is merely Memel in nature because it seeks to regulate
only ithe personnel'; of the ad iffstrative agency and not the general public.
(Tatipcle v. Tuvera, sup
3. When it is a letter ed by an administrative agency concerning
rules:or guidelines to be go loP
. e subordinates in the performance of their
duties (Association' of Soutke, al,9aElectric aoperatives, Inc. v. Energy
Regulatory CommiSSioff , glilliZfsepterilE4r 18, 2012).
Q: What are' he recraisites for ital 'ay of administfalive rules with penal
sanctions? 1,
ANS: The requisites a Ah 011owing: (DF
1. Law itss011De - are as punis ble the violargn ck dministrative rule or
regulation- o.b4
2. Latakluld de ' Fils penalty erefore; an
3. RulroTre atior VeRubli •ed (SUA
,t
.
Quasi-Judicial (..4efruo'Ic ony)Po er
•
Q: Define the ,queskjudicia ower of administrative agencies.
ANS: Quasi judicial p mower Yof adminis i e 'es is the power to hear and
determine questions o -ct to w g sla o Gyms to apply and to decide in
accordance with, the sterards aL down by the law itself in enforcing and administering
the same lew (Smart Co munications, Inc. v. National Telecommunications
Commission, supra). It is nntal to their main function of enforcing the law. The test
of judicial function is not the exercise of judicial discretion, but the power and authority to
adjudicate upOn the rights arid obligations of parties (Santiago v. Bautista, G.R. No. L-
25024, March 3(41970).
Q: Do adminiStrative agencies have the power to promulgate their own rules of

procedure?
ANS: Yes. Admihistrative agencies are clothed with rule-making powers because the
lawmaking body finds it impracticable, if not impossible, to anticipate and provide for the
multifarious and complex situations that may be encountered in enforcing the law. All
that is required'is:that the regulation should be germane to the objects and purposes of
the law and that it should conform to the standards that the law prescribes (People v.
Maceren, G.R.iNO. L-32166, October 18, 1977).
Q. What are the requisites for proper exercise of quasi-judicial power?

ANS: The requisites for the exercise of quasi-judicial power are: (JNH)
1. Jurisdiction;
2. Notice; and
3. Hearing (ALBANO, supra at 702).
135
t•
Administrative Due Process
t '
Q: What atv the requisites for administrative due process?
ANS: Administrative
, due process requires that there must be: (RESS-BAK)
1. Right to a hearing;
2. Tribunal must consider Evidence presented;
3. ',Evidence must be Substantial;
4. Decision must be Supported by law and fact;
5. [ Decision must be Based on evidence adduced at the hearing or at least
contained in• the records and disclosed to parties;
6. Board or judge must Act on its or his own independent consideration of facts
[
and law of the case, and not simply accept the view of the subordinate in
arriving at a decision; and
7. Decision must be rendered in such a manner that parties to controversy can
((now various! issues involved and the reason for the decision rendered (Ang
Tibay v. Court of Industrial Relations, G.R. No. 46496, February 27, 1940).
i
0: What is the nature of VelprocessIn allnpnittr9.ive proceedings?

ANS: In administrative
, igroceedi 'as, a fair-,6d NatontiNpportunity to explain one's
. ..<
side suffices
, to meet he relr entrOraMtiro" ss (PiiVagtrust Resources, Inc. v.
Santiago, G.R. No. 7/ 701 Y a y 26, 2017.,Lagsed Ldgeress simply means the
‘ . .
opportunitY to exp p 4;pidelir the4portaltylo'-sbe i a.41 consideration of the
action or ruling com ned o .. "To 1p heicd"'Tes no Ma'atel-nly erbal arguments in
court; onet, may though pleAna '(Casi "ro v) to G.R. No. 146137,
June 8, 2005).
•"'"`4
Q: When is notice istrati p determinations?
ANS: Notice a a. PL
1. ; Sum rC°41)
u ogrope_ of delinquent
taxpa
2. [ Grant „.:,\ 7ates or to engage in particular
(ine of busineeg'
3. cancella 'on of p (dis tion is clmmitted;
4. [ Summary bateme affec safety of persons or
broperty; I
5. Preventive susp pfficer or g investigation; and
6. Grant or revocatio tidenses ate certain businesses
affecting public order or orals supra at 508).
Q: Is the right to refuse to take the witness stand available in administrative

proceedi4gs?
ANS: Yei. The right to refuse to take the stand does not generally apply to parties in
administrative cases or proceedings. The parties thereto can only refuse to answer if
incriminating questions are propounded. As an exception, a party who is not an accused
in a criminal case is allowed not to take the witness stand in administrative
cases/propeedings that partook of the nature of a criminal proceeding or analogous to a
criminal proceeding. As long as the suit is criminal in nature, the party thereto can
altogether decline to take the witness stand. It is not the character of the suit involved
but the nature of the proceedings that controls (Rosete v. Lim, G.R. No. 136051, June 8,
2006).
Q: Is the'right to counsel mandatory in administrative proceedings?

ANS: No. In an administrative proceeding, a respondent has the option of engaging the
services of counsel. As such, the right to counsel is not imperative because
administrative investigations are themselves inquiries conducted only to determine
whether there are facts that merit disciplinary measures against erring public officers
136
/VOL 1.
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t I
and employeesj with the purpose of maintaining the dignity of government service (Vivo
v. Philippine':, Amusement and Game Corporation, G.R. No. 187854, November 12,
2013). I.
!
Administrative Appeal and Review
Q: What arel1 th:e rules in appeal and review of administrative cases?
ANS: Decisiongl in administrative cases may be appealed in the following manner:
0 o
1. Where provided by law, appeal from administrative determination may be
maaerito a higher or superior administrative officer or body;
2. By rtue
vi of power of control of the President, the President himself or through
the !Department Head may affirm, modify, alter, or reverse the administrative
decip r
onofa subordinate (Please refer to the Doctrine of Qualified Political
Agency); or
3. App1ellate administrative agency may conduct additional hearing in appealed
case; if deemed necessary (NACHURA, supra at 509).
ir 1
Administrative Res Judicata
I' ;
Q: What is the doctrine ofresjuOta7iin qdministrative proceedings?
ANS: Jurispriidence has recognrittee re of administrative res judicata: "The rule
which forbids' thereopening of 71 not e once judicially,,determined by competent
authority appfiei as well to theAlidlec igntd• • ifoi of public, executive or
uas, vciaAcvs
administrativdefficers and bO,ards acting thin tligirjahgCliapn as to the judgments of
courts having general judicial powers'; (S hazer v. De Leon, .. No. 127965, January
20, 2009). ; ""' ' 04'1
I'
Q: When is an ad inisIrg e decision onsidered res dicaa2
ANS: Decisions n orders administratt e agencies have tif)on eir finality, the force
and binding efteA of asfi,t judgment With the purvielof the doc ine of res judicata.
These decisions as..concl e upon ki*t - : jected parties as
though the same' had b2eraanderAy a rt of genera. glgik j t 7b7 on/Ysmae/ v. Deputy
Executive Sedrefaby4OIN$179538179538 Octt r 18, 1990).
1
Q: Does res judicata apply , administr t ve functions in general?
ANS: Doctrine of res jklicate applies only quasi-judicial proceedings, and
not to the exercise of Oinistrattle po e . rim powers here refer to those
purely administrative ingatureolOpposed to administrative proceedings that take on a
quasi-judicial character "(te v. Agustin, Jr., G.R. No. 187317, April 11, 2013). The
rule of resjudidefa applies ' to the judicial and quasi-judicial acts of public, executive,
or administrative'officers
, and boards acting within their jurisdiction as to the judgments
of courts having general judicial powers (VDA Fish Broker v. National Labor Relations
Commission, G.R. Nos. 76142-43, December 27, 1993).
Q: Are administrative decisions subject to judicial power of courts?
ANS: Yes. It should be remembered that quasi-judicial powers will always be subject to
true judicial power — that which is held by the courts. Indeed, under the expanded
jurisdiction of the Supreme Court, it is empowered to determine whether or not there has
been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
any branch or instrumentality of the Government (NHA v. Almeida, G.R. No. 162784,
June 22, 2007) i'
Q: Can the princiPle of res judicata be invoked in labdr relations proceedings?

ANS: No. The principle of res judicata may not be invoked in labor relations proceedings
considering that Section 5, Rule XIII, Book V of the Rules and Regulations Implementing
the Labor Code ' expressly provides that such proceedings are "non-litigious and
summary in nature without regard to technicalities obtaining in the courts of law" (Nasipit
Lumber Company.v. NLRC, G.R. No. 54424, August 3.1, 1989).
! 137
1
Fact-Finding Investigative, Licensing anc/ Rate-Fixing Powers
Q: What are the fact-finding and investigative powers of administrative agencies?
ANS: An administrative agency may be authorized to make investigations, not only in
proceedings of a legislative or judicial nature, but also in proceedings whose sole
purpose: is' to obtain information upon which future action of a legislative or judicial
nature may be taken and may require the attendance of witnesses in proceedings of a
purely investigatory nature. It may conduct general inquiries into evils calling for
correction,Iito report findings to appropriate bodies, and make recommendations for
actions (Evangelista v.1 Jarencio, G.R. No. L-29274, November 27, 1975).
'
Q: What ' is the purpose of the fact-finding and investigative powers of
f
administrative agencies?,
ANS: Investigations are useful for all administrative functions, not only for rule making,
adjudication, and licensing, but also for prosecuting, for supervising and directing, for
determining general policy, for recommending legislation, and for purposes no more
specific than illuminating obscure arearkilir rtiot..,
at ifmanything should be done. This
is pursuant to the principle a e lifeblood otth0 a iVrative process is the flow of
fact, the gathering, th-rga I ton, and thel,bn lys s of evidence (Evangelista v.
Jarencio; supra).
Q: What are the ,a orinvestigativ.e powers o otive agencies?

ANS: The examiciih ve tigativppolfirsli adm st gie-.adbncies are: (PI3S0-
WF) • c
1. Powe nspectionzlraccount ecord k.do6utients, and other
pape Inves.ggaVN
2. Pow er affon iy-o-h it nds rely an to a matter being
inves ig
3. powJ na-andThe
4. Powe intejhg
E Powe o Insp
6. :Power requi
7: Power tax equire
8. 'Power to quire tl7etEil ra at 937).
Q. Discuts the rate-rua Rio elpf adriratO e es.

ANS: This is the function oftp sdribing vfb d inistrative agency, which may
either be:
1. Legislative 'function — When the rates prescribed are meant to apply to all
enterprises of a given kind throughout the country; prior notice and hearing is
not required (Philippine Consumer Foundation v. Sec. Education, Culture and
Sports, G.R.` No. 78385, August 31, 1987); or
Quasii-judiCial function — When the rates imposed apply exclusively to a
particular pally based upon a finding of fact; Prior notice and hearing is
,required (Philippine Consumer Foundation v. Sec. Education, Culture and
Sports, supra).
Q: W4t are the limitations to the rate-fixing power of administrative agencies?

ANS: Wiien there is valid delegation of rate-fixing power, the only standard which the
legislature is required to prescribe for the guidance of the administrative authority is that
the rate be reasonable and just. It has been held that even in the absence of an express
requirement as to reasonableness, this standard may be implied (Philippine
Communications Satellite Corporation v. Alcuaz, G.R. No. 84818, Dedember 18, 1989).
138
.15AK.RFP BOOK "
'VOL 1.
2019
! I,.
Q: Discuss the licensing 'powers and limitations of administrative agencies.
ANS: CongreSs has granted certain administrative agencies the power to grant licenses
for, or to authorize the operation of, certain public utilities. It is generally recognized that
a franchise may be derivedl indirectly from the state through a duly designated agency,
and to this extent, the poweir to grant franchises has frequently been delegated, even to
agencies other than thoselOf a legislative nature. In pursuance of this, it has been held
that privileges ,bonferred by grant by local authorities as agents for the state constitute
as much a legislative franbhise as though the grant had been made by an act of the
Legislature (Philippine Airlines Inc., v. Civil Aeronautics Board, G.R. No. 119528, March
26, 1997). i
I
Q: What are the determinative or incidental powers exercised by administrative
agencies? IH ;
ANS: The determinative orincidental powers of administrative agencies are: (ESDED)
1. En6bling power iSIthe power that enables an administrative agency to do an
ad which the law precisely entry!: it;
2. Sul-ill-nary power; is the ., po i .
'exercised by administrative authorities to
perform coercive, tmeasiff s up persons or things without the need of
. i - '1 6.
securing judicial warrant
3. Directing power which is'' ,.by the power of assessment of the BIR or
the!Bareau of Custems; .4ze-;' *:: -,
,- ---,
4. Ex6tining power is the pdker WI Istratt, agency to examine and
inspect books,,,R6A, and e rds to invesiggte he activities of persons
under its jurisdiction; and
5. Disensing Pfielis the poye an administrate cer to grant exemption
frorh;the perforjriancepf a'bener prohibition. (N Cfr -,t: , supra at 503)
ii...„4:1-
C DOCTRINEIFI PR/MAR i jURISDIcr I AND EXH USTION‘OF
ADMINISTR4 UV? ‘,
...0 REI,DIES
W ..aWt 46„ tvi-
Q: What are itbe requis-te f judicial re iew of adm n .e isions?
ANS: The two r'gqp.titesTe dicial rrvie administrative • ecisions are:
1. Prior kesb4t- o Admiistrative b es (Cruz v. Del Rosario, G.R. No. L-17440,
December 26 194.
2. Extiaustion of • triInistra cswageda Jr, G.R. No. 87437,
May'` 29, 1991
Doctrine of PrknaryAdmihis ative Jurisdiction (Doctrine of Prior Resort)

Q: What is the doctrine of1Primary administrative jurisdiction?
ANS: Under the doctrine ofd primary administrative jurisdiction, courts will not determine
a controversy' where thet issues for resolution demand the exercise of sound
administrative disCretion requiring the special knowledge, experience, and services of
the administrative tribunal to, determine technical and intricate matters of fact. In other
words, if a case is such 'that its determination requires the expertise, specialized
training, and knowledge of !an administrative body, relief must first be obtained in an
administrative, proceeding before resort to the court is had even if the matter may well
be within the,Iatter's propel; jurisdiction (Nestle Philippines v. Uniwide Sales Inc., G.R.
No. 174674, October 20, 2010).
Doctrine of Exhaustion of Administrative Remedies

,
Q: What is the doctrine of exhaustion of administrative remedies?
ANS: Where:the enabling statute indicates a procedure for administrative review, and
provides a system of administrative appeal, or reconsideration, the courts for reasons of
law, comity, and convenience, will not entertain a case unless available administrative
remedies have been resorted to and the appropriate authorities have been given
139
VOL 1.
2019
opportunity to act and correct errors committed in the administrative forum (Teotics v.
Ageda Jr., sUpra).
Q: Distinguiph primary administrative jurisdiction from exhaustion of

administrative remedies.
ANS: Primary administratiVe jurisdiction and exhaustion of administrative remedies can
be distinguished in this manner:
Doctrine of Exhaustion of Doctrine of Primary Administrative

Administrative Remedies • • Jurisdiction
As to issues that can be passed upon
The adrtlinistrative agency has Both the court and administrative agency
authority to pass on every question have jurisdiction to pass on a question
raised by a person who had resort to when a particular case is presented to
judicial relief, therefore enabling the court, as an original matter, rather than a
court to withhold its aid entirelyountr ni
rtrdrof
r review.
the admintstrative remediesld beeril
exhausted. <or
ft ft .AC4'1
As to jurisdiction to take cognizance of a case .
The claim1, 4 matter's,). Sizable-11T - 7—e 'ZIaim:a)ftiliralte rois cognizable by both
12:11
the first inst6neei a adrninistrallye rt thetburt abd dtkniriislrative agency.
agency alonOl
A. A
A
As to purpose of the doctrine
,'" ,e--"--. : im^
1orth' rule iito -cor;itroP Tfle-
The purpOsoft ---/761
ru e i; not cancer with judicial
the timing:' o ftftftjh iciaHjklief frarg* buy6Lermiperlij ome instances
adjudicatiie ac ion; of a ‘._a la c . It .§-'-:-,- —Whether ctiob should be taken by a
a defenselaglips rci'
ft alicial rt ostipti N inisifakiv—qgency. It is a
de 9'iTsey4Pdinst r sort t he courts in the
fr star
As to effect of failure to comply
M.1 . _L....-. _re
Failure to • • exhaustadininis r tiv ■ •Lailti'cortip4vyjti
Vo the doctrine of prior
remedies "results in the,,laaVofirseft.. estlfr ckcce t_,•5 into the jurisdiction of
of action and is ground foro rtoition to AheA48;tbft cane the matter is within the
dismiss (Sunville Timber' Pr ducts, noirua!g' Figirial jurisdiction. The court may,
Inc. v. "Abad, G.R. No. 85 , o u proprio, or upon motion, suspend
February 24; 1991). the judicial process pending referral of
such issues to the administrative body for
its view (Industrial Enterprises v. Court of
Appeals, G.R. No. 88550, April 18, 1990).
Q: Are there exceptions to the doctrines of primary jurisdiction and exhaustion of

administrative remedies?
ANS: Yes.; 'The doctrines of primary jurisdiction and exhaustion of administrative
remedies are subject to certain exceptions, to wit: (MEAN-LIQUID-PUPA)
1. Where there is Estoppel on the part of the party invoking the doctrine;
2. Where the challenged administrative act is patently Illegal, amounting to lack
of jurisdiction;
3. Where there is Unreasonable delay or official inaction that will irretrievably
prejudice the complainant;
4. Where the Amount involved is relatively so small as to make the rule
impractical and oppressive;
140
5. Where the questiOn involved is purely Legal and will ultimately have to be
decid0 by the courts of justice;
6. Where judicial intervention is Urgent;
7. Where the appliCation of the doctrine may cause great and Irreparable
daniage;
8. Where the controverted acts violate Due process;
9. Where the issue of non-exhaustion of administrative remedies has been
rendered Moot;
1,
10. Where there is NQpther plain, speedy and adequate remedy;
11. Where Public interest is involved; and
12. In QuC,warranto proceedings (Samar II Electric Cooperative, Inc.
(SAMELCO II) v. Seludo, Jr., G.R. No. 173840, April 25, 2012);
13. When"the respondent is a department secretary whose acts as an Alter ego of
the President bears the implied and assumed approval of the latter (Kilusang
Bay°ani•sa Paglilingkod ng mga Magtitinda ng Bagong Pamilihang Bayan ng
Muntinlupa, Inc. v. Dominguez, A i?. No. 85439, January 13, 1992);
14. When 'the subject matter is,;a:Ofrate land in land case proceedings (Marcoso
v. Court Of AppealS; i G.0161.5-5 95, May 8, 1992); and
„h.-sr •im-w,
W. When!.. to require, etwsttorwpf administrative remedies would be
UnreaSonable (SUARE4gt#0046).
41,V
Q: Is the doctrine •.0 of eZhauglioirafiitrm nig edies applicable in all
cases? ',off"' , r="
:.:! . tg.#-`' na.
ANS: No. Only thoseaecisions of adrrpstrative agencies o ade in the exercise of
guasiludicial r **subject to Marine. If in the exer is of its quasi-legislative
function, the egular
regular cAlrlsAprisffictionkSmart v. NTC, &13 o 151908, August 1Z
2003). I.[,,,,:0-0"- ,et.•
r ,• 4, kr-'
1;,' fp'' 44,
Q: Will the fditUre to elhaUSt adminikr 'urisdiction of the
Po41,
court over th.qIcas'd? ..aa
ANS: No. Fail to OM 4-4 operaPes a waiver of he ooh
1 ---0-
' 0 :4on as a ground for a
motion to dist'tlie?Ittlatft!.:rt maifproceld with the case as if the doctrine had been
observed (Sunville Rmber PMductsi Inc. v Abed, supra).
, '. : r k ..4 I 9
Doctrine ofFinalitvof4'clmmistrativeA
f
Q: What is the doctriuekolfinLisify of administrative action?
ANS: The doctrine of fi.a1'6/.Aadministrative action pertains to the rule that when an
administrativeaCtion has bot 'Erne final and executory, it is removed from the power and
jurisdiction ofe'knirt to further alter or amend it, much less revoke it. The Court will no
longer open !e ![ case that ';has attained finality, even if it was only heard by an
administrative body (Mendiola v. CSC, G.R. No. 100671, April 7, 1993).
i I. i
g tj'Ai. - . • i - i ,W
: .emu., .'!' P "...& iwA • , 1 ••..pfr . a**1
.11ANNV W411
A. SUFFRAGF
Q: Define suffrge.
ANS: Suffrage is the right to vote in the election of officers chosen by the people and in
the determinatiOn of questions submitted to the people. It includes within its scope
election, plebiscite, initiative and referendum (NACHURA, supra at 615).
Q: Define eldotion.
ANS: Election IS the means' by which the people choose their officials for a definite and
fixed period and to whom they entrust for the time being the exercise of the powers of
government (Id.).
141
Q: Whaare the kinds of elections?
ANS: There are two kinds of elections:
1. ; Regular/General - one provided by law for election of officers either
nationwide or in certain subdivisions thereof, after the expiration of the full term
of the former members.
2. Special - one,held to fill a vacancy before the expiration of the term for which
the incumbent was electedad.).
Q: Define Automated Election System.

ANS: It is a system using appropriate technology which has been demonstrated in the
voting, counting, consolidating, and transmission of election result, and other electoral
processes (R.A. 9369, otherwise known as The Election Automation Law, Sec. 2, par.
(1)).
Qualing
fi on
rit; and Disqualification of Voters
Q: Whja;.e the qualifications ofvoters
ANS: TOt e}tercise the right o cage a er o yVst-eCARD):
1. Citizenship piqi? itOn;
2. i, Age - at leas 1> ?? 00,0o •e,
3. Resident
a. a 'de t t o e1 r;
: b.e of e play lite proposes o t r at least six (6)
i; imont and
4. Not o p Disq lifiedh ;rrC 1► V,
,---*W.57
Q: When aho Id a y ter pos ess tfie,a e andtesid cy req im rer ts?
ANS: The;: aglet'd esi e recjtii a list 13 mph erd-Wit on the day of
electionJAhy pbrsorri ho p e-day-o gistratio ht erat hed the required
age or period •enc , who, n l e
ele bonNis all possess such
tP6MV
qualificapons, y regi ter
LP
,Aeir them ise kn.- wn as the Voter's
Registretion Act, ec. 9).
Q: For election la urpos is'<$42Ns. iipymous wi,t "domicile"?

ANS: Yes!, In electio Case - out beats` II • c' e idence as synonymous
terms. Both import not n y tentloq o resitde\ IA place but also personal
presence in that place, C'611 *ith ve" of such intention. Domicile
denotesia :fixed permanent resi absent for business or pleasure, or
for like reasons, one intends to return (Pundaodaya v. COMELEC, G.R. No. 179313,
September. 17, 2009).
Q: Mayilie Congress enact a law which provides for additional qualifications for
voters to kit: (a) must be able to read and write; (b) must be an owner of a
residential house of the place where he proposed to vote?
ANS: No. 1No literacy, property, or other substantive requirement shall be imposed on
the exercise of suffrage (CONST., Art. V, Sec. 1).
Q: Whoatel those persons disqualified from registering as voters?

ANS: Under the Omnibus Election Code (B.P. 881), the following are disqualified to
register;ad voters (IDNI):
1. Those convicted by final judgment to suffer Imprisonment for not less than 1
year, unless pardoned or granted amnesty, but their rights are automatically
reacquired upon expiration of 5 years after service of sentence;
2. Those adjudged by final judgment as having committed any crime involving
Disloyalty to govemment or any crime against National security, but their rights
are reacquired upon expiration of 5 years after service of sentence; and
142
'VOL 1.
2019
3. Insane or incompetent persons as declared by competent authority (B.P. 881,

Se9. 118).
Registration and Deactivation of Voters

Q: What is a voter's registration?
ANS: Voter's registration is the act of accomplishing and filing a sworn application for
the registration' by a qualified voter before the election officer of the city or municipality
wherein he >resides and including the same in the book of registered voters upon
approval by the Election Registration Board (R.A. No. 8189, otherwise known as The
Voter's Registration Act of 1996 Sec. 3, par. (a)).
Registration does not confer the right to vote; but it is a condition precedent to the
exercise of the4ight. Registration is a regulation, not a qualification (Yra v. Abano, G.R.
No. 30187, November 5, 1928).
Q: What is the' System of Continuinge istration under R.A. No. 8189?

ANS: The personal filing of applicaSel egistration of voters shall be conducted daily
in the office of the Election Officert ti" egular office hours. No registration shall,
however, be'cOnducted during thqeg,, ing 120 days before a regular election and
90 days beforela special election (y.All 89 Sec. 8).
elktitfr-t.D.-f:
,t4,:s.w.,:. .,
Q: How may an applicatio u,forregis to Jon be c
ANS: The right, to regisig ay be chaUen "4 d through the foil *ng process: (OOH)
1. Any voter, cJ4didate, or re: entative of a re 7 e ed political party may
challenge inTkr. g anpplZation
yA for regist atun stating the grounds
thdrefor. -dhallenge shall be der Oath and ad ed to the application,
toget e ith thelroBrof nolce earing to t r and the applicant;
2. 2pposktioons to,. ontest a regi tr s applicati I n in the voter's list
muqh all- e filed not I ter than t itv.412 of the month in
which the sa, t..47, be hear
sclial led mi -.X. es by the Election
Regisitratior033,ard Should the * :::o o;:f:londay o t e month fall on a non-
working niaay, op•ositions m-rt. be filed on the next following working day;
anc!I ' 1 '''4
3. The Hearing on-the challen.e.,,s ,, „, .. ,_"ft. :44,,,,,e third Monday of the month
and the decision Shal 41:ie ren• efe. •e end of the month (R.A. No.
8189 Sec. 183.: 0,
1 '41
k_P'A
Q: What is deactivation of registration?
ANS: Deactivation is the process of deactivating the registration of certain persons,
removing th;eiriregistration records from the corresponding precinct book of voters and
placing the same in the inactive file after entering the cause or causes of deactivation,
properly marked "deactivated" and dated in indelible ink (R.A. No. 8189, Sec. 27).
Q: In what instances may a person's registration be deactivated?

ANS: The 14i6tration of the following persons may be deactivated: (1-DIVE-C)
1. Any person who has been sentenced by final judgment to suffer imprisonment
for not less than 1 year, such disability not having been removed by plenary
pardon or amnesty;
Note: The right to vote may be automatically reacquired upon expiration of 5
years after service'of sentence as certified by the clerk of court.
2. Any person who has been adjudged by final judgment by a competent court or
tribunal of having caused/committed any crime involving Disloyalty to the duly
constituted government such as rebellion, sedition, violation of the anti-
subversion and firearms laws, or any crime against national security, unless
restored to his full civil and political rights in accordance with law;
143
: 11
Note: The right to vote may be regained automatically upon expiration of 5

years after service of sentence.
3. Any person declared by competent authority to be Insane or incompetent
1. unless such disqualification has been subsequently removed by a declaration
of a proper authority that such person is no longer insane or incompetent;
4. Any person who did not Vote in the two successive preceding regular elections
as shown by their voting records. For this purpose, regular elections do not
include the Sangguniang Kabataan (SK) elections;
5. ; Any person whose registration has been ordered Excluded by the Court; and
6. Any person who has lost his Filipino Citizenship (R.A. No. 8189, Sec. 27).
Q: How can a registration be reactivated?

ANS: Anylvoter whose registration has been deactivated may file with the Election
Officer aisworn application for reactivation of his registration in the form of an affidavit
stating triat4he grounds for the deactivation no longer exist at any time but not later than
one huncire'd 120 days before a regykrAectiquand 90 days before a special election
(R.A. Noi8i189, Sec. 28) •
i Z X I U . .1 . .)- .
, ill plometn ak atpnAmposed under R.A. 10367
Q: Is the:Statutory requitè7F
(No bio-no boto) vfestital,„ati unconstitutionaksdbsta4ial requirement in the
exercisekAlthe right oftilfragg3----'---..,.._
Jk
ANS: niq: The i ltetsi srvajidatioh6as rrequiremapt itopra "qualification" to the
exercise of the r ht okSkiffragp but alifier‘spe6 of th regiVr;glon iiprocedure, of which
the State has tIle,rightto readonably regal*. Registra 'on reg a e the exercise of the
right of sirffragO.pla a q a i ica ion abataa Padlist v. COMELEC,
G.R. No. 2213 8;13edetnber 6, 20':0',1
Inclusion arid
i __--t)
s
mon Proceedin
Q: What are (irois sn . 3 t. I e\k g oVAr: n clingi or the inclusion,
exclusion, and orrec ion 6 Orliespo
ANS: The f011owi g proc° dure ha .CIDE)
1. Petition r inclusion, ex on ofiames o voters shall be filed
during Office hours,
2. Notice of th lace4 fr1pe petition shall be served
Upon the memloefs gEd voter upon filing of the
petition;
3. A petition shall! refer and shall implead the Board as
respondents;
4. No Costs shall be assessed against any party in these proceedings. However,
if the court should find that the application has been filed solely to harass the
adVerse party and cause him to incur expenses, it shall order the culpable
party to pay the costs and incidental expenses;
5. Any voter, candidate, or political party who may be affected by the
proCeedings may Intervene and present his evidence;
6. The decision shall be based on the evidence presented and in no ease
rendered upon a f stipulation of facts. If the question is whether or not the voter•
is real or fictitious, his non-appearance on the day set for hearing shall be
prima fade evidence that the challenged voter is fictitious; and
7. Thei petition shall be heard and Decided within 10 days from the date of its
filing. Cases appealed to the RTC shall be decided within 10 days from receipt
of the appeal. In all cases, the court shall decide these petitions not later than
15 days before the election and the decision shall become final and executory
(R.A. No. 8189, Sec. 32).
; i
144
VOL 1.
DAN RED BO 2019
nl i
Q: Disting ishinclusion proceedings from exclusion proceedings.
ANS: Inclusion and exclusion proceedings may be distinguished in this manner:
(PV-TAPA)1,
Inclusion and Exclusion Proceedings

. Petition for In.clusion Petition for Exclusion
(R.A. No. 8189, Sec. 34) (R.A. No. 8189, Sec. 35)
As to Prayer
1
Any person whose application for Any registered voter, representative of a
registratiOnl has been disapproved by political party or the Election Officer, may
the Board kir whose name has been file with the court a sworn petition for the
stricken Outlfrom the list may file with exclusion of a voter from the permanent
the court ;a 'petition to include his name list of voters giving the name, address
in the per7anent list of voters in his and the precinct of the challenged voter.
precinct.
As to Venue
I I 40.5".ege"k
Municipal Trial Court anctMetropopan al Court shall have original and exclusive
jurisdiMbh 189, Sec. 33).
.4;
As to Time of Filing
Any time except one idn red five ""Any time e 'Cep ene hundred (100) days
ir
prior to a regul
(105) days prior to aje_gular electiorror ,gction or
seventy-five(75) c(4ys prior to, sixty-five (65) a9s before a special
special eleCtion election
1
As to Required Accompanying Documents
••t,
1. Certificatk6f disal9val of his
applicargn ;
2. Proof of srvicesOf otice o
petitip t upo Board%
%SA
As to Period for COMELEC to Dedide
ig
Within ;15 days after itrirr afiLS • rom its filing
• As to Appeal
;
Decisions of MTC and c1 I may be appealed by the aggrieved party to the RTC
• ;
within 5 days from receipt of notice thereof. Otherwise, said decision shall become
final and executory.
RTC sha(I 'decide within 10 days from the time it is received and the decision shall
become final and executory. No motion for reconsideration shall be entertained (R.A.
8189, Se9.1 33).
In R.A. 9189, as amended •
Petition for{ Inclusion. — Within ten (10) Petition for Exclusion. — If the
days from receipt of notice denying the application has been approved, any
motion for reconsideration, the interested party may file a petition for
applicant l may file a petition for exclusion not later than one hundred
inclusion with the proper eighty (180) days before the start of the
Municipa /Metropolitan Trial Court in overseas voting period with the proper
the City Of Manila or where the Municipal/Metropolitan Trial Court in the
overseas voter resides in the City of Manila or where the overseas
Philippines,1 at the option of the voter resides in the Philippines, at the
•etitioner. o.tion of the • etitioner.
145
I 11
"The petition shall be 'decided on the "The petition shall be decided on the
basis Of the documents submitted basis of the documents submitted within
within fifteen (15) days from filing, but fifteen (15) days from its filing, but not
not later 1 than one hundred twenty later than one hundred twenty (120) days
(120) days before the start of the before the start of the overseas voting
overseas tvoting period. Should the period. Should the Court fail to render a
Court fail !to render a decision within decision within the prescribed period, the
the presCribed period, the RERB ruling ruling of the RERB shall be considered
shall lae I considered ilaffirmed (R.A. affirmed (R.A. 9189, as amended, Sec.
9189, as amended, Sec. 9). 9).
Q: May the trial court ideclare a voter as a resident of another municipality in

exclusion Proceedings?
ANS: No." It1is not within the competence of the trial court, in exclusion proceedings, to
declare the challenged voter aa4-0"gii:Te t of a other municipality. The jurisdiction of the
trial court is limited only to eSrrp Ling t e r gh 3 fAhrdter to remain in the list of voters
or to declare that the cal aged ofer ' a N total the precinct in which he
is register41, speci tjie nd for the tefeif alification (Domino V.
COMELEC; G.R. N 0 -efugl r 499q)-.
!
Local and Civers'eaQh e VotiP1 it, X
Q: What is an d erseZ Voti
ANS: It is rocessty whi•h qualified citizens of the s ad exercise their
right to vote ( erwise r=1; s The Overseas
Voting Actof
Q: What is the cpriage,q,

ANS: All citizen òf tfitiliP the ise di ualified by law, at
least eighteen ( @) yea of aka tip s, y vote r President, Vice-
President, Senatks and Rarty-LI e en a as w as in 1 national referenda
and plebistites (R.74 9189,
Q: Who are disqualifie f

ANS: The following shall b fled fritev is Act: (LRCI)
1. Those who have LOSN401140 ...1 ...1 ip in accordance with Philippine
la14; •
2. Those who have expressly Renounced their Philippine citizenship and who
have pledged allegiance to a foreign country, except those who have
reacquired or retained their Philippine citizenship under Republic Act No.
9225, otherwise known as the 'Citizenship Retention and Reacquisition Act of
2003;
3. Those who have Committed and are convicted in a final judgment by a
Philippine court or tribunal of an offense •punishable by imprisonment of not
less than one (1) year, such disability not having been removed by plenary
pardon or amnesty: Provided, however, That any person disqualified to vote
under this subsection shall automatically acquire the right to vote upon the
expiration of five (5) years after service of sentence;
4. Any; citizen of the Philippines abroad previously declared !mane or
incompetent by competent authority in the Philippines or abroad, as verified by
the Philippine embassies, consulates or foreign service establishments
concerned, unless such competent authority subsequently certifies that such
rs
i :on is no longer insane or incompetent (R.A. 9189, as amended, Sec. 5).
146
•
VOL i.
2019
, II
I requirements 1
Q: What are the for registration as an Overseas Voter?
ANS: Every Filipino registrant shall be required to furnish the following documents:
(PRO)
1. A valid Philippine Passport.
In the absence of a valid passport, a certification of the DFA that it has
reviewed the appropriate documents submitted by the applicant and has found
thernSufficient to Warrant the issuance of a passport, or that the applicant is a
holdel'' I of a valid passport but is unable to produce the same for a valid reason;
2. Accomplished Regiistration form prescribed by the Commission; and
3. Applicants
l who availed themselves of the 'Citizen Retention and Reacquisition
Act'l 0, .A. No. 9225) shall present the original or certified true copy of the
Ord?r l of approval 1 of their application to retain or reacquire their Filipino
citizenship issued by the post or their identification certificate issued by the
BureaU of Immigration.
Therdommission day also require additional data to facilitate registration and
I1 .1
recording.
[, No information otherlhan those necessary to establish the identity
and'qualification of the applidefttlhall be required.
I • P -,4W t..,
All applications for:registrehog rtd/or certification as an overseas voter shall
be considered as i I applarfiWto vote overseas. An overseas voter is
1 p vt ,m•kkoi
presumed to be abroad:untksn ge applies for transfer of her/his registration
A -i ,v-va414,Asi -
records or requests ithat,,,her/hisisgarnealcancellecgfrom the National Registry
of Overseas Voters'plOVfeer '
"./'
re
igThgwatVitiet
'
.jr Sea 12).
.M.
i 1
I
Q: How may the regi 4iatio,n of an pti as voter be deacti ated?
ANS: The Resident Elect' ' [ Registratio Board (RERB) Sna' I deactivate and remove
the registration irecor s,of'142:following pesons from thelorriesonding book of voters
and place the s az; properly andFated, in the in cti file after entering any of
the following ceffses ocdeactiVation:
1. AncEirso,mh,olbewente d by fine d m y., 41, ilippine court or
,
tribunal to sb‘f rrgiorisoaent not less : ,... ok ,ear,
-,-.[..,:..4.4 - such disability
J-' 1 i
not haring_ eemremove „, y pl nary pardon or amnes : Provided, however,
Thateny —61:-s1Wars'qualified to 9te under this paragraph shall automatically
reacquire he fight vote upon e ex i ation of five (5) years after service of
sentence, as reified by the courts of the Municipal, Municipal
Circuit, 'Metro [tan, RegiciffaliTraTIG re74Mandiganbayan;
A- fr
2. Any person 46Iare tr? 46y competent authority to be insane or incompetent,
unleSal Such diseali cation has been subsequently removed by a declaration
of a proper authort l?at such person is no longer insane or incompetent;
3. Any person who did not vote in two (2) consecutive national elections as
shown 'by voting records; and
4. Any person whose registration has been ordered excluded by the courts (R.A.
9189); 11 amended, Sec. 13).
i
I
Q: How may the reactivation of the registration of an overseas voter previously
deactivated be made? , I;
ANS: Any overseas voter whose registration has been deactivated pursuant to the
preceding section may file with the RERB at any time, but not later than one hundred
twenty (120) days y before the, start of the overseas voting period, a sworn application for
reactivation of registration stating that the grounds for the deactivation no longer exist
(R.A. 9189, as Othended, Sec.`16).
Q: How to cancel the registration of an overseas voter?

ANS: The REaBl. shall cancel the registration records of those who have died, as
certified by either, the posts or by the local civil registrar, and those who have been
proven to have lost their Filipino citizenship (R.A. 9189; as amended, Sec. 17).
1
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Q: What is the manner of voting of an overseas voter?

ANS: VOting may be done either personally, by mail or by any other means as may be
determined by the Commission on Elections. For this purpose, the Commission shall
issue the necessary guidelines on the manner and procedures of voting.
(I
The Office for Overseas Voting (OFOV), in consultation with the Department of Foreign
Affairs Overseas Voting Secretariat (DFA-OVS), shall determine the countries where
voting shall be done( by any specific mode, taking into consideration the minimum
criteria enumerated under this Act which shall include the number of registered voters,
accessibility of the ppits, efficiency of the host country's applied system and such other
circumstances that may affect the conduct of voting:
(
The Commission shall announce the specific mode of voting per country/post at least
one hundred twenty( 120) days before the start of the voting period (R.A. 9189, as
amended, Sec. 23).
,„,,,,,‘,..
Q: Is the absentee voting av illai only
wot i erpe-as Filipino citizens?
1
ANS: NO. The Comniissip on &;jectiok.94 Steftlezight to vote under the local
absentee voting syste(riad,ect afder.existing avi,§ a 'd Z utive orders to members
of media, media prod iti ( 'nbrciing the techn bal end,skirt staff, who are duly
registered voters net‘ 9I1,,electioliTar-may
, L. .rabt '&-ablyo vote due to the
i
performance of 4 onsfin coising7and•ceportin) oN. eOctkons: Provided, That
they shall be allowea o votte onlyrforhielfiositions ofl ceside t, Vice President,
Senat6r4( and PA -Lis Representative ( '•.;110380, S c. 2).
.11 f I
svir,
Detainee Votinr--i
U : .( .
Q: Who1 may 1 wail o .cletpn voted•?4,jv.o.i.
ANS: Detaine votirI4 (el g rough-tre pecial-p jails or escorted
voting) May b trfliat of regale tai ion record is not
transferrad/deactivate8/ anc • I eres o. 9371, Rule 1,
Sec. 1). 1 N. I
1 I
Q: Who are con:11red deta" vo ing?
ANS: Detainee referkto an
1: : Confined in jai awaiting/undergoing trial;
i or
Z Serving a seintence of i psis sole s than one (1) year; or
3. Whose Conviction of a crime involving disloyalty to the duly constituted
government !such as rebellion, sedition, violation of the firearms laws or any
,: crime againgt national security or for any other crime is on appeal (COMELEC
: Resolution,No. 9371, Sec. 2(a)).
1
1 ' I
Q: Mar is a special polling place?
ANS: Special polling place shall be established in detention centers/jails with at least
fifty (50) registered detainee voters (COMELEC Resolution No. 9371, Rule 3, Sec. 1).
=
Q: Who are Escorted Detainee Voters?
ANS: The following shall avail of the escorted voting: .
1: ' Detainee voters who are residents/registered voters of municipalities/cities
other than;the town/city of detention; and
2. Detainee voters in detention centers/jails where no special polling places are
established.'
Provided: •
1. That said detainee voters obtained court orders allowing them to vote in the
• place where they are registered.
polling
148
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2 019
!'
2. That 'it is logistically feasible on the part of the jail/prison administration to
escort the detainee voter to the polling place where he is registered; and
3. 1-14t1 reasonable measures shall be undertaken by the jail/prison
adrpirlistration to secure the safety of detainee voters, prevent their escape
and ensure public safety (COMELEC Resolution No. 9371, Rule 7, Sec. 1).
I
11
B. CANDIDACY
iII
Q: Who is considered a candidate?
ANS: A ca4d'pte is any person aspiring for or seeking an elective public office, who
has filed a certificate of candidacy by himself or through an accredited political party,
aggroupment, Or coalition of parties (B.P. 881, Sec. 79, Par. (a)). A person who files
certificate of,' candidacy within the period for filing shall only be considered as a
candidate at i6e start of the campaign period for which he filed his certificate of
candidacy (Penera v. COMELEC, G.R. No. 181613, November 25, 2009).
Qualifications and Disqualifications ofiCahcliclates

Q: What qualifications should a Ofdi ate for President and Vice-President have?
ANS: The follCWing are the wale- roaijb-RAW-VR10):
1. Natural-born citizen; t
2. At leaSt 40 years old on ,t114 #49.9tion;
3. AblO to. Read And Write"!'
4. Registered Vote,Onci
,t5t• --: A ‘h-
5. Resident of the Philippines for.p . -geast 10 years imme iately preceding the day
of the 'electio ILCQNST., A AVII,Secs. 2 and 3; BP. 1, Sec. 63).
i .'
Q: What qualificaeon% staid a candidate for Senator have?
4,
ANS: The follb V6 are
1. Matt!: *o.troitq
t's --o• -
st,,t.thelualificatiNs: 35-RAW-VR2)
2. At least Myearg'slo on ih"exlay o' er he elect
3. Able tpztleadikrdariter4
--.7--p.
. . .0,,'N.,. 1
4. Registerepfoter, and
5. Resident Mir Philippines for n an 2 years immediately preceding the
day of the election '6 A - '''" •ii.
.
vim?-::,t, r -
Q: What qualifications3shouldfa4candidate for District Representatives have?
ANS: The following aret10,9.6pfications: (N25-RAW-VR1)
1. Natural-born citigri,,
2. At least 25 years old. on the day of election
3. AbletoRead And Write; and
4. Registere
d Voter in, the district in which he shall be elected;
5. Resident of the same district for a period of not less than 1 year immediately
preceding the day ofelection (CONST., Art. VI, Sec. 6).
I' !
Q: What qualifications should be met to be a candidate for Governor, Vice-
Governor, Mayqr, Vice-Mayor, Punong Barangay, and Sanggunian Members?
ANS: The following are the qualifications: (CA- RAW-VR1-)
1. Citizen of the Philippines;
2. On election day, Age must at least be:
a. 21 years — for governor, vice-governor, member of the Sangguniang
i Panlalawigan, mayor, vice mayor, or member of the Sangguniang
Panlungsod of highly urbanized cities;
b. ' 21 years — for mayor or vice mayor of independent component cities,
Component cities, or municipalities; or
;
149
c. 18 years — for member of the Sangguniang Panlungsod or Bayan, or
Punong barangay or member of the Sangguniang Barangay(LGC, Sec.
39);
d. 18 but not more than 24 years — Sangguniang Kabataan (R.A. 10742,
otherwise known as the Sangguniang Kabataan Reform Act of 2015,
Sec. 10).
3. Able to Read And write Filipino or any other local language or dialect;
4. Registered Voter in the barangay, municipality, city or province, or, in the case
of a member of the Sangguniang Panlalawigan, Panlungsod or Bayan, the
district where he intends to be elected;
5. I Resident therein for at least 1. year immediately preceding the election; and
Q: What are the diiqualifications applicable to all candidates under Section 12 of

the Omnibus Election Code?
ANS: The disqualifidations to be a candidate and to hold any office are the following: (I-
SIR018-MT)
1 Declared as Incompeterfroan byAcn pettnt authority;
2 Convicted by fiparlud ent f r upesidn, urrection, Rebellion, or any
112ffense for whielMs ntence itofa ptern of more than 18 months
.
impnsonmen belga expiration of a ears from his service of
sentence.
3. Convic.to c1/5 itude.
Note: These d squ life e declaration by
competent autt irity th oved or after the
expiration of a pen f 5 ye Sec. 12).
Q: Provide t ualific nder the Local

Government ne...4 1
ANS: The folio j3e ive local position:
(M-ROC:FPI)
1. Those enten Moral turpitude or
for an o ense p onment, within two
'(2) years fter se
2. Those flemoyed frp ive case;
3.' Those conviat d-b ath of allegiance to the
Republic;
4. Those with 'Dual citiz
5. fugitives from justice in crrhfra' political cases here or abroad;
6. fermanent residents in a foreign country or those who have acquired the right
to reside abroad and continue to avail of the same right after the effectivity of
this Code; and
7. The Insane o!. feeble-minded (R.A. No. 7160, Sec. 40).
Q: What are other grounds for disqualification under the Election Code?
ANS: After having filed a certificate of candidacy, the following shall be disqualified from
continuing as candidate, or if he has been elected, from holding the office:
1. ' One who has given money or other material consideration to influence, I
induce or corrupt the voters or public officials performing electoral functions.
2. One who committed acts of terrorism to enhance his candidacy.
3. One who spent in his election campaign an amount in excess of that allowed
by the Code.
4. One who has solicited, received or made contributions prohibited under Sec.
89 (transportation, food and drinks), Section 95 (public or private financial
institutions, public utilities or exploitation of natural resources, contractors of
public works or other government contracts; franchise holders or
150
concessionaires; educational institutions receiving grants from the
government, offiCials of the Civil Service or the AFP, foreigners or foreign
corporations), Section 96 (foreign-sourced contributions), Section 97 (raising
of funds through lotteries, cockfights, boxing bouts, bingo, beauty contests,
etc ) and Section 104 (prohibited contributions to churches, school buildings,
roads, bridges, medical clinics, etc.).
5. Oriel who has violated the provisions of Section 80 (campaign period), Section
83 (removal, destruction of lawful election propaganda), Sec. 85 (prohibited
forms of propaganda), Section 86 (regulation of propaganda through mass
media) and Section 261 (election offenses).
6. One, who is a permanent resident of or Immigrant to a foreign country, unless
saidperson has waived his status as permanent resident or immigrant of a
foreign country in accordance with the residence requirement provided for in
the election laws p.p. 881, Sec. 68).
Q: Is premature campaigning prohibit9

ANS: No. The Congress, has laid 4p e law — a candidate is liable for election
offenses onlyI upon the start of theca n period. This Court has no power to ignore
1. , express mandate ce
clear and at "any person who files his certificate of
candidacy within [the filing] period be considered a candidate at the start of
the campaign 'period for which 1p cate of didacy". Neither can this
Court turn a blind eye to the eisfressVri• g - - "a - ne law that "any unlawful
+e,0
act or omission applictlotta candidat y upon the start of the
) .J
campaign period" (Pe :era v. Comm'ss o o. 181613 (Resolution),
November 25j 2009).
Section 15 of Rgpublic n;p No. 8436, is Act No. 9369 or

otherwise kriptas TheZiection Auegia efinition of the term
"candidate," esauP lesfithich, rematu er,be committed.
.,
Te
Q: Discuss tne.agi ynas pro er R.A. 107
ANS: An official ortjpSangitniang n, either elective or appointive, must not be
related within , the second' 41 degree uinity or affinity to any incumbent
elected national officialkoLcaby incumben e•ional, provincial, city, municipal,
or barangay official, it f e locality ere h e -Trato be elected (R.A. 10742,
Sec. 10). •
I '
Q: Are dual citizens allolke o run for public office?
ANS: No. Under Section 4(d) of the Local Government Code, a person with "dual
citizenship" is , disqualified from running for any elective local position. For national
positions, althOugh he meets the qualification of being a Filipino citizen, he does not
meet the qualifiCation that he is ONLY a Filipino citizen (Mercado v. Manzano, G.R. No.
135083, May26, /999).
Q: What steps must dual citizens take to become eligible to seek public office?
ANS: To become eligible to seek public office, a dual citizen must:
1. Meet' the qualifications for holding such public office as required by the
Constitution and existing laws; and,
2. Make a personal and sworn renunciation of any and all foreign citizenships
befcirelany public officer authorized to administer an oath prior to or at the time
of filing of their Certificate of Candidacy (R.A. No. 9225, Sec. 5(2)).
Note: It has been held that the Affidavit of Renunciation shall be deemed withdrawn
when the person performs acts which unequivocally repudiate his prior renunciation
such as the use of his foreign passport even after executing said affidavit (Amado v.
Commission on Elections, G.R. No. 210164, August 18, 2015).
151
Q: What steps must a natural-born Filipino citizen who has lost his Philippine
citizenship by reason of his naturalization as a citizen of a foreign country take to
become
« eligible to, seek public office?
ANS. To become eligible as a candidate for public office, such a person must:
ANSI
I Meet the qualifications for holding such public office as required by the
1 Constitution and existing laws; and,
2Re-acquire his natural-born citizenship by taking the Oath of Allegiance found
in Section 3 of R.A. No. 9225.
3. I Make a personal and sworn renunciation of any and all foreign citizenships
• before any, public officer authorized to administer an oath prior to or at the time
1 of filing of their Certificate of Candidacy (Japzon v. COMELEC, G.R. No.
• 180088, January 19, 2009).
Note; It has been held that failure to comply with any of the formal requisites prescribe
in R.A No. 9225, such as the execution of a sworn renunciation of foreign citizen, is
fatal to the candidacy
1 of a foreign/dual citizen seeking public office. It is immaterial that
the foreign country 'of whom he was citizemno49ager treats him as their citizen. It is the
comRliince with Philippine la governs
, —Son's citizenship with respect to the
/ pe
Philipp ne state (Japzon v4COMELEC, iuj2.0)1 Z
Q: Aije foundlings ural-4.ops itizens?
ANS:;Yes. As a mpeINtop rfotmdlings—ateas-a4ass, ral-bqrn citizens. While the
. rafion istosilep,t as ,to form liQg{s, ece is no restrictive
19351Cpnstitutio 's.`" ilum
languege which ou %cldfinitel „ y exclilltle folilndlieags eit er. Tie delibbrations of the 1934
Constitutional onvention show that th9Orpers inten ed fortto be covered by
the eptimeratio difeoverj treaties errilj in erne ion I law\convT tions, which are
genera I acc &Kinciple of fiik?hati4: al1 /:4 16etsup ort the pres ption of natural-
born 'c tizens pof.41fOundlin s (Pde-1 q ?es v. COMELEC-1— R. No. 221697,
221698-700, aTh114, 6
Q: What is the ff e .
il rom Ott cellation of the
certificate of capdidac
ANS: Any candid to judg ent to fie disqualified under
Section 69 or 78 s ell not b qrt s cyst for hi shall not be counted.
If for any reason a ndidat inqkjad ment efore an election to be
disqualified and he, is aritl.treceiveVe p umber of votes in such
election, the Court or Commass confin}fA ial and hearing of the action,
inquiry, or protest and, uporirnoLn of t60.haplainafif or any intervenor, may during
the pendency thereof order the s"0.srension'tf*The proclamation of such candidate
whenever the evidence of his guilt is strong (R.A. No. 6646, Sec. 6).
Q: What is the "second placer" rule?

ANS: The electorate's awareness of the candidate's disqualification is not a prerequisite
for the disqualification to attach to the candidate. The very existence of a disqualifying
circumstance makes the candidate ineligible. Knowledge by the electorate of a
candidate's disqualification is not necessary before a qualified candidate who placed
second to a disqualified one can be proclaimed as the winner. The second placer in the
vote count is actually the first placer among the qualified candidates (Maquiling v.
Filing of Certificates of Candidacy
Q: What is the deadline for filing of certificate of candidacy?
ANS: The deadline for the filing of certificate of candidacy/petition for
registrafon/manifestation to participate in the election shall not be later than one
hundred twenty (120) days before the elections: Provided, That, any elective official,
whether national or local, running for any office other than the one which he/she is
152
I
holding in i a ipermanent capacity, except for president and vice-president, shall be
deemed resigned only upon the start of the campaign period corresponding to the
position for which he/she is running (R.A. 8436, as amended, Sec. 11).
II
F
Effect of Filing,
I
Q: What is:,a certificate of candidacy?
ANS: It is a 'statement of a person seeking to run for a public office certifying that he
announceslhis.candidacy for the office mentioned and that he is eligible for the office,
the name of the political party to which he belongs to, if any, and his postal address for
all election pUrposes (Sinaca v. Mula, G.R. No. 135691, September 27, 1999).
Q: What the effect of filing a certificate of candidacy by a person in public

office?
ANS: Depending on the position the candidate is currently occupying, the filing of a
certificate of candidacy would have the following effects:
1. Appointive Officials - Any, *son holding a public appointive office or
posit(on including active rheth:13-1 of the Armed Forces of the Philippines, and
oth0 officers and emplokg0,eakvernment-owned or controlled corporations,
shall be considered ipig10,0Aigned from his office upon the filing of his
certificate of candidac0 1001y.o. 9369, Sec. 13, par (3); COMELEC
ResOlution 8678,.Sec. .?,+‘
2. Elective OfficialS person hoi ing an'eledtiftlfice or position shall NOT
be considered designed upop tItt filing of his certilcate of candidacy for the
same or antilthej elective office or position (CO LEC Resolution 8678,
Sec. 4). InAfihelan elecied ticial may run or,,akther position without
forfeiting hivseattgeiiiito COMELEC, G.R. No 18P698 February 22 2010).
LA.0
Q: What is theeffect Ogling two dehifilVes of can idacy for di erent offices?
ANS: The peg on shallmofbeeligVe for eft officers o eve Oefo he expiration of
the period for•te filinga:cg,hifica4of candidacy, the filed more than
one certificate 'Optapdidabriflay declare er oath the office or which he desires to be
eligible and cancethWertifi#ate ofkandaacy for the other office or office/s. A person
who has filed a certificate of candidacy a 'ofp to the election, withdraw the same.
The filing of" withdrkeVecertificat- acaickda":9141:41 not affect whatever civil,
criminal, or administrative liabilileS 'cantidale frTaftave incurred (COMELEC
Resolution 8678 Sec.
Q: What is the effect of formal defects in the certificate of candidacy?

ANS: While the certificate of, candidacy is required to be under oath, the election of a
candidate cannot be annulled on the sole ground of formal defects in the certificate,
such as lack .of the required oath (De Guzman v. Board of Canvassers, G.R. No. L-
24721, November 3, 1925). Nowhere in Sec. 40 of the LGC will one find that a defective
candidate of candidacy is a ground for disqualifying a candidate. Neither does it specify
that a defective' notarization is a ground for disqualification of a candidate (Sergio Amora
v. COMELEC, G.R. No. 192280, January 25, 2011).
Substitution and Withdrawal of Candidates
" I
Q: In what instances may a candidate be substituted, and by whom?
ANS: If after the last day for the filing of certificates of candidacy, an official candidate of
a registered political party'dies, withdraws, or is disqualified for any cause, he may
be substituted:by, a candidate belonging to, and nominated by, the same political party.
No substitute shall be allowed for any independent candidate. No person who has
withdrawn his candidacy fora position shall be eligible as substitute candidate for any
other position after the deadline for filing of certificates of candidacy (COMELEC
Resolution 8678, Sec. 13).
153
Q: What is the effect of withdrawing a certificate of candidacy?
ANSI she withdrawal of the certificate of candidacy shall effect the disqualification of the
candidate to be elected for the position. The withdrawal of the withdrawal, for the
purpase of reviving the certificate of candidacy, must be made within the period
provided by law for the filing of certificates of candidacy (Monsale v. Nico, G.R. No. L-
2539, (1ay 28, 1949). The filing or withdrawal of a certificate of candidacy shall not affect
whatever civil, criminal, or administrative liabilities which a candidate may have incurred
(B.P.: 881, Sec. 73, par. (5)).
Q: Until when can the substitute file his certificate of candidacy? What is the
same surname policy?
ANS: IThe substitute of a candidate who has withdrawn may file his certificate of
candidacy at least 150 days before election day. No substitution due to withdrawal shall
be alloted thereafter.
The substitute for a candidate whoAlg,,5..or.isztis ualified by final judgement may file his
certifiC6 of candidacy up ta,theiiiid-dpy electd ay, provided that the substitute
and the' substituted have mes.j V
Ifthe, eath or disquiV12ca rp) betweekih' e efore the election and

mid-d, of ElectiotiDatpes_Ostittttrer .ndidate., as nit C4:11kC with any Board of
,p, Vovticial ec
Election' Inspectof Eller tionrOffice dbrvisor or Regional
Electiorpirecto • as e ase ay bCin st.•divi q wh e such person is a
candidate, or i the ca e of candidatWpresident, ice- (si,t) , or Senator, with
the LavI/JI Cepa rovid a e si.s i u e an. the s bstitut d candidate haVe
the same sum nres-,( OMEL • C firetc3/9tiof 998
Q: What are tie q isitfil a vali

ANS: Tie reqtf st si6r a u stit 9rg, e o Q) .
1. j There a'0.alid e ate o hcpa ELEC, G.R. *No..
119680 OctAr 9,
2 The On final can liidat disqualified for
cause (B.. 881,
3 • There is a alid Wi far the filing Oft0Cs;.,
4 1The substitute el political pally; '
5 The substitute ! of election day (Cerafica y..
COMELEC, G.R. No. 14): and • •
6 ;The substitUte himself Qua e position.
Nuisance Candidates
Q: Who are nuisance candidates?
ANS: Nuisance candidates are those whose certificates of candidacy:re presenled and
filed to ptit the election process in mockery or disrepute, or to cause occinfusieri among
the voters by the similarity of the names of the registered candidates,. or by :pther..
circumstances or acts which clearly demonstrate that the candidate has no bonafide.
intention to run for the office for which the COC has been filed and thus prevent a
faithful determination of the true will of the electorate (B.P. 881, Sec.. 69; Baut/Sta
COME/4C, G.R. No. 133840, November 13, 1998).
Q: What is the period for filing a petition against a nuisance candidate?

ANS: Tf1e petition to deClare a duly registered candidate as a nuisance candidate shall
be filed personally or through a duly authorized repreientative with the Commission by
any registered candidate within 5 days from the last day for the filing of certificates of
candidacy (COMELEC Resolution 9523, Rule 24, Sec. 5).
154
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'14'?'••• • '1‘,- •
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Q: What isittie nature of the petition against nuisance candidate?

.1 :
ANS: A peitiAon to cancel or deny due course to a COC on the ground that he is a
nuisance candidate under Section 69 as in Section 78 cannot be treated in the same
manner as a petition to I 'disqualify under Sec. 68. Hence, the legal effect of such
cancellation Id a COC of a nuisance candidate cannot be equated with a candidate
disqualified on grounds provided in the Omnibus Election Code and Local Government
Code (Dela Cruz v. COMELEC, G.R. No. 192221, November 13, 2012).
Q: Is a candidate accused of being a nuisance candidate entitled to notice and

hearing?. 11. ',
ANS: Yes. ,he1 COMELEC would commit grave abuse of discretion if it denies due
course to or1 'cancels a Certificate of candidacy without affording the candidate an
opportunity tc be heard. The COMELEC should also balance its duty "to ensure that the
electoral process is clean,i,honest, orderly, and peaceful" with the right of a candidate to
explain his or her bona fide intention to run for public office before he or she is declared
a nuisance Candidate (Timpol v. COMELEC,COMELEC G.R. No. 206004, February 24, 2015).
11 1
Q: What is ttie effect of disqualification as a nuisance candidate on votes cast for
the nuisande candidate?' • ' '
I
ANS: The vo es cast for a nuisance ate declared as such in a final judgment,
shall be considered stray VOtes. Hovigirl, i0"fiere<such nuisance candidate, so declared
1 tiii - ..t ,idti.44.*;44th&PA. . ki,I*1
by final judge ent as such, ha4.,s ,the,_Irriqp,sumanA,,mitatnf r of a legitimate candidate,
votes cast for the nuisangeMndidate gie.irot straylui'musr pe counted in favor of the
latter (Dela CrUz v. COMELEC, supra) YA
Note: The exception does ,not applyille are two or more 4 cTa fide candidates with
the same name and/or.elirnpmas the nuisance candidatefTOuqthe votes cast for the
nuisance cancliOateofiRall alsO7,16e, considered as stray votes (COMELEC Resolution No.
41,...45y; A
9599). 7
I
1°27.4e '` 1
Duties of the:COMELEC :),
Is
Q: Does the COMELEC-V* ,,a 'ledi
s tlionsa
IV refuse certificate o andidacy?
ANS: No. When rd'ancljda -taLfiles hieCO t
he COMELEC has only a ministerial duty to
receive and acknowledge iteReceipt (B.T.881 lea 76; Luna v. COMELEC, G.R. No.
165983, April 24, 2001.4Th receiving oft Si, s akige the ministerial duty to receive
and acknowledge receipl 'of the:X9Actiffeig, •Ofiifancitcley/nomination by registered
political parties 'or coapion ofeical parties on or before the deadline for filing of
certificates of candidacyprovi ed said certificates are under oath and contain all the
required data and in the atmiiprescribed by the Commission (COMELEC Resolution
8678, Sec. 8) 1,
Q: In what instances may the COMELEC go beyond the face of the certificate of
candidacy?ivlI
ANS: The CO ELEC may do beyond the face of the COC in cases of: (NDD)
1. Nuisance candidates;
2. Petit ons to Deny due course or to cancel a COC under Section 78 of B.P.
i
881; and
3. DisqL0fication cases based on any of the grounds in B.P. 881, Section 68.
h
C REMEDIES Alf JURISDICTION
Petition to DenyDue Course or Cancel a Certificate of Candidacy
Q: In what instances may the COMELEC deny due course to or cancel a certificate
of candidacy?
ANS: The COMELEC, upon proper petition, may deny due course to or cancel a
certificate of candidacy on the ground that any material representation contained therein
as required under Section 74 of the OEC is false, provided that:
155
The false representation pertains to material matter affecting the substantive
rights of a candidate; and
The false representation must consist of deliberate attempt to mislead,
misinform, or hide a fact which would otherwise render a candidate ineligible
(Salcedo 11'v. COMELEC, G.R. No. L-16835, July 26, 1960).
In addition,the COMELEC may motu proprio or upon verified petition refuse to give due
Course, to or cancel 4 certificate of candidacy if shown that it was filed: (MIC)
1. To put the election process in Mockery or disrepute;
2. To cause, Confusion among voters by similarity of names of registered
candidates; or
3. By other circumstances or acts which demonstrate that a candidate has no
bona fide Intention to run for the office for which his certificate of candidacy
has been filed, and thus prevent a faithful determination of the true will of the
electorate (B.P. 881, Sec. 69; COMELEC Resolution 8678, Sec. 14).
Q: When may a petition toOn or carpel a e ificattof candidacy be filed?

ANS: -Me petition may bs,figd b any ptOnikinpdpystom the last day for filing of
certific4t4 of candidacy:04 not lalethan25,4tysrfror,thegiling of the certificate of
candid cy subject ofAelpetjqprin case of a substitute candidate, the Petition must be
filed within 5 days riprn't lirflt,tbe.sdb§tigifd-candiclateIf lerdtis certificate of candidacy
(COMELEC Reso Oaf 3, rule 2 Tht
Note: .junsdictiin o er, petition to cahpel A4Lcertificate f canaiclacy lies with the
COMELEC sitt' g in Vision, not with tpk,p(DMELEC 6 bahf 'da v. Sales, G.R.
No. 12072, S b r 10, 1
Q: Whq are t e j-pq firemen in rifiettio to denybr-ca cel a certificate

of carIchFlacy \h oloto4er
ANS: Fpr a pe lipiTtAcien db lkourspi p.r cri
,p. ri • d tidate to prosper,
the defendant 6st Aaye m \a m4ttri I3m nvo v g his eligibility or
qualifioAtion for e offide to Wit =A ki".15,,e the equisite residency,
age, citizenship,Ir any kier lbgak- (Cabo to run or elective position.
t1I
Moreover, the fal repregepktatiWe 78 the 9F-C must consist of a
deliberate attempt to Tisleadllmszifor d Riad vi41 would otherwise render a
candid ineligible (yitiaW6bcptiE M6'• 8, February 25, 2014).
lIl • ' \-
Note: i The COMELEC can self, Mh cancellation case, decide the
qualifiCation or lack thereof of the candierd e tribunals which have jurisdiction over
, i J.
the question of the qualifications of the President, the Vice-President, Senators and the
Members of the House of Representatives was made clear by the Constitution (Foe-
Llamanzares v. COMELEC, supra).
1
Petition forDisquclification
Q: WholMay be disqualified from the elections?
ANS: Any candidate who, in an action or protest in which he is a party, is declared by
final deciSion of a competent court, guilty of, or found by the Commission to be suffering
from any disqualification provided by law or the Constitution(COMELEC Resolution No.
9523, Rule 25, Sec. 1).
El
Q: Who imay file a petition for disqualification?
ANS: ArlY registered:voter or any duly registered political party, organization or coalition
of politic4I parties may file a verified Petition to disqualify a candidate (COMELEC
Resolution No. 9523, Rule 25, Sec. 1).
156
Q: Disting iish a petitiOn to disqualify a candidate from a petition for cancellation
of a certificate of candidacy.
ANS: A priition to disqulify a candidate and a petition for cancellation of a certificate of
candidacy may be distinguished in this manner:
1
Petition for Cancellation of a
Petition to Disqualify a Candidate 1
(1 'Certificate of Candidacy
As to basis
Based on i?
i rohibited acts committed by Based on material misrepresentations in
a candida es(B.P. 881, Sec. 68). the COC or on allegations of nuisance
candidacy (B.P. 881, Sec. 69 or 78).
111
As to the period of filing the action
May be (lipid not later than the date of Action under Sec. 69: Must be filed within
proclamation (B.P. 881, Sec. 68). ) 5 days from the last day for the filing of
certificates of candidacy or, if substitute,
from the date of substitution.
ction under Section 78: Must be filed

in)45 a stei the filing of COC
As to effect when granted

, il ir ,
The candidate is s!i..j.9..qUalified from
a.
The person w filed the CoC shall be
running film officetaneskallynOt be deemed to ha e ev - been a candidate.
voted for. 1,1f JjeAs nd_ftsqualified • Any votes hal receive shall be
before the.el‘Ctions a , fie obtainet0e consideredray otesand shall be null
highest 1 rnlie„o • votes, his nd void e candidates
proclamaiios i ,:6 shall bet uspeli,4ed. who have similar sounding
Upon disqualkcati '‘e vFdaticy name to a dna ddidate.raan Second
shall be filled by eration of theAws placer rule applies.
on success on.
i i
T
(Gonzalezt460MELECVR. No4 ardaSSIMpi
4.,
Failure of thel tions, CataSpecial Election
Ne44,
-1,1p
1
stances may a failure of election be declared?
Q: In what nipt
ANS: Failure of elections may be declared in the following cases: (NSA)
1. Thel election in any polling place has Not been held on the date fixed on
account of force majeure, violence, terrorism, fraud, or other analogous
causes;
H
2. The election in any polling place had been Suspended before the hour fixed by
law, ifor the closing of the voting on account of force majeure, violence,
terronsm, fraud, or other analogous causes; and
3. Aftell the voting and during the preparation and transmission of the election
1 s or in the custody or canvass thereof such election results in a failure to
de
rettlion
bt account, of force majeure, violence, terrorism, fraud, or other
analogous causes (Mutilan v. COMELEC, G.R. No. 171248, April 2, 2007).
..1
Q: What are apl, requisites before a failure of election may be declared?
ANS: The following requisites must concur: (VAC)
1. No VO.ting took place in the precinct or precincts on the date or hour fixed by
law,ior even if there was voting, the election resulted in a failure to elect;
2. The votes not cast would have Affected the result of the election; and
157
• VOL 1.
2019
The Cause of such failure of election should have been force majeure,
violence, terrorism, fraud or other analogous causes (B.P. 881, Sec. 6).
1
l ,
Q: Who has the power to declare a failure of election?
ANSI 1The COMELEC en banc has the original and exclusive jurisdiction to hear and
decide petitions for1 declaration of failure of election or for annulment of election results
i1
'(R.A No. 7166, Sec. 4).
i'
Q: IsIthere an instance where the HRET may annul elections results?
ANS Yes.Yes. The HRET, as the sole judge of all contests relating to the election, returns,
lifications of members of the House of Representatives, may annul election
and qua
Jesuits' if in its determination, fraud, terrorism, or other electoral irregularities existed to
. warrant the annulment. Because in doing so, it is merely exercising its constitutional
, . duty WI ascertain who among the candidates received the majority of the valid votes cast
(AbOop v. HRET, G.R. No. 222236, May 3, 2016).
. .Note: The power of the HRET to aaauLelectiqns differs from the power granted to the
.COMELEC to declare failuTopflectioys.lfhe,Bpstitution no less, grants the HRET
with .ei elusive jurisdictioVO.,deide all electioNonfOstl'ihyolving the members of the
House of Representapetlich c w pocessarilyt:inetiesphohb,,which raise the issue of
.fraud,Iterrorism, or o h r irregiitarities committed beforei-durjeor after the elections. To
deprive the HRETi t e eto 40,10-atifitirelections$oy,14Limdroine its constitutional
• fiat to decide elect-keg ntdstsr(Abayon v: HRET7 supra . \c, c1,t,s
„:, I, ,,,t,
0: Who. shall on aIpetition toeclare failure (t!ections and call for
s'peclei electiqns 1 1,..,-,4
ANS: the OME EC sitt . g e`f1:13,arjc by, a"MOjdfity vote of its mem ers. The causes
for the declar iorof, failureV eleatickmblayytidcurbefore
.- ", t,.//.., or 'after-tilet casting of votes
or on- theday Icti . 716CSea--4).
I
Q: Wheh shall C eclat 1 1. forpresgrent,o repiden be held?
ANS: ililcase a acanckoccr.05 .,0 esictent andhice-President, the
Batashhg Pamb sa I at`te N-o'cloc irrthe\rribrnigd of thythird day after the
vacancy occurs, c vene s of a call and within
vqtrigirql. es without need
sevenicleys enact a he cap b4for rehffillete-Etion'S ect/President and a Vice-
Presicierilt to be held ,nctedr tektR"fflorty4ive'eajt aterthan sixty dayg from the
time of such call (B.P.,1 88T,*(1.
1111fSec. 14)4 _dor
Q: When shall a special eleCIrtretterdin case of vacancy in the House of

Representatives or,Senate?
ANS: Hi case a permanent vacancy shall occur in the Senate or House of
Representatives at least one (1) year before the expiration of the term, the Commission
than ca Land hold a Special election to fill the vacancy not earlier than sixty (60) days
nor lohber than ninety (90) days after the occurrence of the vacancy. However, in case
of such vacancy in the Senate, the special election shall be held simultaneously with the
, .1
succeeding regular election (B.P. 881, Art. Ill, Sec. 14).
Pre-Proclamation Controversy
Q: •What is a. pre-proclamation controversy?
.ANS: A pre-proclamation controversy refers to any question pertaining to or affecting
the proceedings of the board of canvassers which may be raised by any candidate or by
any registered political party or coalition of political parties, or by any accredited and
particiP,aiing party ligt group, before the board or directly with the Commission
(COMELEC Resolution No. 8804, Rule 3, Sec. 1, as amended by COMELEC Resolution
No. 9164)
158
Q: What issues may be raised in a pre-proclamation controversy?
ANS: A pre-proclamation controversy covers only two issues:
1. Illegal composition of the Board of Canvassers (BOC) which exists when, among other similar circumstances,
any of the members do not possess legal qualifications and appointments. The information technology capable
person required to assist the BOC by R.A. No. 9369 shall be included as among those whose lack of
qualifications may be questioned (COMELEC Resolution No. 8804, Rule 4, Sec. 1);
2. Illegal proceedings of the BOC which exists when the canvassing is a sham or mere ceremony, the results of
which are pre-determined and manipulated as when any of the following circumstances are present:
a. Precipitate canvassing;
b. Terrorism;
c. Lack of sufficient notice to the members of the BOCs; or
d. Improper venue (COMELEC Resolution No. 8804, Rule 4, Sec. 2).
Q: Who has jurisdiction over pre-proclamation controversies?
ANS: The COMELEC has exclusive jurisdiction over all pre-proclamation controversies arising form national, regional,
or local elections. It may motu propio or upon written petition, and after due notice and hearing, order the partial or total
suspension of the proclamation of any candidate-elect or annul partially or totally any proclamation, if one has been
made, as the evidence shall warrant (B.P 881, Sec. 242).
Election Protest
Q: What are the requisites for an election protest?
ANS: According to Rule 6 of COMELEC Resolution No. 8804, an election protest must be filed:
1. By any candidate who has filed a certificate of candidacy and has been voted for in the same office and who
received the second of third highest number of votes or, in a multi-slot position, was among the next four
candidates following the last ranked winner duly proclaimed,
2. On the grounds of fraud, terrorism, irregularities, or illegal acts committed before, during, or after the casting
and counting of votes (NACHURA, supra at 684). The election protest must be filed within 10 days from the
proclamation of the election results (ld.).
Quo Warranto
Q: What are the requisites for a petition for quo warranto relating to elections?
ANS: The requisites for a petition for quo warranto relating to elections are the following:
(RI-10)
1. It must be filed by any Registered voter in the constituency;

2. Based on the grounds of Ineligibility or disloyalty to the Republic; and
3. It must be filed within 10 days from the proclamation of the election results
(B.P. 881, Sec. 253; COMELEC Resolution No. 8804, Rule 6).
159
•
Q: Distinguish an election protest from a petition for quo warranto?
ANS! ,Election protebt and a petition for quo warranto may be distinguished as follows:
Election Protest Qdo Warranto

As to Nature
It is 'strictly a contest between the It refers to questions of disloyalty or
defeated and winning candidates, ineligibility of the winning candidate.
bas'ed on grounds of election fraud or It is a proceeding to unseat the ineligible
irregularities, as I to who actually person from office, but not to install the
obtained the majority of the legal protestant in his place.
votes and therefore is entitled to hold
the office.
I
As to Who may File
;
It can only be filed' by a candidwho— 'It"canJlefiled by any voter. It is for this
has duly filed i a cettifiE to ot ree'sion , tketkiLis not considered a contest
candidacy and has be rro iwtierd tt. perties strive for supremacy.
same position.
As to Effect fo the Prostestee
NUT V#T.)
A protesteetp y and ). e the espopclent may be unseated,
protestant ed
sat in e officerk;the petition r b'e)Seated.
vacatee. mi
.-1111 •
(Luison v. Ga fa, G No. 13 81,Apnrzpi 1958).
.11 1222,rf-3
Q: What Is th n-electi rotest-of for
_,..quo warranto?
ANS: The filin rotegt jelspetitior gto qu cif. 0.40to precludes the
subsequent filing of a foitm petVion to annul proclamation.
It also amounts toI thelab filed die/
, thu-Ideprivipb the COMELEC of
the authority to inquire in e of th protestee the validity of his
proclamation. The eson enVfibunal he's acquired jurisdiction
over an election protest tio rlioc,a10,stions relative thereto will
have to be decided' in 1 ape er proceeding (Villamor v.
COMELEC, G.R. No. 169865 Juty 21, 20i
Q: In what instances may a pre-proclamation controversy still proceed despite the

proclamation of the winning candidate, or the filing of an election protest or
petition for quo warranto?
ANS: A pre-proclamation controversy may still proceed if (IRWAN):
1. What is filed is not really a quo warranto or election protest but a petition to
Annul a procIamation;
2. Quo warranto is not the proper Remedy;
3. 'The BOC is IMproperly constituted;
4. The filing of e quo warranto or an election protest is expressly made Without
Prejudice to pre-proclamation contest, or is made ad cautelam; or
5. The proclamation is Null _ and void (Dumayas, Jr. v. COMELEC, G.R. Nos.
141952-53, April 20, 2001).
160
VOL 1.
2019
fi I
f I
Q: Proyide the rules on jurisdiction over election protests, quo warranto, and
related remedies.
ANS: The following is the summary of rules on jurisdiction over election offenses:
.I 1
Summary of Rules on Jurisdiction .
Proceedings Court with Jurisdiction

Elective Barangay Officials
11
Election Protest / Quo Warmnto MeTC, Municipal Trial Courts in Cities,
MTC, MCTC
: ,
1 . ,
Appeal /Certioran / Mandamus / COMELEC
1
Prohibition
I I.,
Certiorari (from COMELEC decisions) SC
a
Elective Municipal Officials

Election Protest / Quo Warranto, • T -C
,
',,t. IV
I . .,6 4Aft„ ig.P4
Appeal / Certiorari/Mandamus! - .:' eomEti,E41 --hi
Prohibition
rd Lv i 3
t9
.04r
Certiorari (from COMELEC Cattt A
decisions
dr'
•• 1g.aSC /1
Elective Regional, Provincial, City Officials
I Ii "-4
."
Election Protesti Quo arranto -,,, 40MELEC I P
i I, rivr.... . ate, Ilk
1.
Certioran r It pt • groti, :ti,..,i..4,..1:
‘
. II=
Members of the House of Representatives
1I ' i'NIA 1
Election Pretest / t uo Wa nto
Certiorar) .411: " i*0.-a-- - IA.
-
i
, . Members of the Senate
Ii
Election P
Protest / Quo Mo SET
'
Certiorari' `. jii SC
• President and Vice-President •
1
Election Contests / Quo Warranto SC (Presidential Electoral Tribunal)
Q: Discuss .when the jUrisdiction of the Electoral Tribunals begins, and the
COMELEC$ jurisdiction ends.
ANS: In the: case of HoUse of Representative Electoral Tribunal, once a winning
candidate has peen proclaimed, taken his oath, and assumed office as a Member of the
House of Representatives, the COMELEC's jurisdiction over election contests relating to
his election, returns, and qualifications ends:and the HRET' s own jurisdiction begins.
Stated in another manner, where the candidate has already been proclaimed winner in
the congressional elections, the remedy of the petitioner is to file an electoral protest
with the HRET(Vinzons-Chato vs. COMELEC, G.R. No. 172131, April 2, 2007).
161
i ,:,„,t.,.... , ,...,.t..,
• r.: J-te....:',:•.:•AN$.4:1,„.,,
•.' —
"VOL 1.
2019
XI. LOCAL GOVERNMENTS

A. PRINCIPLES OFL.00AL AUTONOMY
I.
Q: VVhat is local autonomy?
ANS: The princjPie of local autonomy under the 1987 Constitution simply means
decentralization (Basco v. PAGCOR, G.R. No. 91649, May 14, 1991). Local
Goyernment has been described as a political subdivision of a nation or state which is
constituted by law and has substantial control of local affairs. In a unitary system of
government like the Philippines, local governments can only be an infra sovereign
subdivision of one sovereign nation, it cannot be an imperium in imperio. Local
government in such a system can only mean a measure of decentralization of the
funotion of governrnent (Limbona v. Mangelin, G.R. No. 80391, February 28, 1989).
Note: Under the Philippine concept of local autonomy, the national government has not
completely relinquished all its powers over local governments, including autonomous
regions. Only adMinistrative powers omer,„19,c,a1 affairs are delegated to political
subdivisions. The t,urpose of..-the delegationkis7tb%make governance more directly
1 , Intel,
responsive and effective at lie rocal leOels1 (TrNr .. Ochoa, G.R. No. 195770,
July1t 2012). :i Ai`—‘ 1 ''',...,---- 1 I ,-N.
i j l' N it,.. 4N,
.1411
.,(
' -, - \''..".
"° ,,,_—_, 'Nv, .0,.
Q: What are the kinas f utonomy? 2. ----- ' ,, - ,L.
\-...set.„5,t,,
ANS: There are ty1424)1(31Cs Of autorRmS/Ai ;..
1. Decentralizatkon o admthishipoti'L— the central go?ernment delegates
1 i 1
administrative/powe s to politibal Subdivisions in oraKtylkaden the base of
s s•--.
govemmpt power land-111 - .i e process ima e LGUs responsive and
accohThble and eneuratfileir; lesravilop ent a self-reliant communities
and mask, .them effective paitn rs,iinlhe pu uit of n tional development and
‘1.... t_h_ii,4 i
i socialgress;
tif
\ '
2 l ' DecentrijiVtio ower :.1.0Volves a ofjooliki.cajpower in favor of
r LGUs cleciar d al) oAontous.
II, " Pa JaVOu p _.,. selflmmOrapon," because the
I, autono ous I vern griqoa.gcirn s 4it e n 1 to thecentral authorities
1 ' but to it constabency. Lifhbcii
.....L.:_09/1 (suP ).
Q: Define devolution. ,
CIENer\N"
11
ANS: Devolution is i am...al --\w ibh.the.fratibna arpment confers power and
authority upon various LGU.it pfe ormispfcgqii4ctiopeand responsibilities (LOCAL
GOVERNMENT CODE, Sec.. -14par. (a)).11hdr far LGC.1. It is synonymous with
decentralization of pOwer (Province-7'0'm s v. Romulo, G.R. No. 152774, May 27,
1
2000 ,..1,
III
Q. Defiine deconcentration.
ANS: ! Deconcentrahon, also known as administrative decentralization, is a
decentra ization which is administrative in nature. It involves the transfer of functions or
the delegation of authority and responsibility from the national office to the regional and
local .office (Disomangcop vs. Secretary of DPWH, G.R. No. 149848, November 25,
2004).L I,
Ilk;: 1
Q: ArelOcal government units (LGU) subject to the supervision of the President?
ANS: `(es'. The president exercises the power of general supervision over LGUs. The
Presidentican only interfere in the affairs and activities of a local government unit if he or
she finds that the latter had acted contrary to law (Judge Dadole v. Commission on
Audit, GR.
, 1! No. 125350, December 2, 2002).
:II
162.
• • .• z • i:.•:i:'•I•et•
D • •
B. AUTONOMOUS REGIONS AND THEIR RELATION TO

NATIONAL GOVERNMENT
Q: What is an autonomous region?
ANS: Autonomous region is a corporate entity with jurisdiction over all matters devolved
to it by the Constitution and the Organic Act (Sec. 2, R.A. 9054). From the perspective
of the Constitution, autonomous regions are considered one of the forms of local
governments, as evident from Article X of the Constitution. Autonomous regions are
established and discussed under Sections 15 to 21 of the said Article—the article wholly
devoted to Local Government (Datu Michael Abas Kida v. Senate of the Philippines,
G.R. No. 196271, October 18, 2011).
Q: What consists an autonomous region?

ANS: Autonomous regions shall consist of provinces, cities, municipalities, and
geographical area sharing common and distinctive historical and cultural heritage,
economic and social structure, and other relevant characteristics within the framework of
the Constitution and the national p..gy,OrIgnty as well as territorial integrity of the
Republic of the Philippines (CONST4:,A,..it,P Sec. 15).
Q: What is the relationship of ailt6q,p, regions to the national government?

ANS: While autonomous regions,',`.aCrgiteilattical autkoaomy, the framers of the
Constitution never equated autoporrqValeku;qmsq„41. autonomous region, as a
regional entity, continues to4dp'brate wirli a larger 'ffame'Wokk of the State and is still
subject to the nationolAircies set .18Q • e national gover knt, save only for those
specific areas reserveq:y Ore Constaitio for regional autodo ous determination (Datu
Michael Abas Kida v.Senaikof
•pp •th
ees,
Philipp' supra).1
4, th„,
Q: What is akotganic acfiinielatioQ4o tonomous wimp?
ANS: An orgtaici act in;kktion to autonomous regio0heplky the Congress which
shall define tRabare-rnict.pfe oNcirm t for th .e IgtinisAdrof the executive
department, legleative.,sos'§nblmbolli of ich shall belglEe11yerad
. representative of
the constituent pol tictAitik The same all likewise provide for special courts with
personal, family, a d property la‘Ar juris ction consistent with the provisions of the
Constitution and nation la (CONST. Aaec41:Par. (1)).
f,tt
Q: What are the two constitutVflally created autonomous regions?
ANS: The following are/ikwodcolistitutionally created autonomous regions:
1. Autonomous regto.Oh Muslim Mindanao (R.A. 9054, amending R.A. 6734
which is the organic act for the Autonomous Region in Muslim Mindanao)
2. Autonomous region in the Cordilleras (has yet to receive real autonomy
considering that only the province of Ifugao voted favorably for the creation of
the Cordillera Autonomous Region) (Ordillo v. COMELEC, G.R. No. 93054,
December 4, 1990).
Q: Can a sole province voting favorably in a plebiscite for the creation of an

autonomous region legally and validly constitutes such region?
ANS: No. It is explicit in Article X, Section 15 of the 1987 Constitution that the keywords
— provinces, cities, municipalities and geographical areas connote that "region" is to be
made up of more than one constituent unit. The term "region" used in its ordinary sense
means two or more provinces. To become part of a region, such province must join
other provinces, cities, municipalities, and geographical areas. It joins other units
because of their common and distinctive historical and cultural heritage, economic and
social structures and other relevant characteristics (Ordillo v. COMELEC, supra).
163
Q: When does the creation of autonomous region take effect?
ANS: Consistent with the requirements set forth in par. 2, Sec. 18, Art. X of the
Constitution, the creation of the autonomous region shall take effect only when
approved by a majority of the votes cast by the constituent units in a plebiscite, and only
those provinces and cities where a majority vote in favor of the Organic Act shall be
included in the autonomous region. The provinces and cities wherein such a majority is
not attained shall not be included in the autonomous region (Abbas v. COMELEC, G.R.
No. 89651, November 10, 1989).
Q: What powers does the President have over the autonomous regions?
ANS: The President shall exercise general supervision over autonomous regions to
ensure that the laws are faithfully executed (CONST. Art. X, Sec. 16). The President
shall exercise general supervision over the Regional Governor to ensure that his or her
acts are within the scope of his or her powers and function. The president may suspend
the Regional Governor for a period not exceeding six (6) months for willful violation of
the Constitution, the Organic Act o e.aut nomous region or any existing law that
applies to the autonomous re 054, , c.1)
Q: What are the legis a 9 ers.granted 0hgauktopo ous region, which it will
exercise within i i terrftpe i" jurisdiction,s i e provisions of the
Constitution and afro
ANS: The legislq, „Qo
1. trati
anted*? t e,eutoreioZbs re
zationjr 2A.\.
ojI nTA.
car,
(ACAP-PE2R0)
2. Great of s f revenuesk,
3. Ance na ura rein
4. Pers
5. Re ions ut an and ural pain
6. Econ tourisni'd
7. Educ olic
8. Prese and
9. Such ther lle promotion of the
general elfare f the e•t Sec. 20).
C POWERS OF LO
Q: Do LGUs have inhe ?
ANS: None. Congress enac Local 111E9-e t e as the implementing law for
the delegation to the various L e tel great powers, namely: the police
power, the power of eminent domain, and the power of taxation. The LGC was
fashioned to delineate the specific parameters and limitations to be complied with by
each LGU in the exercise of these delegated powers with the view of making each LGU
a fully functioning subdivision of the State subject to the constitutional and statutory
limitations (Legaspi v. City of Cebu, G.R. No. 1591101, December 10, 2013).
Police Power (General Welfare Clause)

Q: What is the basis for the exercise of police power by LGUs?
ANS: The police power can be exercised through the general welfare clause. But, police
power is not inherent in municipal corporations or local governments. In order that a
local government may exercise police power, there must be a legislative grant which
necessarily sets the limits for the exercise of the power. Congress has enacted the
Local Government Code which provides the standards as well as the limitations in the
exercise of the police power by the local government unit (Tano v. Socrates, G.R. No.
110249, August 21, 1997).
164
Q: What are the limitations on the exercise of police power by LGUs?
ANS: The exercise of police power by LGUs has the following limitations: (C-DET)
1. Must not be contrary to the Constitution and the law — prohibited activities may
not be legalized in the guise of regulation, and activities allowed by law cannot
be prohibited, only regulated;
2. Due process clause — the means employed are reasonably necessary for the
accomplishment of the purpose and not unduly oppressive on individuals;
3. Equal protection clause — the interests of the public in general, as
distinguished from those of a particular class, require the exercise of the
power; and
4. Territoriality — police power may be exercised only within the territorial limits of
the local government unit, except for protection of water supply (NACHURA,
supra at 714).
Eminent Domain
Q: What is the basis for the exercis Hof e power of eminent domain by LGUs?
ANS: An LGU may, through its cplpte cutive, and acting pursuant to an ordinance,
exercise the power of eminent tkoppilk public use or purpose, or welfare for the
benefit of the poor and the landlukop ayment of just compensation, pursuant to
the provisions of the Constitution atid&pe t laws (LGC, Sec. 19).
Strictly speaking, the powlraprexp opr ion poss- n LGU is in reality not
eminent but merely inktiordomaiqsi ce it must confor o the limits imposed by
legislative delegation, 41 thus pedal% ly of a share in nt domain. Indeed, the
national legislature is4,%'11 pri~cil of LGUs, and the Ott nnot defy, modify, or
violate its will (Muntipali Parafiaque V.M. Realty. or .R. No. 127820, July
20, 1997).
44.
Q: What ayeve..the •Iimitatio e cise o propriation by
LGUs?
ANS: The folio nngxae imitates o he exercise of eminent domain by LGUs:
(CO2-UP) f.r‘
1. qonstitutiona
a. NecesA uti
b. Prope Y- to be g pea e is pnva e;
c. There Ss • st csensation; and
d. Taking m st bi with due process
2. Taking must be pursuant to an Ordinance, exercised by the local chief
executive;
3. Taking must be for Public Use, purpose or welfare for the benefit of the poor
and landless;
4. There must be Payment of just compensation as required under Article III,
Section 9 of the Constitution; and
5. Taking must be made only after valid and definite Pifer had been made to, and
not accepted by the owner (Municipality of Parafiaque v. V.M. Realty Corp.,
supra).
Q: May an LGU, acting pursuant to a Sanggunian resolution, exercise the power

of eminent domain?
ANS: No. Expropriation must be exercised through an Ordinance, which is a local law of
permanent character (Id.). No power or right can be conferred by and be inferred from a
resolution, which is nothing but an embodiment of what the lawmaking body has to say.
The Sanggunian, by such adoption, is only expressing its collective sentiment or opinion
(Sps. Yusay vs. CA, G.R. No. 156684, April 6, 2011).
165
, • •,•4 • ..; tk • ';,+::••••
Taxing Power
Q: What is the basis for the exercise of the taxing power by LGUs?
ANS: Each LGU shall have the power to create its own sources of revenues and to levy
taxes, fees, and charges subject to such guidelines and limitations as the Congress may
provide, consistent with the basic policy of local autonomy (CONST., Art. X, Sec. 5).
LGUs have the authority to create their own sources of revenues and to levy taxes, fees
and charges which shall accrue exclusively for their use and disposition and which shall
be retained by them (LGC, Sec. 18).
Q: What are the fundamental principles of taxation by LGUs?
ANS: The following fundamental principles shall govern the exercise of the taxing power
by LGUs: (UnPIN-OPEN)
1. Taxation shall be Uniform in each LGU;
2. Each LGU shall, as far as practicable, evolve a Progressive system of
taxation;
3. Revenue shall Inure sol9jy,loghetenefitpf, and be subject to disposition by,
the LGU, unless ot erVe speZ , ifilallAprpate herein;
4. Collection shalljno case be Iktio eMpri t won; and
5. Taxation shajittht.,,,
a. not er t, ecessive,122p4qssive ore nfis tp ; and
b. °IA for Pic, purposes;
c. E:q611091 and basecIpaskr aypracti•ab the ttaxpayer's ability to
iipayiNgq,
d. !Not gintra to law olic ationa (icon mic policy, or in
Tar int of tr
I
Legislative PoweroA
Requisites fall-Cid rdina
11 r-^
Q: What are thq 'r_rei quisites
ANS: The follovikig arel ce: pup3u9
1. Must nt travene
con the statute;
2. Must not`be UnfA r o
3. Must not 11,artial
4. Must not ProftiV, gulateptratie•
5. Must be consist blic RAT
6. Must not be Unreas andLVI
7. Must be General in applica -(-Marjtajas v. Pryce Properties Corp., Inc., G.R.
No. 111097, July 20, 1994).
Q: Discuss the process for the approval of ordinances.
ANS: An ordinance is approved in the following manner:
1. The local chief executive affixes his signature on each and every page thereof;
2. If the loc.al-tiiief executive vetoes the same, it may be overridden by a two-
thirds vote Of all Sanggunian members;
a. The focal chief executive may veto any ordinance on the ground that, it
is ultra vices or prejudicial to public welfare, stating his reasons therefor
in writing;
b. The local chief executive may veto particular item/s in an apptopriation
ordinance, ordinances adopting local development plans and public
investment plans, or ordinances directing the payment of money or
creating liability; and
c. The local chief executive may veto an ordinance only once;
3. The veto must be communicated to the Sanggunian within 15 days for a
province and 10 days for a city or municipality; otherwise, the ordinance shall
be deemed approved. Ordinances enacted by the Sangguniang Barangay
166'
•• V•:7,e•
shall, upon approval by the majority of all its members, be signed by the
Punong Barangay (LGC, Secs. 54 and 55).
Q: Are there additional requisites if an ordinance imposes penal sanctions?

ANS: Yes. The gist of all ordinances with penal sanctions shall be published in a
newspaper of general circulation within the province where the local legislative body
belongs. If there is no newspaper of general circulation within the province, posting of
such an ordinance shall be made in municipalities and cities of the province where the
Sanggunian of origin is situated (LGC, Sec. 59, par. (c)).
Q: What is the difference between an ordinance and a resolution?

ANS: A municipal ordinance is different from a resolution in the following ways:
• Ordinance • Resoliition
As to Definition • • •
Mere declaration of the sentiment or
opinion of a lawmaking body on
specific matter
As to'Nature.....
fr.c4S1.
17nz,„
o
General and permanent in character, ipitagleara„.
01.
As to Enactment .;.•
(.
A third reading is necessafy A third readinitsn t necessary, unless
.4,911. A decided othe b a majority of all the.
,• :. ,v4s
, , Sanggunian em4ers
(Sps. Yusay Court oq)Ipeals supra).
Q: When do or inansesOsolutiginAltakeleffect?
ANS: Unless ottietwiesi , alt in the.Rordi
,sq e or resolution, the same shall take effect
after 10 days fromilie date 'e'lcopy•fherechs posted in a bulletin board at the entrance
of the provincial capitol,, or or municip17.1Tara%ay hall, as the case may be, and
in at least two other covpicffus pJaces,iifi
.91qa ed (LGC, Sec. 59, par. (a)).
Of-
Local Initiative and Referendam
oi
t
Q: Define local initiative.
ANS: Local initiative is the legal process whereby the registered voters of a local
government unit may directly propose, enact, or amend any ordinance (LGC, Sec. 120).
Q: What are the limitations on the exercise of the local initiative?

ANS: The limitations are:
1. It shall not be exercised more than once a year;
2. The local initiative shall extend only to subjects or matters which are within the
legal powers of the Sanggunian to enact; and
3. If at any time before the initiative is held, the Sanggunian concerned adopts in
toto the proposition presented and the local chief executive approves the
same, the initiative shall be cancelled. However, those against such action
may, if they so desire, apply for initiative in the manner provided by law (LGC,
Sec. 124).
Q: Define local referendum.

ANS: Local referendum is the legal process whereby the registered voters of the local
government units may approve, amend, or reject any ordinance enacted by the
Sanggunian (LGC, Sec. 126).
167
Q: Who may exercise the power of local initiative and referendum?
ANS: The power of local initiative and referendum may be exercised by all registered
voters of the provinces, cities, municipalities, and barangays (LGC, Sec. 121).
Ultra ViresActs
Q. What is an ultra vires act?
ANS: An ultra vires act is one committed outside the object for which a corporation is
created as defined by the law of its organization and therefore beyond the powers
conferred upon it by law. There are two (2) types of ultra vires acts, namely:
1. An act utterly beyond the jurisdiction of a municipal corporation (ultra vires in
the primary sense and void); and
2. The irregular exercise of a basic power under the legislative grant in matters
not in themselves jurisdictional (ultra vires in a secondary sense which does
not preclude ratification or the application of the doctrine of estoppel in the
interest of equity and essential justice) (Land Bank of the Phils. v. Cacayuran,
G.R. No. 191667, April 1 048).
j
Q: What are the types o tra kes a s f kwistfl * at is the distinction
between them?
ANS: The differenc- ettw jothtwo types of ultr • s a as follows:
° Void Ultra Vires I • Ultra Vires Irregularity

As to Nature
Utterly beytkei juris iction ofac Attended only pgt34irregularity BUT
municipal co or rfaslains ithin th municipality's power
s.
Void
:
Municipal contracts whir
1.entered into beyond
*.<
xpres&
Liui4
X ,!-•
ecluge
Jnyttracts which:
tification or the
ion f doct e of estoppel in
est f equjfy and essential
nte'red into by the improper

implied, or inherent powers epartment, board, officer, or agent;
LGU; or, or
2. do not comply with the substantive 2. do not comply with the formal
requirements of law, e.g., when requirements of written contract, e.g.
making expenditure of public funds, statute of frauds 003
they must be an actual appropriation
and certificate of availability of funds
(Land Bank of the Phils. v. Cacayuran, supra).

LiabilityofLGUs
Q: Is there a difference between suability and liability?
ANS: Yes. Suability depends on the consent of the state to be sued, liability on the
applicable law and the established facts. The circumstance that a state is suable does
not necessarily mean that it is liable; on the other hand, it can never be held liable if it
does not first consent to be sued. Liability is not conceded by the mere fact that the
state has allowed itself to be sued. When the state does waive its sovereign immunity, it
is only giving the plaintiff the chance to prove, if it can, that the defendant is liable
(University of the Philippines v. Dizon, G.R. No. 171182, August 23, 2012).
168
Q: Give instances where an LGU is liable under specific statutory provisions.
ANS: An LGU is liable for the defective condition of roads under its control or
supervision (CIVIL CODE, Art. 2189). It is also liable when the state acts through a
special agent (CIVIL CODE, Art. 2180). The LGU is subsidiarily liable when a member
of the police force refuses or fails to render service or aid (CIVIL CODE, Art. 34).
Q: May an LGU be held liable for a violation of the law?

ANS: Yes, the municipality was held liable for damages when it closed a part of a
municipal street without indemnifying the person prejudiced thereby (Abella v.
Municipality of Naga, G.R. No. L-3738, November 20, 1951). A municipality, through the
mayor, was held in contempt and fined with a warning because of the refusal of the
mayor to abide by a temporary restraining order issued by the Court (Moday v. Court of
Appeals, G.R. No. 107916, February 20, 1997).
Q: When may an LGU be held liable for a tort?

ANS: LGUs and their officials are liable4or death or injury to persons or damage to
property (LGC, Sec. 24). However, ti OLGU can be held answerable only if it can be
shown that its officers and agen fiereking in a proprietary capacity because the
state cannot be held liable for -1,96 milled in the discharge of governmental
functions (Municipality of San Fenian o,~., Firme, G.R. No. L-52179, April 8, 1991;
Jayme v. Apostol, G.R. No.360 169, Ng% 2 008). %
Q: May an LGU be held (ia e under a c ntract?

ANS: Yes, provided t e sLo-
contract is igt7a, Tres (NACHURA, at 743). With respect
to proprietary functions ttled .
ryriis at a municipal tion can be held liable
to third persons ex co ri6 v. Font G.R. No. October 23, 1978).
Q: What is tl egdooctrir4o implied atm al liability

ANS: The doe neaoimplied municipal ility pr cipality becomes
obligated uponApn implietratracF161pay reason .enefits accepted
or appropriated tj_x. ignAvhicrighas e general po e ontract. The doctrine
applies to all casesViere ltney oth property of a party is received under such
circumstances that h genaal law, ind de de of an express contract, implies an
obligation to do justice pect to th vince of Cebu v. IAC, G.R. No. L-
72841, January 29, 19 4wAti
-
Settlement ofBounda bise es

Q: How may boundary disputes be settled?
ANS: Boundary disputes between and among LGUs shall, as much as possible, be
settled amicably. The following are the rules on settlement of disputes:
1. If the dispute involves two or more barangays in the same-city or municipality,
it is referred to the Sangguniang Panlungsod or Sangguniang Bayan;
2. If the dispute involves two or more municipalities in the same province, it is
referred to the Sangguniang Panlalawigan;
3. If the dispute involves municipalities or component cities in different provinces,
it is jointly referred to the Sanggunians of the provinces concemed; and
4. If the dispute involves a component city or municipality on the one hand and a
highly urbanized city on the other, or two or more highly urbanized cities, it is
jointly referred to the respective Sanggunians of the parties (LGC, Sec. 118).
In the event that the Sanggunian fails to effect a settlement within 60 days from the date
the dispute was referred to it, it shall issue a certification to this effect. The dispute shall
then be formally tried by the Sanggunian concerned which shall decide the issue within
60 days from the date of certification (LGC, Sec. 118).
169
Vacancies and Succession
Q: What are the causes of permanent vacancy?
ANS: The following are the causes of permanent vacancy: (HiFInD-RemResRef)
1. Succession to a Higher vacant office;
2. Failure to qualify to office;
3. Permanent Incapacity to discharge the functions of an office;
4. Death;
5. Removal from office;
6. Voluntary Resignation; and
7. Refusal to assume office (LGC, Sec. 44).
Q: What are the rules of succession of local elective officials in case of permanent
vacancy?
ANS: In case of permanent vacancy in the positions given below, the following shall
succeed: (Vacancy: Successor)
1. Office of the Governor: Vic crverntr----
2. Office of the ManR,reVi9e-mayer j 3 ,,,_
3. Offices of the Gover onice-dovern r, M yorioNpe-mayor: Highest ranking
e •&
Sanggunian* em er oroinrege ofhVpe anent i alty, the second highest
ranking SO ems s
,
4. Office or? ii o g' Barangay: Hpist-fa g guniang Barangay
membetIn gib& o , in ciJt rgb zli
othisIierma
. ent na he second highest
rankingSandinian member x-,‘
ryc f,
Ilk
A tie between ,..4 ong th t hikelst.rrixoli g_:Sanggu
, hall be resolved
by the drawing of lo s- For p rposegof:A:cq scion, ra ggunian shall be
ti i
determined o bas sro he proWritorrorthe A sob arced y each winning
candidate to t e to a nur0 f—registgr :voter the immediately
preceding elec Sec 4 4). 2%,,
•("(k , s,2,,,
Q: What are th rules in ca ‘ 9:spem4.7 r vac anggunian where
automatic succe tion do noila0
ANS: Permanent va ancies irQie`-' adStigh4he utoma succession does not
apply shall be filled b cp.9titinglitxby,,, in ec Ives:
1. President, thrOD h 4h pcutive Sec et derides in the:
a. Sanggunta anialawAo
b. Sangguniang lun tw,Hig ly Urbanized City (HUC) and
Independent Component City (ICC)
2. Governor, for vacancies in the:
a. Sangguniang Panlungsod of component cities
b. Sangguniang Bayan
3. Municipal or City Mayor, upon recommendation of the Sangguniang Barangay
concerned, for vacancies in the:
a. Sangguniang Barangay
Except for the Sangguniang Barangay, the appointee must be nominated by the same
political party as that of the Sanggunian member who caused the vacancy and shall
serve the unexpired term of the vacant office. If the Sanggunian member does not
belong to any political party, the local chief executive shall appoint a qualified person,
upon recommendation of the Sanggunian concerned. In case of vacancy in the
representation of the youth and the barangay in the Sanggunian, it shall be filled
automatically by the official next in rank of the organization concerned (LGC, Sec. 45).
170
A ...i.RFP. OQ
In case of vacancy in the representation of the youth and the Liga ng mga Barangay in
the Sanggunian, the vice president or the official next-in-rank of the Pederasyon ng mga
Sangguniang Kabataan and the local chapter of the Liga ng mga Barangay concerned
shall automatically fill up said vacancy (A.O. No. 270, Art. 83, par. (c)(4)).
Q: What are the rules of succession in case of temporary vacancy in the office of
the local chief executive?
ANS: The table provides for succession in cases of temporary vacancies in the office of
the local chief executive (LGC, Sec.46).
Rules of Succession
Cause of Vacancy Who may Succeed
Governor, mayor, or punong barangay Vice-Governor, Vice-Mayor, or the highest

is temporarily incapacitated to perform ranking Sangguniang barangay member,
his duties for physical or legal reasq5k,t= fi respectively, shall automatically exercise
such as, but not limited to leaMif,) powers and perform duties and functions
absence, travel abroad, or susperiy6q., f the local chief executive concerned
from office. cept the power to appoint, suspend, or
saiss employees which can only be
kercra
s d if tie' period of temporary
incapacity-e 30 working days.
,
The incumbent local ;c • letexecutive,AS' He may desigrft writing the officer in
travelling within tlirRystry " but charge for the said off ce.
outside his territ9firjuriikapp for a
period not eaeedin9 St consecutive
days.
61,7%
The local .chief,exebtirtqconeered ice-governoceWyor, or the highest
fails or refuses, to Issue stich ranking Sangguniang barangay member,
6,•
authorization. ' ecase may be, shall have the right to
Abe powers, duties and functions
osadi fcoo the 4th day of absence of
the said local chief executive.
Note: Except as providedlita the local chief executive shall in no case authorize any
local official to assume the powers, duties, and functions of the office, other than the
vice-governor, the city or municipal vice-mayor, or the highest ranking Sangguniang
Barangay member, as the case may be.
Recall
Q: Define recall.
ANS: Recall is the termination of official relationship for loss of confidence prior to the
expiration of his term through the will of the people (NACHURA, supra at 626).
Q: What are the limitations on the exercise of recall?

ANS: Any elective local official may be subject of a recall election only once during his
term of office for loss of confidence, and no recall shall take place within one (1) year
from the date of the official's assumption to office or one year immediately preceding a
regular local election (LGC, Sec. 74).
171
**,
Q: How may a recall be initiated?

ANS: The recall of any elective provincial, city, municipal, or barangay official can only
be commenced by a petition of a registered voter in the LGU concerned and supported
by the registered voters in the LGU concerned during the election in which the local
official sought to be recalled was elected subject to the percentage requirements
provided by the law (LGC, Sec.70, as amended by R.A. 9244).
Note: R.A. No. 9244 eliminated the preparatory recall assembly (PRA) as a mode
of instituting recall of elective local government officials. Before R.A. No. 9244,
recall may be initiated either by a PRA or by the registered voters of the LGU. PRA was
composed of all mayors, vice-mayors, and sanggunian members of the municipalities
and component cities for provincial level recall; all punong barangay and sanggunian
barangay members in the city for city level recall; in case where
sangguniangpanlalawigan members are elected by district, all elective municipal officials
in the district; and in cases where sangguniang panlungsod members are elected by
district, all elective barangay officials in the district, for legislative district level recall; and
all punong barangay and sangguniang.barangpy members in the municipality for
municipality level recall. Thus,,there. is oly'prie,miTde,qt initiating recall, that is, through
petition and election made,b9 the4voters. \
r an• e
Q: When shall a reca .,p+ A.Hakefr
effecir ,
ANS: Recall shall pe effeViye osly-uptirthrelsction,,ziid,p(uClarriStion of a successor in
the person of the Aendijate feceiving the higpestniumiNrecif:votes cast during the
election on recap'. Shciulphe official iougfikto,be recalled recejKre ths highest number of
tes, confidence
votes, confiden in him is thereby affirpie,d,And he shall co ti(ae..m. office (LGC, Sec.
vo .11
Q: May a local ?Acti e official resigh,c4MnOthe recall proceSs•?1

ANS: No. An ilectivse locratficial souVittiffie reca Oaf:I:. all ot be [lowed to resign
while the recall races is (<13rOlgress (1.G0 Sec. 73
Term Limits *i\c-

Q: What is the te qi of office of; oc ectiKe- [dials?
ANS: The term of o ice of 'electiV )re4lEitOte , t baranyly officials, which shall
be determined by la , hall te7fir ryear§-a nooutjrsopicial shall serve for more
than three (3) consecu Wert) yoluntpry/sQugltibppfhe office for any length of
time shall not be considered,--as ntinterrrifin'th Luitinuity of his service for the full
term for which he was elected ('CON,SZSee. 8).
The term of office of Barangay and Sanggunian Kabataan elective officials is 3 years
(R.A. No. 10742, Sec. 11).
Q. What is the three-term limit rule?

ANS: The three-term limit applies to bar an election for a 4th consecutive term when:
1. The local official has been elected in regular election, for three (3) consecutive
preceding terms, for the same position;
2. He has fully served the three consecutive terms for which he had been elected
(Boda v. COMELEC, G.R. No. 133495, September 3, 1998).
The intention behind the rule was not only to abrogate the "monopolization of political
power” and prevent elected officials from breeding "proprietary interest in their position"
but also to "enhance the people's freedom of choice" (Abundo v. COMELEC, G.R. No.
201716, January 8, 2013).
172
OLITICAL ~/
Q: What are the rules with regard to the three-term limit rule?
ANS: The following table provides for the summary of the three-term limit rule.
- Considered an To count as a term, one must have

interruption both been elected for the term and
Assumption serve such term fully (Borja v.
of Office by Comelec, supra).
Operation of
. Law (e.g. Not a voluntary Law allows the severance . to
Succession) renunciation of prior effectuate succession (Montebon v.
office COMELEC, G.R. No. 180444, April 8,
2008).
Service on _tpe Interruption of term by defeat in a ,

remaining terpfK„not preceding recall election shall prevent
counted in tfa -tr such term from being counted
bar lk•_-. (Adormeo v. COMELEC, G.R. No.
., 147927, Febgary 4, 2002).
Recall '
Election ,''• • --illo -'a Ori i•n in the preceding
gC
• • regular e ec n but winning in the
T 41
recall electi alter does not count as
election regular term for the
,00 - purposes of -th) rule (Socrates v.
0 4. COMEL -C, s pra k
w•Att, ,%
Conversion 1 /'' ,,,--
Aaakonsi ered No r a -win of
, s local chief
of
intention ' exec r, as • 00MELEC, G.R.
Municipality
to City Na 154829, —e ember 10, 2003).
. ,n,
o culdered ---- kispended officer continues to hold
inte ruption osition, but only barred from
Preventive ,.--zzsif ts e el galls functions (Aldovino Jr.
Suspension
,ff v. COMELEC, G.R. No. 184836,
• December 23, 2009).
. If unseated during the Not deemed elected for the said term
same term; considered (Lonzanida v. COMELEC, G.R. No.
•
an interruption 135150, July 28, 1999).
. .
If unseated after the Managed to serve the term from start
service of the full term; to finish (Ong v. Alegre, G.R. No.
not considered an 163354, January 23, 2006; see also
Election interruption Rivera Ill v COMELEC, G.R. No.
Protest • 167591, May 9, 2007).
The period served by The proclaimed winner was deemed

the unseated officer is a private citizen warming his heels
considered an while awaiting the outcome of his
interruption to the protest (Abundo v. COMELEC,
service of the duly supra).
proclaimed winner •
173
t.:4•::.it:4‘..;;',:-.1.,644
,
'Z''
`2.---5. .. N RE
( -'0?..4.41 '... • .....1.,...:, --,m;,:.•,. . f.....t......••.,.., . ,. . ,,
XII. NATIONAL ECONOMY AND PATRIMONY

A. REGALIANDOCTRINE
Q: What is the Regalian Doctrine?
ANS: The Regalian doctrine, embodied in Section 2, Article XII of the 1987 Constitution,
provides that all lands of the public domain belong to the State, which is the source of
any asserted right to ownership of land (Leonidas v. Vargas, G.R. No. 201031,
December 14, 2017).
All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils,
all forces of potential energy, fisheries, forests, or timber, wildlife, flora and fauna, and
natural resources belong to the State. With the exception of agricultural lands, all other
natural resources shall not be alienated (CONST., Art. XII, Sec. 2). The 1987
Constitution reaffirmed the Regalian doctrine in Section 2, Article XII (Cruz v. Secretary
of DENR, G.R. No. 135385, Decembe.G,6,,-2000),,,
Exception: Any land indihepop,sessiouf

tv
occilpa_nt,,,...nd of his predecessors-in-
interest since time immemoTial, for>ch.posses 10Q quid justify the presumption that
the land had never 134n,patt*trie public domairibr,,that itfiaakeen a private property
even before the SpanislcConquest40h-CfirrDirectir'bf Ltd: G . No. 48321, August
31, 1946).
F,....
B.NATIONALIST AND NSHIP P OISIONS
. li
Q: What are Ole F r nized • ctivities.iwarcling,natio
.1,. al economy and patrimony?
:e
ANS: The fol owin jactivitids rea'trAlpgypational e7nomy s nd a rimony mu t be
nationalized ude tri ,law• (C-11F-12-60Z6)111
1. Co-production, In,t4nturero4rauction-s 1 2ij
. g agrATAe t for exploration,
develorr ep an 0":9Ntioniputint..9441 soy roes;( ilipino citizens or
entitle read. corPo,a0 s gij1 sigaliods, ith 0% Fl ino capitalization
(CON ., Art. I, Se 2 ~4
2. Use an njoyeeklt of ion'. - ne ealtphjy hin terrtory shall exclusively
be for Filipi o citizeTt (- rEil. gkr es )-
3. Only Filipino. itize . ,Apau2. __2mord"i t an ectares of alienable lands
of the public do 1641 parchav, otnes.laad, *g nt, or lease not more than
500 hectares. Privete.eoratiqk ly oas„pdtmore
A. than 1,000 hectares for
25 years renewable for anotWlyeausg(CONST., Art. XII, Sec. 3);
4. Those areas of investment reserved by law for Filipino citizens or entities with
60% Filipino Capitalization, although Congress may provide for higher
percentage (CONST., Art. XII, Sec. 10);
Note: Grant of rights, privileges, and concessions covering national economy
and patrimony, the State shall give preference to qualified Filipinos (CONST.,
Att. XII, Sec. 10); and
5. Franchises, certificates, or any other form of authorization for the operation of
a public utility shall only be granted to Filipino citizens or entities with 60%
Filipino capitalization (CONST., Art. XII, Sec. 11).
C EXPLORATION, DEVELOPMENT, AND UTILIZ4TION OF

NATURAL RESOURCES •
Q: Discuss the rules on the exploration, development, and utilization (EDU) of
natural resources.
ANS: The EDU of natural resources shall follow the following rules:
1. The EDU of natural resources shall be under the full control and supervision of
the State.
174
••••••.f ,;',..•••-•,•••••••• -••
2. The State may directly undertake such activities, or it may enter into co-
production, joint venture, or production-sharing agreements with Filipino
citizens, or corporations or associations at least 60% of whose capital is
owned by such citizens.
3. Such agreements may be for a period not exceeding 25 years, renewable for
not more than 25 years, and under such terms and conditions as may be
provided by law.
4. The exception to this rule is that for large-scale EDU of minerals, petroleum
and other mineral oils, the President may enter into agreements with foreign-
owned corporations involving technical or financial assistance (CONST., Art.
XII, Sec. 2).
Note: These agreements refer to service contracts which involve foreign
management and operation provided that the Government shall retain a
degree of control sufficient to direct and regulate the affairs of individual
enterprises and restrain undesired activities (La Bugal-Biaan Tribal Assoc., et
al v. Secretary, DENR, eta!, G.1,31.11o. 127882, December 1, 2004).
.01
D. FRANCHISES, AUTHORITY ANL;FERTI ICATES FOR PUBLIC UTILITIES
Q: What is a public utility? .H,:t,vs..14
ANS: A public utility is a businesokse_ ice engagedl in regularly supplying the public
with some commodity or service of pciii. 103 i se Lhee .,_,_
Totconstitute a public utility, the
facility must be necessaryofROffie maitifernce o Tifggiiate&upation of the residents.
As the name indicates,, OUblic utility"Limplies public use andrservice to the public (JG
Summit Holdings v. CA G.R: No. 1242,983 eptember 24, 200)
.4pie.. et .10
Et pa.dr- -•
Q: Discuss the rtjtslon tnekoperation o j ublic utilities.
ANS: The folloxing are thelfalffon the o e ation of pubJjc utilities:
1. No 43arkphise/&rtificate, or any er form of thor, ation•for the operation of
.--,,a
a 01118. utility shall bkg1 ante xcept to, cj
ante , Philippines or to
corporqtionshopociatio s or under ,,, f* he Philippines, at
least 6014is w o4,:gapital s-bw. ,- e,d by such citizens;
2. No such gnchiseVrtifi te, o uthorization shall be exclusive in character
or be for a pepod logger than 50
3. Neither shall itylsUch fr n ,wrijite51 except under the condition
that it shall olls
ubjec amen men , alteration, or repeal by the Congress
when the co oQ goli so requires;
4. The State shali/MoZage equi y participation in public utilities by the general
public;
5. The participation of foreign investors in the governing body of any public utility
enterprise shall be limited to their proportionate share in its capital, and all the
executive and managing officers of such corporation or association must be
citizens of the Philippines (CONST., Art. XII, Sec:' 11).
Note: The right to operate a public utility may exist independently and separately from
the ownership of the facilities thereof. One can own said facilities without operating them
as public utility, or conversely one may operate a public utility without owning the
facilities used to serve the public (Tatad v. Garcia, G.R. No. 114222, April 6, 1995).
Q: Can the State temporarily take over or direct the operation of any privately
owned public utility or business affected with public interest?
ANS: Yes. In times of national emergency, when public interest so requires, the State
may, during the emergency and under reasonable terms prescribed by it, temporarily
take over or direct the operation of any privately owned public utility or business affected
with public interest (CONST., Art XII, Sec.17).
175
E. ACQUISITION, OWNERSHIP, AND TRANSFER OF PUBLIC AND PRIVATE
LANDS
Q: What are the classifications of the lands of public domain?
ANS: Lands of the public domain are classified as:
1. Forest land;
2. Agricultural land;
3. Timber land;
4. Mineral land; and
5. National park (CONST., Art. XII, Sec. 3).
Q: What are the limitations as to disposition of alienable lands of the public

domain?
ANS: The limitations to such disposition are the following (AFP):
1. Alienable lands shall be limited to agricultural lands;
2. Only Filipino citizens may acquire lienable land by purchase, homestead or
grant, and the same h no be more thak12 hectares, or lease not more
than 500 hectare,se stibb lan a I.-
3. Private corprli di's\ mOle eat rqthan ..).:0(19 hectares for 25 years,
renewable or ncltVe -5 ., kil, -s. . 3).
..
Q: What are theyule 4 e cqui Vioincow\irrshipianiftr ear of private lands?
ANS: The general r I myi es th411o4rivate_Jand ihalllb trans erred or conveyed
except to individuals, c6rpor lions, or apt'Nations qua ifiedlo date or hold lands of
the public domaikT6O ST., frt:-XItstc7r .
I
The exceptio9sto s rule ak thetl?' •ri2,CP)
1. Fore er.s4 ho • ilo nt sthrosutt
gb3
,w
_n__,
e mate
: I
:m
e ista
ucc Art. XII, Sec. 7);
2. A N ureal-bl fn. 1 q cibzea virip,ii,as. io,s1 enship may be a
trans I of pnvat s aw (CONST., Art.
XII, Se . 8); fffl '
3. Ownerap in‘ Sondo i fu ru s i ct to he 60% Filipino-40% alien
ownershiptof thAondQmJ1 ,riwsor ftio 7 6firemen under Sec. 5, of the
Condomini Act 41,........f.
...
kfYeet:00;) . G No 56364 September 25,
2008); and
4. Parity right agre Cn lier the , t.9
The 1935 Constitutio rovidesq e proclamation of Philippine
independence all existing roper-4rd s of citizens or corporations of the
United States shall be acknowledged, respected, and safeguarded to the
same extent as property rights of citizens of the Philippines (Moss v. Director
of Lands, G.R. No. L-27170, November 22, 1977).
Q: What is the Stewardship Doctrine?

ANS: Under the Stewardship Doctrine, private property is supposed to be held by the
individual only as a trustee for the people in general, who are its real owners. As a mere
steward, the individual must exercise his rights to the property not for his own exclusive
and selfish benefit but for the good of the entire community or nation (Mataas na Lupa
Tenants Association v. Dimayuga, G.R. No. L-32049, June 25, 1984).
176
(
F PRACT/CE OFPROFESS/ONS
Q: Discuss the rules on the practice of professions in the Philippines.
ANS: The practice of all professions in the Philippines shall be limited to Filipino
citizens, save in cases prescribed by law (CONST., Art. XII, Sec. 14). The power to
regulate the exercise of a profession or pursuit of an occupation cannot be exercised by
the State or its agents in an arbitrary, despotic, or oppressive manner (Board of
Medicine v. Yasuyuki Ota, G.R. No. 166907, July 14, 2007)
G.ORGANIZA TIONAND REGULATION OF CORPORATIONS, PR/VA TEAND

PUBL/C
Q: Discuss the rules on the organization and regulation of private and public
corporations.
ANS: The Congress shall not, except by general law, provide for the formation,
organization, or regulation of private corporations. Government-owned or controlled
corporations may be created or established by special charters in the interest of the
common good and subject to the tes,L ciTOnonnic viability (CONST., Art. XII, Sec. 16).
H. MONOPOLIES, RESTRAINT OFTRADEIAND UNFAIR COMPETITION

OW
Q: Discuss the rules on monopeAiagwgai int of trade, and unfair competition.
ANS: The State shall regulate 55r krk0,070pRiles Ian the public interest so
requires. No combinations irk„ristraiiitr,bfiratfeifPiklignapA1petition shall be allowed
(CONST., Art. XII, Sec. 8IV-'
Note: Monopolies are It pr se .prolhite by the Constituyo ‘ut may be permitted to
exist to aid the government in, carrying on an enterprise or to aid in the public
performance of various'seEyles and fun8;tions in the inttirres o the public. However,
47 .
because they apAjectli'abuses that can inflict sevle prpjudi,e to the public, they
are subjectedlohighp .4ex/el of Staigve Motion than ordi • ary filminess undertaking
(Agan v. PlAtve0, ocA155001 May 003).
A. CONCEPT
Q: What is social justtce, as ,xlypioned by the Constitution?
ANS: Social justice, unam9onstitution, involves the following:
1. Equitable diffusiantAealth and political power for common good (CONST.,
Art. XIII, Sec. 1);
2. Regulation of acquisition, ownership, use and disposition of property and its
increments (CONST., Art. XIII, Sec. 1); and
3. Creation of economic opportunities based on freedom of initiative and self-
reliance (CONST., Art. Xlll, Sec. 2).
Q: Discuss the concept of social justice.

ANS: Social justice is neither communism, nor despotism, nor atomism, nor anarchy,
but the humariization of ldws and the equalization of social and economic forces by the
State so that justice in its rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the welfare of all the people, the
adoption by the Government of measures calculated to insure economic stability of all
the competent elements of society, through the maintenance of a proper economic and
social equilibrium in the interrelations of the members of the community, constitutionally,
through the adoption of measures legally justifiable, or extra-constitutionally, through the
exercise of powers underlying the existence of all governments on the time-honored
principle of salus populi est suprema lex (Calalang v. Williams, G.R. No. 47800,
December 2, 1940).
177
B.ECONOMIC SOCIAL, AND CULTURAL RIGHTS
Q: Discuss the nature of the economic, social, and cultural rights found in Art. XIII
of the Constitution.
ANS: Except to the extent that they prohibit government from embarking in activity
contrary to the ideals of social justice, such rights are generally not rights in the strict
sense that the rights in the Bill of Rights are. They are primarily in the nature of claims
or demands which people expect government to satisfy, or they are ideals which
government is expected to respect. Thus, in the nature of things, the satisfaction of
these demands must for the most part depend on legislation (BERNAS, Commentary on
1987 Constitution, supra at 1238).
C.COMMISSION ON HUMAN RIGHTS (CHR)

Q: What is the composition of the CHR and qualifications of its members?
ANS: The Commission shall be composed of a Chairman and 4 Members who must be
natural-born citizens of the Philippins.1,and.a.mojority of whom shall be members of the
Bar (CONST., Art. XIII, Sec. 17400. (2))r
Q: Discuss the powns'vestefi )onlbe:e"

ANS: The CommissioWs Owe is only investigate e: s kosecutorial power. For
prosecution, it must(relYV ; e e ecutiVellgrartm t (BE(VASPhilippine Constitution
Reviewer, supra M26), ."
Note: The CHRis cons it do ally authonzgd tool) cite Tor cei mpt r violations of
its operational idelin s and rules of pr,o0c(nre, and (3) this Wati cite for contempt
is limited to viplgiOns of its pies and guidelines ref ting tov vestigatory powers
(Simon v. CHR :G:Rr No. 100 50,Virt-adil,!5/490):`
\_> "
Q: Discuss thk) ctions".46 e..6HR.
ANS: The CHFiiti lsinot sbj dicjal g'4 cy. Its function is
merely to recei e-evtd lice n h an rights violation
involving civil a fl politvl right:s ion of Humarr Rights, G.R. No.
96681, Decemberq, 1994
•
But fact finding is kadjud*c tion, Likrinc) - enWo Jhe judicial function of a
court of justice, or eve casifjudicial-agent qN-CtialpoThe function of receiving
evidence and ascertainin èlknoln the lactskrti ,C,pbtrovrsy is not a judicial function,
properly speaking (Simon, r,ftvCommigi
,...,„„ gicen ) tan Rights, G.R. No. 100150,
January 5,1994). -
Q: Does the CHR enjoy fiscal autonomy the same way the Supreme Court and
other Constitutional bodies do?
ANS: No. The CHR, although admittedly a constitutional creation is, nonetheless, not
included in the genus of offices accorded fiscal autonomy by constitutional or legislative
fiat. •(Commission on Human Rights Employees Association v. CHR, G.R. No. 155356,
November 25, 2004).
178..
XIV. EDUCATION, SCIENCE, TECHNOLOGY,
ARTS, CULTURE, AND SPORTS
A.ACADEMICFREEDOM
Q: What are the aspects of academic freedom?
ANS: There are 3 views with regard to academic freedom. These are:
1. From the standpoint of the educational institution, which seeks to provide that
atmosphere which is most conducive to speculation, experimentation and
creation. It espouses freedom to determine for itself on academic grounds:
a. Who may teach;
b. What may be taught;
c. How shall it be taught; and
d. Who may be admitted to study (Miriam College Foundation v. CA, G.R.
No. 127930, December 15, 2000).
2 From the standpoint of the fa,ccef-
a. Freedom in resear111)On the publication of the results, subject to the
adequate perforrrgeeift other academic duties;
b. Freedom in the eigep0 discussing his subject, less controversial
matters which bear noNAILn to the subjec
c. Freedom from linstijiltio ship oNiscipline, limited by his
special positionin itiVcbTrrnunitr(EazdxsP,:lippine Governance and
the 19.87686titution,f20 9), p.354).
3. From the stabogint of theri ent, which seeks 0 , to enjoy in school the
guarantee of-A-ThèiBill
- of Rights PWon v. Danes , G. No. 89317, May 20,
1990).
1:147
444'
Q: What are4thefequigites for due process for stu. en s the imposition of
disciplinary 44:Ction"§?
ANS: The folio ing rsqugt of cludpro ss must be • Of for the imposition
of disciplinary sari o ( EAC)
1. The stude must .,r informeda n writing of the Nature and cause of the
accusation against Lim;
2. He has the ngh-rto with the assistance of
counsel, if deVed;
3. He must be inOrrRedif the Evidence against him;
4. He has the rigtil t toVAdduce evidenbe in his behalf; and
5. Evidence must be dulyCOnsidered by the investigating committee or official.
designated by the school to hear and decide the case (Ateneo de Manila
University v. Capulong, G.R. No. 99327, May 27, 1993). .
Note: The right to discipline students finds basis in the freedom "what to teach" (DLSU
v. CA, G.R. No. 127980, Dec. 19, 2007).
Q: What is the Termination of Contract Rule?

ANS: The termination of contract rule provides that when a student enrolls in a given
school, he is registering for the entire semester and after the semester ends, the school
has no duty to accept him because the contract is deemed terminated (Alcuaz v.
Philippine School of Business Administration, G.R. No. 76353, May Z 1988).
Q: May a school revoke an award or recognition it has given to a student?

ANS: Yes. A university has the right to revoke or withdraw the honor or distinction it has
awarded compared to a student who already graduated if there is evidence that said
honor or distinction was obtained through fraud (UP Board of Regents v. William, G.R.
No. 134625, August 31, 1999).
179
BEDAN RED B(
XV. THE. FAMILY
Q: What are the duties of the State with regard to the family?
ANS: The following are the constitutionally mandated duties of the State:
1. To recognize the Filipino family as the foundation of the nation (CONST., Art.
XV, Sec. 1);
2. To strengthen the family's solidarity and actively promote its total development
(Id.);
3. To protect marriage as an inviolable social institution and foundation of the
family (CONST., Art. XV, Sec. 2);
4. To defend the right of spouses to found a family in accordance with their
religious convictions and the demands of responsible parenthood (CONST.,
Art. XV, Sec. 3);
5. To defend the right of children to assistance, including proper care and
nutrition, and special protection from all forms of neglect, abuse, cruelty,
exploitation, and other RonditibrerrelpiciaLto their development (Id.);
6. To defend the rig family tola livingpage and income (Id.); and
7. To defend thrtighk +familis- -faiiilyfaspoiatons
r to participate in the
planning anchnli5lem,entatior617611Cles=a6d pfogfarns,that affect them (Id.).
Note: The Constitupber( ogstbcrestOish..the..parametels.ofeitateqprotection of marriage
as a social institu to ar i d tfiefifdadatio66f the fa-m.‘tet7icihe
V province of the
legislature to de, n6,4 legal specipof hanNe andpr Ccrilbd the strategy and the
modalities to protect it ffntoni v. Reyes,*Mo. 155 00, M rph 19- 2006).
Q: Does the Cpissa ion pehib
'
ANS: No. Whi,Ilide d marriage iflust'W iegirded s an inolable social institution,
the legal inte 40111It of Sect' n 2 i a Ian 'bition of divorce
(BERNAS, Co eePt o C:pastituti
Q: Does the Con u .segga

ANS: No. The Aght topcivac r4ritip tberty it the Due Process
Clause also includes the Tr edcih yfO h e4'igiit mar . This was the import of the
US Supreme Cou 's rulin n 001\f,711trlft-Iiph invalid ed a law prohibiting
interracial marriages. his w Is Zrnethe-g-s§priffal ?Oli9gaiin Obergefell v. Hodges
which held same-sex aril clsi'adristitutiirM {4:04Cadiz v. Brent Hospital and
Colleges, Inc., G.R. No. M7 1A,-F..tbruaaf2,4„p015A).-
1,V1
'7•0'
tiORTHEIC-0"
Q: Distinguish amendment from revision.
ANS: Amendment broadly refers to a change that adds, reduces, or deletes without
altering the basic principle involved, and generally affects only the specific provision
being amended. On the other hand, revision broadly implies a change that alters a basic
principle in the Constitution, i.e., altering the principle of separation of powers or the
substantial entirety of the Constitution, as when the change affects substantial
provisions of the Constitution (Lambino v. COMELEC, G.R. No. 174153, October 25,
2006).
Q: To determine whether a proposed amendment is within the power of the

people to directly propose through initiative, what are the tests applied?
ANS: A two-part test may be applied:
1. Quantitative test - it asks whether the proposed change is so extensive in its
provisions as to change directly the "substantial entirety" of the constitution by
180
D ►N RED B( 0 .
•-
the deletion or alteration of numerous existing provisions. The court examines

only the number of provisions affected and does not consider the degree of the
change; and
2. Qualitative test — it inquires into the qualitative effects of the proposed
change/s in the constitution. The main inquiry is whether the change will
accomplish such far reaching changes in the nature of our basic governmental
plan as to amount to a revision. Whether there is an alteration in the structure
of government is a proper subject of inquiry (Lambino v. COMELEC, supra).
A. PROCEDURE TO AMEND OR REVISE THE CONSTITUTION

Q: What are the steps involved in the amendatory or revision process?
ANS: The amendatory or revision process involves:
1. Proposal; and
2. Ratification (CONST., Art. XVII).
Q: How can a proposal to amend th‘cOstitution be made?

ANS: Proposal to amend the Constittl0b...tpay be made: (CCP)
1. 'By the Congress acting 6Sga' Cergtituent Assembly (Con-Ass) by a vote of 3/4
of all its members (CONS74.4:ri "s "11, Sec 1, par (V);
2. By a Constitutional CCOveVit Ile by 2/3 of. all the members of the
Congress. Alternativele Ofidi;e...sspfflia..09,44,11)it to the electorate, by
majority of all its rwribers, thre7Ve stion of'calliiigididh a convention (CONST.,
Art. XVII, Sec,d-3,6"r
3. Through a Per ple.'s Initiative:lem_,:odied in a petitiorif\a
:f ,st least 12% of the total
number of T.41*recl,voters, of which every egislVive district must be
represented.* 40111(3% of thejegistered voters t"ere'in (CONST., Art. XVII,
Sea Of"'
Note: The last ,ode may not be used Within 5 year e ratification of the
1987 Constittiti5b, norinae•ofgn--than
• awe everf, r (CONST., Art.
XVII, Sec. 2)• .!•Z
Olt )1%
-CI: What are the iti des of rgisin the
ANS: The modes of Fetiowe:
1. By the CongreWupon ieyole .at hers; or
2. By a Constitutional CorWiton- CO S Art. 14 Sec. 1).
Q: Is the People's InitiatiztOode of revising the Constitution?

ANS: No. The People's Initiative can only be exercised to propose amendments to the
Constitution (CONST., Art. XVII, Sec. 2).• A revision of a constitution affects basic
principles, or several provisions of a constitution, thus, a deliberative body with recorded
proceedings is best suited to undertake a revision (Lambino v. Commission on
Elections, supra).
Q: How is ratification made? -

ANS: Proposed amendments or revisions shall be submitted to the people and shall be
deemed ratified by the majority of the votes cast in a plebiscite, held not earlier than 60
days nor later than 90 days:
1. After the approval of the proposal by the Con-Ass or the Con-Con; or
2. After certification by the COMELEC of sufficiency of people's petition to amend
the constitution (CONST., Art. XVII, Sec. 4).
Note: Ratification of the constitution may be held simultaneously with the
general/regular elections (Gonzales v. COMELEC, G.R. No. L-28196, November 8,
1967).
181
Q: What is the Doctrine of Proper Submission?
ANS: Amendments must be fairly laid before the people for their blessing or spurning.
The people are not to be mere rubber stamps. They are not to vote blindly. They must
be afforded ample opportunity to mull over the original provisions, compare them with
the proposed amendments, and to reach a conclusion as the dictates of their
conscience suggest, free from the incubus of extraneous or possibly insidious
influences. We believe the word "submitted" can only mean that the government, within
its maximum capabilities, should strain every efforts to inform every citizen of the
provisions to be amended, and the proposed amendments and the meaning, nature and
effects thereof. By this, we are not to be understood as saying that, if one citizen or 100
citizens cannot be reached, then there is no submission within the meaning of the word
as intended by the framers of the Constitution. What the Constitution in effect directs is
that the government, in submitting an amendment for ratification, should put every
instrumentality or agency within its structural framework to enlighten the people, educate
them with respect to their act of ratification or rejection. For as we have earlier stated,
one thing is submission and anothe ation. There must be fair submission,
intelligent consent or rejection olentilo- v. 'Co ission on Elections, G.R. No. L-
34150, October 16, 1971) pe— f
)•"`Nt
,ct
•11,1.
•
rtzr
A IT
d:)-*A
Q: Define Pub teinationaLL
ANS: It gover relation an international
entity (SUAR ,Postat La
Obli•ations Er•.a*Ombes
Q: What are o s e 4bq nes :0,
3,, A,
ANS: Obligatio s erg omhe,g atige o if" or "g ligations towards
everyone". It ref s to those Obii o s w is e oftheir nape and importance,
are the concern o all Sta and Ni -r-wb______pr e on IrStates.have a legal interest,
such as obligations rising GigIngb gassion and genocide, as well as
from the principles an kruleAgn (r.thwAuman person, including
protection from slavery Irtra vCI:cnrrin4selednvi. Spain ICJ 1, February 5,
1970). They are obligation it invol Vadajoahlal values of the international
community whose violation by h tateskes.noranly violate the rights of the State
directly affected but also the rights of the international community as a whole
(HOFILEFIA, International Law (2016), p. 163) (hereinafter, HOFILENA, International
Law].
Q: Can a State that violates an obligation erga omnes be brought automatically to
the International Court of Justice (ICJ) or any other international tribunal?
ANS: Not necessarily. The erga omnes character of a norm and the rule of consent to
jurisdiction are two different things. State consent is a precondition before the ICJ or an
international tribunal can acquire jurisdiction over a state (Order of 3 May 1991, I.C.J.
Reports 1991, p. 9).
Q: Can any State bring a case before any international tribunal for any violation of
an obligation erga omnes, which may not necessarily be done against the
complaining state?
ANS: Yes. Any state may institute a proceeding before any tribunal for another state's
violation of human rights obligations, which are obligations erga omnes in nature as
these obligations are concern of all States for whose protection all States have a legal
interest, although the violation was not committed against the complaining State (B.
Simma, Bilateralism to Community Interest in International Law, pp. 296 — 297). All
182
States are entitled to invoke responsibility for breaches of obligations to the international
community as a whole (International Law Commission (ILC), Draft Articles on
Responsibility of States for Internationally Wrongful Acts, with commentaries, 2001).
However, this does not automatically vest on any international tribunal jurisdiction to
handle the case.
Q: What is the effect of a breach of an obligation erga omnes under general
international law or a multilateral treaty?
ANS: All the States to which the obligation is owed are entitled, even if they are not
specially affected by the breach, to claim from the responsible State in particular:
1. Cessation of the internationally wrongful act;
2. Performance of the obligation of reparation in the interest of the State, entity or
individual which is specially affected by the breach. Restitution should be
effected unless materially impossible (Obligations and Rights Erga Omnes in
International Law, Resolution of the Institut de Droit International, Fifth
Commission, Krakow Session, August 27, 2005, Art.2).
Jus Cogens
Q: What is a jus cogens norm?:f. , .,.
ANS: Jus cogens (a peremptory "ermlneneral international law) is a norm accepted
and recognized by the internationplArntfit6 5.91 States ago whole as a norm from
which no derogation is permitteckiincl ri fit i'‘,3P.3 ly by a subsequent norm
iedr.o
&IS;
of general international law pAng the aide charactery 'Gk. Art. 53).
Q: Distinguish volunt pAVtew' from 4-ietory law.
ANS: Jus dispositivu40yOluntgry law at% ro consensual agreesne, is between states, as
oppose to jus scrip, y girgitory law pich stem frog thoe netckaessary principles of
international lamtfigt bind ilibles as lit of conscience regar less of consent (e.g.
jus cogens) (gjetips, OTAIRw of War an eace, as c' d in t he Dissenting Opinion of
Justice SererWil IrreR6De4 Cestlq, A o. 10-7 , sitivum refers to
norms of CustomaryIrltgL ,nit'onalkaA wh'c are derivelf, m- nsent of States and
therefore only biftdsates • hich nse ,thereto (SARMIENTO, Public International
Law Reviewer (20q13' . 17)?(hereingfter, iV RMIENTO, PIL Reviewer]. •
Q: Distinguish soft laal
, frorntard law.
ANS: Hard laws • areI 6 ding rillTO
h aTvE4hile soft laws are the non-
binding norms, principl , and .pla,ctices that influence state behaviour. (Pharmaceutical
and Health Care AssociRein ADuque III, G.R.173634, October 9, 2007)
Q: Distinguish jus cogens from an obligation erga omnes.
ANS: Jus cogens norms or peremptory norms result from the substantive importance of
the interests protected and the universal recognition that underlying value/s are not at
the disposal of individual states (Tomuschat, "Obligations Arising for States without or
against their will" (1993), pp. 306-307).
Obligations erga omnes, on the other hand, are results of concessions and agreements
among States that certain values are concerns of the international community. Thus, all
peremptory norms create obligations erga omnes, but not all erga omnes obligation are
derived from peremptory norms (Max Planck Article by Karl Zemanek, New Trend in the
Enforcement of erga omnes obligations, pp. 6-7).
Ex Aequo et Bono
Q: What is the concept of ex aequo et bono?
ANS: It literally means "according to what is right and good" or "from equity and
conscience". A decision made ex aequo et bono is one made on the basis of justice and
equity untrammeled by technical legal rules. The concept recognizes the existence of
aequitascontra few or justice in opposition to law;
183
An international court may only decide a case ex aequo et bono when the parties agree
to it (ICJ Statute, Art. 38(2)). No decision has ever been made ex aequo et bono by the
ICJ (SHAW, International Law (2008), p.1087) [hereinafter SHAW, International Law],
although the principle was used by its predecessor, the Permanent Court of
International Justice, in The Diversion of Water from the Meuse (Netherlands v.
Belgium, PCIJ, 1937).
B. RELATIONSHIP BETWEEN INTERNATIONAL AND NATIONAL LAW

Q: What are the two theoretical approaches to the relationship between
international law and national law?
ANS: Monism and dualism.
1. Monists believe that international law and domestic law are part of a single
legal order; international law is automatically incorporated into each nation's
legal system and is ultimately supreme over domestic law.
2. Dualists, however, contend that international law and domestic law are
distinct fields, with eacob,natian—ascertaiping for itself as to the extent that
international law intorporated TrtoNtsAnetic legal system. Dualist hold
!'
s
that the status of irlterationaklaw in the dorpes "c system is determined by
domestic laVunder)t suvielt7STrairmudcipapdw rovides that international
law appliesfi " holeor part IN' in our junscrictio Os but an exercise of the
authority of r ythpal, 4 w, areadopkin forutation of the rules of
interngon'alla (Gcrvernrri-O.nt of,the7.1.S.A. v. Rulnark G.R. No. 148571,
Decernber 002. ". .
Q: What are t e ways/by w ichVet-nati?nal Jr can beco p e ar -of the sphere of

domestic law f'i'des hilippr e law.? IId z••;./ I
ANS: Under t egrby Const tion,iiritgrtmlisfiPlaw beco '0,34 of the sphere of
domestic law ation omnco oration/ aceuticat and Health Care
Association v. Lica!) k...,A4
f2Per 940 7-P
(ss-
Q: What is the goctrin;4o s f Tr-k5 f n?'"
ANS: The doctrine of tra forn)46 od !Ike thal/specifi international law be
transformed into 5 domes i la' cInstitutioffal meclanism such as local
legislation before it s all be pi i afe etiez become part of the law of
the land through trans at nt.,,toArt e,
6tir:th 21 of the Constitution
which provides that "no tea ntern-09p rshall be valid and effective
unless concurred in by at leas ci-thirdd.r27.3 LI1A e members of the Senate. Thus,
treaties or conventional internationa atrV) through a process prescribed by the
Constitution for it to be transformed into municipal law that can be applied to domestic
conflicts (Pharmaceutical and Health Care Association v. Duque, supra).
Q: What are the types of Transformation Theories?
ANS: The two types are:
1. Hard Transformation — holds that only express legislation can transform
international law into domestic law. Courts may apply international law only
where it has been authorized by legislation.
2. Soft Transformation — holds that either a judicial or legislative act of a State
can transform International Law into domestic law (SARMIENTO, Public •
International Law Reviewer, supra at 51).
Q: What is the Doctrine of Incorporation?
ANS: The doctrine of incorporation in our jurisdiction is embodied under Article
Section 2 of the Constitution, which states that the Philippines "adopts the generally
accepted principles of international law as part of the law of the land." Under the
doctrine, general rules of international law, such as the principle of pacta sunt servanda,
form part of the law of the land and no further legislative action is needed to make such
184
rules applicable in the domestic sphere (Secretary of Justice v. Lantion, G.R. No.
139465, January 2000).
Q: What is the Charming Betsy canon?
ANS: It is a presumption that Congress will not legislate contrary to the international
obligations of the state and a principle of interpretation that where an act and a treaty
deal with the same subject, the courts will seek to construe them so as to give effect to
both of them without acting contrary to the wording of either. Where the two are
inconsistent, the general rule has been posited that the law enacted later in time will
prevail, provided that the treaty is self-executing (SHAW, International Law, supra at
164-165).
Q: What specific rules should followed by the courts in resolving conflict between
International Law and Municipal Law?
ANS: In addition to the Charming Betsy canon, the following rules are being followed:
1. Perspective of the State — WhFi n there is an irreconcilable conflict between:
a. Constitution v. Gener.# Infernational Law - uphold the Constitution. All
doubts must be resolved favor of the fundamental law of the State
because the courtsdrer:ifeete organs of the constitution and are at all
times bound to uppolla
b. Constitution v. Trp9tyM. ,Ge aly, the treaty is rejected in the local
forum. The Supferqe p Abaiittie.po
• g to declare a treaty or
executiveavaag ementtn " pstitutionafL(GO T., Art. VIII, Sec.5, par.
(2)(a)p Nevertheless the treaty may still be upheld by international
tribunals as-a source of mandable obligdfi8n rom its the signatories
under)) .-614nciple df pac 4 sunt servanda/
c. LoOr Ste v. Gen‘ I International Law- The doctrine of
incorporati n 'decrees thg rules of intelnati nal @w are given equal
tandin ith, b t are'n mperior to natio al legTslative enactments.
This ptruant` tqghe p ciple oRexly:Lse- Orregat priori which
eangEttkaSwhicPzpome ast in timeiniiIP aOr be upheld by the
mi grInbunal.
2. PerspectIT of thetemationaj-Community - International law is superior to
municipal la se internatpa a col/ides the standard by which to
determine tboz egality ofofi gaiets_olialp1S, International Law and
World Politics:R.994, Thereinafter PARAS, InternaMonal Law].
te V
C SOURCES OF OBLIGATQW1 INTERNATIONAL LAW
Q: What are the squrces of International Law?
ANS: The gehbrally accepted sources of international law are:
1. • Primary sources of International law:
a. International conventions, whether general or particular, establishing
rules expressly recognized by the contesting States
b. International custom, as evidence of a' general practice accepted as
law
c. General principles of law recognized by civilized nations
2. Subsidiary means•of determining rules of international law:
a. Judicial decisions; and
b. The teachings of the most highly qualified publicists of the various
nations (STATUTE OF THE INTERNATIONAL COURT OF JUSTICE
Thereinafter ICJ], Art. 38(1)).
Note: Article 38(1) of the Statute of the ICJ is widely recognized as the most
authoritative and complete statement as to the sources of international law (SHAW,
International Law, supra at 70). It does not stipulate a hierarchy between a treaty law,
customary international law, and the general principles of law (WOLFRUM, Max Planck
Encyclopedia for Public International Law (2010), p. 6) Thereinafter WOLFRUM].
185
Q: What is customary international law?
ANS: Customary international law originated from the practices of one or more States
which were later adopted by other States. In the course of time, due to continuous
usage and non-repudiation, these practices ripened into customs (HOFILEFIA,
International Law, supra at 5).
Q: What are the elements of customary international law?

ANS: The elements of customary international law are:
1. State Practice - consistent and uniform conduct of states within the period in
question, short it might be; and
2. Opinio juris sive necessitates - acts of state must be carried out in such a
way as to be evidence of a belief that this practice is rendered obligatory by
the existence of a rule of law requiring it. The States concerned must therefore
feel that they are conforming to what amounts to a legal obligation. (North Sea
Continental Shelf case (F.R. Germany v. Denmark; F.R. Germany v
Netherlands), 1969
..A.0
Q: What is Persistent Ob'ector octri e?
ANS: Under this doc ri cry. te.persis tlyt b'e o a developing norm of
International Law, it- 111,not.,brbound by that no ipens into a customary
norm. This is a vyrid
fide se againsrITThforce,abi it Tistomary norm to the
persistent objector le 6 psto , ry cirrrwttains the oka peremptory norm
(Anglo-Norwegi1Fishrs Case [UKv. . OrwaPj,4-t. ICJ repo 1951).
Q: What can Offe effec are incons stent i h,....,

of1 an international
customary norm?-4 1
ANS: An act c ntwylo a cus i give ris to or c datetnew norm. There
would thus be riaeqces etinconsist with stab ished rules can be
an indication o t
However, if a s to act .5, . Ai f . ible, with a r cognized rule, but

defends its cond ct by a, n 0 0 -x p i , us ifications contained within the rule
itself... the significkce of th aitt.tttp

- t •z. eilqu'athfirlhan to eaken the rule (Case
Concerning Military -bed Pa• lit_ey he -Mrfipd; aga'apt rcaragua (Nicaragua v.
United States of Amenaa aft Mdgmentl.leeS , • 86).
).-
Q: What are general princip
ANS: These are principles recognize ed nations to be so fundamental to the
maintenance of justice that they are basic tenets commonly adhered to in virtually every
major legal system. As such, they are often derived from domestic law (e.g. prescription,
res judicata, and pacta sunt servanda) (SARMIENTO, PIL Reviewer, supra at 41).
Q: Who are highly-qualified publicists?

ANS: These are writers whose main value depends on the extent to which 'their books
and articles are cited as works of scholarship, that is to say, based on thorough
research into what the law is said to be (lex late) rather than comparing the views of
other writers as to what they think the law ought to be (lex ferenda) (AUST, Handbook
on International Law, 2010, p.9) Thereinafter AUST, International Law]. Examples of
highly qualified publicists are: Hugo Grotius, Gilbert Gidel, and Malcolm N. Shaw.
Q: Is the reference to the "teachings of the most highly qualified publicists"

limited to individual publicists or writers?
ANS: No. It includes entities such as the International Law Commission (ILC) which was
established by the UN to encourage the progressive development of international law
and its codification (UN CHARTER, Art 13(1)(a)), Another widely recognized highly
186
qualified publicist is the International Committee of the Red Cross (ICRC), in so far as its
Study on Customary International Humanitarian Law provides a periodic report on
developing customary rules of international humanitarian law applicable in international
and non-international armed conflicts (The European Journal of International Law Vol.
24 No. 2, Oxford University Press, 2013).
Q: Is the International Court of Justice bound by the doctrine of stare decisis?

ANS: No. The decision of the Court has no binding force except between parties and in
respect of that particular case (STATUTE OF THE ICJ, Art. 59). The Court, however,
may apply judicial decisions as subsidiary means for the determination of the rule of law
(STATUTE OF THE ICJ, Art. 38(1)(d)).
Q. Can the resolutions of the UN General Assembly be considered as a source of

international law?
ANS: No. However, resolutions may evince an existing custom or constitute usage that
may lead to the creation of a custom,,aw the opinio juris requirement may similarly
emerge from the circumstances „spiratiOing the adoption and application of the
resolutions. The effect of consentit re(ofutions may be understood as acceptance of
the validity of the rule or set tifiu.Wt clared by the resolution by themselves
(Nicaragua v. USA, supra). 11,4 tiAM
Sry
D. SUBJECTS
Q: What is the distinciionzetween asu ject and an obje5 f international law?
ANS: In international irdiC, subject rritans'• an entity that hap ii is and responsibilities
under international 1a4HOlis op i .?ao irectly qualifie ro oVated by the rules of
international law. 0,01liefilfgUland, ob e t refers to a erspn 'or entity for whom or
which the subtOof inteMonal law h Td rights and obligption‘ in the international
legal order. It mot directly governed' b e rules of nterrLational law. Its rights are
received, and its resper5Sibillies'impose ndirectl to3,4E: qffk
krar mentality of an
international ag ncy WA. GT RA, is 6).
Q: Who are considered su

ANS: The subjects of i terna
1. States;
2. International tieganizatioi1s;
3. Insurgents
4. National Liberaements
, -5. In specific circumstances, Individuals (BERNAS, Introduction to Public
International Law, 2009, p: 71 to 101) [hereinafter, BERNAS, Public
International Law].
.Q: Why is an individual considered a subject of international law?

ANS: As a general rule, individuals lack standing to assert violations of international
treaties in the absence of protest of by the state of nationality (U.S.A. v. Noriega, 808
F.Supp. 791 S.D.Fla.,1992). However, treaties can confer particular rights on individuals
which will be enforceable under international law, independently of municipal law, eg.
legal standing of an individual before the ICC or human rights tribunals (Danzig Railway
Officials Case, PCIJ Series B, No. 15, 1928).
States
Q: What is a state?
ANS: It is an entity that has a defined territory and permanent population, under the
control of its own government, and engages in, or has the capacity to engage in, formal
relations with other such entities (MONTEVIDEO CONVENTION, Art. 1).
187
Q: What are the elements of a state from the perspective of International Law?
ANS: The elements of a state are: (PTGC)
1. Permanent Population;
2. Defined Territory;
3. Government; and
4. Capacity to enter into relations with other States (MONTEVIDEO
CONVENTION, Art. 1).
Q: Explain the doctrine of state continuity.
ANS: Under the doctrine of state continuity, a state's identity as an international legal
person persists notwithstanding unconstitutional or even violent changes in its
government. As a result, a state generally continues to owe and accrue international
legal obligations notwithstanding such changes (CURRIE, Public international Law, 2nd
ed).
Q: Explain the principle of self-determination in relation to statehood.
ANS: Self-determination is the •ght157rbence of peoples in non-self-governing
territories and peoples< s b'eckto alien
l subju atipriNdomination, and exploitation
(Accordance with Intern Tonal py
. , of linit te I b4acation of Independence in
Respect of Kosovo) (Mvis or,O o7ittr7 F.C.J. Re s OM, gz. 403).
)J
4/ 0), ,,r .
Q: What are the two4 1 5-offselt-determination?
ANS: The two ty es r'self-delerminfionsA(Ke: 'N, '- ‘s
1. Intern I self-diterm pation — a pgiipres purl it of p ,tiolitical, economic,
social an4 ural de,velopmerit_ illiin-the..fra ewo of-An'e isting state.
2. Exte al,,s f-clete ination,.
'ulltk•
.- 11
the,pestabli hment yaf,..a sovereign and
e., ar a
ndepi State, he tree "astociatt 'h or integratipuyil an independent
"• inde er---4
& -m-4
State; .o r4 e erg [ice infoWy.totber par; al4ata rfii) determined by a
peope corltut pt ' Nrignting-th,‘ f of self-determination by that
people qia cence8e eceg!gio 1,5" u 1 o. 12Supreme Court of
Canada 998) X.s..) N -i-V
Q: What is the concept of asso 14 oder 014 f atio al Law
ANS: Under interNtional la kbigpc i i f 764 when o states of unequal
- NI
power voluntarily estaWish d9rIble . e basicm e state, the associate,
delegates certain resfoggibiJitiel-i tcilffe'dffr,:tbV1ri ji al, while maintaining its
international status as a a.t.e.Fr..0.e astrttioeip esent a middle ground between
integration and independence -''" inte tio alolractice, the "associated state"
arrangement has usually been used as as Transitional device of former colonies on their
way to full independence. Examples of states that have passed through the status of
associated states as a transitional phase are Antigua, St.' Kitts-Nevis-Anguilla,
Dominica, St. Lucia, St Vincent and Grenada. All have since become independent
states (Province of North Cotabato v. GRP Peace Panel on Ancestral Domain, G.R. No.
183591, Oct. 14, 2008; citing C.L Keitner and W.M. Reisman, Free Association: The
United States Experience, 39 Tex. Intl L.J. 1(2003)).
Q: Is the concept of association under International Law recognized under the
1987 Constitution? .
ANS: No. No province, city, or municipality, not even the ARMM, is recognized under
our laws as having an associative relationship with the national government. Indeed, the
concept implies powers that go beyond anything ever granted by the Constitution to any
local or regional government. It also implies the recognition of the associated entity as a
state. The Constitution, however, does not contemplate any state in this jurisdiction
other than the Philippine State, much less does it provide for a transitory status that
aims to prepare any part of Philippine territory for independence (Province of North
Cotabato v. GRP Peace Panel on Ancestral Domain, supra).
188 •
Q: What are the classifications of states? Distinguish each.
ANS: States are classified as (a) independent, (b) dependent, and (c) neutralized:
Independent Dependent Neutralized .
Has freedom to direct and An entity which, although Independence and

control foreign relations theoretically a state, does integrity are
without restraint from other not have full freedom in guaranteed in an
states. the direction of its international treaty on
external affairs. the condition that such
An independent state may state obligates itself
be: Dependents states may never to take up arms
a.Simple either be: against any other state,
b. Composite a. Protectorates — or to enter into an
i. Real Union — two (2) established at the international obligation
or more states merged requeq„of the weaker as would indirectly
under a unified stataifdr the protection involve it in war.
authority so that they iitlyIrstikg power.
form a single IAStizglates (tributary
international person
through which they act p igsfne result of a
yp;m.cessiop .oaj a state
as one entity. t olito ,that
ii. Federal Union „415 is '1%.lowed to
combination of M EM) indpe ent subject to
or more states RIJN ention by the/
agreement crea_e .0* foreign sovereign o
entity wh.,,,,,,,
ich-$ o .Tcls certain e.owers over thp
their bepl'as a single' externa ffairs of de
intemap, onal latter.
personV 16. 4
purposes Nr. 0,214
internationarielatione.r,
(NACHURA, Political Ren ewer, supra
International Organizations
Q: What are internationAnganizations?
ANS: They may be deMibet as legal entities created by group of states and
functioning under international law to achieve purposes defined in their constitutions
(GARDINER, • International Law (2003), p. '206). 'They refer to public or
intergovernmental organizations, in contrast to private or non-governmental
organizations, such as Amnesty International or the International Red Cross/Crescent
(SARMIENTO, PIL Reviewer, supra at 174).
International organizations are characterized as:

1. Institutions established by a treaty;
2. Composed of members that are states or international organizations;
3. Regulated by international law; and
4. Endowed with a legal personality and thus generally can engage in contractual
relations and can sue and be sued in national courts subject to certain
immunities (Id., citing Count Bernadotte Case, Advisory Opinion on Reparation
for Injuries Suffered in the Service of United Nations, I.C.J. 174, April 11,
1949).
189
Q: What are International Administrative Bodies?
ANS: International Administrative Bodies are certain administrative bodies created by
agreement among states which may be vested with international personality when two
conditions concur: first, their purposes are mainly non-political, and second, they are
autonomous and not subject to the control of any state e.g. International Labor
Organization (ILO), Food and Agriculture Organization (FAO), World Health
Organization (WHO) (Southeast Asian Fisheries Development Center v. Acosta, G.R.
Nos. 97468-70, September 2, 1993).
Q: What is a specialized agency?

ANS: Specialized agencies are international organizations having functions in particular
fields, such as posts, telecommunications, railways, canals, rivers, sea transport, civil
aviation, meteorology, atomic energy, finance, trade, education and culture, health, and
refugees (ICMC vs. Calleja, et al., supra, citing Arts. 57 and 63 of the United Nations
Charter). This would include the World Health Organization, Word Bank Group,
Individuals .4".
- LT 1 77----,
International Monetary Fund, Internattonatlab.or Organization, among others.
,-..,---,
Q: Can individuals be regqrai
',---) ,
ed as,sciThje-cTsig,Irkerntion Law?
a,
ANS: There are two le s.,
1. Under the, di ngt,,Dc nne„ii;Trrn y s ates,in saidivi uals, are subjects of
internatrona . The noiliis off, iritefnatio al Taw -t,
pose obligations and
respoOibilitie exctively -Up4firStati eS and alt rganizations. This
limitayort_gf the ersonaL:SpKre_of_v.a dity or tau es an essential
charactensti - of i erne?* */..._,190,yidu poniidered merely as
objedts,
tsot
n
not subject of interndt461.109 (NA oh "c I Law Reviewer,
objec biR.-- 7;1 to
suprj tA 5
2. Under th Op p\..gig lew\-:-;*11--li
cording—to Kase rue subjects of
internWofa)‘cw ceA pas whg iestits e qtr.• Individuals are
subjekTo in erna rectl;Th IlecDvely through the juridical
of Ike S eA A 041 9YEN OR, Inlemational Law and
World Organizaflops ( 004)
World 0 nafte COQUIA AND DEFENSOR,
Intematiohal Law].''‘.
E. JURISDICTION OFSrAk‘ Of
E.9
-/7
Q: What is referred to as the-jukL

sdictilMf ate?.
ANS: It is the power exercised blittl --StatetrIgrpersons, property, transactions, or
events (SUAREZ, Political Law, supra at 1229).
Q: What is International Jurisdiction?

ANS: International jurisdiction is the allocation of power and authority among the States
(MALONE, International Law (1995), p. 66) (hereinafter, MALONE, International Law].
Basis of Jurisdiction
Q: What are the generally accepted bases of jurisdiction or theories under which
a State may claim to have jurisdiction to prescribe a rule of law over an activity?
ANS: It is based on the following principles (TNPUP):
1. Territorial Principle;
2. Nationality Principle;
3. Protective Principle;
4. Universality Principle; and
5. Passive Personality Principle (SUAREZ, Political Law, supra at 1229).
190
ED BO
Territoriality Principle
Q: What is the Territoriality principle?
ANS: It postulates that a state exercises exclusive jurisdiction (executive, legislative,
and judicial) with respect to all persons, things, transactions, or happenings within its
territorial limits. The extent to which a State exercises jurisdiction over persons or acts
done outside its territory is narrower and depends on the kind of jurisdiction it seeks to
invoke (Id.).
Q: Distinguish Subjective Territoriality from Objective Territoriality.

ANS: The distinctions are as follows: .
1 Subjective Territoriality- postulates that if an activity takes place within the
territory of the Forum State, then the Forum State has the jurisdiction to
prescribe a rule for that activity. The vast majority of criminal legislation in the
world is of this type.
2. Objective Territoriality- this jurisdiction is invoked where the action takes
place outside the territory a4,1,Litorum State, but the primary effect of that
activity is within the ForaP9. The classic case is that of a rifleman in
Canada shooting an Arp4p9;900—Cross Niagara Falls in New York State. The
shooting takes place in ,q4adaj ‘ e murder — the effect — occurs in the 'United
States. The United States ve the jurisdiction to prescribe under this
principle (SARM/ENTO4POareeWft gr:/4
.40
li: 4..
vi w
1{P
Q: What is terra nullius, :
Abe. A
ANS: Territorywhich prior o occupa oEitelonged to no sta e which may have been
abandoned by prior oceliPa t BERN. S, ratio International La .103).
Nationality Principle
• Ag•principle?
Q: Whatis th,siNationali • - 4N,
ANS: AccorditrtoThitere stat, as j ,given when those
nationals are oesidefrtike tateg- ER nal Law, p.140 citing
Blackmer v US, 2-0421Set21tt 932).
•
Q: What is the principt offeetiVe natio a
ANS: A person having,ore tha941,W a e a gat mated as if he had only one-
either the nationality of he Stat which he is habitually and principally resident, or the
nationality of the State ' inch he appears in fact to be most closely connected
(Nottebolim Case (Liechtens din v. Guatemala] ICJ Reports, 1955).
• Protective Principle
Q: What is the Protective principle?
ANS: States claim extraterritorial criminal jurisdiction to punish crimes committed
abroad which, .are prejudicial to their national security or interests, .even when the
offenses are .perpetrated by non-nationals e.g. Article 2of the. Revised Penal Code
(RPC)(Nottebohm Case (Liechtenstein.v. Guatemala] ICJ Reports, 1955).
UnIversalityPrinciple
Q: What is the Universality principle?
ANS: Under this principle, a State also claims extraterritorial jurisdiction over all crimes
regardless of where they are committed or who committed them, whether nationals or
non-nationals. Although this principle is generally considered as forbidden by
international law, it is recognized with respect to crimes which threaten the international
community as a whole and which are considered criminal offenses in all countries.
These are referred to as universal crimes (i.e. terrorism, genocide, piracy, slaver and
hijacking). The recognition, however, does not extend with respect to the enforcement of
191
an action i.e. the agents of a State cannot effect an arrest or make an apprehension in
the territory of another State without the latter's consent (Nottebohm Case
[Liechtenstein v. Guatemala] ICJ Reports, 1955).
Passive Personality Principle

Q: What is the Passive Personality principle?
ANS: The State exercises jurisdiction over crimes against its own nationals even if
committed outside its territory (Nottebohm Case [Liechtenstein v. Guatemala] ICJ
Reports, 1955). Otherwise stated, a State may claim jurisdiction to try an individual for
offences committed abroad which have affected or will affect nationals of the State
(SHAW, International Law, supra at 664).
Exemptions from Jurisdiction

Q: What are the exemptions from a State Jurisdiction?
ANS: The following are exemptions fro *grisdiction:
1. Act of State Doctri veiy •• overer rh state is bound to respect the
independence o e other sov refbn st te nd the courts of one country
will not sit in 11 igaept oft if t e ov rn ent of another, done within
its own ter, .1ecke s of grievancestAby-• easockof such acts must be
obtained m ans-ogerrto-b.eraiiRcArb sovereign powers as
betwee (Pc9GIvs.wiSANDIGANktil and OFFICECO
HOLDI N ...124M, OguA,14, 2007 cif nv On erhill v. Hemandez,
r
168 ti S. 250 52 ( 897)). 6.,lls.,y
).i ,
2. Doct f tate mmunity:"Abi a (..uirseci Ince. o Cf6 192)ndence, territorial
suprq acyi nd e ualitrqa--sfrAte4-60joSis i muni 1Torn the exercise of
jurischctio egislati e, expAtiva??4.1dicial) by ano er.sl te, unless it has
'"se
giver! co its irr,,,,,„t,„„r s.
volu dlyisublmittea o the jurisdiction
JVVA Na , N and OFFICECO
of th i .ctiout c c d (he
HOL NOS: up
3. lmmu ity of he Unk • a ion , ti SpecializedAgencies, Other.
Interne 'one! 6 anizatte a doi cers Uncle/Article 105. of Ull•
Charter, Organi Lion 0 •t nta es of Members of UN, shall
enjoy such rivilege n.4 .1 1.- essery for the independent
exercise of lizirjefOlptto lea h grant of privileges and
immunities to inter-6011 ornnizati9n, t§..16ft als and functionaries, is to
secure them legalliv.pocticallaranae in fulfilling their duties (Lasco V.
UN Revolving Fund forM-tionat rces Exploration, G.R. Nos. 109095-
109107, February 23, 1995).
The specialized agencies, their property and assets, wherever located and by
whomsoever held, shall enjoy immunity from every form of legal process
except insofar as in any particular case they have expressly waived their
immunity. It is, however, understood that no waiver of immunity shall extend to
any measure of execution (1947 Convention on the Privileges and Immunities
of Specialized Agencies, Art. III, Sec. 4).
The premises of the specialized agencies shall be inviolable. The property and
assets of the specialized agencies, wherever located and by whomsoever held
shall be immune from search, requisition, confiscation, expropriation and any
other form of interference, whether by executive, administrative, judicial or
legislative action (1947 Convention on the Privileges and Immunities of
Specialized Agencies, Art. Ill, Sec. 5).
4. Diplomatic Immunity — Part of customary international law which grants
immunity to diplomatic representatives, in order to uphold their dignity as
representatives of their respective States and to allow them free and
192
unhampered exercise of their functions. There are varying rules for different
diplomats. The procedure for claiming this immunity starts with a request by
the foreign State for an executive endorsement by the Department of Foreign
Affairs, and the determination made by the Executive Department is a political
question which is conclusive on Philippine courts (NACHURA, Political Law
Reviewer).
5. Foreign merchant vessels exercising the right of innocent passage or
arrival under stress— Innocent passage is navigation through the territorial
sea of a State for the purpose of traversing that sea without entering internal
waters, or of proceeding to internal waters, or making for the high seas from
internal waters, as long as it is not prejudicial to the peace, good order or
security of the coastal State. Arrival under stress, or involuntary entrance, may
be due to lack of provisions, unseaworthiness of the vessel, inclement
weather, or other case of force majeure, such as pursuit by pirates (Id.).
6. Foreign armies passing through or stationed in the territory with the
permission of the State (Id.).
7. Warships and other puti1F essels of another State operated for
noncommercial purposeiriey are generally immune from local jurisdiction
under the fiction that the7140. b ting territory" of the flag State. Their crew
members are immune 1 omkbagjurisdiction when on shore duty, but this
immunity will not apply ifite, won.? bers 4791a t e local laws while on
furlough or off-duty (Sphooneite ange* ,' .cfa"Xdbn, 7 Cranch 116).
of A.
Q: What are the proFfost ions und,eming the grant of in ational immunities to
international organizi#9,ng?
r4
immunities to interrationallr'
,, P
ANS: There are basicall ,-q• bree propo ons underly
gnizations. ese principle re
rant of international
1
1. Inte lignal , Lust' utions set.ild rave a statu whi>h pr tects them against
corCo rjEgp nce by any o overn e • I.,.. nce of functions
for tf, effective" 'schar c of ich they a i o democratically
,. ..
constituted 467' 06 odie n which al - -a ions concerned are
represeigt
2. No country ti_,.financial advantage by levying fiscal
charges on coin 1.7, ; :i -.: d
3. The internatioga orga ization 0 c.= _ ectivity of States members,, be
accorded thea ,:facilitielor
' the conduct of its official business customarily
extended to ed8blot O by its individual member States.
Natir„.0
The raison d'etre for these immunities is the assurance of unimpeded performance of
their functions by the agencies concerned (International Catholic Migration Commission
vs. Calleja, G.R. No. 85750 September 28, 1990).
Q: What are the three methods of granting privileges and immunities to the
personnel of international organizations?
ANS: The three methods of granting privileges and immunities to the personnel of
international organizations are the following:
1. By simple conventional stipulation, as was the case in the Hague
Conventions of 1899 and 1907.
2. By internal legislation whereby the government of a state recognizes the
international character of the organization and grants, by unilateral measures,
certain privileges and immunities to better assure the successful functioning of
the organization and its personnel.
3. By combination of the first two, wherein, one finds a conventional obligation
to recognize a certain status of an international organization and its personnel,
but the status is described in broad and general terms. The specific definition
193
and application of those general terms are determined by an agreement
between the organization itself and the state wherein it is located (Jeffrey
Liang v. People of the Philippines, G.R. No. 125865, March 26, 2001).
Q: What is the status of a UN official with respect to his private acts?

ANS: Section 18(a) of the General Convention on Privileges and Immunities of the
United Nations has been interpreted to mean that officials of the specified categories are
denied immunity from local jurisdiction for acts of their private life and empowers local
courts to assume jurisdiction in such cases without the necessity of waiver. It has earlier
been mentioned that historically, international officials were granted diplomatic privileges
and immunities and were thus considered immune for both private and official acts. In
practice, this wide grant of diplomatic prerogatives was curtailed because of practical
necessity and because the proper functioning of the organization did not require such
extensive immunity for its officials. Thus, the current status of the law does not maintain
that states grant jurisdictional immunity to international officials for acts of their private
lives (Jeffrey Liang v. People of he„dahilippi es, supra, separate and concurring
opinion). T j
c.„
bo.
Q: What is exterritorial . q Dis 'n 'sh,this:fr,_o_ xbiaterribiniality
ANS: The term extelonaljtY 's commonly useorto,q,(6rib.d \that status of a person or
thing physically prete t ji atets-tbrii orriput,w_tiol ,6 ,1:aRly withdrawn from the
State's jurisdictiopf , o Interngode:Las‘pi (SARV/ q:7-t aeL)D
, 1 Reviewer, supra at
131). Extraterritoria it ea s the right ckforetn citizbns to IRe trie by the laws of the
country they d fro not the laws .60tile count whe Kfrtra live. (Cambridge
Dictionary). li i
-,"IV
A 1111! 1
Q: What are t eRgi es of re olviri btjurisidiction?
H
ANS: The mo s f o :
1. Bala c n st State a I ingyme u do Wit he act's intended
effect ent n Arn
2. Intern tonal omi whe a, ate as basis for exercising
jurisdictrbn, it willklefra o6 xergj e will befunreasonable; and
3. Forum atcotre le I tiqn is,jilcretion96, the court weighing
private inte st fac or t res ,adforrAgeENTO, PIL Reviewer,
supra at 173)1 4
1\4N-A
F GENERAL PRINCIPLES 0
Q: What is a treaty?
ANS: A treaty is an international agreement concluded between states in written fOrm
and governed by international law whether embodied in a single instrument or in two or
more related instruments (VCLT, Art. 2).
Q: Should a treaty be in writing? •

ANS: Yes. Under Article 2 of the VOLT, treaties should be in writing. Nevertheless,
under Article 3 thereof, the fact that a treaty is unwritten shall not affect its legal force.
The International Law Commission clarifies that the word "written" does not mean that
oral and tacit agreements under international law have no legal force or that the
substance of the VOLT articles may not be relevant to them — it merely means that they
are not dealt under the VOLT. Relevant customary law provisions of the VCLT continue
to apply to all treaties, regardless of whether it is codified or not (Nuclear Tests Case
(Australia & New Zealand v. France], 1.C.J. Reports, 1974).
194
Q: Under Philippine law, who has the power to make treaties?
ANS: The 1987 Constitution does not contain an express provision that gives the
President the power to make treaties. Nonetheless, the power to negotiate and enter
into treaties is already included in the inherent powers of the President in the conduct of
foreign affairs subject only to the power of the Senate to concur in treaties as spelled out
in Article VII, Section 21 of the 1987 Constitution (SARMIENTO, PIL Reviewer, supra at
23).
Q: What are executive agreements?

ANS: Under Philippine law, executive agreements are international agreements
embodying adjustments of details of carrying out well-established national policies and
traditions and those involving arrangements of a more or less temporary nature
(Commissioner of Customs v. Eastern Sea Trading, G.R. No. L-14279, October 31,
1961). They merely involve arrangements on the implementation of existing policies,
rules, laws, or agreements. They are concluded to 1) adjust the details of a treaty; 2)
pursuant to or upon confirmation by an act of the Legislature; or 3) in the exercise of the
President's independent powers under Constitution. The raison d'etre of executive
agreements hinges on prior constitutional or legislative authorizations (Saguisag v.
Executive Secretary, G.R. No. 21242014raty 12, 2016).
m.
1:i' Aft-
S=t
Q: Distinguish Treaty from ExecidiVe 4ggergerit,
ANS: They may be distinguish e as fd tii.a1A4-1 'n*P-IPpl.
A .
1. From the persROtive of In abonal L,awtherels no distinction in their
binding effe41UPon States s„ ong as the negORng functionaries have
remained withi t en- powers (USAFFE VeteransAssociation Inc. v. Treasurer
of the PhilyirieskafeNo. L-10100, June 30, 149591 e Vienna Convention
on the4a1A74 of Treaties does riot also make, di tine\ ion. An international
agreeW'ent that ineets the\reitirementsr of the klefin tion of a treaty is
gi.‘,..,, 6"09.5•4,
recomzed asrairAaty vy,r,Vever$: particul espAatio kW, Art 2).
2. FronVthe pergbative'd A Ph Opine la tre -oncluded by the
President wit e'advic IlcolLent of the Se ate-Nii reaty or international
Ni
agreemenshallvalid , nd effective unless concurred in by at • least two-
thirds (2/3o all bers of t Senat (CONST., Art. VII, Sec.21). On the
other hand, arJ-e cec1itive agree uded by the President based on
authority gradtt by C9sibfaltlabil as d rgenherent authority granted by
the ConstitutiV(SARiNTO, PIL Reviewer, supra at 34).
International agreeme is involving political issues or changes of national

policy and those involving international arrangements of a permanent
character usually take the form of treaties, while those embodying adjustments
of detail carrying out well established national policies and traditions and those
involving arrangements of a more or less temporary nature take the form of
executive agreements(Commissioner of Custom v Eastern Sea Trading, GR
No. L-14279, October 31, 1961; as cited in Bayan Muna v. Romulo, G.R. No.
159618, February 1, 2011).
Q: What are the elements of a treaty?

ANS: The elements of a treaty are (PAWL-R):
1. It is entered into by Parties having treaty-making capacity;
2. It is made through their Authorized organs or representatives;
3. It is made Without the attendance of duress, fraud, mistake, or other vices of
consent;
4. It has a Lawful subject matter and object; and
5. It was Ratified in accordance with the respective constitutional processes of
the parties (SARMIENTO, PIL Reviewer, supra at 10).
195
Q: Distinguish law-making treaties from contract treaties.
ANS: Law-making treaties are multilateral agreements that create legal obligations the
observance of which does not dissolve treaty obligation. They create general norms for
the future conduct of the parties in terms of legal propositions, and the obligations are
basically the same for all parties. Contract Treaties are bilateral or multilateral
agreements for the mutual interchange of benefits between the parties and which create
reciprocal or concessionary obligations between and towards particular parties only and
not towards the whole international community (SARMIENTO, PIL Reviewer, supra at
13-14).
Q: What are the steps in the treaty-making process?

ANS: The steps are: (NeSiRa-ExReg)
1. Negotiation — Discussion of the provisions of the proposed treaty, undertaken
by the representatives of the contracting parties who are provided with
credentials known as full powers or pleins pouvoirs;
2. Signature — Primarily intended—as.,s of authenticating the instrument
and symbolizing th5godalaithiof thetofiff'aot(p.g parties;
3. Ratification — Act _y witch the'&eloVallYa7copts the provisions of a treaty
concluded bydifWe‘ilative• ...? 2-4\
4. Exchange of2nstrD0 tearatification; a d ' '•,,,
5. Registratiorn wi U (F)jmerite7: , Egmut" e ect ry, G.R. No. 158088, July
6, 200511, fl
P 1,
Q: What are the restri* bons on the sublet
,, matter o treat
arf restri ions on e9u •jec ma e of tre tcaA
ANS: The folloiviri,
1. Jus t en restrictiontre*igibld if at the ime ; its conclusion, it
conflpts a pd ennptb - rib Of ge ral Int rhati lal Law (Vienna
Conkriti
b. Ind between the
2. Princlp)
obligaii6 s o charter and their
obligatl obligations under
the U.N.
Q: May a treaty vio Intein

ANS: Yes, a treaty mayvi6iRi tionaki AtT time of its conclusion, it
conflicts with a perempernk of gqporalNarlti pa law Os co ens or if its
conclusion has been procureft _. #15 rce in violation of the principles
e threUtloi- Lis,
of international law embodied in the trafterVCLT, Arts. 52 and 53).
Q: What is ratification? Is it an executive or tegislative act?

ANS: Ratification is the formal act by which a State confirms and accepts the provisions
of a treaty concluded by its representative. It is generally held to be an executive act,
undertaken by the head of the State or of the government, as the case may be, through
which the formal acceptance of the treaty is proclaimed. In our jurisdiction, the power to
ratify is vested in the President and not, as commonly believed, in the legislature. The
role of Senate is limited only to giving or withholding its consent or concurrence, to the
ratification (Bayan v. Zamora, G.R. No. 138570, October 10, 2000).
Q: What is the effect if the treaty is signed but not yet ratified?
ANS: It creates an obligation upon the State to refrain from acts which would defeat the
purpose and object of a treaty prior to its entry into force (VCLT, Art. 17).
Q: What is the effect when a treaty is ratified but not concurred by the Senate?
ANS: A treaty not concurred by the Senate will not be valid and effective (CONST, Art.
VII, Sec.21).
196
Q: What is accession?
ANS: Accession is a process by which a State expresses its consent to be bound by an
already existing treaty. The consent of a State to be bound by a treaty is expressed by
accession when the treaty provides that such consent may be expressed by that State
by means of accession or when the negotiating States agreed or have subsequently
agreed that such consent may be expressed by that State by means of accession
(VCLT, Art. 15).
Q: What is a reservation?
ANS: A reservation is a unilateral statement, however phrased or named by the State
when signing, ratifying, accepting, approving, or acceding to a treaty, whereby it
purports to exclude or to modify the legal effect of certain provisions of the treaty in their
application to that State (VCLT, Art.2).
Q: What is the principle of pacta sunt servanda?

ANS: Pacta sunt servanda (Latin for ”piicts must be respected") is a basic principle of
international law that is now codified irphiVCLT which states that "every treaty in force
is binding upon the parties to it miff.' Li'g*t4be performed by them in good faith" (VCLT,
Art. 26).
Q: What is the general rule on the ezp tjmof treaties

ANS: A treaty shall be interprt OW V ffilWrdaraiitt
,
" ith the ordinary meaning
to be given to the terms o Ithe treaty in > ieir context an e light of its object and
purpose (VCLT, Art. 3i)
A
Q: May a State invoke wrOvisions f its internal, justification for its
failure to perfoffl$ eat4? . ice,
ANS: No. A partS7 maypohnvoke theNpro Isions of its i -s justification for its
failure to perfala treatf(CLW. Art. 27 rticle 13-o , • t, Draft Declaration
on Rights of tajties of S ates alsi:6,p4ov t "Every .‘ ., -p.
,
V,,K,
a e , .I
v,
..-
to carry out in
good faith its obligtioCi
. :prt -, g frorrigreat and other so
' international law, and
it may not invoke 51:Visions' its gonsti ions or its laws as an excuse for failure to
perform this duty."
Q: When may a Statemyoke the ac t a di a eht f• be bound by a treaty has

been expressed in violation Qfftprovision of its internal law?
ANS: When the violati4tqlnanifest and concerned a rule of internal of fundamental
importance (VCLT, Art. 4600Z violation is manifest if it would be objectively evident to
any State con ducting itself in the matter in accordance with normal practice and in good
faith (VCLT, Art. 46(2)).
Q: What are the grounds for the invalidation of a State's consent to be bound by a
treaty?
ANS: The grounds are (EFC-CCPP):
1. Error;
2. Fraud;
3. Corruption of a representative of a State;
4. Coercion of a representative of a State;
5. Coercion of a State by the threat of force;
6. Conflict with Peremptory norms; and
7. Conflicts with Provisions of internal law (VCLT, Arts. 47-53, Sec. 2).
197
Q: When may a treaty be terminated or suspended?
ANS: A treaty may be terminated or suspended: (ARMS-FLaW)
1. By Agreement of the parties, if the treaty so provides;
2. If the goal of the treaty is already Realized;
3. Termination due to a Material breach;
4. Supervening impossibility of performance;
5. Fundamental change in circumstances (rebus sic stantibus);
6. Later inconsistent treaties between the parties; and
7. War between contracting parties (VCLT, Arts.54-63, Sec.3).
Q: What is the doctrine of rebus sic stantibus?
ANS: The doctrine of rebus sic stantibus is a principle in customary international law
which provides that where there has been a fundamental change of circumstances from
the conclusion of an agreement, a party to that agreement may withdraw from or
terminate it. It is justified by the fact that some treaties may remain in force for long
periods of time, during which fundamental changes might have occurred (SHAW,
International Law, supra at -y •
r
Q: What are requisites4efopvglicNyocab n of doc".iirite rekus sic stantibus?
ANS: The requisites for validIOvocatidtrerfirprin lepre-f (SUC-DIR)
1. The changiraisteisbitpatenfia hat the foundaliOntof the treaty must have
altogethelegpfiegred, • \..)"
2. The chingutaist hd've been UriforaU forp'S eab at the time of the
.11 .M. s`'.1. en or n
perfec
Ei ion orrtif
e tredty; —
i " \ sr fl
3. The c ange rust nothave beedisFaused_byille partyonvokirig the doctrine;
4. The octrigeYrnust 'e inviked w!tx.a-Tasonable tirr?ei.---.4
5. The curet of the t eaty'rifilst-Olidefliiite; acnd
6. The do ine capne operSte7fleircspi ciltely,lcier.„,it us adversely affect
..
provi'mns ich to e-alreadA eii,cornpli 44 h prior tote vital change in
the si Ko VC idle 6 or}
Q: May a treaty becomkbincrrig is ndt a part i to it?

ANS: No. Article 4 of the VC a gieleral rule, a treaty does not
create obligations ck rights fou nsent (pacta ter its nec nocent
,f,' . .
nec prosunt). Howeges, a rylp co e binding upon a third
State as a customary rale ofDtp, sized as such (VCLT, Art.
38). 1
G. DOCTRINE OF STATE RESPOZIBILTTY

Q: Is a State responsible for an internationally wrongful act?
ANS: Yes. Every internationally wrongful act of a State entails the international
responsibility of that State (ARTICLES ON THE RESPONSIBILITIES OF STATES FOR
INTERNATIONALLY WRONGFUL ACTS 2001 (ARSIWA), Art. 1).
Q: What are the elements of an internationally wrongful act of a State?
ANS: There is an internationally wrongful act of a State when conduct consisting of.an
act or omission: 1) is attributable to the State under International law; and 2) constitutes
a breach of an international obligation of the State (ARSIWA, Art. 1).
Q: What is attribution?
ANS: Attribution or imputability is a legal construct whereby an internationally unlawful
conduct of a State organ acting in that capacity is regarded as the conduct of the State
itself, making that State responsible for it as an internationally wrongful act. It proceeds
from the theory that as an abstract entity, the State can physically act only through
individuals or groups of individuals performing "acts of the State" on its behalf
(Differences Relating to Immunity from Legal Processes of a Special Rapporteur of the
Commission of Human Rights (38 International Legal Materials 873, 1999]).
198
Q: What is the consequence of statelessness?
ANS: Any wrong suffered by him through the act or omission of a state would be
damnum absque injuria for in theory no state has been offended and no international
delict was committed (Simperingham, The International Protection of Stateless
individuals: A Call for Change, June 2003). While the Philippines is not a party to the
1961 Convention on the Reduction of Statelessness, it does not mean that their
principles are not binding upon it. The principles codified in the said convention is
binding in this jurisdiction as "generally accepted principles of international law". All of
the international law conventions and instruments on the matter of nationality of
foundlings were designed to address the plight of a defenseless class which suffers
from a misfortune not of their own making. We cannot be restrictive as to their
application if we are a country which calls itself civilized and a member of the community
of nations (Poe-Llamanzares v. COMELEC, et al., supra).
J. EXTRADITION
Q: What is extradition? ,It:
ANS: Extradition is the removal ofp-ii,,acclised from the Philippines with the object of
placing him at the disposal of foleOrdatjt ,....orities to enable the requesting state or
government to hold him in conne7otaD - ny criminal investigation directed against
:a pAo-,,- , .
him or the execution of a penalty irppc4wuj i under thepenal or criminal law of the
requesting state or government' 4.4'Dp 169:' ,0 ketwis tknown as the Philippine
Extradition Law, Sec. 2, par. '7;''' 0.:.
rte
Q: What are the elemtatsfpf extraditfaii? )w
ANS: The three elemst:SV, textcaditibn ar?;(SRD)
1. Acts of So.vpreigptta the part ofja o States;
2. A Request by or S a e t%andt. er State for to it of an alleged
,s.-- %
crimtaal•oand
3. TheIrelivery` - -CI heat pellog req ed for el.:pa:4os a.,4,9 Oa .orsentence in
the 01-Rory 9,Dtbekquestiu) sta N'SARM/ENTOIV"0133).
.... AWR
.14.\. e".
S2907 t v
4-1
Q: What is the nature of ex reition?
ANS: Extradition isnott„.a. ,dliminal procwn ven if the potential extraditee is a
criminal, an extraditionlogedingtp,noart, la cltranal, for it is not punishment
for a crime, even tho?h suctOunishment may fo ow extradition. It is sui generis,
tracing its existence wtilly,to teel a obligations between different nations. It is not a trial
to determine the guilt or innocence of the potential extraditee. Nor is it a full-blown civil
action, but one that is merely administrative in character. Its object is to prevent the
escape of a person accused or convicted of a crime and to secure his return to the state
from which he fled, for the purpose of trial or punishment (Government of Hong Kong v.
Olalia, G.R. No. 153675, April 19, 2007).
Q: What are the fundamental principles of extradition? .

ANS: The fundamental principles of extradition are the following:
1. Based on the consent of the State expressed in a bilateral treaty;
2. Principle of Specialty - a fugitive who is extradited may be tried only for the
crime specified in the request for extradition and included in the list of offenses
in the extradition treaty;
3. Double Criminality - The act for which the extradition is sought must be
punishable in both States; (SHAW, International Law, supra at686);
4. Any person may be extradited, whether he be a national of the requesting
State, of the State of refuge or of another State. He need not be a citizen of
the requesting State;
5. The offense must have been committed within the territory of the requesting
State or against its interest;
203
- . ••• • sic.- t:,44'4••••h:a.•
6. Political or religious offenders are generally not subject to extradition, as well

as military offenses (BERNAS, Public International Law, supra at 174);
Note: Attentant clause is a provision in an extradition treaty which states that
the murder or assassination of the head of a state or any member of his family
will not be considered as a political offense and therefore extraditable
(SARMIENTO, PIL Reviewer, supra at 142);
7. Prohibition on Discrimination- extradition may not be granted if it would subject
the fugitive to prosecutions based on race, nationality, or political opinion;
8. Lack of probable cause clause- the request for extradition must include
sufficient prima facie evidence of guilt attributable to the person requested to
be extradited (Id.).
Q: Distinguish the Principle of Double Criminality from Principle of Specialty.
ANS: Under the Principle of Double Criminality, the crime involved should be a crime in
both the requested and requesting states to make it extraditable. Under the Principle of
Specialty, a person surrendered may be WO and punished only for the offence for
which extradition had been s9.uglirand glianied:(SWW, International Law, supra at
686). u f1/4
V if
Q: Under what authority in y aiuditive from rastroe be-ex radited?
ANS: A fugitive frotju tice ay be_extrac,Ilted.o* uposn.t 9 auNority of an extradition
treaty between t*.r,eq 9.s ing*Titliority,'Ond the reques'bd st6le (SARMIENTO, PIL
Reviewer, supra A.t req) lijik
a.
Q: Who are the persons subjectto-extildition?—_ Cr)
ANS: Those c arggpir coniictecl,,,fakopfkes,t1:19par extra itable4u der the terms of
the extradition treaty etweeri the re*Tieb4Sfltes, here tffecrillii was committed,
and the requesk Slate where theVersoOrequestedo b ited has sought
refuge (Id.). k"4 t
) e
•c>.)
Q: What is the proceuure itjo from the 13 ilippines?
ANS: The procekure to ke folloeaso ext iadi s follows: (R-FPJ-HADE)
1. RequesAthroughNiplon3a
a. Debj,sion oftsectsa;rE
b. Criminal chdfWaRcZarL...... res
c. Recitareksy) y N-1
d. Text of appli able taw d s i thle`ff nse; and
e. Pertinent paper ,
2. DFA Forwards request to DOJ;
3. DOJ files Petition for extradition with RTC;
4. Upon receipt of a petition for extradition and its supporting documents, the
Judge must study them and make, as soon as possible, a prima facie finding
whether
a. They are sufficient in form and substance;
b. They show compliance with the Extradition Treaty and Law; and
c. The person sought is extraditable. At his discretion, the judge may
require the submission of further documentation or may personally
examine the affiants and witnesses of the petitioner. If, in spite of this
study and examination, no prima facie finding is possible, the petition
may be dismissed at the discretion of the judge.
5. Hearing (provide counsel de officio if necessary);
6. Appeal to CA within ten days whose decision shall be final and executory;
7. Decision forwarded to DFA through the DOJ;
8. Individual placed at the disposal of the authorities of requesting state costs
and Expenses to be shouldered by requesting state (P.D. 1069, otherwise
known as the Philippine Extradition 14w).
204
AN :RED:E...13
Q: What conduct are attributable to the State?
ANS: Under Chapter 2 of the ARSIWA, the conducts attributable to the State are:
1. The conduct of any of its organs, whether exercising legislative, executive,
judicial or any other functions (Art. 4);
2. The conduct of a person or entity which is empowered by law of that State to
exercise governmental authority provided the person or entity is acting in that
capacity in that particular instance (Art. 5);
3. The conduct of a person or group of persons that is in fact acting on the
instructions of, or under the direction or control of, that State in carrying out the
conduct (Art. 8);
4. The conduct of a person or group of persons that is in fact exercising
governmental authority in the absence or default of the official authorities and
in circumstances such as to call for the exercise of that authority (Art 9);
5. The conduct of an insurrectional movement which becomes the new
Government of a State (Art. 10, par. (1));
6. The conduct of a movement,Ansurrectional or other, which succeeds in
establishing a new State iwrfolretbf the territory of a pre-existing State or in a
territory under its adminigtqloatall be considered an act of the new State
(Art. 10, par. (2)); and ti
7. Conduct which the StatO'aek- ow edges and adopts as its own (Art. 11).
I. REFUGEES
Q: Who is a refugee?4,
ANS: Any person whOrg to wel: ded fear of being.secuted for reasons of
race, religion, national' , sImb9.rshif; of ::4particular socia. grip or political opinion, is
outside the country40hrs4arciliality and inunable or, owjfig tv silch fear, is unwilling to
avail himself ollaprotecticin'tifithat,c unr. ; or who, nolhavi g a ationality and being
outside the can* of hisafqrmer habitresidence as resul of such events, is unable
or, owing to sttetrfearfiLatillinbs/to.retu o it (19 "Tattffeto the Status of
Refugees, Se0 2; inAretsn toet4 19g. Convention e atita3tO the Status of the
Refugee, Art. 178ew90111V) [herpafte 967 Refugee Protocol, and 1951 Refugee
Convention, respectively]; (1):11 Circular 058-12, Sec. 1 (d)).
Wr.
Q: What are the o4 jga ions of rap ountry where they find
themselves? 16
ANS: Every refugee haNuties o- he country in which he finds himself, which require in
particular that he confor i s laws and regulations as well as to measures taken for
the maintenance of public order (1951 Refugee Convention, Art.2).
Q: Who are excluded from the coverage of the 1951 Refugee Convention?
ANS: The following persons are excluded:
1. Those already receiving from organs or agencies of the United Nations other
than the UNHCR protection or assistance so long as they are receiving such
protection or assistance;
2. Already recognized by the competent authorities of the country in which they
have taken residence as having the rights and obligations which are attached
to the possession of the nationality of that country; and
3. If there are serious reasons for considering that:
a. They have committed a crime against peace, a war crime, or a crime
against humanity, as dened in the international instruments drawn up to
make provisions in respect of such crimes;
b. They have committed a serious non-political crime outside the
Philippines prior to their admission to the Philippines; and
199
RED BOOK
c. They have been found guilty of acts contrary to the purposes and
principles of the United Nations (DOJ Circ. No. 058-12, Sec. 10; 1951
Refugee Convention, Art.1, Sec. D, E, and F).
Q: When does a person cease being a refugee?

ANS: The refugee status ceases when: (PLN-FER)
1. Voluntarily re-availed himself or herself of the Protection of the country of his
or her nationality;
2. Voluntarily re-acquired his or her Lost nationality;
3. Voluntarily acquired a New nationality and enjoys the protection of the country
of his or her nationality;
4. Voluntarily re-established himself or herself in the country he or she left, or in a
country where he or she remained owing to Fear of persecution;
5. Enjoys the protection from the country of his or her nationality, because the
reasons in connection with which he or she was granted refugee status have
ceased to exist; Provided, thAthissparagraph shall not apply to a refugee who
is able to invoke sppigirrig reagonka7gng„out of previous persecution for
refusing to avail bimselfor herself of eipr6teaion of the country of his or her
nationality;
6. Not having' yriierZcs to his br,herr cot.i9try of habitual residence
due to cfAng stancr111,e
57rd , attbgara raph shall not apply to
a refug e to iiyokfcorppelling reako arising out of previous
persec tion 6. refising tclravakhimelf or hers f of th protection of the
count or her former ha pal residen e. (D (.9c* No. 058-12, Sec.
24; 1 5Ze gee •onven ec ton ).
"---f i f.'c:
Q: Who may rantsteree s atus ,i-til -1,1
ANS: General tt '%e tarl which ittMum se to apply as refugees.
Individuals ma also ac f.conce HCR.
1. The p sg 19,4e y therafl of the country of
his do icile o aw of the country of his
residen
2. Rights prkiously acqqui dependent n personal
status, morartic
et\ Igif am e, s all be respected by
a Contracting if Vibe necessary, with the
formalities requir !Ted that the right in question
is one which would hav e law of that State had he not
become a refugee (1951 Redg o venfion, Art. 12).
Q: What are the rights of an applicant for refugee status?

ANS: The Applicant has:
1. The right to legal counsel;
2. He is entitled to have the services of an interpreter, if necessary, at all stages
of the refugee status determination and for the purposes of the preparation of
the written application and for the interview
3. He shall not be denied access to the UNHCR (DOJ Circ. No. 058-12, Sec. 10).
Q: When will an applicant be declared a refugee?

ANS: An Applicant will be declared a refugee upon a finding that he meets the
definition of a refugee. The responsibility of proving a claim to refugee or stateless
status is a shared and collaborative burden between the Applicant and the Protection
Officer. The Applicant has the obligation to provide accurate, full and credible account
proof in support of his/her claim, and submit all relevant evidence reasonably available
(DOJ Circ. No. 058-12, Sec. 9).
200
Q: What is the effect of recognition of refugee status under Philippine law?
ANS: The following are the effects of recognition:
1. The benefits of recognition, as appropriate, shall automatically inure to the
accompanying Family Members.
2. Refugees and stateless persons including their Family Members have the right
to residence.
3. They are entitled to the appropriate visas and such other immigration
documents appurtenant thereto as may be provided by immigration laws and
regulations. No renewal of visa shall be allowed by the Bureau without the
endorsement of the RSPPU.
4. They may enjoy and exercise such rights and privileges accorded by the 1951
Refugee Convention and 1967 Refugee Protocol subject to Philippine laws
and regulations. (DOJ Circ. No. 058-12, Sec. 15).
Q: What are the rights of a refugee?

ANS: Among those enumerated in the 144 Refugee Convention are:
1. Non- discrimination of appligho (for refugee status) based on race, religion,
i0
or country of origin (Art. 3.) 4 4
2. To be treated similar to r,OrigiOth respect to the following:
a. Right to Religion 'cArt*ta
b. Rationing system(viekt:iatkere short f 4rt. 20)
c. Elementary education (A
d. Public Relief (Art. 23)
e. Labot#1‘: gislation an" tSol cial Seogrity (Art ))
f. Fiscalikatiges (Art 29
3. To be accoreedkeo(anie treyjrnent as an ten or foreign national with
, for folltirWew
respectioiKe
respect
a. • o hap his personarstat respected c; rt. 1
b .TI) ac w.fir ovable and i ovable pe
.A-. -.4. . of indAt,rial
c..,,i Protect' petty an tt41
Pacy, artistic, and
p-•
,scientik rks (Art ' 4)
d. Riatacskociatiorf(Art.
e, _.Ac6ess to C4rts (Art. 16
f. Wage ate employme ,.,..,_147411
g. Self-e eFvort
0 oyme effgiff -zmIz'
h. To pr ace M.) 4afprofession (Art.19)
i. Housin f
j. Education oHhdr ier than
than elementary (Art. 22(2))
4. Administrative Assistance (Art. 25)
5. Freedom of movement (Art. 26)
6. To be issued travel documents (Art. 28(1))
7. Be permitted to transfer their assets (Art. 30(1))
8. Sympathetic considerations as regards the following:
a. Extension of benefits similar to death benefits or social security (Art.
24(4))
b. Issuance of travel documents to refugees who are unable to obtain a
travel document from the country of their lawful residence (Art. 28(1))
c. Permission to transfer assets necessary for their resettlement in
another country (Art. 30(2))
9. To not be expelled (Art. 32 and 33)
10. To not be penalized for illegal entry until their status in the country is
regularized or they obtain admission into another country (Art. 31)
Q: Are States allowed to expel refugees?

ANS: No, as a general rule (1951 Refugee Convention, Art. 32(1)).
201
Q: What is the exception to prohibition against expulsion?
ANS: Only on the grounds of national security or public order. It shall be only in
pursuance of a decision reached in accordance with due process of law. Except where
compelling reasons of national security otherwise require, the refugee shall be allowed
to submit evidence to clear himself, and to appeal to and be represented for the purpose
before competent authority or a person or persons specially designated by the
competent authority. The Contracting States shall allow such a refugee a reasonable
period within which to seek legal admission into another country (1951 Refugee
Convention, Art. 32).
Q: What is the principle of non-refoulement?
ANS: It is a principle which prohibits Contracting States to expel or return ("refouler") a
refugee in any manner whatsoever to the frontiers of territories where his life or freedom
would be threatened on account of his race, religion, nationality, membership of a
particular social group or political opinion (1951 Refugee Convention, Art. 33(1)).
Q: What is the exception to nqa,rafriTTOTI
1?
ANS: When there are reapaik
ngrou dsiforiregar ifigkps a danger to the security of
the country in which WI ro )vho, hattin bee .on3icted, by a final judgment of a
particularly serious critie, ptet a danger toy e ty of that country (1951
Refugee Conventio 33
min
Q: What is the iffe, betweerTa rtgdFan intern displaced person, and
an asylum see r?
ANS: Refugee/ pare ople basan 0 rtio...tbe. (._if)o\kgin because of a
well-founded featodf ersec tion,arltlic o ifrArtistances that have
seriously distu bealblic or er, antQn/h9 aa.attesui international protection
(The Refu 'Ad.Tsgrig2,5''" Ref eyed from
https://www.un, f7, mzsee hose request for
sanctuary has esse Asylum-Seekers.
Retrieved from /
Thus, an applicarikfor a refuge s a3 asylum jeeker. On the other

hand, internally dgplacefte t crossed a order to find safety.
Unlike refugees, th4ore o,rr staNt,it their own country and
remain under the proteNiotc• ov o ernment is the reason for
their displacement (The TINze gee li Isplaced People. Retrieved
ntl -dis
from https://www.unhcrorg/iTha eop tml).
Q: What is statelessness?
ANS: It is a condition or status of an individual who is born without any nationality or
who loses his nationality without retaining or acquiring another (NACHURA, Political
Law Reviewer, supra at 691).
Q: Who are Stateless persons?

ANS: A Stateless person is a person who is not considered as a national by any State
under the operation of its law (1954 CONVENTION RELATING TO THE STATUS OF
STATELESS PERSONS, Art. 1) [hereafter 1954 CONVENTION]).
Q: What are the rights of stateless persons?
ANS: A Stateless person shall be accorded the same treatment granted to a national of
the country of his habitual residence with respect to the rights to artistic rights and
industrial property, free access to courts, rationing, elementary education, and public
relief and assistance. He shall also be accorded the same treatment which shall be as
favorable as possible and, in any event, not less favorable than that accorded to aliens
(1954 CONVENTION, Arts. 14-24).
202
Q: What are the distinctions between Extradition and Deportation?
ANS: Extradition and deportation may be distinguished in the following ways:
Extradition Deportation
As to Its Nature
Surrender by force of a wanted Expulsion of an unwanted or
person by the requested state to the undesirable alien
requesting state
As to its Exercise
May only be made pursuant to a A pure unilateral act and an exercise of
treaty between the requesting and sovereignty
requested State
As to Basis
•
Based on offenses gen9,0% Based on causes arising in the local state
committed in the state of origin t"it` •
Ai to Place of Transfer
It calls for the return of thisfUgitive An undesirable alia.n may be deported to a

the state of origin state other than Allkr her own or the state
of origin
eg,b,. A Aol I
As to What State is Benefifted

40'"
For the benefit of thefiequesting state. akes place 4 the interest of the
." country o
" 4'1 4--,9:4
(SUAREZ, PolitibatkawAuowar at 108u).
Q: What is the Ker-Frisbie Doctrine?

ANS: It holds that cTrpinti'defendantsitaAbr d tged,,Rgardless of whether their
presence before the cam was sepf . cikibtiT'ddisiE0ifflefritorial jurisdiction by means
other than pursuant to qalid eAr.:4clition (SARMIENTO, PIL Reviewer, supra at 136).
K. BASIC PRINCIPLES OFI TERNATIONAL HUMAN RIGHTS LAW

Q: What is International Human Rights Law?
ANS: It is a law that transcends state boundaries by seeking to define and uphold those
rights held universally by every person regardless of nationality. It deals with the way a
State acts towards individuals and groups, and in particular, its own citizens (EPPS AND
GRAHAM, International Law, p. 176).
Q: What are human rights?

ANS: These are rights inherent to all human beings, whatever our nationality, place of
residence, sex, national or ethnic origin, color, religion, language, or any other status.
These rights are all interrelated, interdependent, and indivisible (UN Office of the High
Commissioner on UN Human Rights). These are the rights that take the form of claims
limiting the power of government over the governed (SHAW, International Law, supra at
268).
205
Q: What are the three generations of human rights?
ANS: The three (3) generations of human rights as classified by Czech jurist Karel
Vasak, the first Secretary General of the International Institute of Human Rights in
Strasbourg, follow the three watchwords of the French Revolution: Liberty, Equality and
Fraternity:
1. First Generation Rights (Civil and Political Rights) — Everyone has the right
to life, liberty, and security of person (UNIVERSAL DECLARATION OF
HUMAN RIGHTS AND THE INTERNATIONAL COVENANT OF CIVIL
POLITICAL RIGHTS (UDHR), Arts. 3 to 21).
2. Second Generation Rights (Economic, Social and Cultural Rights) —
Everyone, as a member of society, has the right to social security and is
entitled to realization, through national effort and international co-operation
and in accordance with the organization and resources of each State, of the
economic, social and cultural rights indispensable for his dignity and the free
development of his personality (UDHR, Art. 22).
3. Third Generation Rights --„rights,thalgo beyond the mere civil and social, as
expressed In manprqgressivp dpcupe7ibhqQnternational law, including the
Stockholm and Rio DeprationaAIKENTOtP/L Reviewer, supra at 221). It
includes thedright,tolip,ea..,
ce,.clean.envirohmOasejf-determination, common
heritage RV mankipd development, and% mori *ghts (BERNAS, Public
Internet:liar* ship t-2219):77'''"*"'
IL
1
T))
Q: What are thOim a ions., n the exercise ofithe rights niler the Declaration?
ANS: In the exercise o his n hts and frAglops, every ne shbelbject only to such
.
limitations as dtsrmined y law rfe !tor the pu ose of ec due recognition
and respect fol. t rights an freellps'i9iXeiMnd f f meetifig thg ust requirements
of morality, pu b lisor4r and the genartiti Vasab a democrat? tociat (UDHR, Art. 29,
Sec. 2).Theseiiglit,s1 an edoms 64 ' no cal 41.;k9e e arrcigicontrary to the
purposes and pnp~es ted Kati ns,
Q: What is the concep Self-4 tni6ti crpt-s?

ANS: The conc4t postulates lhat'pec av,e4he light of se"If-determination. By
virtue of that rigt‘he
hyfreed dQtetni ojilic44tatus add freely pursue their
economic, social andt,,,culturardeqeolrri 8 NATtftA COVENANT ON CIVIL
AND POLITICAL RIGHTe*R0) papper
Q: May the rights under the9G PR be fIrttc rom?

ANS: No, except in times of public em r titTM - tiich threatens the life of the nation and
the existence of which is officially proclaimed, the States Parties to the present
Covenant may take measures derogating from their obligations under the present
Covenant to the extent strictly required by the exigencies of the situation, provided that
such measures are not inconsistent with their other obligations under international law
and do not involve discrimination solely on the ground of race, color, sex, language,
religion, or social origin (ICCPR, Art. 4, par. (1)).
Q: What are the rights which may not be derogated from under any
circumstance?
ANS: The following rights cannot be derogated from, which means that a State cannot
derogate from their obligations under the ICCPR with regard to these rights:
1. Article 6: Right to life;
2. Article 7: Freedom from torture and other inhuman punishment;
3. Article 8:(pars. (1) and (2)). Freedom from enslavement or servitude;
4. Article 11: Protection from imprisonment for inability to fulfil contractual
obligations;
5. Article 15: Protection from ex post facto laws;
206
AN RED BOOK
6. Article 16: Right to recognition everywhere as a person before the law; and
7. Article 18: Freedom of thought, conscience and religion.
Q: What is the limitation in the exercise of the rights under International Covenant
on Economic, Social, and Cultural Rights (ICESCR)?
ANS: The State may subject such rights only to such limitations as are determined by
law only in so far as this may be compatible with the nature of these rights and solely for
the purpose of promoting the general welfare in a democratic society (ICESCR, Art. 4).
L. BASIC PRINCIPLES OF INTERNATIONAL HUMANITARIAN LAW (/HL)

Q: What is International Humanitarian Law (IHL)?
ANS: This pertains to the laws of war or the laws of armed conflict. It seeks to protect
victims of armed conflicts (such as the wounded and the sick, prisoners of war, and
civilians) and tries to constrain the conduct of military operations in a humanitarian
fashion (SHAW, International Law).
fsivo•
Q: What are the sources of Intel-Patton Humanitarian Law (IHL)?
ANS: A major part of IHL is contaf40. e four Geneva Conventions of 1949. The
Conventions have been developedlgd4 Rlemented by two further agreements: the
Additional Protocols of 1977 relkirrte e protection of victims of armed conflicts
(Sarmiento, PIL Reviewer, supre :al 2"904:
:400
Q: Is the Philippines,,, Vrtypa to the R' me Statute whig defines and penalizes
crimes against inter atnal hUritairtarian law and"r crimes against
humanity?
ANS: Yes. The Phil ine
i r p•aiset' \the
to th ome Statute on gust 30, 2011 and it took
effect on Nov5906r 1, 20046wever, tl Philippines has n tiflea the U.N. secretary-
general of itspcjpion to‘,Withdraw froni‘th riternationa ICrimiRal Co rt (ICC) last March
14. 2018. Accerdingrto tib'llpmkiSteut state pa raw rom the ICC can
only take effecilt yeal,taftcpMe wrikpin nlitiDcation of '
t rrl
a a is received by the
United Nations sebretaAerieral (ROME ATUTE, Art 127).
Q: What is the MartenkSIgie?

ANS: The clause readsrrollowsj.an,, case edfaby this Protocol or by other
international agreemils, civiliat an-Ercombatants remain under the protection and
authority of the principletol international law derived from established custom, from the
principles of humanity anditgathe dictates of public conscience." (Protocol Additional
to the Geneva Conventions of 12 August 1949 and relating to the Protection of Victims
of International Armed Conflicts, Art. 1(2)).
This Clause should be understood as an instrument for the protection of every human
being and the acknowledgment that although humanitarian positive norms are
advanced, they hardly may be considered fully complete. The Martens Clause must be
observed by all States whether or not they have ratified the conventions that contain
them because they constitute intransgressible principles of international customary law
(Legality of the Threat or Use of Nuclear Weapons, ICJ Reports, 1996).
Q: What is the concept of war?

ANS: War is a contention between two or more states, through their armed forces, for
the purposes of overpowering each other and imposing such conditions of peace as the
victor pleases (Sarmiento, PIL Reviewer, supra at 255).
207
Q: What is an "armed conflict'?
ANS: An armed conflict exists whenever there is a resort to armed force between States
or protracted armed violence between governmental authorities and organized armed
groups or between such groups within a State (Prosecutor v. Tadic, ICTY Case No. IT-
94-1-AR72).
Q: What are the qualification of a belligerent force in a civil war?

ANS: Under Article 1 of The Hague Regulation of 1907, the qualifications of belligerents
are: (CECO)
1. They must be Commanded by a person responsible for his subordinates;
2. They must have a fixed distinctive Emblem recognizable at a distance;
3. They must Carry arms openly; and
4. They must conduct their Operations in accordance with the laws and customs
of war.
Q: What is retorsion? ,,---,—,z.,,

ANS: Retorsion consists in a retdriationiwherep9, acts complained of do not constitute
a legal ground of offense but ri'Llier in i tel nArie of upripndly acts done primarily in
pursuance of legitimaleit ate ipterests,,but.iridlodey flufrtful to other State. Resort to
retorsion is chiefly 1.00,i0 re,actioh to discriminato yAtanffs,b estic legislation against
aliens, port restrictions; catiditi er-•natioliFre7gisla febt to international law
(Fenwick, 532). A\ V
, ' IC
10,
m, I
Q: What is rep z' -
ANS: Literally is °mall. , reprisal di 'notes t e s izing of ropte y or persons by

way of retalilci :--Riprisal het-NW:rare:rare tal..i-Pliy q State 9 ay denote any kind of
coercive action VAL ountin to Warmheicsbla State attem p=tois cure satisfaction
from another f f Idrq wrol-16 (rich thelAtiethas com ed aghinst It BrierIy, 321).
c1
Q: What is a asefirk
4Z---
ANS: It is an aged cekatio Th, ightjrig withi, a period of armed
conflict. It does of nece,psanly eks.r0%med 9onflict e isting between the
belligerents, either e jurei) d pe rp erve 's .V6manitarian purposes
like to search for an collec.pt cloto pto ectpthem against pillage and
ill-treatment, or to ensure tbeeadpq ate.earertneq& pr the dead and prevent their
being despoiled, and to Illav4ie pdpsgpre'll,105nd religious personnel and
equipment on their way to tha r a Gene Con hod 1, Art. 15; Geneva Convention
11, Art. 18; Geneva Convention IV, A .
Q: What are the two divisions of the laws of war?

ANS: The two divisions of the laws of war are:
1. Jus ad bellum refers to the conditions under which one may resort to war or
to force in general; with a subdivision known as jus contra bellum or•the law.on
the prevention of war.
2. Jus in Bello governs the conduct of belligerents during a war, and in a
broader sense comprises the rights and obligation of neutral parties as well.
(International Committee of the Red Cross. Retrieved April 18, 2019 from
https://www.icrc.org/en/documenVwhat-are-jus-ad-bellum-and-jus-bello-0)
208
Q; Distinguish International Humanitarian Law and Human Rights Law.
International Humanitarian taw. International Human Rights Law '

As to Its Nature
Covers all the rules protective of Encompasses all fundamental freedoms

potential or actual victims of armed and all basic social, economic, and
conflicts, all the rules of the conduct cultural rights recognized to each
of warfare, and all the provisions individual independently of nationality.
relating to the rights and duties of the
armed forces towards the other party
in case of armed conflict.
When Applicable
Applicable in armed conflicts only. Applicable in all situations (peace and

.4- war) and in all places.
As to Purpose
4‘
11 r
Aims to protect people who 0.9gfigoktC Wei edtWriMat for peacetime, and
are no longer taking part initfastilitte& applies 64eVe .'.one. Their principal goal is
The rules embodieggiONL impose '1to protect indfduals from arbitrary
duties on all parties bfi5. cpnflictP, behavior by then iv governments.
(Kolb, Max Planckt-tncycro_peata of Pgglic Intemationgl Am. Human Rights and

Humanitarian Lac 61.
Q: What arethe.differentleptegbries of aFried coal

ANS: Armed conflicts pay e categAzed I either:
1. IntemafitudAffnetonflic3s;
2. Internal oVon-InteLriational Ar Conflict (Prosecutor v. Dusko Tadic, IT-94-
1-A, :July 15, ,999)• 6r
3. Wars of Natio VEiberatio
Q: What is an Interna ed Conflict?

ANS: These are conflict 'ich at least two States are involved. It includes all cases
of declared war or of any other armed conflict which may arise between two or more
States which are parties to the Conventions, even if the State of war is not recognized
by one of them and all cases of partial or total occupation of the territory of a State
Party,-even if the said occupation meets with no armed resistance (Geneva Convention,
Common Art. 2).
Q: What is an Internal or Non-International Armed Conflict?

ANS: These are conflicts which are restricted to the territory of a single State, involving
either regular armed forces fighting groups of armed dissidents, or armed groups
fighting each other (Geneva Convention, Common Art. 3; Prosecutor v. Tadic, supra.).
Q: Why is it important to determine whether a conflict is international or non-

international?
ANS: International armed conflicts are governed by the Geneva Conventions and
Additional Protocol I (SARMIENTO, PIL Reviewer, supra at 266). Non-international
conflicts are governed by the Common Article 3 to the four Geneva Conventions and by
the Additional Protocol II (Id.).
209
Q: What is the test for determining the existence of an international armed
conflict?
ANS: The test for determining the existence of an international armed conflict is whether
there is a resort to armed force between states or protracted armed violence between
governmental authorities and organized armed groups or between such groups within a
State (Prosecutor vs Tadic, ICTY-IT-AR72, October 2, 1995).
Q: What is Internationalized Armed Conflict?

ANS: In case of an internal armed conflict breaking out on the territory of a State, it may
become international if:
1. Another state intervenes in that conflict through its troops; or
2. Some of the participants in the internal armed conflict act on behalf of that
other state (Prosecutor v. Tadic, supra).
Q: What is a War of National Liberation?

ANS: A conflict in which peoples against colonial domination, alien
occupation, and against racistreOrenes itnt th? exerlikto their right of self-determination,
as enshrined in the U.N. Oft9,rterXnd thepecidratiati
4. io 'Principles of International Law
concerning friendly rejjafii; s 'and 99Aperatio mong Staten accordance with the
U.N. Charter (Protoccir ;•A 11.01. (4)).
............77.'4.6.
Q: What is aparthe ? r fo, ' KJ 'Wr

ane acts dcrnmitted in e c text o an institutionalized
ANS: "Apartheidfmeanshnhum
.
syst atic ppres ion and doViination by ne raci group or groups and
regime of witl-it
committed ,_,In ention manaini a Jeg, me R.A. k
1 o erwise known as
the Philippine rel-on CrimeiagWiii# -In 017atiogi H manita La Genocide, and
Other Crimes agai §t umani y, Sedigfati..-_,:rwi
%-s, ..,IA.
k-5
, kcat•‘ob(ies or,-stages of c all gesAt established state
Q: What are gle,-3
authority, on aqcdnai g s4? - -'1*
ANS: The categbries or tages-gre• "s...
1. RebelliOn,
2. Insurgen8y
3. Belligerenc (Lagtparps Aiic-arg
'ei ,- N- 198* July 4, 2017;citing Noelle
Higgins, The RpItc nio• ternatio an Law to Wars of National
Liberation, JouRa1.0 IA anit is -ilks nre 2004)).
Q: What is insurgency?
ANS: Insurgency constitutes a civil disturbance which is usually confined to a limited
area of the territory of the state and is supported by a minimum degree of organization
(Lagman v. Medialdea, supra).
Q: What is the material field of application test?

ANS: Under this test, a dissident armed group can claim the status of insurgent only
when it is under responsible command and exercises such control over a part of its
territory as to enable it to carry out sustained and concerted military operations (Lagman
v. Medialdea, supra, citing Protocol II, Art.1).
Q: What is belligerency?
ANS: A State of belligerency exists when:
1. insurgents had occupied a certain part of the State territory, •
2. established a government which exercised the rights inherent in sovereignty
on that part of territory, and
3. if they conducted the hostilities by organized troops kept under military
discipline and complying with the laws and customs of war. (Lagman v.
210
Medialdea, supra, citing Institut de Droit International's 1900 Resolution on
Insurrection).
Q: Define armed conflict under the Philippine Act on Crimes against International
Humanitarian Law, Genocide, and Other Crimes against Humanity (R.A. No. 9851).
ANS: "Armed conflict" means any use of force or armed violence between States or a
protracted armed violence between governmental authorities and organized armed
groups or between such groups within that State: Provided, That such force or armed
violence gives rise, or may give rise, to a situation to which the Geneva Conventions of
August 12, 1949, including their common Article 3, apply. Armed conflict may be
international, that is, between two (2) or more States, including belligerent occupation;
or non-international, that is, between governmental authorities and organized armed
groups or between such groups within a state. It does not cover internal disturbances or
tensions such as riots, isolated and sporadic acts of violence or other acts of a similar
nature (R.A. No. 9851, Section 3(c)).
Q: What is meant by attack directedlag ii4

, nst any civilian population?
ANS: It means a course of condudinVoW g the multiple commission of acts referred to
in Section 6 of this Act against arf4c0 copulation, pursuant to or in furtherance of a
State or organizational policy to cb ttack (R.A. No. 9851, Section 3(e)).
Q: Who is Hors de Combat?'

ANS: He is a person whe
A
1. is in the pow* an adverse
2. has clearly expreed an ipten o to surrender; o
3. has been rflerFeLz d un*conscio or otherwise incApa itated by wounds or
sicknesslaneNTh'e
th (LA• •incapa of defendin 4elf.
Provided, tha IR' any of these caseh,th erson for any, ostil' act and does not
attempt to esCip ( 851k Sec. 3(
Q: What is perfida
ANS: It means aCTATich vite tie co dence of an adversary to lead him/her to
believe he/she is dliti ted tou, or is oblig :_ccord, protection under the rules of
International Humanitaia aw, with theaNr ""tra that confidence, including but
not limited to:
1. feigning an in e t to r el late under a flag of truce;
2. feigning surre
3. feigning incapaci a ion by wounds or sickness;
4. feigning civilian or noncombatant status; and
5. feigning protective status by use of signs, emblems or uniforms of the United
Nations or of a neutral or other State not party to the conflict (R.A. No. 9851,
Sec. 3(o)).
Q: What is Military necessity?

ANS: "Military necessity" means the necessity of employing measures which are
indispensable to achieve a legitimate aim of the conflict and are not otherwise prohibited
by International Humanitarian Law (R.A. No. 9851, Sec. 3(l)).
Q: Do crimes under R.A. No. 9851 prescribe?

ANS: No. The crimes defined and penalized under this Act, their prosecution, and the
execution of sentences imposed on their account, shall not be subject to any
prescription (R.A. No. 9851, Sec. 11).
211
Q: Which court in the Philippines has jurisdiction over violations of international
humanitarian law?
ANS: Under R.A. No. 9851, Sections 17 and 18, the Regional Trial Courts shall have
original and exclusive jurisdiction over crimes against international humanitarian law and
other crimes against humanity provided that any one of the following conditions is met:
(FPC)
1. the accused is a Filipino citizen;
2. the accused, regardless of citizenship or residence, is present in the
Philippines; or
3. the accused has committed the said Crime against a Filipino citizen.
Such decisions may be appealed to the Court of Appeals and the Supreme Court.
Q: Does presidential and parliamentary immunity apply for violations arising from
R.A. No. 9851?
ANS: No. RA No. 9851, Section 9 provides that the law shall apply equally to all
persons without any distinction bas2sLon.officA,Eapacity. In particular, official capacity
as a head of state or government; m br o aeOvernment or parliament, an elected
representative or a government icial h31 d ca-eAx9pt a person from criminal
responsibility underie thci,-7tor h ILitrin-and.o itself, constitute a ground for reduction
of sentence. However?
1. Immuniti g ec aLprocetlatrrOles, that may be attached to the official
capaci i perfn urger ss!le6thin the established
constk tion munity from stfitloalhe Philippine 4Presi • ent during his/her
tenure, shall of ba the court j'torn,exercising jurisa ctio b er such a person;
and
2. Imm 40113Vi official cap~aciry a person under
inte ppliCation lof this Aatr; only within the
1,2,7
boun copal law.
Ei
Q: What is th efso 1,1..4 ugeli ns committed by their
subordinates‘ •c.(,,c,- ‘...,
ANS: A supenol shall e civil RN princip‘l for such crimes
committed by sulkdinate under re mand atopti control, or effective
authority and controkas tl3e f his/her failure to properly
exercise control over su,ph(seprcIT esr.wher .
1. That superior ertherithq or, oNtipig o h oircu stances at the time, should
have known that thZ‘st.aordir gortrrilitting or about to commit such
crimes;
2. That superior failed to take all necessary and reasonable measures within
his/her power to prevent or repress their commission or to submit the matter to
the competent authorities for investigation and prosecution (R.A. No. 9851,
Sec. 10).
M. LAW OF THE SEA

Q: What is the Law of the Sea?
ANS: It is the body of international rules that bind states and other subjects of
international law in their marine affairs. It is one of the oldest branches of public
international law, built on widely accepted customary laws (TANAKA, The International
Law of the Sea (2012), pp. 3-4) [hereinafter TANAKA].
Q: What are the functions of the Law of the Sea?

ANS: The functions of the Law of the Sea are:
1. Spatial distribution of national jurisdiction — the law of the sea divides the
ocean into multiple jurisdictional zones and provides the rights and obligations
of a coastal State and third States according to these zones;
212.
• ..-Z.v.:1•;
'-x ,.'•••,!•••• •,,-r •
2. Ensuring international cooperation between States — the law of the sea

provides a legal framework for ensuring international cooperation in marine
affairs, thereby safeguarding the common interests of the international
community as a whole (TANAKA, supra at 4).
Baselines
Q: What is a baseline?
ANS: The baseline, also called the internal limit of the territorial sea, is the line from
which the extent of the territorial sea is measured. The other coastal zones, which are
defined in terms of distance from the coast, are also measured from the same baseline
(SCOVAZZI, Max Planck Encyclopedia of Public International Law: Baselines, par. (1)).
Q: What are the different types of baselines?

ANS: Under the United Nations Convention on the Law of the Sea, they are:
1. Normal Baselines — the low-water line drawn along the coast (UNITED
NATIONS CONVENTION Q. 1 HE LAW OF THE SEA, Art.5) [hereinafter,
UNCLOSP
4
2. Straight Baselines — a,.40 e of straight lines joining specified or discrete
points on the low-wateiRigok may be used only in localities where the
coastline is deeply indenteqp into, or if there is a fringe of islands along
the coast in its immediatd,irdiai 4:A
1 15,0g, Art. Z
3. Closing Lines acrosOlver pffths antiTOVreLOS, Art 9); and
4. Archipelagic Baarnes (UNba5S, Art. 47).
Q: What are the limits ions on tbe, se f Straight Baselin thod?

ANS: The limitations OthbVof the Str lght Baseline nith ale:
1. The baseline ralgtIrtiot depart any appreciablelexte t from the general
direcligi of thAcovast;
2 The tf19§traig rbaseline arly closely linked
to thaand for,m_,,a,tirns wIn-div* eLor surround
3. AccoutitlhUlObVtaken N jf ce sin economic in eres s peculiar to a region
when theer ;Ai impo'rtanc are clearly evidenced by a long usage (U.K.
v. Norway,'" 3 DeZember 18, 5
Archipelagic-States
Q: What is an archipe
ANS: It means a group o s, including parts of islands, interconnecting waters and
other natural features which are so closely interrelated that such islands, waters and
other natural features form an intrinsic geographical, economic and political entity, or
which historically have been regarded as such (UNCLOS, Art.46).
Q: What are Archipelagic States?

ANS: A State constituted wholly by one or more archipelagos and may include other
islands (UNCLOS, Art. 46(a)).
Q: What is the concept of the Straight Archipelagic Baselines?

ANS: Archipelagic states may draw straight baselines by joining the outermost points of
the outermost islands and drying reefs of the archipelago (UNCLOS, Art. 47).
Q: What does the sovereignty of the Archipelagic States cover?

ANS: It extends to the waters enclosed by the archipelagic baselines (called
archipelagic waters) regardless of their depth or distance from the coast, to the
superjacent air space over the archipelagic waters, as well as to their bed and subsoil,
and the resources contained therein (UNCLOS, Art. 49(/)).Sovereignty over
archipelagic waters is subject to the right of innocent passage for the ships of all states.
213
However, the regime of archipelagic sea lanes passage shall not in other respects affect
the status of the archipelagic waters, including the sea lanes, or the exercise by the
archipelagic State of its sovereignty over such waters and their air space, bed and
subsoil, and the resources contained therein (UNCLOS, Art. 49(4)).
Q: What is an archipelagic sea lanes passage?

ANS: Archipelagic sea lanes passage means the exercise in accordance with the Law
of the Sea Convention of the rights of navigation and over flight in the normal mode
solely for the purpose of continuous, expeditious, and unobstructed transit between one
part of the high seas or an exclusive economic zone and another part of the high seas
or exclusive economic zone (UNCLOS, Art. 53). An archipelagic State may designate
sea lanes and air routes there above, suitable for continuous and expeditious passage
of foreign ships and aircraft through or over its archipelagic waters and adjacent to its
territorial sea. All ships and aircraft enjoy the right of archipelagic sea lanes passage in
such sea lanes and air routes (UNCLOS, Art. 53).
4e. .
Q: What is the right of inp6cenbpassage Iti i -*I,N
.orc-§, .P
ANS: The easement opt-) ocentpL8sage-allow l a- oreigprri tchant or public vessel to
pass thru the mariti 6 one pfithelttoral state pro itledr'
1. That the, as 6_,is' re Ily-Irtroo7nr-i:e:. e?e,ritibt be ulterior motive for
*,
the passN3ra All e regujatiti s of,,state ncerrie.drecomplied with; and
2. That t ere !sty .g upass6benzil,ssinS3 thru, q
load' g or unloading of
perso or go s (PARAS, Inte naiional Law, supracia€04
Q: When is pas> ageinnocent? `q,'4` -,:‘,

ANS: Passagi is inhocent slongE*, otifirejud'cial to the-pef e, good order or
security of thepAtAstaV NCLOS5A
Q: When is 11141 j * , or
5 sec r'ty of the coastal
state?
1‘.
ANS: The passage is prekdici I engages in the following
acts in the territorial sea: (TWEL st
1. Any Ihreak use gfiorc2 ~in igri ter i orial integrity or
political indepNliefrAot el-coastaltgei-0 in ther manner in violation
of the principles o nt6rdiionallavt1. Itered e Charter of the United
Nations; 1._
V
2. Any exercise or practice wi ns of any kind;
3. Any act aimed at collecting Information to the prejudice of the defence or
security of the coastal State;
4. Any act of Propaganda aimed at affecting the defense or security of the
coastal State;
5. The loading or unloading of any Commodity, currency or person contrary to
the customs, fiscal, immigration or sanitary laws and regulations of the coastal
State;
6. The carrying out of Research or survey activities;
7. The launching, landing or taking on board of any Aircraft;
8. The launching, landing or taking on board of any Military device;
9. Any act aimed at interfering with any ystems of communication or any other
facilities or installations of the coastal State;
10. Any act of willful and serious pollution contrary to UNCLOS;
11. Any Fishing activities;
12. Any Other activity not having a direct bearing on passage (UNCLOS, Art.
19(2)).
214
Q: Is there a right of innocent passage through archipelagic waters?
ANS: Yes. Ships of all States enjoy the right of innocent passage through archipelagic
waters (UNCLOS, Art. 52). However, this right is not available inside the closing lines
within the archipelagic waters which had been drawn for the delimitation of internal
waters (UNCLOS, ART. 50).
Q: Is there a right of innocent passage through internal waters?

ANS: No. The right applies only to the territorial sea and the archipelagic waters
(UNCLOS).
Exception: A coastal state may extend its internal waters by applying the straight
baseline method in such a way as to enclose as its internal waters areas which are
previously part of the territorial sea. It also applies to straits used for international
navigation converted into internal waters by applying the straight baselines method.
Thus, the right of innocent passage continues to exist in the "extended" internal waters
(UNCLOS, Art. 8(2)).
Q: What are the conditions bel;o0 Otate may suspend the right of innocent
passage of foreign ships in arctflirejOtkaters?
ANS: The conditions to suspenciria ,the golf innocent passage in archipelagic waters
are: (VVTSSP) (r
14
r
,Zft..
•
1. The suspension is made . It 41§0 rg p o
ati . form or in fact among
foreign ships;
4 ,
74f,s4. ...lelEargsl
.
2. The suspensip, • : is q.1:5'only Tem rary;
3. It must Speel: the areas 0 rchipelagic wate s ere innocent passage
1-4, -Ps
shall not be allowaLsoa, -. 1
4. Such suFefiliOnWitsential for e protection ofits Security;
;•9 .y--v-h.
5. Suchs , spensior4 sh% take erect only afte hav'ng Aeen duly Published
(UNCLOS, Ad 2 par. (2)).-'
s*. *
Q: What is a regime of isi ds?
ANS: Under thhre,gr- 4 Islamise an island is a naturally formed area of land,
surrounded by watelr ich I labove wat at high tide, and generates maritime zones,
e.g. territorial sea, `C"on iguou_, zone, excess' nomic zone, and continental shelf.
However, rocks which ritge sustai 1 : eri".1LWi4c economic life of their own
shall have no exclusivegronomicrterie Or%triiitierMlialftUNCLOS, Art. 121).
Internal Waters
Q: What are internal waters?
ANS: Those waters which lie landward of the baseline from which the territorial sea is
measured (UNCLOS, Art. 8).
Territorial Sea
Q: What is the breadth of the territorial sea?
ANS: Under the UNCLOS, the territorial sea of every State shall not exceed twelve (12)
nautical miles, measured "from its baselines (Art.3); and in the case of an archipelagic
State, the breadth of its territorial sea shall be measured from its archipelagic baseline
(Art. 48).
Q: What are the methods in determining the territorial sea?

ANS: There are two (2) methods in determining the territorial sea. These are:
1. Normal baseline method — Under the normal baseline method, the territorial
sea is simply drawn from the low-water mark of the coast, to the breadth
claimed, following its sinuosities and curvatures but excluding the internal
waters in bays and gulfs; or
215
2. Straight baseline method - Under the straight baseline method, straight lines
are made to connect appropriate points on the coast without departing
radically from its general direction. This method may be employed in localities
where the coastline is deeply indented or if there is a fringe of islands along
the coast in the immediate vicinity (CRUZ, International Law (2003), pp.122-
123) [hereinafter CRUZ, International Law].
Contiguous Zone
Q: What is the contiguous zone?
ANS: The contiguous zone is a zone contiguous to the territorial sea of a coastal State
which extends up to 24 nautical miles from the same baseline that is used in measuring
the breadth of the territorial sea.
In this zone, the coastal State may exercise the control necessary to:
1. Prevent infringement of its customs, fiscal, immigration, or sanitary laws and
regulations within its territory or territorial sea;
2. Punish infringement of the-abbigelaws.. d regulations committed within its
territory or territori lotF (UNC1O ,
Exclusive Economic ZonelE?.ZI

,
Q: What is the copeelotb59xclsppe-ecormic.zge(EEZyunder the UN
Convention on th'etsa Ypith(ea?-
ANS: It is an l-paal:my hi d atid adjd.cent4o, tAterrito ial ove which a State has
special rights ler the xplo ation and „iftl ization of the manp fe) urces. It shall not
extend beyonof 20 utical mites iWbaseti from hith t e breadth of the
Hui
territorial sea i ea,sred.
( In case of etagt..1 tat", its bre th s all be measured
from the archi iela 1 aseline (UNCLei§-11 57, Ind 48). H
Q: Does a-law a s'O\

16-9
)
e. or n,,eNclusiv *ono tc..zbpe?
Yes. Se 'or/ 1)af P.O 590s p onomic zone of the
Philippines wh' shallxten k-clista'n es-o au ical Iles I7'ond and from the
baselines from w ich the errito ais
Q: What are the rig is enj b PatJ• ingin it exclAive economic zone?
ANS: The rights enjoy b. lippineitsnlAe:
1. Sovereignty rig or iurposerprolatio d exploitation, conservation
ft 4
and management, Stile naturaN kso ear.45 it. ether living or non-living, both
renewable and non-renewablerof*th'Mabed, including the subsoil and the
superjacent waters, and with regard to other activities for the economic
exploitation and exploration of the resources of the zone, such as the
production of energy from the waters, currents and winds;
2. Exclusive rights and jurisdiction with respect to the establishment and use of
artificial islands, off-shore terminals, installations and structures, the
preservation of the marine environment, including the prevention and control of
pollution and scientific research.
3. Such other rights as are recognized by international law or state practice
(UNCLOS, Art. 56(1)).
Continental Shelf anc/ Extended Continental Shelf

Q: What is a continental shelf?
ANS: It comprises the seabed and subsoil of the submarine areas that extend beyond
its territorial sea throughout the natural prolongation of its land territory to the outer edge
of the continental margin, or to a distance of 200 nautical miles from the baselines from
which the breadth of the territorial sea is measured where the outer edge of the
continental margin does not extend up to that distance (UNCLOS, Art. 76(1)).
216
Q: What is continental margin?
ANS: It comprises the submerged prolongation of the land mass of the coastal State and consists of the seabed and
subsoil of the shelf, the slope, and the rise. It does not include the deep ocean floor with its oceanic ridges or the subsoil
thereof (UNCLOS, Art. 76(3)).
Q: What are the rights of a coastal state over its continental margin?
ANS: The rights of a coastal state over its continental margin are:
1. The Coastal state has sovereign rights over the continental shelf for the purpose of exploring and exploiting
its natural resources. However, it does not form part of the territory of the coastal state. The natural resources
referred to in this Part consist of the mineral and other non-living resources of the seabed and subsoil together
with living organisms belonging to sedentary species, that is to say, organisms which, at the harvestable stage,
either are immobile on or under the seabed or are unable to move except in constant physical contact with
the seabed or the subsoil;
2. The rights are exclusive in the sense that if the coastal State does not explore the continental shelf or exploit
its natural resources, no one may undertake these activities without the express consent of the coastal State;
and
3. The rights of the coastal State over the continental shelf do not depend on occupation, effective or notional,
or on any express proclamation. (UNCLOS, Art. 77).
Q: What is the extended continental shelf?
ANS: The coastal state is allowed to claim a continental shelf of up to 200 nautical miles from the baselines; however,
if the outer margin extends beyond 200 nautical miles from the baselines, then the outer limit of the continental shelf
shall not excedd 350 nautical miles from the baselines (UNCLOS, Art. 76, pars. (4) and (6)).
International Tribunal for the Law of the Sea (ITLOS)
Q: What is the jurisdiction of the International Tribunal for the Law of the Sea (ITLOS)?
ANS: The jurisdiction of the ITLOS comprises all disputes and all applications submitted to it in accordance with the
UNCLOS. It also includes all matters specifically provided for in any other agreement which confers jurisdiction on the
Tribunal (ITLOS Statute, Art. 21).
Q: What is contentious jurisdiction?
ANS: The Tribunal has jurisdiction over all disputes concerning the interpretation or application of the UNCLOS, subject
to the provisions of ART. 297 and to the declarations made in accordance with ART 298 of the UNCLOS.
217
N. BASIC PRINCIPLES OF INTERNATIONAL ENVIRONMENTAL LAW
Q: What are the major instruments that have shaped the modern development of
International Environmental Law?
ANS: The major instruments relating to international environmental law are:
1. The Stockholm Declaration on the Human Environment, held in Stockholm,
Sweden; and
2. The Rio Declaration on Environment and Development, which was adopted at
the 1992 Rio Conference on Environment and Development, also known as
the 'Earth Summit" (SARMIENTO, PIL Reviewer, supra at 404).
Q: What are the pertinent provisions of the Stockholm Declaration on the Human
Environment?
ANS: The pertinent provisions of the Stockholm Declaration are:
1. Principle 1: Man has the fundamental right to freedom, equality and adequate
conditions of life, in an environment of a quality that permits a life of dignity
and well-being.
2. Principle 2: Statesoff e the (sager le ripliNt exploit their own resources
pursuant to th9ir n ,ironmerital e responsibility to ensure
that activitieywit 'n h *rojtarsTICTOT-rbr4tktrtgl4o ot cause damage to the
environment of of of State .,or—of.,,, ,reas bey611\ e limits of national
jurisdictig
3. Principfe 09 deighbaines WIR1 L7'brohibi
fis
sS nvising or permitting
the u 6 of its ferritch in a manner tnat is in urio tp prilher State, or that
other tats persons-or properly- ,1 ic-uteret outali ill' on Ia edas. So use
your vAo r s not to injtj_ to,tlsgd
ri Ird1,,,o,
Q: May a Stal Id tesponsib ezkylan0 her Stie-for t nsb undary pollution

caused by pritate in-its-jurrtiliction?-1
ANS: Yes. Th entet, nng1151;es o tati ity f r tray oundary pollution
under lntematio ELS.
1. A State ust s *dam ge setup to be efititled to legal relief;
and Oab 04'
1
2. A State ha a duty to, pp Ii3fE41-* dag lutioniand may even be held
responsible r pgj16,tioThb nva e agiesti tinsdiction if such pollution
results in demllsirablAnjury t t ( Ida, 3 R.LA.A. 1905 1941).
N‹.7(
Q: What is the precautionary prrncip
ANS: The precautionary principle is contained in Principle 15 of the Rio Declaration,
which states that: "In order to protect the environment, the precautionary approach shall
be widely approached by States according to their capabilities. Where there are threats
of serious or irreversible damage, lack of full scientific certainty shall not be used as a
reason for postponing cost-effective measures to prevent environmental degradation"
(International Service for the Acquisition of Agri-biotech Applications, Inc. v Greenpeace
Southeast Asia [Philippines], G.R. No. 209271, 209276, 209301, & 209430, 08
December 2015).
218
LABOR LAW AND
SOCIAL LEGISLATION
KRISTINA D. CABUGAO
Subject Chair
VICTOR KENNER S. GALANG

MISHAEL R. OCCIANO
SUBJECT HEADS
Labor Standards NATHANAEL A. QUIJANO

Labor Relations PATRICIA BEATATRICIA G.
DANGAZO
Jurisdiction and Special Laws JUZMEND FRANCEZ THERESE M.
ABRIAM
SUBJECT MEMBERS
JOHN BENEDICT M. RIVERA JOANNA PATRICIA R. PADRID

RAJEEN JILLIAN D. BIASCA STEPHANIE NICOLE M. ILACAD
CHRISTIAN MARIE LYNN P. SOLIS ANN MARY MICHELLE B. RUALO
ADVISERS
Atty. MARLON J. MANUEL

Atty. JOYRICH M. GOLANGCO
Atty. PETER-JOEY B. USITA
•••••••::,'
LABOR LAW
I..PENERAL PROVISIONS.
A. BASICPOLICY ONLABOR
Q: What is the basic policy on labor?
ANS: The State shall afford protection to labor, promote full employment, equal work
opportunities regardless of sex, race or creed and regulate the relations between
workers and employers. The State shall assure the rights of workers to self-
organization, collective bargaining, security of tenure and just and humane conditions of
work (LABOR CODE, Art. 3).
B. CONSTRUCTION IN FAVOR
Q: How are the provisionsg,r LaborCj3d
ANS: All doubts in the ' Attie ttioussijotri etatior 911be provisions of this Code,
including its impleme regulatiori§Alakbe Asolved in favor of labor
(LABOR CODE, A 44 de „(
C CONSTITUTION IL COPE11301.?plON.S RELATI GTO LABOR LAW

Q: What provisions ire 1 87 Constitution are relekran t to p61) Law?
ANS: The folio tricsarg the ccinstitatibmArgpiisturirre vant tapais aw:
1. Stat FrOlicids (CO ST1T4TIOIVLillArt:71;,,Sec . 9, 10 Y. 9 aid 20 (hereinafter
CO T.
a. T to shaltWidafe a jus 4%-dyn uric ial order that will
iepeg ofith ion and free the
pry
hatiprovid adequate social
pro t isinghtanda of living, and an
irkprove Qualik
b. Sep p. Th StatQl4. ,social in II phases of national
dev opm.V; EN
c. Sec. '8 ffirmslabor social economic force. It
shall prole tt i hts o wqrkAr ote their welfare; and
d. Sec. 20. Th e rec iia-theA ispensable role of the private
sector, encourages te--etire7Prise, and provides incentives to
needed investments.
2. Bill of Rights (CONST., Art. III, Sections 4, 8, 10, 16, and 18 (2))
a. Sec. 4. No law shall be passed abridging the freedom of speech, of
expression, or of the press, or the right of the people peaceably to
assemble and petition the government for redress of grievances;
b. Sec. 8. The right of the people, including those employed in the public
and private sectors, to form unions, associations, or societies for
purposes not contrary to law, shall not be abridged;
c. Sec. 10. No law impairing the obligation of contracts shall be passed;
d. Sec. 16. All persons shall have the right to a speedy disposition of their
cases before all judicial, quasi-judicial, or administrative bodies; and
e. Sec. 18 (2). No involuntary servitude in any form shall exist except as a
punishment for a crime whereof the party shall have been duly
convicted.
3. Social Justice (CONST., Art. Xlll, Sections 2, 3, 13, and 14)
a. Sec. 2. The promotion of social justice shall include the commitment to
create economic opportunities based on freedom of initiative and
self-reliance;
220
b. Sec. 3. The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full employment
and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities,
including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living
wage. They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be provided by
law.
The State shall promote the principle of shared responsibility between
workers and employers and the preferential use of voluntary modes in
settling disputes, including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers,
recognizing the right of pbor to its just share in the fruits of production
and the right of ente psis to reasonable returns on investments, and
to expansion and,ditnithlt%
c. Sec 13. The stat9AWAstablish a special agency for disabled persons
for their rehabilitatiMtegdevelopment and self-reliance and their
integration into To' ritaVraarpt society; rid • ,
d. Sec. 14. The..§tAte 'shall redt•vortin en by providing safe and
healthful, Alking ccnqons, taking inI6 ccount their maternal
functi,,
ong',7 and such faci it es and opportuni that will enhance their
v<aw
welfaiOn0 enable _the to realize their full otential in the service of
the r‘aTicin4i, • 3:-4• •
Q: What Civil pro,visions are felevp t to Labor Law?

ANS: The foil' jig art,tPie•provisions rele nt to Labors w. CODE, Arts. 1700,
1701, 1702 fv, .*
1. Article 1700PAibtt rela ions be een capita atEr are not merely
contractualVEheivale so fripresrd with public interest that labor contracts
must yieldlc; the common goodi er f 1e, such contracts are subject to the
special laws tp. n labbr unions, eR .e ,bargaining, strikes and lockouts,
closed shop,Awes, wo4ingicafdifiouP• oakaiabor and similar subjects.
2. Article 1701. ileithergati61 nor labor shall act oppressively against the other,
or impair the inkre,§tskr convenience of the public.
3. Article 1702. In ale,of doubt, all labor legislation and all labor contracts shall
be construed in favor of the safety and decent living of the laborer.
4. Article 1703. No contract which practicaliy, amounts to involuntary servitude,
under any guise whatsoever, shall be valid. •
maNzgr
,A 45-
14vograwatrpW7 w71-7; 61
‘.31:14:
:
id • ••-1.4.1.11thot
A. RECRUITMENTAND PLACEMENT OF LOCAL AND MIGRANT WORKERS
Q: Define recruitment and placement. (CETCHUP-CRAP)
ANS: Recruitment and placement refers to any act of Canvassing, Enlisting,
Transporting, Contracting, Hiring, Utilizing, or Procuring workers, and includes Contract
services, Referrals, Advertising, or Promising employment, locally or abroad, whether
for profit or not.
Any person or entity which, in any manner, offers or promises for a fee employment to
two or more persons shall be deemed engaged in recruitment and placement (LABOR
CODE, Art 13, par. (b)).
221
Note: To be engaged in the practice of recruitment and placement, it is plain that there
must at least be a promise or an offer of employment from the person posing as a
recruiter whether locally or abroad (People v. Gallardo, G.R. Nos. 140067-71, August
29, 2002).
Q: Who are the parties involved in recruitment and placement activities?

ANS: The parties involved are the worker, the recruiter-agent, and the employer-
principal.
Q: Who may engage in recruitment and placement of workers?
ANS: Except when otherwise authorized by law, only public employment offices can
engage in the recruitment and placement of workers for local or overseas employment.
(LABOR CODE, Art. 16).
Q: What are the exceptions to the rule that only public employment offices can
engage in recruitment and placement of workers?
ANS: The private sector is not„,..gilidirRelrivilege to engage in recruitment and
placement, except for: ..i.p K ...,,,
1. Private emplo p A T .i- ,- any person or entity engaged
y Xen7genciesjyyit a liceripe).1
in the recrui ,entan iilacelneni-orvkirk fol-alealw,hich is charged, directly
or indirec
i eefre12),e4Orke s_or-eraployee r bcifhVABOR CODE, Art. 13,
par. (c))•
2. Private rear i men
'H ---s- \Loci\
t ntitief(with\ anyauthon ) - arly-' ecson or association
engaged in 6 rec itmen an, lac'ement f wo lecrsecally or overseas,
withoutxharging, di ectly-or-inairealy,aay.-fe from lie orkers or employers
(L4B6 ectE, Art 13 par4a))11 ..--- , p.....4 I
1 ' ,
..st . i II 4--:- -I:, 7'
3. Shippaing o anning agencies •-i„, anylerson partnerpWri corporation duly
licen4e he,Se ketant 04 1 b7O-F4j and E joysne 1 tiiiiceruit seafarers for
vessals p p kite d ional-wate send-for a d m ritime ctivities (IRR on
t
Overset10 oolf4 ute:sirkpa nd i
4. Such her pe tieka ffi (• rizeof by the, ecretary of. Labor
and Emoyme t (IR BglaC ...9,0 le IV, Sec. 4).
o
Q: Who are disquld gsegiyERrsiOtit i p. and pliement activities for
overseas employment,? y
ANS: The following ar If q i ' ea4M en'agi
-Tiri''''''' '°° yecruitment and placement
activities for overseas emp bm.... croplpi qk
1. Travel agencies and sales e Yet'bf iri(companies;
2. Officers or members of the oard of any corporation or members in a
partnership engaged in the business of a travel agency;
3. Corporations and Partnerships, when any of its officers, members of the board
or partners, is also an officer, member of the board or partner of a corporation
or partnership engaged in the business of a travel agency;
4. Individuals, partners, officers or directors of an insurance company who make,
propose, or provide an insurance contract under the compulsory Insurance
coverage for agency-hired Overseas Filipino Workers;
5. Sole proprietors, partners or officers and members of the board with
Derogatory records, such as, but not limited to the following:
a. Those convicted, or against whom probable cause or prima facie
finding of guilt is determined by a competent authority, for illegal
recruitment, or for other related crimes or offenses committed in the
course of, related to, or resulting from, illegal recruitment, or for crimes
involving moral turpitude;
b. Those agencies whose licenses have been previously revoked for
violation of R.A. No. 8042, P.D. No. 442, as amended, and R.A. No.
• 9208, as amended, and their implementing rules and regulations;
222 •
c. Those agencies whose licenses have been cancelled, or those who,
pursuant to the Order of the Administrator, were included in the list of
persons with derogatory record for violation of recruitment laws and
regulations; and
6. Any official or Employee of the DOLE, POEA, OWWA, DFA, DOJ, DOH, BI,
IC, NLRC, TESDA, CFO, NBI, PNP, Civil Aviation Authority of the Philippines
(CAAP), international airport authorities, and other government agencies
directly involved in the implementation of R.A. No. 8042, as amended, and/or
any of his relatives within the fourth civil degree of consanguinity or affinity
(Revised POEA Rules and Regulations Governing the Recruitment and
Employment of Land-based Overseas Filipino Workers of 2016, Sec. 3, Rule I,
Part II).
Q: Who are disqualified from engaging in recruitment and placement activities for
local employment?
ANS: The following are not qualified prgage in the business of recruitment and
placement for local employment: . 4#11
1. Those who are convicteckb9lleplecruitment, trafficking in persons, anti-child
labor violation, or crimelptifiroporal turpitude;
2. Those against whom prqbq ,; use or prima facie finding of guilt for illegal
recruitment or other relatedisqs -exiavarticularitto owners or directors of
agencies who have4q9Amitt011palt etiftilWriOlher related cases;
3. Those agencies,w 7 trs'e licenses t ave been previously revoked or cancelled by
the Departm ":Tinder Sec.,,54o , he Rules; '
4. Cooperatives heiher regiirei'e or not under tf-4 qcoperative Act of the
Philippines; .0.$
5. Law eframers and ty, official ari employee o ithe•Department of Labor and
Employment;
6. Solt 10:)* ilf ditty licenied agencies, phibited, from securing
anorfter license' o ngagV-• rec lnent annt,
7. Sole prgpriet rs, _xtne s"1 orporations License o engage in private
recruitmeWair plreemenOor I -al employment are prohibited from engaging
in job contracting qxsubcontraccd Qt..1 ties (Revised Rules and Regulations
Governing Rezmitnignt and Plac $e h .--frocal Employment, D.O. No. 141-
gt ..01m4
14 Series of 26P, Sec.45).0a21 .i:,
Q: What is the citizensh-p ualification for a person or entity engaged in the

recruitment and placemen o orkers?
ANS: Only Filipino citizens or corporations, partnerships or entities at least 75% of the
authorized and voting capital stock of which is owned and controlled by Filipino citizens,
shall be permitted to participate in the recruitment and placement of workers, locally or
overseas (LABOR CODE, Art..27).
II/ego/Recruitment
Q: What is illegal recruitment?
ANS: Recruitment is illegal when:
1. Any acts of recruitment or placement (CETCHUP-CRAP) is undertaken by
non-licensee or non-holder of authority contemplated under Article 13(f) of the
Labor Code;
2. When any person, regardless of whether he is holder of a license or authority,
performs any of the following prohibited acts: (CPM-QI-HaRSO-WiDeR-NON)
a. To Charge or accept directly or indirectly any amount greater than that
specified in the schedule of allowable fees prescribed by the DOLE, or
to make a worker pay or acknowledge any amount greater than that
actually received by him as a loan or advance;
223
b. To furnish or Publish any false notice or information or document in
relation to recruitment or employment;
c. To give any false notice, testimony, information or document or commit
any act of Misrepresentation for the purpose of securing a license or
authority under the Labor Code, or for the purpose of documenting
hired workers with the POEA, which include the act of reprocessing
workers through a job order that pertains to nonexistent work, work
different from the actual overseas work, or work with a different
employer whether registered or not with the POEA;
d. To include or attempt to induce a worker already employed to Quit his
employment in order to offer him another unless the transfer is
designed to liberate a worker from oppressive terms and conditions of
employment;
e. To Influence or attempt to influence any person or entity not to employ
any worker who has not applied for employment through his agency or
who has formed, joi esi.or.supported, or has contacted or is supported
by any unior.o l cr,Ai o a z
f. To engageln t recru tm nt IVemedtof workers in jobs Harmful
to pub it' 6;11 oralitpor. t etligici›.of-, Republic;
Reports on the tatus xifekriployment, placement
g. Tov 11619
an m nce-V 4 Ign-e ch RR'earnings, separation from
rt es arcOber m tte fa‘riation as may be
equir 0.13y t e DO A
To Sl6stitu or alterefOtrie prejud ce o t olker, employment
co tr cts ap rove an pn le_ y DOLE the time of actual
rgni g ther of Krithe s-2
, irtie-s'Aff to nd inci e period of the
expi tion of e 6 the app oval of E;
a or agenitt cruitme ac ment ency to become
ry0 ce m•er co dationi engaged in travel
d'ac Or o dire y in fie management of
travel aRenckcp
j. Th VAtittqd d tr WTI is fr m aploy cant workers before
d arture !ornAa inpfistal
sonsiderati ns, or for any other
rea ons, of VittroilzeU der jhe Labor Code and its
IRR; - (9(1
k. Failure t ctual ipapl qkrZra orker without valid reason as
determined b DOLE;
I. Failure to Reimburse ses incurred by the worker in connection
with his documentation and processing for purposes of deployment, in
cases where the deployment does not actually take place without the
worker's fault. Illegal recruitment when committed by a syndicate or in
large scale shall be considered an offense involving economic
sabotage (R.A. No. 8042, Sec. 6); and
j. To allow a NON-Filipino citizen to head or manage a licensed
recruitment/manning agency (R.A. No. 10022, Sec. 5).
Q: How many persons are required to be recruited in order for the act to
constitute recruitment and placement?
ANS: The number of persons dealt with is not an essential ingredient of the act of
recruitment and placement of workers. Any of the acts mentioned in the basic rule in
Article 13(b) will constitute recruitment and placement even if only one prospective
worker is involved. The proviso merely lays down a rule of evidence that where a fee is
collected in consideration of promise or offer of employment to two or more prospective
workers, the individual entity dealing with them shall be deemed to be engaged in the
act of recruitment and placement. The words "shall be deemed" merely create a
presumption (People v. Panis, G.R. Nos. L-58674,77, July 11, 1986).
224 .
Q: Does the act of referral constitute an act of recruitment defined in Article 13(b)
of the Labor Code?
ANS: Yes. The act of referring constitutes the recruitment defined in Article 13 (b) of the
Labor Code. Referral is the act of passing along or forwarding of an applicant for
employment after an initial interview of a selected applicant for employment to a
selected employer, placement officer or bureau (People v. Agustin, G.R. No. 113161,
August 29, 1995, as cited in Rodolfo v. People, G.R. No. 146964, August 10, 2006).
Types of II/ego/Recruitment
Q: What are the types of Illegal Recruitment?
ANS: The following are the types of illegal recruitment:
1. Simple illegal recruitment — illegal recruitment committed by, or against, one
or two persons only; where illegal recruitment is proved but the elements of
"large scale" or "syndicate" are absent, the accused can be convicted only of
"simple" illegal recruitment (Peo le v. Sagun, G.R. No. 119076, March 25,
2002).
2. Illegal recruitment involtpgit onomic sabotage
a. Syndicated — ill gApt ent carried out by a group of any three (3)
or more persons,g4F4 a=rconfederating with one another; and
b. Large Scale or ititte, recruitmen t committed against three
(3) or more persons?. t rtbs??. ,g our (IRR of R.A. Na 10022,
4,44r0_4v
Sec. 2, uleR%
Elements
Q: What are the ess n l' rele eents of s mple illegal revuipe t?
ANS: The esserpageme tv s,91„simple ill I recruitmentpre:
1. The42fff6ndechas'no valid leaps r authority required w to enable one to
lawflerigagft,tecruinnent a acernea4 d
2. He ,dertakes4e t er acti' . within 1, _ eanj. recruitment and
placemeAdefiga nde icle tV(b), or any pr hi 1.e ractices enumerated
under Art Te184 OE the Lp or :ode (Romero v. People, G.R. No. 171644,
Novembet',2320111, ' 114i4E735--,
Note: Under the MigraFiVorlZers and 0 eo. a _ :yliaiyos Act of 1995 or R.A. No. 8042
as amended by R.A. }o. 10022ha -1:rers - e era non-licensee, non-holder,
licensee, or holder of rthority ay be held liable for illegal recruitment. In case the
offender is a holder of aXckse or authority, he must have committed any of the
prohibited acts mentione inlMtion 6 of R.A. No. 8042.
Q: What are the elements of illegal recruitment in large scale?

ANS: The essential elements of illegal recruitment on large scale, as distinguished from
simple illegal recruitment, are as follows: (ERAP not 3M)
1. The accused Engages in the Recruitment And Placement of workers as
defined in Article 1(b) or in any prohibited activities under Article 34 of the
Labor Code;
2. The accused has NOT complied with the guidelines issued by the SOLE,
particularly with respect to the securing of license or an authority to recruit and
deploy workers, either locally or overseas; and
3. The accused commits the same against 3 or More persons, individually or as a
group (People v. Lo, G.R. No. 175229, January 29, 2009).
225
•
BEDAN RED
OtherProhibitedActivities
Q: What are the other prohibited activities in connection with recruitment for
overseas employment?
ANS: The following are the other prohibited activities in connection with recruitment for
overseas employment: (8-HR-PAST)
1. Granting a loan to an overseas Filipino worker with interest exceeding 8% per
annum, which will be used for payment of legal and allowable placement fees
and making the migrant worker issue, either personally or through a guarantor
or accommodation party, postdated checks in relation to the said loan;
2. Imposing a compulsory and exclusive arrangement whereby an overseas
Filipino worker is required to undergo Health examinations only from
specifically designated medical clinics, institutions, entities or persons, except
in the case of a seafarer whose medical examination cost is shouldered by the
principal/shipowner;
3. Refusing to condone or renegotiate a loan incurred by an overseas Filipino
worker after the latter's ,mpltryffre'fircontr„ct has been prematurely terminated
through no fault of ii ocher on; INt.. 14. , .
r
4. For a recruitmerlUmanning_ag ne / of. a/foreign p qcipal/employer to Pass on
the overseasofirOvkrkereiraZilrcKrtm 0s-tir,he salary the payment of
the cost o i surpriceree_j_
s laterniura94offret iasVancle related charges, as
providedj compVsory worker's iritukaftcb.cove aQe;
5. Imposig§ a. co pullory ayll exclusiR Arrange a—t— hereby an overseas
Filipinp"worg is rehuired to ag211' of a loan my r specifically designated
institutipns eptities tr_persons6 •^
1 i
6. For SSr1 ended ecruftcren4/ Hapuirjgyage cy to engah in any kind of
rec tmen ctivity r ch4. ,t 41.46 %ping o f pendi 9241Zers' applications;
and „ tai /
-A I
7. Impo mg co per • ry—an clusive—arA 'An , wheneby an overseas
.),. .
Filipino(o er r ‘ uired o u r.go jai mg, sempr, instruction or
schoor g of y ki ,c).‘iy frp-iv lop ed institutions, entities or
person ex pt ec ainingsf mandated by
principal/ hipownez wh e cost ouch trainings; (R.A.
No. 8042 r theMi ran ended 'by R.A. No.
10022).
Q: What are the penalties for,,.,Ile al re

ANS: The following are the penalties
Crime . Imprtionment : . Fine • .,.. :
Simple illegal 12 years and 1 day to 20 P1,000,000 to
recruitment years P2,000,000
Illegal recruitment
P2,000,000 to
involving economic Life imprisonment
P5,000,000
sabotage
Other prohibited acts 6 years and 1 day to 12
years P500,000 to P1,000,000
Note: The maximum penalty shall be imposed if the person illegally recruited is less
than 18 years of age or committed by a non-licensee or non-holder of authority; if the
offender is an alien, he or she shall, in addition to the penalties herein prescribed, be
deported without further proceedings. In every case, conviction shall cause and carry
the automatic revocation of the license or registration of the recruitment/manning
agency, lending institutions, training school or medical clinic (R.A. No. 10022, Sec. 6).
226
/I/ego/Recruitment vs. Estafa
Q: Distinguish illegal recruitment from estafa.
ANS: The following are the distinctions between illegal recruitment and estafa:
Illegal Recruitment • I Estafa
As.to Nature
It is malum prohibitum. It is malum in se.
As to Necessity of Criminal Intent
The criminal intent of the accused is The criminal intent is imperative.
not necessary
As to Governing Lair
It is penalized under the Labor Code. It is penalized under the Revised Penal
Code (RPC).
• As to Scope
qt is wider in scope and covers deceits
_
‘thgther or nob-. related to recruitment
.
oiactAti les
.011W
(CHAN, The Labor Co (ivofthe PHL Torated Vol. I, 2nd Ed , 2009), p. 258)
(hereinafter CHAN]. ' k 4, .,
distinct crimesomr
A: ihug.,9
i °' 4
4k -1
• It
Q: May a person OfirgeOnd 5 onvicted•of illegal recruit enebe also charged and
convicted of Oka?
ANS: Yes. qvOction46`0111egaL recruit e t does no recl de p nishment for other
—iiiiigdVOthekocess i t ch .as estafgaL ciMreop/e, G.R. No.
ht.
-et; ,,,.."
178337, June 25, 200p)R4111;gal recatme Tris malum iIrf hir adErWGRile• estafa is malum
in se. In the first:IRMA rintent o the accused is not necessary for conviction. In the
second, such an ifil9nt is i erati e. Estafa under Article 315, paragraph 2, of the
Revised Penal Code, ff's mitted by -nom; defrauds another by using
fictitious name, or fals etend*opotrAViranli E ?ffigence, qualifications, property,
credit, agency, busin4 , or imaginary transactions, or by means of similar deceits
executed prior to or sialtaneo J slt with the commission of fraud (People v. Chua, G.R.
No. 184058, March 10, koWS
Liability°, Local Recruitment Agency and Foreign Employer
Q: Who may be held criminally liable for illegal recruitment?
ANS: The persons criminally liable for illegal recruitment are the principals,
accomplices, and accessories to illegal recruitment and placement activities. In case of
juridical persons, the officers having •control, management or direction of their business
shall be liable (R.A. No. 8042, Sec. 6; Omnibus Rules and Regulations Implementing
R.A. No. 8042, Sec. 11).
Q: What is the nature of the liability of employer-principal and the local
recruitment agent for unpaid salaries due to the OFW?
ANS: The liability of the principal/employer and the recruitment/placement agency for
any and all money claims of an OFW shall be joint and several. As a condition
precedent to the issuance of a license, a private recruitment agency is required to
submit a document containing its power to sue and be sued jointly and solidarily with the
principal or foreign-based employer for any of the violations of the recruitment
agreement, and the contracts of employment (POEA Rules and Regulations; R.A. No.
8042, Sec. 10, as amended).
227
Q: What is the duration of solidary liability of the employer-principal and the local
recruitment agency?
ANS: The solidary liability of the employer-principal and the local recruitment agency
shall continue during the entire period of the employment contract and shall not be
affected by substitution, amendment, or modification of the contract. Severance of
relations between the local agent and the foreign employer does not affect their liability,
except for those contracts willingly and freely entered into between the employer and
the employee without the knowledge or consent of the local agent (Sunace International
Management Services v. NLRC, G.R. No. 161757, January 25, 2006).
Q: Is the solidary liability of corporate officers of the recruitment agency

"automatic" in character?
ANS: Yes. The joint and several liability of the principal/employer,
recruitment/placement agency, and the corporate officers of the latter, for the money
claims and damages of an overseas Filipino worker is absolute and without qualification.
It is intended to give utmost prote.stigputo,,11A4larseas Filipino worker, who may not
have the resources to pursu ofrer mopew d damages against the foreign
principal/employer in ar, r co ry. Tke)q 6j-filip • zworker is given the right to
seek recourse against he n y I k,Arthe-cou tqgthq•f9ralgp principal/employer, i.e.,
the recruitment/place e t [ICY and its corporateofficeNPrincess Talent Center
Production v. Masaerca, 11107" p t14 2x18).
Q: What is the lei? (Im uted Kno t dg.~~

ANS: The theT of i pute• knowledgaspribes the kno e the agent to the
principal, but not er w aroun•. a now e•ge f the r nca foreign employer
cannot, as a , be mpute to kefOntrStkrieVinte ation Ma ement Services,
Inc. v. NLRC, wait Hence in this- ? dhace, b ing ign tantj the employment
extension, the gehq is ee •m Habil - LICEN 13 La or Co e with Comments
and Cases (20r 03) after rite 9Apii.
.
Q: May a recr "trnent ge liable der a co tract ecuted privately
between the 0 W an the (-1\loici r rin afte the o ginal employment
contract for whic the ag d Ri
te IN. ad pired? •
ANS: No. There ha een n 0 n epc relationship when after
the termination of th or gi oyment ngt, °reign principal directly
negotiated with the OFW EL eft- ed in% a n _prate employment contract. In
a'
any event, theory of imputed owled'd4 o ) onscribe the knowledge of the
employer-principal to the recruitmen . herefore, the acts of the employer-
principal cannot bind the agent without the latter's knowledge and consent (Sunace
International Management Services, Inc. v. NLRC, supra.).
Termination of Contract of Migrant Worker Without Just or Valid Cause

Q: What are the remedies available to OFWs who are unjustly dismissed, whether
actual or constructively, or when the employer is otherwise in breach of contract?
ANS: An OFW has the following remedies: (UPD)
1. To be paid the full amount of Unpaid salaries for the unexpired portion of his
contract as indemnity. The principle of "no work, no pay" does not apply.
2. To be reimbursed in full for the amount paid as Placement fees with 12%
interest per annum from the time he paid the same to the agency.
3. To be awarded moral Damages if the acts or omissions of the employer and/or
agent was attended by bad faith, malice, or fraud (Serrano v. Gallant Maritime
Services, G.R. No. 167614, March 24, 2009).
Note: The re-enactment of the clause "for three (3) months for every year of the
unexpired term, whichever is less" in R.A. No. 10022, which took effect on May 9, 2010,
does not operate to cure its unconstitutionality, after it had already been struck down by
228
the court from R.A. No. 8042 in the 2009 case of Serrano v. Gallant Maritime Services,
Inc. (Sameer Overseas Placement Agency, Inc. v. Cabiles, G.R. No. 170139, August 5,
2014). The reinstated clause as provided in R.A. No. 10022, which severely limited
without lawful reason, the unpaid wages that could be recovered by an illegally
dismissed OFW, was ruled by the Supreme Court as violative of an OFW's rights to due
process and equal protection (Serrano v. Gallant Maritime, G.R. No. 167614, March 24,
2009).
Ban on Direct Hiring

Q: What is direct hiring?
ANS: It is the process of directly hiring workers by employers for overseas employment
as authorized by the SOLE and processed by the POEA (Revised POEA Rules of 2016,
Rule II, Part Ill).
Q: Is direct hiring allowed?
ANS: As a general rule, direct hiring_,ofilFilipino workers for overseas employment is
prohibited. No employer may hire4licno worker for overseas employment except
through the Boards and entities atighz,eDly the Department of Labor and Employment
(LABOR CODE Art 18). Direct hiregftWer, may be undertaken: (DIFN)
1. For members of the Dipitrn, s;
2. By International Organization
3. By other Foreign empyiyerSV low AR LE; and
4. Name Hirds: workers ho are able to se e contracts for overseas
employment 6.1ibtheir own effdls, nd representation ithout the assistance or
participation aria agencynhe hiring, nonethere hall pass through the
POEA for p42 r.glfrurposes evised POEAIR es .f 2016, Rule II, Part
Ill). au,
,maIteN1 ESIeENTA ENS

B. EMPLOYMENT/OF
Q: What is - the repirement of° pl yment of, aliens in the
Philippines?
ANS: Any alien seeking adrhission to the ilippines for employment purposes and any
domestic or foreign erpployi who desir a age an alien for employment in the
Philippines shall obtain' n empl YvAgt -% Writ Department of Labor and

Employment (LABOle, DE, 11ft, .40. A oreign na ovals who intend to engage in
gainful employment in hileines shall apply for an Alien Employment Permit (AEP)
(D.O. No. 186 Series of 20; 1-7)S.
Note: The employment permit may be issued to a non-resident alien or to the applicant
• employer after a determination of the non-availability of a person in the Fhjlippines who
is competent, able and willing at the 4me of application to perform the services for which
the alien is.desired (LABOR CODE, Art. 40).
Q: Who are exempted from securing an AEP?
ANS: The requirement for foreign nationals to seCure an,AEP is not absolute. The law
exempts the following categories of foreign nationals from securing an AEP: (DOOF-
PRE)
1. All members of the Diplomatic service and foreign government officials
accredited by and with reciprocity agreement with the Philippine government;
2. Officers and staff of international organizations of which the Philippine
government is a member, and their legitimate spouses dqsiring to work in the
Philippines;
3. Owners and representatives of foreign principals whose companies are
accredited by the Philippine Overseas Employment Administration (POEA),
who come to the Philippines for a limited period and solely for the purpose of
interviewing Filipino applicants for employment abroad;
229
DAN?.
4. Foreign nationals who come to the Philippines to teach, present and/or
conduct research studies in universities and colleges as visiting, exchange or
adjunct professors under formal agreements between the universities or
colleges in the Philippines and foreign universities or colleges; or between the
Philippine government and foreign government: Provided, that the exemption
is on a reciprocal basis;
5. Permanent resident foreign nationals and probationary or temporary resident
visa holders under Section 13 (a-f) of the Philippine Immigration Act of 1940
and Section 3 of the Alien Social Integration Act of 1995 (RA7917);
6. Refugees and Stateless Persons recognized by DOJ pursuant to Article 17 of
the UN Convention and Protocol Relating to status of Refugees and Stateless
Persons;
7. All foreign nationals granted Exemption by law (D.O. No. 186 Series of 2017,
Sec. 2)
Q: Who are excluded from securiTAan,AERZ.,

ANS: The following are exc.ludeff frorise-cur'nOnAEP: (GPC-InC0)
1. Members of the,GbverNg board votiplg hts only and do not intervene
in the managemWrit• flthe orporation t e ay, to day operations of the
enterprise;
2. Presiden ebs re whcrareprtzawnergb trt. rp any;
3. Those diy Co sultarwy s-grvices wh -so% do ni)t v employers in the
Philippines; Jr Afk
4. Intra forpora e tra sferee wbOs a manager, ei e'c ti or specialist in
accoifi5Tar ith Trt e greemen s an an mplol i. .91,44e foreign service
supilerfor t least oner"y;e41 mploy ent prtpr to deployment
to a Iran ubsidialy affi _fie eSental e offic ih-thy hilippines;
5. conttiat al ery ce, bpplier so-isra mane• 4;9 ecetive or pecialist and an
employp ervicegs pp,jer w 4tas n eoTttii rcial presence in
the Pffilip es:
a. ho enters t e hi ipp e terri o o sr ply a s rvice 'pursuant to a
contract'betwe- is'7h- p • te an a servi e consumer in the
PIii(ippines SC
b. muk possess .1.F1À
, pkt ) ducVio al and professional
qualifiaa.1;gzs
lry .
c. must be I ci by thk fArt9ThskAtic upplier for at least one year
prior to the s sergaih th_otri ippines;
6. Representative of the Forel n Mitirl/Employer assigned in the Office of
Licensed Manning Agency (OLMA) in accordance with the POEA law, rules
and regulations (D.O. No. 186 Series of 2017, Sec. 3).
Note: All foreign nationals excluded from securing an AEP shall secure Certificate of
Exclusion from the Regional Office (Id.)
Q: What are the grounds for denial of application for new or renewal of AEP?
ANS: An application for AEP or renewal thereof may be denied on any of the following
grounds: (MSCG-AWE)
1. Misrepresentation of facts in the application including fraudulent
misrepresentation, i.e. false statement that has a negative effect in the
evaluation of the application made knowingly, or without belief in its truth, or
recklessly whether it is true or false;
2. submission of falsified documents;
3. Conviction to a criminal offense or a fugitive from justice in the country or
abroad;
4. Grave misconduct in dealing with or ill treatment of workers;
230
5. Availability of a Filipino who is competent, able and willing to do the job
intended for or being performed by the foreign national based on data in the
PEIS, PRC Registry of Professional and TESDA Registry of Certified Workers;
6. Worked Without valid AEP for more than a year; or
7. Application for renewal with Expired visa or with temporary visitor's visa (D.O.
No. 186 Series of 2017, Sec. 12.)
Q: What are the grounds for cancellation/revocation of AEP? (Non-MSM-CTG)

ANS: The Regional Director may, motu proprio or upon petition, cancel or revoke an
AEP after due process, based on any of the following grounds:
1. Non-compliance with any of the requirements or conditions for which the AEP
was issued;
2. Misrepresentation of facts in the application including fraudulent
misrepresentation, i.e. false statement that has a negative effect in the
evaluation of the application made knowingly, or without belief in its truth, or
recklessly whether it is true or fpLse;
3. Submission of falsified or tastigeyd documents;
4. Meritorious objection oriltito' Von against the employment of the foreign
national;
0043
5. Foreign national has been iGo victed of a criminal offense or a fugitive from
justice;
.41
6. Employer Terminall lhe emplpypen ef,an-lional; and
7. Grave misconslAtAin dealin• with or ill treatmen of workers (D.O. No. 186
Series of 201i Sec 13).
IIMIZI.Srp$11,
t
404,44.4te
-
AiL,,:.:vitiersr.
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ts,
A CONDITIORSCFEWL'OrMENT
te4
Coverage
Q: Who are the ereptbyees covered un Title I on Working Conditions and Rest
Periods of Book 111?4
ANS: All employees in establishments rofit or not, are covered by the
law on labor standardsi 01BOR GOD54iir
' •
Q: Who are the excludecgemLoyees?
ANS: The following employers excluded: (GM3-Dom-ReF)
1. Government employees;
2. Managerial employees;
3. Managerial staff;
4. Members of the family of the employer who are dependent on him for support;
5. Domestic servants and persons in the personal service of another;
6. Workers paid by Result; and
7. Non-agricultural employees (Field personnel) if they regularly perform their
duties away from the principal or branch office or place of business of the
employer and whose actual hours of work in the field cannot be determined
with reasonable certainty (LABOR CODE, Art. 82).
Q: Who are government employees?

ANS: GoverriMent employees refer to employees of government agencies, of the
-political subdivisions of the national government, of government instrumentalities, and of
government corporations that are not incorporated under the Corporation Code (i.e.,
those which have original charters) because they are governed by the Civil Service Law
(Juco v. NLRC, G.R. No. 98107, August 18, 1997).
231
Q: Who are managerial employees?
ANS: An employee is a managerial employee if he meets all the following conditions :
(M2A)
1. His primary duty consists of the Management of the establishment in which he
is employed or a department or subdivision thereof;
2. He customarily and regularly directs the work of two () or more subordinate
employees; and
3. He has the Authority to hire or fire other employees of lower rank; or make
suggestions and recommendations as to the hiring, promotion, termination, or
any other change of status of other employees (IRR of LABOR CODE, Book
Rule I, Sec.2, par. (b)).
Q: Who is considered a member of the managerial staff?

ANS: An employee is part of the managerial staff if he performs the following duties and
responsibilities:
1. One whose primary duty copsist&attie performance of work directly related to
carrying out the masagement ployer;
2. One who custonfarily nd regij i arl ei
r"dise discretion and independent
judgment wh9650
a. Red al apd erectly assisting a prop. etor Xagnanagerial employee;
b. Epctiti 4 hd .r.--gerreTralpen.cissiN rk along specialized or
.
d Mica theiwg requ s -e Vrain b , xmpce or knowledge; or
c. xec ti g un er geribral0erlision, s eciat4ssign ents and tasks;
3. One ho dos not devote mpreiit an 20% f then. Worked in a work
week 1 afi 'ties whic are no iirec yan closely r late ti the performance
of th ork escri4d kitar7agOlohair(2)1 and (a abo e (IRR of LABOR
COD , Bob Rul I, Sdc:(2„-pi r-(c)1
<L4
Hours of Wo f:,._.,
Q: What are co pens ble Atir? .,f..c4,••
ANS: Compens le hours worl#0 \alt inglude: .--\''
1. All time\luring 1pich a mp10 21.
ee0"i ,., re uire o be on duty or to be at a
prescribe workplaae•o(nd:crENIA.r'
2. All time dun whj,e Ttem;_l effcliort''
iaerupided to work.
Note: Rest periods of s • ort-d ipn-di.mr
—rgor mgoilr 4hall be counted as hours
worked (LABOR CODE, A 84 .L
Q: What are the normal hours of work of an employee?

ANS: The normal hours of work of an employee shall not exceed 8 hours a day (LABOR
CODE, Art. 83) for 6 days for a total of not more than 48 hdurs in .a* work week. The
exceptions are as follows:
1. Health Personnel: For health personnel in cities and municipalities with a
population of at least 1 million or in hospitals and clinics with a bed capacity of
at least 100. Regular office hours shall be 8 hours a day for 5 days a week, or
40 hours a week, exclusive of time for meals. In case of exigencies, they may
work for 6 days or for 48 hours, but they shall be entitled to an additional
compensation of at least 30% of their regular wage for work performed on the
6th day (LABOR CODE, Art. 83).
2. Compressed Work Week (DOLE Advisory No. 02, series of 2004).
232
Meo/Break
Q: Discuss the rules on meal periods.
ANS: The following are the rules on meal periods:
1. Meal periods should not be less than 60 minutes. Meal time is not
compensable except in cases where the lunch period or meal time is
predominantly spent for the employer's benefit or where it is less than 60
minutes (AZUCENA, p. 199).
2. Meal period may be less than 60 minutes, but should not be less than 20
minutes and the shortened mealtime must be with full pay, under the following
instances:
a. Where the work is non-manual work in nature or does not involve
strenuous physical exertion;
b. Where the establishment regularly operates not less than 16 hours a
day;
c. In cases of actual or impending emergencies or there is urgent work to
be performed on nAtii eries, equipment or installations to avoid
serious loss which:,ffiRtritloyer would otherwise suffer; and
d. Where the work:2,irtittepesary to prevent serious loss of perishable
goods (IRR of 1.460:01k, Book Ill, Rule I, Sec. 7).
3. If leis than 20 minutesUgtKes only a rest ptiod and is considered as
work time, e.g., coffe911:freWSCL ffifffta 5-20fffinutes are considered as
Night-ShiftDifferentt
....„
compensable worlAng-ffimerffitrof LAI3ORtODEJ:1 ok III, Rule I, Sec. 7).
it
...0
Q: What is a Night SOi:DRIzasetittal (NS pay?
ANS: It is an additionalcappssation o • of less than employee's regular bib&
wage for eveVour of mil done beNee 0:00 pm a whether or not such
period is parblitatfez0e,s regular shift BOR C
.4'
Q: Who are those employs e I led to. SD?

ANS: All employeeVreen ed, excgpt: ( oM_.. a1-FamDom-SerRes5)
1. Those pro sided in icle 82 oft Labor. Code:
a. Goverwhemployees•
b. Managral employees;
c. Field pgisonneW- c,
d. Merrtbrb t e Family of the employer who are dependent on him for
support;
e. Domestic helpers;-
f. Persons in the personal Service of another; and
g. Workers who are paid by Results as determined by the Secretary of
Labor.
2. Employees of retail and service establishments regularly employing not more
than 5 workers (IRR of LABOR CODE, Book III, Rule II, Sec. 1 (b)).
Overtime Work
. . . .
Q: What is overtime work?
ANS: Service rendered in excess of and in addition to eight (8) hours on ordinary
working days, which are the prescribed daily work period, is overtime work (Caltex
Regular Employees at Manila Office v. Caltex, PHL, G.R. No. 111359, August 15,
1995).
•233
Q: What is overtime pay?
ANS: It is the wage paid to an employee for working in excess of 8 hours a day the
amount of which is obtained by multiplying the applicable hourly rate of an employee by
the number of hours that he worked in excess of eight hours (Seaborne Carriers
Corporation v. National Labor Relations Commission, G.R. 88795, October 4, 1994).
Q: What are the rates of overtime pay corresponding to the day on which overtime
work is performed?
ANS: The following are the rates:
• Overtime Work .
performed on: Overtime Pay
Ordinary day Plus 25% of the basic hourly rate
Rest day or on a Plus 30% of,tliella,5,ic hourly rate which includes 30%
special holiday additigal compensalitint,
r?.. ie. II A / •,. "k4,.,
_. • .4.-., .4 Ni j ,,,.,‘
•
Rest day which falls/ • , Plus-3) .0-of the bastpbur . J,atekAhich includes the 50%
on a special holidaNt7 "'additional cormensatiorrt< 4,4'A
'.4 '
e- -.% *Nk.'" ?A ckt.
Regular holida -4' Pirs30y.of itre basic hourly ratZ dhichtncludes 100%
additional cofgfrei-Mtion 1 %. 4
A (,...rfk
i?"1 I 0
I .1
,p
Rest day wh'Clk: al, Ptlus 30,+oc vbasjooury rate Iiicencludes 160% of
on a regular olida a UT adaftioria,CoThpapsatio
-e" § - t
( ;..
(CHAN, supra fat 40 -* 08) ,•<",
Note: Entitleani
rn erti mush firgAgstablis ed b. sufficient proof that said
overtime work was actually Re eilg kW/ Aipploye may veil of the same
(Cagampan v. NLRC, 6 14-6 ‘:22, 1961). Th burden of proving
entitlement to ov ime pa olid A and r st days: rests on the
employee because ese are fry course of business (Loon v.
Power Master, Inc., G. Nlcer9 404‘psssapsr, ,
7
Q: What is the basis for co Qation o
ANS: The basis for computatio .ko e Rap,' the regular wage which includes
cash wage only, without any deduction on account of facilities provided by the employer
In other words, "regular base pay' means regular basic pay which necessarily excludes
money received in different concepts such as Christmas bonus and other fringe benefits
(Bisig ng Manggagawa ng PH Refining Co., Inc. v. PH Refining Co., Inc., G.R. No. L-
27761, September 30, 1981).
Note: It should be clarified that the fair and reasonable value of facilities customarily
furnished by the employer to the employee is part of the wage as defined in Art. 97(f) of
the Labor Code. Being part of the wage, the value of facilities, i.e. board and lodging,
cannot be excluded before computing the overtime rate (1 AZUCENA, p. 307).
Q: Is an employee entitled to overtime pay for work rendered in excess of 8 hours
a day, if his employment contract specifies a 12-hour workday at a fixed monthly
salary rate that is above the legal minimum wage?
ANS: Yes. The contract in question could have been deemed in violation of pertinent
labor laws. And the provisions of the latter prevail over the terms of the contract
(PESALA v. NLRC, G.R. No.105963, August 22, 1996).
234
Q: May an employee who remains in the office beyond his normal 8-hour duty
without the approval of his manager, claim overtime pay?
ANS: As a general rule, an employee who remains at the office or place of work beyond
his normal 8-hour duty is not immediately entitled to overtime pay in the absence of any
instruction or permission from the employer for him to render overtime work. Such
instruction or approval of overtime work, however, need not be made expressly by the
employer as it is enough that the employee is permitted or suffered to work beyond his
8-hour normal working hours. Moreover, if the work performed was necessary or that it
benefited the company, the overtime is compensable even without the approval of the
company (CHAN, supra at 405).
Q: Can an employee be compelled to render overtime work?

ANS: The general rule is that an employee cannot be compelled to render overtime
work. The exceptions under Article 89 of the Labor Code are as follows: (WEUP-8)
1 When the country is at War or when any other national or local emergency has
been declared by the National Assembly or the Chief Executive;
2. When it is necessary to psKe:fifffoss of life or property or in case of imminent
danger to public safetyegeot&an actual or impending Emergency in the
locality caused by so 'r Idents, fire, flood, typhoon, earthquake,
epidemic, or other disast-wvo ty;
When there is Urgent,wct, fp dor ed o achines, installations, or
equipment, in orderlsavoidep to the employer or some
other cause of erjlar nature;.
4. When the wgrkts pecessa revent loss or da die to Perishable goods;
and H
5. Where the cpipL epolii:or contin ation of the wor st Arted~before the 8th hour is
necessa4fto prifiern,,,serious Llstruction or rej dice to the business or
opeecins ofMemployer PA, BOB CODE, A 89).
Note: Any ertripee_rAcp d to render o wo rticA9 shall be paid the
additional comaensationte :aired took ee, Title Labor Code.
•
Q: Can an employitififfsetrap employee undertime by overtime?
ANS: No. Undertime wprk•orbny particul -y,-sh II not be offset by overtime work on
any other day (LABOR(090,Art. 88).
Q: What is the proper ethod i accounting for undertime or absences?

ANS: It has been held- 116011:roper method in accounting for undertime or absences
should be to deduct unglertime,or absencas.against the employee's accrued leave but
pay him the overtime'to which he is rightfully entitled (Detective & Protective Bureau,
Inc. v. United Employees Welfdre Ass'n., G.R,'No. L-4337; December 29) 1951).
Q: Can.the right to overtime pay be waived?

ANS: As a general rule the right to overtime pay cannot be waived expressly or
impliedly; Any contrary. stipulation is null and void as it is intended to benefit laborers
and employees. However, there are exceptions, as:
1. When the waiver is made in consideration of benefits and privileges which may
be more than what will accrue to them in overtime pay (MERALCO Workers
Union v. Manila Electric Company, G.R. No. L-11876, May 29, 1959); and
2. For work performed in excess of 8 hours as part of a compressed work week
arrangement (Bisig Manggagawa sa Trvco and/or Francisco Siquig v. NLRC,
G.R. No. 151309, October 15, 2008).
Note: Compressed work week is an alternative arrangement whereby the normal
workweek is reduced to less than 6 days but the total number of normal hours per week
remains at 48 hours (D.A. No. 2 Series of 2004, Implementation of Compressed Work
Week).
235
Q: Differentiate overload work from overtime work.
ANS: Overload work is additional work performed within 8 hours of a normal working
day. Overload work is considered compensated by the basic pay and does not grant any
additional benefit for the purpose of computing 13th month pay. Overtime work is work
rendered in excess of 8 hours on a normal working day (LABOR CODE, Art. 87).
Facilities vs. Supplements

Q: What are facilities?
ANS: Facilities include articles or services for the benefit of the employee or his family
but shall not include tools of the trade or articles or service primarily for the benefit of the
employer or necessary to the conduct of the employer's business (IRR of LABOR
CODE, Rule VII-A, Sec. 5). They are items of expense necessary for the laborer's and
his family's existence and subsistence so that by express provision of law, they form
part of the wage and when furnished by the employer are deductible therefrom (SLL
International Cable Specialist v. NLRC, G.R. No. 172161, March Z 2011).
Q: What are supplement ) „.

ANS: Supplements cons e)tti.4,remlin ratiorVor speclak rivileges or benefits given
\
to or received by t eflers,ovell a=db—Ovejhojkiriihkry earnings or wages
Accordingly, they 'nd Ohdent_of4e,..,ge'Ond 446 wage deductible. (SLL
International Cab/ 2Spe f/is CfiC, G R. No.172161, arc \2011).
11)) 4) 'T . r
Q: What are th requisites fpr the ciredi ilifysof facilities (f)
ANS: The requ sitey : (CI") r "
;11 ...
1. Proo paL fsl e sho n tbat,„sucl facilities i lities a g.ustimaril furnished by the
-Q.4fac
trad
2. The pro sio ofrtle tictible factlitiWthust be 01 nta ly acee ted in writing by
the etl.lplo ee; arkcil'. LI)
3. The fad' us* Edfi,o_ncl, I all. tgitit (Our Haus Realty
J st 6, 04651,2014).
Augu
DeyelOc,ment orpo f/ ti,•,9111:r
( ' i
Weekly Rest Perrods
Q: What is a week! est day
ANS: It is a rest perio 9 han.29.con ec after every 6 consecutive
normal work days (LABO rtguArt 91). A .
Note: All establishments an e risesifcflyioPJAte r open for business on Sundays
and holidays provided that the emp o b-ditffitj'IM1 the weekly rest day and the benefits
provided under the law (IRR of LABOR CODE, Book III, Rule 111, Sec. 2).
Q: Who determines the employee's weekly rest day?

ANS: The employer determines and schedules the weekly rest period subject to the
following: (CSR)
1. Collective bargaining agreement;
2. Rules and regulations issued by the Secretary of Labor; and
3. Employee's preference based on Religious grounds (LABOR CODE, Art. 93
(d)).
Q: Do bona fide members of religious groups who reserve worship on a day other
than Sunday have any right to choose their own rest days?
ANS: Yes. The employer, under the law, is required to respect the preference of the
employee if the same is based on religious grounds (IRR of LABOR CODE, Book I, Rule
Sec. 4).
236
Q: If the employer has a well-founded claim that it cannot accommodate the
preference of some of its employees without undue detriment to its business,
may it legally refuse to re-schedule the rest day of the employees involved?
ANS: If the employer cannot resort to other remedial measures, it may schedule the rest
days of the employees involved on the days of their choice for at least 2 days in a
month. The other rest days within the month will have to be taken on days chosen by
the employer (ALCANTARA, supra at 195).
Q: Can the employer require its employees to work on a rest day?

ANS: No. As general rule, the employer may not require the employees to work on a
rest day. The law, however, recognizes several exceptions (UPECAA):
1. In cases of Urgent work to be performed on the machinery, equipment, or
installation;
2. To prevent loss or damage to Perishable goods;
3. In case of actual or impending Emergencies caused by force majeure to
prevent loss of life and propertmsf imminent danger to public safety;
4. Where the nature of the 0611 requires Continuous operations and the
stoppage of work may reqtr(E10reparable injury or loss'to the employer;
5. In the event of Abnompbtete of work due to special circumstances,
where the employer canijoUditiiiia -iy be expected to resort to other measures;
and •
6. Under other circumsLancesYA a •ous to4falfor ing as determined by the
Secretary of Labor:And Employ nt (LABOR tt. 92).
Note: No employee sifter requireciagar st his will to wor e his scheduled rest day
except under circumsrappe proviSerrin• his Section. Ho e etil where an employee
volunteers to work o,shis*.t2gray unde ther circumstances, shall express such
desire in writingObjectritarap provisioDs of Section hereo regarding additional
compensati9eABORSOE, Art. 92)k
,na.Ze41 •.
4t
Q: What is the 'rate of additionaltompe sation Sunday or
holiday?
ANS: The rates ‘ are
" igs::
b'el ovr•
Da9 r• ' 7 Rate of Additional Compensation
Work on a scheduled restay,;gip'TOT05:M

roar
ii
f wage
No regular workdays al*0;specific rest 30% of regular wage for work

days performed on Sunday and holidays
Work on Sunday when it is his 30% of regular wage

established rest day •,
Work on special holiday 30% of regular wage
Work on special holiday falling on 50% of regular wage .

scheduled rest day
Work on regular holiday falling on 260% of regular wage (IRR OF THE

scheduled rest day LABOR CODE, Art. 93).
Note: The employees and employer, however, may stipulate in their collective
agreement the payment for overtime work at rates higher than those provided by law
(IRR OF THE LABOR CODE, Art. 93,(b)).
237
Holidays 003
Q: What are the legal holidays?
ANS: Under the Administrative Code of 1987 or E.O. No. 292, as amended by R.A. No.
9849, unless otherwise modified by law, order or proclamation, the following are the
regular holidays in a year:
Regular Holidays - •
New Year's Day January 1
Maundy Thursday Movable date
Good Friday Movable date
Eid'IFitr Move* ate
EidlAdha vable c at6

- ',.:,
0 P ?Mo I
d ..,0 t- I _ V, g ,,
Araw ng Kagitingarf:" ‘ 11/4r2g, oo'
---
Monday nearest-prill( ...".
.1 '''',e. ., —,,,,,—"-- 7.----- ---.. s.'")
s, , ,
7,
Labor Day /
'Lc/ mdriblaysteareit
dill.
Ma
')il \;;,*1 ) \
i i c' • , i A CO j
Independence Dayl I--- --Monday-Junei 12 A
1 _.0.- ,.......4 1
National Herbes,D4
Iii ; '-`' j
LastWo dVio . August
t <1 3 ---r11 ::, .,._;..: I' ir:---,
Bonn=• Dad
i c,f)
-1 ksl, \-,\\
.,-;..)
. \m 61trWer,b6=c
d Kr, rys.,‘t .Av
orwy , 41
Christmas Da \ :D\d'clern'bLr it74'S 7

.
**%...1...0.
' /
Rizal Day \ Nb.,,,

, (:2S.ce
dijiti
nk-d_2per*er 349/
„ . '''' ''.
• , •. Nalionlivide
. . , Special Holidays
.1Vi ti
Ninoy Aquino Day °'"'MoraaLat_asest
c g ust 21
All Saints Day November 1
Last Day of the Year December 31 (E.O. 292; as amended by R.A..o.

9492, Sec. 26, pars. (a) and (b), Ch. 7, Book 1).
Note: For movable holidays, the President is mandated under R.A. No. 9492, otherwise
known as An Act Rationalizing the Celebration of National Holidays, to issue a
proclamation on the specific date that should be declared as a non-working day, at least
6 months prior to the holiday concerned.(E.O. 292, as amended by R.A. No. 9492, Sec.
26 par. (c), Ch. 7, Book I).
Q: Who are excluded from the payment of holiday pay?

ANS: The following are not entitled to holiday pay (GMF-Dom-Staff-10):
1. Government employees;
3. Field personnel;
4. Domestic helpers, persons in the personal service of another;
238
REDBOOK
5. Officers or members of a managerial Staff (2017 Handbook on Workers'
Statutory Monetary Benefits, p. 12); and
6. Employees of retail and service establishments regularly employing not more
than 10 workers (IRR of LABOR CODE, Book Ill, Rule IV, Sec. 1).
Q: What is holiday pay?
ANS: Holiday pay refers to the payment of the regular daily wage for any unworked
regular holiday (2017 Handbook on Workers' Statutory Monetary Benefits).
Q: What is the rationale of holiday pay?
ANS: The purpose of the holiday pay is to prevent diminution of the monthly income of \RN
the workers on account of work interruptions. In other words, although the worker is
forced to take a rest, he earns what he should earn, that is, his holiday pay (Asian
Transmission Corporation, G.R. No. 144664, March 15, 2004).
Q: X works as a manicurist in the D'Style Barbershop which has 20 barbers and

manicurists. She is paid P5 per manicure that she performs. Sometimes she earns
P90 per day, but there are also,-A4.4a4bns when there are no customers. Is she
entitled to holiday pay? ExplainttOr
ANS: Yes. X is an employee !h--osield by results in a service establishment
employing more than 10 persons. S1147,4. -itled to holiday pay which shall not be less
than her average daily earningg,0 theqas %.91444 ,ays preceding the regular
holiday and in no case less t. a the app icatileZgtaftitory minimum wage rate
(IRR of LABOR CODE,BIAN,111, Rule IV, c. 8, par. (b)).
Q: X earns a daily ratoff300 and is e titled to holiday pay. If he works for eight
hours on NaticinaL eroetADay, which Is on a Sunday, scheduled rest day,
what will be X'5;,tatal co Veristtiorkfor ch work?
ANS: X will ge1200%.okh s daily rate ••00 or P600, plus 0% thereof, or a total of
P780. This istrOwinglthi-ule that the kajday wor disteduled rest day of
an employee, he shai6hatiflep ,for ak not exceetiffdr8 reto an additional
premium pay ofàladstiO of hisi gulqholiday rate OT200% based on his regular
wage rate (IRR of epoR CODE, Bdok 111 ule IV, Sec. 4): '
A. 11
Q: If X, whose daily rale,fsjP300, wor A o llemight hours on National Heroes
Day, which falls on a Sunday Kis sc dUedqeskia ay much will he get for
such work?
ANS: X will get, for eac 044 1 excess of 8 hours, P75 which is his hourly rate for the
first 8 hours plus 30% thereof or a total of P97.50. The rules provide that for work
performed in excess of eight hours on a regular holiday rest day, the employee shall be
paid an additional compensation for the overtime work equivalent to his regular holiday
rest day rate' for the first 8 hours plug 30% thereof (IRR of LABOR CODE, Book Ill, Rule
IV, SeC. 5).
Q: What are the rules on holiday pay of teachers, piece workers, seafarers,
seasonal workers, etc.?
ANS: The following are the rules:
1. Private school teachers, including faculty members of colleges and
universities, may not be paid for the regular holidays during semestral
vacations. They shall, however, be paid for the regular holidays during
Christmas vacation;
2. Where a covered employee is paid by results or output, such as payment on
piece work, his holiday pay shall not be less than his average daily earnings
for the last seven (7) actual working days preceding the regular holiday;
Provided, however, that in no case shall the holiday pay be less than the
applicable statutory minimum wage rate;
239
3. Seasonal workers may not be paid the required holiday pay during off-season
when they are not at work; and
4. Workers who have no regular working days shall be entitled to the benefits
provided in this Rule (IRR of LABOR CODE, Book Ill, Rule IV, Sec. 8).
Q: What is the rule on holiday pay of teaching personnel paid per lecture hour?
ANS: Faculty members paid by the hour by virtue of their teaching contracts:
1. NOT entitled to payment of holiday pay because they are paid only for work
actually done. Since regular holidays are known to both school and faculty
members as "no class days," certainly the latter do not expect payment for
said unworked days, and this was clearly in their minds when they entered into
the teaching contracts.
2. However entitled to their regular hourly rate on days declared as special
holidays or when classes are called off or shortened on account of typhoons,
floods, rallies, and the like because the faculty member, although forced to
take a rest, does not earn daLhashosyld earn on that day (Jose Rizal College
v. NLRC, G.R. No. 6,548ZDecrlfe 1, r98Z).
le, lt,
. .6.4":"..i. i-- ........,
Q: What are the rules. n Isetyvo,egular.holl,,,,QII,s I 111 : prit e same day?
ANS: For instance, h.pn Af,pierfig Kagitingan falls on khe tsame day as Maundy
Thursday or Good rick?99.vered-EIRro-yee4s, Ntitle lo:at least two hundred
percent (200%) oftehef ailytwageireFf sid•day l is Le ofkANyhere the employee
is required to work on' day, he/she 4sentiiled to dItionay 00% of the daily
wage (2018 Ha>,..bookion Wd ers' Statyt*,Monetaty s-cfj t
Q: What are effer of b siries.F`glos rOffibliday parr e
ANS: These a5e.:444 tair - -27 Izd
kAki11,!llie. q
1. If it i§ meEey a cte ovary orpenclaic shut and tem .qrary cessation of
work Ipirr-ItabtO ho falli §--vlit the period shall
be cotvVn§a‘fd;
fr
2. If the cqssatio of o eri as d, e to biAiness reverses as
authoriZed by th Sec a or" egulaf holida may not be paid by
the em4 er (IRR act:Tggmtx) 111, .0,0 Ri;le IV, S c. 7).
Service Charge 9
Q: How are service ch 10
s colleNefl ho1:t\Is,
} restaurants and similar
establishments distributed?
ANS: It is distributed as follows:
1. 85% for all covered employees to be equally distributed among them;
2. 15% for disposition by management to answer for losses and breakages and
at the discretion of the management, distribution to managerial employees
(IRR of the LABOR CODE, Book III, Rule VI, Sec 3); and
3. The shares referred to herein shall be distributed and paid to employees not
less than once every two. (2) weeks or twice a month at intervals not exceeding
16 days (IRR of the LABOR CODE, Book Ill, Rule VI, Sec. 4).
Q: Who are covered?

ANS: All employees of establishments collecting service charges are covered,
regardless of their position, designation, employment status, irrespective of the method
by which their wages are paid, except managerial employees (IRR of LABOR CODE,
Book III, Rule VI, Sec. 2).
240
Q: What are the establishments required to award service charges to their
employees?
ANS: The establishments required to award service charges are those which collect
service charges such as hotels, restaurants, lodging houses, night clubs, cocktail
lounge, massage clinics, bars, casinos, and gambling houses, and similar enterprises,
including those entities operating primarily as private subsidiaries of the government
(IRR of LABOR CODE, Book III, Rule VI, Sec. 1).
Q: What happens when the service charge is abolished?

ANS: In case the service charge is abolished, the share of the covered employees shall
be considered integrated in their wages. The basis of the amount to be integrated shall
be the average monthly share of each employee for the past 12 months immediately
preceding the abolition or withdrawal of such charges (IRR of LABOR CODE, Book Ill,
Rule VI, Sec. 5).
Thirteenth Month Pay

490
Q: What is thirteenth (13th) montttippg•
ANS: Thirteenth-month pay shat ?441ean- gap twelfth (1/12) of the basic salary of an
employee earned within a calep a . ar 13th Month Pay Law or P.D. No. 851
.
(Requiring All Employers to Pay their . ' . l'- es a 13th-month •ay) Sec. 2. par. (a)).
Prt%
Q: What is the nature of 13thrimontlNa
ANS: The payment ofriptgrOnth pais statutory grant, a compliance therewith is
mandatory. This bet-refers deemed ma* into every Collective- Bargaining Agreement
(PAL v. NLRC, G.R. ;91280., &R. 115224, July, 6). Hence, benefits in
the form of food or frdetel, ley are not roper substituteforte 13th month pay. So
also, year-endoWards foillOalry erase e and othelnontion tary benefits cannot
be consideresftpayrrfeAin lieu of 13th nth pay (F ncis . M' of 'ster,
Labor, G.R.
Nos. 72616-17J-Warcht8,j.§89). --41.--.T* .4,-,-49*
vd A.4 'fV- 00r zo--7-
,---
-
Q: What does Naasic2 .. 1 ' inckide f . purposes of computing the 13th month
v.-..:s.,- xr•
pay? VI rn
ANS: Basic salary incpdes JI remunera El arnings paid by an employer to an
employee for services4rIndered irogn.:_. 0 ,Weltvances. It does not include
allowances and monet4,benetst hich are no cons .ered, or integrated, as part of the
regular, or basic,,splar* e cash equivalent of unused vacation and sick leave
credits, overtime, premitr nj t differential and holiday pay (Q&A on 13th Month Pay,
From the Department of tabor and Employment's Bureau of Working Conditions,
Official Gazette, November 14, 2014).
Note: However, these salary-related benefits should be included as part of the basic
salary in the computation of the 13th month pay if, by individual or collective agreement
or company practice or policy, the same are treated as part of the basic salary of the
employees (Id.).
Q: When shall 13th. month pay be paid?

ANS: As a general rule, it should be paid not later than December 24 of every year. The
exceptions are as follows: (1/2-CA)
1. The employer may give to his employees % of the required 13th month pay
before the opening of the regular school year and the other half on or before
the 24th of December of every year (DOLE Labor Advisory No. 12, Series of
2013);
2. If otherwise provided in the CBA; or
3. If otherwise provided in any other agreement, i.e., employment contract.
241
Q: What is the formula in computing for 13th month pay?
ANS: The formula is as follows:
Total basic salary earned during the year = 13th month pay
12 months
(2018 Handbook on Workers' Statutory Benefit, p. 39)
Q: Who are excluded from the coverage of the 13th month pay?
ANS: The following are excluded from the coverage of the 13th Month Pay Law (D-GEE)
1. Distressed employers such as:
a. Those which are currently incurring substantial losses; or
b. In the case of non-profit institutions and organizations, where their
income has consistently declined by more than 40% of their normal
income for the last two years;
Note: Under Section 7 of the IRR of P.D. No. 851, distressed employers shall
qualify for exemption from ip,requirkwnt only upon prior authorization by the
Secretary of Labor (C ntral 41zupa7ra7tlelriac v. Central Azucarera de
Tarlac Labor Dv N 1 p1491Ju .2,,,6z 2010).
2. The Governs i an la iyV,,its,politicatuNivistons-Nkncluding GOCCs, except
those corp$atio t,,opgFating psiiifte subsidiaries of the
Governm‘n
3. Employ '1/4:2aiceyfy ayingibtperkempyee's\ 1 ,irn,...gth. pay or more in a
calend r yeapy its quivalerfit atiihe tale oft is iss (me
Note: is eqiivalen
O)
a. as b sus; I
b. 'dy ar bon s; `trcV- •Intl i•
c. aofi -sharin fayrriert;a9r67
d. ca onuses nottfes than f th basicjsalary (P.D. No.
5, ec. VJ
ra?
4. Emp hos re
a. purely mmiktj sis; I.
b. B,punda asi; •••-.
c. T4k basis,
oticN*
d. A d a go r LS
if in.-De rk, except where the
t
workers%!re LclAinsna iece-raet casethe empclooynecresrnheadll
be covere rt soslrhworkers are
(P.D. No. 85
Q: Are extras, casual, and seasonal workers entitled to 13th month pay?
ANS: Yes. All rank-and-file employees regardless .'of their designation or employment
status, irrespective of the method by which their weges-are paid, are entitled to 13th
month pay, provided that they have worked for at least one month during a calendar
year. They are entitled to the proportionate 13th month pay (In Re: Bagong Pit/pin°
World's Fashion Workers Union, Opinion of the Bureau 'of Working 'Conditions,
December 19, 1987, citing P.D. No. 851 as amended by Memorandum Order No. 28).
Q: Discuss commissions vis-à-vis 13th month pay.

ANS: In remunerative schemes consisting of a fixed or guaranteed wage plus
commission, the fixed or guaranteed wage is patently the "basic salary" for this is what
the employee receives for a standard work period. Commissions are given for extra
efforts exerted in consummating sales or other related transactions. They are, as such,
additional pay, which this Court has made clear do not form part of the "basic salary"
(Bole Takeda Chemicals, Inc. v. de la Sema, G.R. No. 92174 December 10, 1993;
Philippine Fuji Xerox Corporation v. Trajano and Philippine Fuji Xerox Employees Union,
G.R. No. 102552, December 10, 1993).
242
•
E DA
. .
Q: Is 13th month pay part of the retirement benefits?

ANS: Yes. Thirteenth month pay is included as part of the retirement benefits that a
retiring employee is entitled to under Article 287 of the Labor Code. It is provided therein
that a retiring employee is entitled to a retirement pay equivalent to 1/2 months' salary for
every year of service, at least six (6) months being considered as one whole year. The
same article provides that the term "1/2-month salary" shall mean the salary for 15 days
plus 2.5 days (representing 1/12 of the 13th month pay) and the cash equivalent of not
more than five days of service incentive leaves or a total of 22.5 days' salary (IRR of the
Retirement Pay Law, Rule II, Sec. 5.2; Capitol Wireless, Inc. v. Confesor, G.R. No.
117174, November 13, 1996).
B. WAGES
Q: What is basic wage?
ANS: Basic wage means all remuneration or earnings paid by an employer to a worker
for services rendered on normal working days and hours but does not include cost-of-
living allowances, profit sharing paymeroiremium payments, 13th month pay or other
monetary benefits which are not ....CAI-4d as part of or integrated into the regular
salary of the workers on the date AtieMbegame effective (IRR of LABOR CODE, Rule
VII, Book III, Sec. 1(n)).
•
Q: What is statutory minimum wage?oit . • •
ANS: Statutory Minimum Wage the lowest wagethe aw that an employer can
pay his workers (IRR ofy.LABOR CODE; R • e VII, Book III, -Se (o)).
Q: What are the attributes-of

rib, 4,
wage?
ANS: Wage paid %Ole f)., Me has the- !lowing attributes:
1. It is t12sOremuneralioFvo'r ear ing owever des • nand, for work done or to be
dondIo services:, endered or rendered; X
2. Ca4§ie expressed in e s of m r ea o ascertained
on a time, tas pigce,
•
OF TO ma r: on basis orot of calculating the
same:
3. Which is payable byrn employ to an employee under a written or unwritten
contract oPerelployftent for wor o e'o e to be done or for services rendered
or to be rendifprald - 'L-,-....P.; ., e,,... gs..3.-
4. Includes the4-, tair and easonab Ovl 7e,ls 4. r
- ermined
e by the Secretary of
Labor, of bold, to gi g, or other facilities customarily furnished by the
employer to theempf4yee (LABOR CODE, Art. 97, par. (f)).
Note: Fair and reasonable value shall not include any profit to the employer, or to any
person affiliated with the employer
Q: What is cash wage?

ANS: The minimum wage rates shall be basiC, cash wages without deducting therefrom
whatever benefits, supplements or allowances which the employees enjoy free of
charge aside from the basic pay (IRR of LABOR CODE, Sec. 4, Rule VIM).
Q: Who are excluded from the coverage of the Title on Wages of the Labor Code?
ANS: The following persons are excluded from the coverage of Title II, Book III of the
Labor Code: (HN-CCF)
1. Household or domestic helpers, including family drivers and persons in the
personal service of another;
2. Home workers who are engaged in Needlework;
3. Workers employed in Cottage industries duly registered in accordance with
law who perform their work in their homes;
4. Workers in duly registered Cooperatives as recommended by the Bureau of
Cooperative Development upon the approval of the Secretary of Labor; and
243
5. Farm tenancy or leasehold (LABOR CODE, Art. 98).
Payment of Wages
Q: What is the minimum wage of 'workers paid by results'?
ANS: All workers paid by results, including those who are paid on piecework, takay,
pakyaw, or task basis, shall receive not less than the applicable statutory minimum
wage rates prescribed under the Act for the normal working hours which shall not
exceed 8 hours work a day, or a proportion thereof for work of less than the normal
working hours (IRR of R.A. No. 6727, otherwise known as Wage Rationalization Act,
Sec. 9).
Q: What is the basis for determining rates for piece, output, or contract work?
ANS: The basis for the establishment of rates for piece, output or contract work is the
performance of an ordinary worker of minimum skill or ability. An ordinary worker of
minimum skill or ability is the average worker of the lowest producing group representing
50% of the total number of emipyee-s 'ged‘imimilar employment in a particular
establishment, excluding !ear6- , apptn icesOnd;Pekpons with disability employed
therein (IRR of LABOR G ? '4\
Q: What is the minjm(p rage of a_epigq4c.P...,_

s and leT-n.tarf
.-)„
\s,
ANS: Wages of 495, rentlps pnd-f&amers2:,shall-fil^119 °else b The,ss than 75% of the
applicable statulo IMU wage: rates R of RA: o 6727 or the Wage
Ern
Rationalization Act, Se 10).
if ,„,.
Q: What is thd ate of learner or an apprenti
ANS: The wa of a lqmer-prrati rqntice i the'p tutory minimum
wage rate (IR No 7, Se56.q-d)agg: 3
Q: What is the v(a 4091.biy D)

ANS: In view R.A. 614#6o,\. ualifed handicapped worker is
100% of the apOlicable qualip0-51liable emplo fee shall be subject
to the same ter s and rAent a , d the ?ame compensation,
privileges, benefits; nge fit eigy9TC..,„. Ito ces as qualified able bodied
person (Sec. 5, Title ft,p,L _arAg,
-iv arta oreprsabled Persons). Wage
Orders issued by the oards o ct,,t prprinciple. For instance, as
shown in Section 7 of Wag rd‘r egebbove, the full amount of the
minimum wage rate prescribed4h nted to a PWD. Moreover, the
employment agreements with persons with disability are deemed automatically modified
insofar as their wage clauses are •concerned to reflect the said legally mandated
increases.
Q: What is a "commission"? . .
ANS: Commission is the recompense, compensation, or reward of an employee, agent,
salesman, executor, trustee, receiver, factor, broker or bailee, when the same is
calculated as a percentage on the amount of his transactions or on the profit of the
principal (PH Agricultural Commercial & Industrial Workers Union (PACIWUFTUCP v.
NLRC, G.R. No. 107994, August 14, 1995).
Q: What commissions are not deemed part of salary?

ANS: Profit-sharing or bonus type commissions may be excluded when determining the
"basic salary." An example of which are commissions paid to or received by medical
representatives or by rank-and-file employees as productivity bonuses (Boie-Takeda
Chemicals, Inc. v. Dela Sema, G.R. No. 92174, December 10, 1993; PH Fuji Xerox
Corp. v. Trajano, G.R. No. 102552, December 10, 1993).
244
Prohibitions Regarding Wages
Q: May an employer make any deduction from the wages of his employees?
ANS: As a general rule, wage deduction is strictly prohibited. However, there are
allowable deductions as provided: (lUA-LA-UWMP-VVWJC)
1. Worker's Insurance premium advanced by the employer with the consent of
the employee;
2. Union dues, where the right to check-off has been recognized by the
employer; and
3. Cases where the employer is Authorized by law or regulations issued by the
Secretary of Labor (LABOR CODE, Art. 113).
4. Deductions for Loss or damage under Article 114 of the Labor Code;
5. Deductions made for Agency fee from non-union members who accept the
benefits of deduction under the CBA negotiated by the recognized or certified
bargaining unions. This form of deduction does not require the written
authorization of the non-union member concerned (LABOR CODE, Art. 259,
par. (e));
6. Union service fee; .k
7. When the deductions are Written authorization of the employee for
payment to a third persoAnai . {employer agrees to do so, provided that the
latter does not receive dnYvtar a benefit, directly or indirectly, from the
ca
transaction; -.t 6'
8. Deductions for value of Meal an• 4)ther facilitis
9.. Deductions tallikremiumsifor SS, PhilHealth,/ ftployees' compensation
and PAG-IBIg.
10. Withholding tarrmadated,kinde e National Inteom Revenue u Code;
11. Withholdtrtrwm;a1-because the employee', de t totthe employer, which
is already-due; „ 4.
12. Deductio ns made pursuant to, a =ourt Judgmelt against t e worker under the
.lon.
circUrnstances nere IQ& wag may -,44 e attachment or
exectien butQegor deb in ur ed for foos e elter and medical
attendancp,beff1,pductIons fr wages are ordered by the court; and
13. Salary dedAtion o to mernb,er, of a legally established Cooperative (CHAN,
supra at 661) zsaw
Q: Can the employet interfeteewith tthe
-s rA-4.2.
X ''Vt .•
he .isposi ion of the domestic worker's
wage?
rs
ANS: No. It shall be un arg for the employer to interfere with the freedom of any
domestic worker to dispose of the latter's wages. The employer shall not force, compel,
or oblige the domestic worker to pirchaSe merchandise, commodities, or other
properties from the employer or from any other person, or otherwise make use of any
store or services of such employer any other person (RA. No. 10361, otherwise
known as the Batas Kasambahay, Sec. 27).
Q: Can the employer withhold the wages of the domestic worker?

ANS: No. It shall be unlawful for an employer, directly or indirectly, to withhold the
wages of the domestic worker, except that if the domestic worker leaves without any
justifiable reason, any unpaid salary for a period not exceeding 15 days shall be
forfeited. Likewise, the employer shall not induce the domestic worker to give up any
part of the wages by force, stealth, intimidation, threat or by any other means
whatsoever (R.A. No. 10361, Sec. 8).
Note: If the employer does so, he/she may be held liable for economic abuse. Economic
abuse refers to the withholding of the Kasambahay's wage or a part of it or any act
which induce the Kasambahay to give up any part of the wage by force, stealth,
intimidation, threat or by any other means whatsoever (Sec. 2(d), Rule X, IRR of Batas
Kasambahay).
245
Wage Distortion
Q: What is wage distortion?
ANS: It is a situation where an increase in prescribed wage rates results in the
elimination or severe contraction of intentional quantitative differences in wage or salary
rates between and among employee groups in an establishment as to effectively
obliterate the distinctions embodied in such wage structure based on skills, length of
service, or other logical bases of differentiation (LABOR CODE, Art. 124).
Note: Wage distortion presupposes an increase in the compensation of the lower pay
class in an office hierarchy without a corresponding raise for high level employees in the
same region of the country, resulting in the elimination or severe diminution of the
distinction between the two groups or classes (Prubankers Ass'n. v. PBTC, G.R. No.
131247, January 25, 1999).
Q: What are the elements of wage distortion?

ANS: These are: (SHED)
1. A Significant change orolhcreatWifilht.salary rate of a lower pay class without
a corresponding i ryay? in thi st alelf'a,,titigher one;
2. An existing Hiep flKo ppcsitions- it dprrespondin9 salary rates;
3. The Eliminaficrn o the di tindtior ntWeenthefitvoAgqxips or classes; and
4. The Distorho gxjs rri1 the s eaggipli orthe,cp,Utryt//fance Trade Unions
v. NLRC ol-1066 FebOry 17,*-2004). ,
Q: What is the in de{ermining *tfiiiion a lust t"?

ANS: Any for be treed_upofi pia.us.ed by the pa te's seeking to cure the
wage distortio urt ho eves,approd of-th,follpwing 4rmula as a good formula
to use in the etropo an Boole& gompal-ry Emp peel tinion-ALU-TUCP
v. NLRC (G.R. 63 tembleia0.71:03Y.
-
ed Increase
:
Illustration: X receives P3k0 pr plca le minimum Cage for is position is
P280. The RegionallBerdpe n ft51f6r5 ((wail clas
(—C031
Distortion Adjustment xP21Vtr-f5,=P
k
New Rate of X = Former Rate + Distortion Adjustment

• =P350+P20
=P370
Q: How are wage distortions resolved?

ANS: Wage distortions are resolved as follows:
• ••
• Unionized establishment •Non-unionized'establishment
Employer and the union shall negotiate Employer and the workers shall endeavor
to correct the distortions using the to correct the wage distortion. If the
grievance machinery procedure in the negotiation fails, any dispute arising
collective bargaining agreement. therefrom shall be settled through the
National Conciliation and Mediation Board
(NCMB).
246
DAN RED . E3:
If it remains unresolved, it shall be If it remains unresolved for 10 calendar
decided through voluntary arbitration days of conciliation, the dispute shall be
within 10 calendar days from. the time referred to the appropriate branch of the
the dispute was referred for voluntary NLRC which shall conduct continuous
arbitration hearings and decide the matter within
twenty (20) calendar days from the time it
was submitted for compulsory arbitration
(IRR of R.A. No. 6727, Chapter Ill, Sec.
7).
Note: The pendency of the dispute arising from a wage distortion shall not in any way
delay the applicability of any wage increase prescribed pursuant to the provisions of law
or Wage Order (IRR of R.A. No. 6727, Chapter III, Sec. 7).
Non-Diminution of Benefits
Q: Is diminution of benefits alloydZi.
ANS: As a general rule, it is prohibit&r::Nnng in the Labor Code shall be construed to
eliminate or in any way diminish s)firipziO,ja, or other employee benefits being enjoyed
at the time of promulgation of thiS,COOKBOR CODE Art 100). Benefits being given
to employees cannot be taken back dCired.„useA p'laterally ji-jt e employer because the
benefit has become part of theAfiipld4 rWcofitracti, sittq.‘nwritten.
s
Q: What is the basis o he.principteh on-diminution ofible efits?
ANS: The principle 81.4 o!-diminution o benefits is fount on the Constitutional
mandate to "protect th.ig fi erivorkers arid promote theLlwafa ," and "to afford labor
full protectiqn." VErfriandlfelin:tum is t basis' of Adige 4g f t e Labor Code which
states that "alleoubts ilkth8 implemelitati nd interpretation of this Code, including its
implementing: shall b enderede labor."" urisprudence is
replete with uses 'whit cogn_, Izelthe ht of em o wasjIN efits which were
voluntarily givemby.threm Ibyef bridlwhi ripened into Zonldiiiy practice (Arco Metal
Products, Inc. v:TdIrfgh an ng nhaM gagawasa Arco-Metal NAFLU, G.R. No.
170734, May 14, 2008)
Q: What are the exceations tothialondimin

ANS: These are (CorNtaRe40):
1. Correction of erer
2. Negotiated benefi
3. Wage order compliance;
4. Benefits on Reimbursement basis;
5. Reclassification of Position;
6. Contingent benefits or Conditional bonus; and
7. Productivity Incentives (Mabeza v. NLRC, G.R. No. 118506, April 18, 1997).
Q: What are the requisites of diminution of benefits?

ANS: It must be shown that: (CUP-E)
1. The practice is Consistent and deliberate;
2. The discontinuance is done Unilaterally by the employer;
3. The grant or benefit is founded on a policy or has ripened into a Practice over
a long period; and
4. The practice is not due to.Error in the construction or application of a doubtful
or difficult question of law (TSPIC Corp v. TSPIC Employees Union, G.R. No.
163419, February 13, 2008)
247
Q: What are the criteria that may be used to determine the existence of company
practice?
ANS: To be considered as a regular company practice, the employee must prove the
following by substantial evidence:
1. That the giving of the benefit is done over a long period of time;
2. That it has been made consistently and deliberately (Vergara v. Coca-Cola
Bottlers PHL, Inc., G.R. No. 176985, April 1, 2013); and
3. The act should not be a product of erroneous interpretations or construction of
a doubtful or difficult question of law or provision in the CBA (National Sugar
Refineries Corporation v. NLRC, G.R. No. 74156, June 29, 1988).
Note: Jurisprudence gives credence to the regularity and deliberateness of the grant of
benefits over a period of time (Vergara v. Coca-Co/a Bottlers PHL, Inc., supra).
C LEAVES
Service Incentive Leave (SIL)
Q: What is service incentivejeaVelia'yfi T
ANS: It is a 5-day leave wiffpag or evbry /epOreenleN has rendered at least 1 year
of service (LABOR COD
• ..0\s,
Q: What is the me tigast-orpneof...9RIviceb.
ANS: It means
as
r r not lessAhan,(12.smontet Wh.011Jercilitinuous or broken,
reckoned from the (he mployee stOted.4torkin inaudihg a thorized absences
and paid regulate holidas, u ess the wok ing days in e eaablig nt as a matter of
practice or poli t pro dadlirthe ntract `Tess an 12 months, in
which case sa shall be au-rirci,er ii year IRR of CODE, Book Ill,
Rule V, Sec. 3 .
Q: Who are not a •

ANS: The folio
1. Emplo cat subdivisions, including
govern
2. Persons it
3. Manageria LaDor Code;
4. field personne playe.e ince are unsupervised by
the employer;
5. Those who are enga •eZn Atra asis, purely commission basis,
or those who are paid in a ft&ama.arn-or performing work irrespective of the
time consumed in the performance thereof;
6. Those who are already enjoying the benefit provided in the law;
7. Those enjoying vacation leave with pay of at least 5 days;
8. Those employed in establishments regularly employing less than 10
employees;
9. Other officers and members of the managerial staff; and
10. Members of the family of the employer who are dependent on him for support
(LABOR CODE, Art. 82; IRR of LABOR CODE, Book Ill, Rule V, Sec. 1; DOLE
Handbook on Workers Statutory Monetary Benefits, No. VI, par. (A)).
Note: The phrase "other employees whose performance is unsupervised by the
employer" must be understood as a separate classification of employees to which
service incentive leave shall not be granted. Rather, it serves as an amplification of the
interpretation of the definition of field personnel under the Labor C6de as those whose
actual hours of work in the field cannot be determined with reasonable certainty (Auto
Bus Transport System, Inc. v. Bautista, G.R. No. 156367, May 16, 2005).
248
Q: Are part-time workers entitled to SIL?
ANS: Yes. The provision of the Article 95 of the Labor Code and its implementing rules
speak of the number of months in a year for entitlement to said benefit. Thus, part-time
employees are also entitled to the full service incentive leave benefit and not on a pro-
rata basis (Advisory Opinion of the Bureau of Working Conditions, Department of Labor
and Employment, on Conditions of Employment of Part-time Workers).
Q: Is SIL commutable?
ANS: As a general rule, SIL is commutable to its money equivalent if not used or
exhausted at the end of the year based on the salary rate at the date of commutation
(IRR of LABOR CODE, Book III, Rule V, Sec. 5). The exception is in the case of
domestic workers, the law provides that any unused portion of the annual leave shall not
be cumulative or carried over to the succeeding years and shall not be convertible to
cash (IRR of Batas Kasambahay Sec. 7, Rule IV).
Illustration:
An employee who is hired on Jangle , 2008 and resigned on March 1, 2009,
assuming he has not used or cortiuft , ny of his accrued SIL, is entitled upon his
resignation to the commutation ofkacq SIL as follows:
SIL earned as of December 31, 2 ,98'*. 5 days
Proportionate SIL for January andtet51
(2/12 x 5 days) 4'. 0.833 days
Total accrued SIL as of Marchfl, 2009 5.833 days
Maternity Leave
Q: What is. maternity 4
ANS: A female Reiter ast 3 monthly onto'buti ns to the SSS in the
12-month period'immedtely a precediqg i +,
: semester of hed chil firth or miscarriage
shall be paicepaitu:ater ity b„enefit eciti alent t .0°.r s wage daily salary
credit for 60 vs or ,78 $ inTdese o esarian el ve "rs--- to the following
conditions:
1. The emp plqyer of her, pregnancy and the probable
•dateof her4ch'Idbirt transmitted to the SSS;
'2. The payment ha It. plo er in 2 equal installments within
30 days from filing p i. tion;
3. The paymen f daft Maternity benefits shall be a bar to the recovery of
sickness bene e same compensable period of 60 days for the same
childbirth, abqrtion.ormiscarriage, or,78 days in .case of caesarian delivery;
4. That the maternity benefits provided under this section shall be paid only for
the first 4 deliveries after March 13, 1973;
5. That the SSS shall immediately reimburse the employer of 100% of the
amount of maternity benefits advanced to the employee by the employer upon
receipt of satisfactory proof of such payment and legality thereof; and .
6. If an employee should give birth qr suffer abortion or miscarriage without the
required contributions having been remitted for her by her employer to the
SSS, orvirithout:Ifie latter having been previously, notified by the employer of
the time of the pregnancy, the employer shall pay to the SSS damages
equivalent to the benefits, which said employee would otherwise have been
entitled to, and the SSS shall in turn pay such amount to the employee
concerned (R.A. No. 8282 or the Social Security Law, Sec. 14-A).
Note: Under the Expanded Maternity Leave Act which was signed into law on February
20, 2019, all covered female workers in government and the private sector, including
those in the informal economy, regardless of civil status or the legitimacy of her child,
shall be granted one hundred five (105) days maternity leave with full pay and an
option to extend for an additional thirty (30) days without pay, provided that in case the
worker qualifies as a solo parent under Republic Act No. 8972 or " Solo Parents'
249
Welfare Act", the worker shall be granted an additional fifteen (15) days maternity leave
with full pay. Maternity leave shall be granted to female workers in every instance of
pregnancy, miscarriage or emergency termination of pregnancy, regardless of
frequency. Provided, that in cases of miscarriage or emergency termination of
pregnancy, sixty (60) days maternity leave with full pay shall be granted (R.A. No.
11210, or the 105-Day Expanded Maternity Leave Law, Sec. 3).
Q: What are the conditions to be entitled to maternity leave for female workers in
the private sector?
ANS: The following are required in availing maternity leave:
1. The female member should be employed at the time of delivery, miscarriage,
or abortion;
2. She must have given the required notification to the SSS thru her employer;
and
3. Her employer must have paid at least 3 months of maternity contributions
within the 12-month period jaimesta2ly before the semester of contingency
(2018 Handbook on arias' Stat toAn lonetary Benefits, pg. 28).
1.
Q: Can a self-employed er d iscama e claim maternity benefits
-K. I
under the Social Selify\A ofelg97?
ANS: Yes. Voluntar plo ,ed-4.9,gmbe of h‘S\ entitled to maternity
leave benefits. T 9c,la fitAct used the works "fe ale ber" without making
any distinctions be er hda9f,tnetlf-err .A. o. 8282, Sec. 14-
A). 40-1,
Note: Matemit besefishal -cover-al hied-and-un arried U fa , including female
workers in the inarfrial eco omy0054.,.
workers erwis kridvr as the 105-Day
Expanded Warm Ltave La , Se,. :6).
Q: Can a dpgnan ipkness benefits

simultaneouslY
ANS: No. A ferha e me be o S mater ty benefits cannot
claim for sicknek bene s fo a • d 6 ays w iin which she was
already paid the rrriternity ene an be entitled to two benefits
for the same periodNEHAN, sti
Note: However, underghe_OrniThr,34; May 24, 1997, if they
have qualifying contribti Tis24Reidule,1he h ad
ed to maternity benefits (1
POQUIZ, supra at 300).
PatemityLeave
Q: What is paternity leave?
ANS: Paternity leave refers to the benefits granted to a married male employee allowing
him not to report for work for 7 days but continues to earn the compensation on the
condition that his spouse has delivered a child or suffered a miscarriage for the purpose
of lending support to his wife during her period of recovery and/or in nursing of the newly
born child (R.A. No. 8187, otherwise known as the Paternity Leave Act of 1996, Sec. 3)
Note: In the event that the paternity leave benefit is not availed of, said leave shall not
be convertible to cash and shall not be cumulative (IRR of R.A. No. 8187, Sec. 7).
Q: What are the conditions to be entitled to paternity leave?
ANS: The conditions are as follows: (LEON)
1. Legally married to, and is cohabiting with, the woman who delivers the baby;
2. Employee of private or public sector;
3. Only for the first 4 deliveries of legitimate spouse with whom he is cohabiting;
and
4. Notified his employer of the pregnancy of his legitimate spouse and the
expected date of such delivery (IRR of R.A. No. 8187, Sec. 7).
250
Q: Discuss the procedure to be entitled to paternity leave.
ANS: The procedures are as follows:
1. Notification: A married male employee shall be entitled to paternity leave by
filing the requisite leave application form within reasonable period prior to the
expected delivery;
2. Availment: The paternity benefits may be enjoyed by the qualified male
employee on the days immediately before, during and after the childbirth or
miscarriage of his legitimate spouse; and
3. Validation Requirement: Any employee availing the paternity benefits may
be required to furnish the necessary documents, e.g., marriage certificate,
birth certificate of the newly born child, medical certificate, etc. (IRR of the R.A.
No. 8187, Secs. 3, 4, & 5).
Q: When should paternity leave be applied for?

ANS: The married employee shall apply for a paternity leave within a reasonable period
of time from the expected date of deliveNa iy his pregnant spouse or within such period
as may be provided by companuOlet,pnd regulations or by Collective Bargaining
Agreement. •
iTug•:`
Note: In case of miscarriage, priorapplica on for paternity leave shall not be required
vei
(IRR of R.A. No. 8187, Sec. 4).
1 eCIF 14 0'
-6,.:.mk,. .4
Q: What rules shall govergilvhertka ale-,employeews already enjoying the
paternity leave benefits?ar
.dear,—
,' St
ANS: Where a male employee is alreVy %. joying the pateril , eave benefits by reason
of contract, company ailigyfor colle9:14 bargaining agreement, he following rules shall
apply: ti .
tom'" . i.
1. If the .exi ting pgekcjity leave benefit is greatee than the benefit herein
7
provided, theAreker benefespa [(-'prevail;
2. If thIp4sLing%1Nternityi eave is vs than - Ah Azoiiiere'n, such existing
vie,,,
ben& it shall betP liPsted d't e e grit of the ai eV tr,r ‘..
Note: However,Verepontract, ernpa policy or colfec nie- bargaining rgaining agreement
provides for an ernetddhcy‘contiggenc r:eave without specific provisions on paternity
leave, the paternity' as4ilierein pro ' ded—shall apply in full -R0/8 Handbook on
Workers' Statutory Mon.etaryibenefits,
•tv,„ p. • -•
ITO,Ta 441.14-iq
hivi
Solo Parent Leave If
Vt\l,
Q: Who are qualified to ayailR,pprental leave or solo parent leave?
ANS: A solo parent employbe can avail a parental leave or solo parent leave of not
more than 7 working days every year (R.A. 8972 or the Solo Parents' Welfare Act of
2000, Sec. 8).
Q: Who is a "Solo Parent"?.

ANS: A "solo parent" is any individual who falls under.any of the. following categories:
1. A woman who gives birth as a result of rape and other crimes against chastity
even without a final conviction of the offender; provided, that the mother keeps
and raises the child;
2. Parent left solo or alone with thee responsibility of parenthood due to death of
spouse;
3. Parent left solo or alone with the responsibility of parenthood while the spouse
is detained or is serving sentence for a criminal conviction for at least 1 year;
4. Parent left solo or alone with the responsibility of parenthood due to physical
and/or mental incapacity of spouse as certified by a public medical practitioner;
5. Parent left solo or alone with the responsibility of parenthood due to legal
separation or de facto separation from spouse for at least 1 year, as long as
he/she is entrusted with the custody of the children;
251
6. Parent left solo or alone with the responsibility of parenthood due to
declaration of nullity or annulment of marriage as decreed by a court or by a
church as long as she is entrusted with the custody of the children;
7. Parent left solo or alone with the responsibility of parenthood due to
abandonment of spouse for at least 1 year;
8. Unmarried mother/father who has preferred to keep and rear her/his
child/children instead of having others care for them or give them up to a
welfare institution;
9. Any other person who solely provides parental care and support to a child or
children; and
10. Any family member who assumes the responsibility of head of family as a
result of the death, abandonment, disappearance or prolonged absence of the
parents or solo parent: Provided, that such abandonment, disappearance, or
absence lasts for at least 1 year (IRR of R.A. No. 8972, Art. III, Sec. 6 (b)).
Note: A change in the status or circumstance of the parent claiming benefits under this
Act, such that he/she is no longer le one.akikthe responsibility of parenthood, shall
terminate his/her eligibility fj3rot se b ne s IR "'of .A. No. 8972, Art. III, Sec. 6,
par.(b)).
Q: Is the solo paren ea4pertible to cash?

ANS: No. In the e en t 6 rentarreyers-not.Avall , it all not be convertible
to cash, unless s Zevl g ed:rureoustyi -How ve if I ave were denied an
employee as a resiilt1 no -comp tance. '&wit%the p ovis n of ese Rules by an
employer, the foremention leave mpc.,be used as a ba s' e computation of
damages (IRR o. 89 v, ,c. •
Q: What are he ditions for es.rporti to entitled-to] 1rental leave or

solo parent le
ANS: A solo pArgn Ib e • to pr t eav car ed hateliAl)
1. He/she 'h. r nde east rp wh er c'6 tinuous or broken
at the e of the a ►
2. He/she as n led 1)1 Y - s the vailme t . thereof within • a
reasonab time p rod, /IAN.
3. He/she hasvresegte 1,4..P
•1 maim_ rd to his/her employer
(IRR of R.A.N . 8.9g
I
Leave Benefits for Women oi ers UM clakftfws
--.....a....„.....,,,......."—
Q: What is special leave benefit (SLB) for women?
ANS: It means a female employee's leave entitlement of two months with full pay from
her employer based on her gross monthly compensation following surgery caused by
gynecological disorders, provided that she has rendered continuous aggregate
employment service of at least 6 months for the last 12 months (D.O. No. 112-A, Sec. 1,
series of 2012).
Q: What are gynecological disorders?

ANS: These are disorders that would require surgical procedures such as dilatation and
curettage. and those involving female reproductive organs such as vagina, cervix,
uterus, fallopian tubes, ovaries, breast, adnexa, and pelvic floor, as certified by a
competent physician. Gynecological surgeries shall also include hysterectomy,
ovariectomy, and mastectomy (D.O. No. 112-11, Sec. 1(b), series of 2011).
Q: Who are qualified to avail of SLB?

ANS: All women employees in the private sector, regardless of age and civil status, are
entitled to special leave benefits (D.O. No. 112, Sec. 1(b), series of 2011).
252
Q: What are the conditions required for a woman worker to avail of the benefit?
ANS: The following are the conditions: (6-RS)
1. She has rendered at least 6 months continuous aggregate employment
service for the last 12 months prior to surgery;
2. She has filed an application for special leave with her employer within a
Reasonable period of time from the expected date of surgery or within such
period as may be provided by company rules and regulations or CBA; and
3. She has undergone Surgery due to gynecological disorders as certified by
competent physician (2018 Handbook on Workers' Statutory Monetary
Benefits, p. 36).
Q: What is the procedure to avail of SLB?

ANS: The procedure to be entitled to special leave benefit is as follows:
1. The employee shall file her application for leave with her employer within a
reasonable period of time from the expected date of surgery, or within such
period as may be provided bypo npany rules and regulations or by collective
bargaining agreement (C1,34)PX
2. Prior application is note -- ply
0? in cases requiring emergency surgical
•
procedure. However, t LI ae must notify the employer verbally or in
writing within reasonable p,recal ime, and after the surgery or recuperating
period, she must immediardi?1e oplicatioqing the prescribed form
(D.O. No. 1f2, Sec. ifferieset
Q: Is SLB cuMulativqia convertib cash?

ANS: No. The special shall bvion-simulative and non vertible to cash unless
otherwise provided b I ective bargai ing agreemerp No. 112-A, Sec.12,
series of 2012).
Leave for Victims of ViofenceAsiainst omen anclIbeir-Chrldren

1m= .4301.31
Q: What is !`vidlencepahttt wqm n a heir chil
ANS: "ViolencAgArt en anYthe hildren," as use• in R.A. No. 9262 or the
"Anti-Violence Again:it! . onkn. and PTheir hildren Act of 2004 " (VAWC), refers to any
act or ,a series of acts cbmm'ited by any p inst a woman who is his wife, former
wife, or against a wo with as :>•r had a sexual or dating
relationship, or with Korn h as a common c , or against her child whether
legitimate or illegitimate, "thin ithout the family abode, which will result in or is likely
to result in physical, se sychological harm or suffering, or economic abuse
including threats of such acts, battery, assault, coercion, harassment or arbitrary
deprivation of liberty (2018 Handbook on Workers' Statutory Monetary Benefits, p. 34).
Q: Who can avail the leave for victims of violence against women and their
children?
ANS: Private sector woman employees who are victims under R.A. 9262, otherwise
known as the VAWC, shall be entitled to the paid leave benefit under such terms and
conditions provided herein (2018 Handbook on Workers' Statutory Monetary Benefits, p.
34).
Q: What is the requirement in order.to be entitled to such leave?

ANS: To be entitled to the leave benefit, the only requirement is for the victim-employee
to present to her employer a certification from the barangay chairman (Punong
Barangay) or Barangay Councilor (Barangay Kagawad) or prosecutor or the Clerk of
Court, as' the case may be, that an action relative to the matter is pending (2018
Handbook on Workers' Statutory Monetary Benefits, p. 34).
.•
253
' ' - •s.,
, ;
:s• • :•?..
Q: What is the extent of such leave benefit?

ANS: In addition to other paid leaves under existing labor laws, company policies,
and/or collective bargaining agreements, the qualified victim-employee shall be entitled
to a leave of up to ten (10) days with full pay, consisting of basic salary and mandatory
allowances fixed by the Regional Wage Board, if any. The said leave shall be extended
when the need arises, as specified in the protection order issued by the barangay or the
court (2018 Handbook on Workers' Statutory Monetary Benefits, p. 35).
Q: Is the leave benefit convertible into cash?

ANS: No. The usage of the ten-day leave shall be at the option of the woman employee.
In the event that the leave benefit is not availed of, it shall not be convertible into cash
and shall not be cumulative (Id.).
Q: What are the consequences to an employer who denies the victim's right to
leave?
ANS: Any-employer who shall prejucliceltra,rigbt of the person under this section shall
be penalized in accordance itrge provisions tflhk Labor Code and Civil Service
Rules and Regulations. pikewir. an emj!)loy'lwtro alai! prejudice any person for
assisting a co-employee` h i is _,,,,,
a yietim-uncle 9--§ all likewise be liable for
discrimination (R.A. Woe' 2 2/.3;6743, par. 2). '''‘
D. SPEC/AL GROUP 5-`0 EMPILO YEE'S'

A, ' P -,.; -
WOMEN if YE, L"
?
Discrimination fr
Li)
s 4 ,f_.-.-.,,,-
Q: What are to dyrent ac a amen. 1 -apron against worrjmck kers?
ANS: The foliar:IL' ace thp_a Is of cirEetialgagorragai stw.9men.Woiltdrs: (PWG-AMC)
1. Discritmi inatid irhP •ayrneritzflesser_co - re- 'sat to emale employee
as aga* m x'e loyee rj,Wacis u) I va e BOR CODE, Art.
133); 4zigh k-P' 47'
2. DiscriNation Wo sb P.O un ty; ,fav 4 a m e emp oyee over a female
employee with resp c 1'0 0 0 aslignmen transfer, training
opportunities, stud n ___
1 :
1fElt1115 2M solely on ccount of their sexes
(LABOR cov.g,
A s.
3. Any Gender-b1V.pi *bon, e c usioik_12 is.triotion which has the effect or
purpose of impairing g 4-01
, g ten, enjoyment, or exercise by
women, irrespective OPtheiwn i st t , on a basis of equality of men and
women, of human rights and fundamental freedoms in the political, economic,
social, cultural, civil or any other field;
4. Any Act or omission, including by law, policy, administrative measure, or
practice, that directly or indirectly excludes or restricts women in the
recognition -and promotion of their rights and their access' to arid enjoyment of
opportunities, benefits or privileges;
5. A Measure or practice of general application that fails to provide for
mechanisms to offset or address sex or gender-based disadvantages or
limitations of women, as a result of which women are denied or restricted in
the recognition and protection of their rights and in their access to and
enjoyment of opportunities, benefits, or privileges; or women, more than men,
are shown to have suffered the greater adverse effects of those measures or
practices; and
6. Discrimination Compounded by or intersecting with other grounds, status, or
condition, such as ethnicity, age, poverty or religion (R.A. No. 9710, otherwise
known as the Magna Carta of Women, Sec. 4 (b)).
254
Q: Is there any exception to the rule against disqualification of a woman from a
work opportunity or from a particular term or condition of employment?
ANS: Yes. Where the job itself necessarily requires a particular qualification, then the
job applicant or worker who does not possess it may be disqualified on that basis. This
will not be unlawful discrimination. This is known as bona fide occupational qualification
or BFOQ (Star Paper Corporation v. Simbol, G.R. No. 164774, April 12, 2006).
Q: What is to be proven by the employer to justify BFOQ?

ANS: The employer must prove two factors:
1. That the employment qualification is reasonably related to the essential
operation of the job involved; and
2. That there is a factual basis for believing that all or substantially all persons
meeting the qualification would be unable to properly perform the duties of the
job (Id.).
Stipulations Against Marriage

. O'
Q: What are the prohibited stipulAtIo
Ang ÷. gainst marriage?
ANS: The Labor Code provides th,41 Va. e unlawful for an employer to:
1. Require as a condition N i.. ent or continuation of employment that a
woman employee shall V A% wed.
2. Stipulate expressly orjecitIO etti tiled a woman employee
shall be deemed reAieed or keparated; orig.&
3. Actually disVsszldischarge diVcriminate or other se prejudice a woman
employee mevcry by reasonfiRe marriage (LAB CODE, Art. 134).
Q: Is there an exception to e_ prohibitib on stipulations pgailist marriage?

ANS: Yes. The upreme Courtruled4i„Ntha e dismissal asei on is stipulation in the
employment Atact i as valid exercise managem nt pr roga : ve. The prohibition
against perso• l'or-mariL l elatia s ips employees-,,.. ,-,. 4- „...., "companies upon
its employees heAeasonatale nde e circums ii - e•-.: se relationships of
that nature migh11%, promit.the ingestof the company. In laying down the assailed
company policy, th emplogr onlyms a protect its interests against the possibility
that a competitor coal-litany ill gain ac 'is secrets and procedures (Duncan
Association v. Glaxo Weltco e, G.R Net ter 17, 2004).
ce'
Prohibited Acts
Q: What are prohibited acct a o ainst women workers?
ANS: It shall be unlawful for an employer: (DDP-RCC)
1. To Deny any woman employee the benefits provided for in Book III, Chapter I
'of the Labor.Code (LABOR CODE, Art. 135 (1));
2. To Discharge any woman employed by.him for the purpose of preventing such
woman from enjoying the maternity leave, facilities, and other benefits
provided under the Code (IRR of LABOR CODE, Book Ill, RULE XII, Sec.
13(a));
3. To discharge a woman employee on account of her Pregnancy, or while on
leave or in confinement due to her, pregnancy (LABOR CODE, Art. 135 (2));
4. To discharge or Refuse the admission of a woman upon returning to her work
for fear that she may again be pregnant (LABOR CODE, Art. 135 (3)); and
5. To discharge any woman or child or any other employee for having filed a
Complaint or having testified or being about to testify under the Code (IRR of
LABOR CODE, Book III, RULE XII, Sec. 13 (d)); and
255
6. To require as a Condition for or continuation of employment that a woman
employee shall not get married or to stipulate expressly or tacitly that upon
getting married woman employee shall be deemed resigned or separated, or
to actually dismiss, discharge, discriminate, or otherwise prejudice a woman
employee merely by reason of her marriage (IRR of LABOR CODE, Book Ill,
RULE XII, Sec. 13 (e)).
Sexual Harassment
Q: What are the specific acts penalized by Anti-Sexual Harassment Act?
ANS: The specific acts are demanding, requesting or otherwise requiring any sexual
favor from the other, regardless of whether the demand, request or requirement for
submission is accepted by the object of the act (R.A. No. 7877, or the Anti-Sexual
Harassment Act, Sec. 3).
Q: Who may be held liable for sexual harassment?

ANS: The following persons can •e.held1rdblMfor.4‘al harassment: (TIP-ME2- ACTS
-AIMD)
1. Teacher;
2. Instructor;
3. Professor;
4. Employe
5. Employ, e,
6. Managbr;
7. Agen
8. Coa
9, Trap r;
10. qupi I r,
11. Any the so avina31 triOrityrin ee or orb scendancy (AIM)
over , or •Vr,•••c
12. Any rson ho to commit ny act of sexual
harass ent as erei • - i ell,a 11
1411
0 • rate in the ommission thereof
by anoth r, witho t whi•44 bee, commi d, shall also be held
liable und this Ac
Q: What is the gravam' o ense

ANS: The gravamen of th il frase in 9 s -nt is not the violation of the
employees sexually but the ab employer. Any employee male or
female may rightfully cry 'foul" provided the claim is well substantiated (PH Aeolus
Automotive United Corp. v. NLRC, G.R. No. 124617, April 28, 2000).
Q: When is sexual harassment committed in a work-related or employment

environment?
ANS: It is committed when:
1. The sexual favor is made as a condition in the hiring or in the employment, re-
employment or continued employment of said individual, or in granting said
individual favorable compensation, terms, conditions, promotions, or
privileges; or the refusal to grant the sexual favor results in limiting,
segregating or classifying the employee which in a way would discriminate,
deprive or diminish employment opportunities, or otherwise adversely affect
said employee (quid pro quo sexual harassment);
2. The above acts would impair the employee's rights or privileges under existing
labor laws; or
3. The • above acts would result in an intimidating, hostile, or offensive
environment for the employee (R.A. No. 7877, Sec. 3).
256
Q: B, a stenographic reporter filed a complaint for sexual harassment against D
due to the latter's constant advances to the former. B alleged that D would run his
fingers across her neck, hold, and squeeze her shoulders during work, and would
initiate inappropriate conversations. She also claimed that D gave her money
allegedly for school expenses with a promise of future privileges. D denied the
allegations by stating that B failed to establish any sexual favor, demand or
request in exchange of her continued employment or promotion. He further states
that the acts imputed to him are without malice or ulterior motive, thus, the
complaint must fail. Was there sexual harassment committed by D?
ANS: Yes. Section 3 of R.A. No. 7877 defines a work-related sexual harassment. Even
if Section 3 calls for a "demand, request or requirement of a sexual favor," it is not
necessary that said demand, request or requirement of sexual favor be articulated in a
categorical oral or written statement. It may be discerned with equal certitude from the
acts of the offender. The combined acts of D resound with deafening clarity the
unspoken request for a sexual favor. Furthermore, it is not essential that the demand,
request or requirement be made as a ondition for continued employment or for
promotion to a higher position. It is4te.$ that the respondent's acts result in creating
an intimidating, hostile or offensive:9w ment for the employee (Domingo v. Rayala,
G.R. No. 155831, February 18, 20 Ile
Q: Who may be victims of p ass ent in education or training

environment? .
ANS: Itmay be committed4CECE)
1. Against one O is,under ttiteai S custody or sup ion of the offender;
2. Against one gse Education7( rung, apprentic r tutorship is entrusted
to the offender or
3. When thetgaral. atgOs made ondition to t f a passing grade or
the enting onors and se larships, ent of a stipend,
alto auces othe ene, its, privi es or c
4. Whk the sex t in an °stile or offensive
Environment:WS" enktrai or apprentic o. 7877, Sec. 3).
Q: What is the liability e employ of office, educational or training

institution?
ANS: They shall be 'clarify igble'15fo =oa age n• from the acts of sexual
harassment committe if the ,erployer or head of office, educational or training
institution is informed of cts by the offended party and no immediate action is
taken thereon (R.A. No. 7 c. 5).
Q: What is the prescriptiVe period for filing the complaint?

ANS: The period is three (3) years (R.A. No. 7877, Sec. 7).
Q: Is the victim precluded from filing a separate action?

ANS: No. The victim may institute a separate and independent action for damages and
other affirmative relief (R.A. No. 7877, Sec. 5). 003
257
Q: Atty. A, a CPA-lawyer and Managing Partner of an accounting firm, conducted
the orientation seminar for newly-hired employees of the firm, among them, B.
After the seminar, Atty. A requested B to stay, purportedly to discuss some work
assignment. Left alone in training room, Atty. A asked B to go out with him for
dinner and ballroom dancing. Thereafter, he persuaded her to accompany him to
the mountain highway in Antipolo for sight-seeing. During all these, Atty. A told B
that most, if not all, of the lady supervisors in the firm are in very productive and
lucrative posts, because of his favorable endorsements. Did Atty. A commit acts
of sexual harassment in a work-related or employment environment? Reason.
(Bar 2009)
ANS: Yes. Atty. A is guilty of sexual harassment. This conclusion is predicated upon the
following contraindication:
1. Atty. A has authority, influence or moral ascendancy over B;
2. While the law calls for a demand, request or requirement of a sexual favor, it is
not necessary that the demand, request or requirement of a sexual favor be
articulated in a categorical_,,,.
oral.or.w iten statement. It may be discerned with
equal certitude fromaetnif thepffpn
3. The acts of Atty,,A to grds13 rdso ) ‘fening clarity the unspoken
request for a s(xual a Ar4pgardlessupL ,ethaer_jt• 1 ccepted or not by B;
4. In sexual /harasatp6Afit is not essential kthsZ‘te, demand, request or
requirem tAlo Aspal—faror," r 136-^m condition for continued
employ 0:1-1r orgbtion i:!.) a ghef,,positiol n.'itvis,Atth that Atty. A's act
result Ain crea.ting do intimidati4g, .hbstile or offence ''environment for B
(Domi1 o v. fayala G.R. No.1.556 1, Febru I8, 00
MINORS \-11.F-A 1 e,--p./
/4
{
Q: Who is a c fi- 1 Ildl:

`-,!sillui-uw
_
ANS: A child r fers
• t pe i nder-149ars-of.ag ( 65-04, Se 3(a)).
Q: What is chilt1 Tabor

4,9
,./4..c.7, s--
ANS: It is any rk or eCono is icy perfo " a 9, !Id that ubjects him/her to
any form of explo ation Nis h and -afety o physical, mental, or
psychosocial development ( lego#
Q: When is a child corm
ANS: It is when:
1. The child is below 18 rs4,09.,..angl.e gaged in work or economic activity
that is not child labor; or
2: The child below 15 years of age:
a. In work where he/she is directly under the responsibility of his/her
parents or legal guardian and where only members of the child's family
are employed; or
b. In public entertainment or information (D.O. 65-04, Sec. 3(c)).
Q: Discuss the rule regarding the employment of minors below 15 years old.
ANS: The general rule is that children, those below 15 years of age, shall not be
employed.
The exceptions are as follows:
1. When a child works directly under the sole responsibility of his/her parents or
legal guardian and where only members of his/her family are employed under
the following conditions:
a. That his/her employment neither endangers his/her life, safety, health,
and morals, nor impairs his/her normal development;
b. That the employer-parent or legal guardian shall provide the said child
with the prescribed primary and/or secondary education (R.A. No. 9231
258
EDAN RED BOOK
or the Special Protection of Children Against Child Abuse, Exploitation
and Discrimination Act, Sec. 2).
2. When the child's employment or participation in public entertainment or
information through cinema, theater, radio, television or other forms of media
is essential, provided that:
a. Employment does not involve advertisements or commercials
promoting alcoholic beverages, intoxicating drinks, tobacco and its by-
products or exhibiting violence (R.A. No. 9231, Sec. 5);
b. There is a written contract approved by DOLE — such contract was
concluded by the child's parents or legal guardians with the express
agreement of the child concerned (R.A. No. 9231, Sec. 2); and
c. The conditions prescribed on the working hours and working permit for
the employment of minors are met.
Note: In the above-exceptional cases where any such child may be employed, the
employer shall first secure, before engaging such child, a work permit from the DOLE
which shall ensure observance of the abm requirements (R.A. No. 9231, Sec. 2).
Note, further: R.A. '9231 is silent vk,ititti
gegbrd_to the issuance of a permit or certificate to
those who are 15 but below 18 yepti.cif pe, although these young persons are still
considered children (Department Atasb . 01-08, series of 2008).
-AMir
Q: Is there an exception to theyro):#1 e,, a;suance QfWork permit prior to the
employment of children belawiN 5 keks. f age?-.
ANS: Yes. In public entertainment or Info ation, the requirments for the issuance of
work permit shall notgrapplicable l'o child below 15 years of age who: (SAAC-
SGSSD)
flY,t'" VI. 1
1. Is a Spot extraistdiAght o he day of film' I taping of a project;
2. Will jointAlfition4loiNIR scree gs;
3. Is patilif the Audience of%li TV show u ess the child's participation is
expEV;
4. Is picked or chos- as a.dtigtesta t from the octij, we TV show;
5. Is a conte,garTfifiasinginagdan or talent con e% -nl-V show but has not•
yet beerigkeed eRAa Semi-fin
6. Is a recipient i f,Giftpiving activi
7. Is a participa 19.-Scitool-related.0'M ': .
,'''.,' ' -i -such as play, skit or recital;
,___ -..
8. Is a participatuin gportsra liqitil eg, -a ngvo -mi shops aimed at developing
the child's talqf or s jtk
9. Will be featur0 a Documentary material (D.C. No. 2 Series of 2018
Guidelines on the', eance of Work Permit for Children Below 15 Years of Age
Engaged in Public Entertainment or Information).
Note: In case the child in the documentary material is -engaged in .child labor, the
producer shall- refer the child to the nearest DOLE Regional/Provincia)/Field Office for
the necessary services needed by the child and his/her family. The identity of the child
laborer shall not be disclosed.
Q: What are the hours of work of a working child?

ANS: The hours of work of a working child are as follows:
1. A child below 15 years of age may be allowed to work for not more than 20
hours a week, provided that the work shall not be more than 4 hours at any
given day;
2. A child 15 years of age but below 18 shall not be allowed to work for more
than 8 hours a day, and in no case beyond 40 hours a week; and
3. No child below 15 years of age shall be allowed to work between 8:00 pm and
6:00 am of the following day and no child more than 15 years of age but below
18 shall be allowed to work between 10:00 pm and 6:00 am of the following
day (R.A. No. 9231, Sec. 3).
259
KASAMBAHA Y
Q: Discuss the Kasambahay Law.
ANS: R.A. No. 10361, otherwise known as the Domestic Workers Act or Batas
Kasambahay, was approved on January 18, 2013. It expressly repealed all the articles
or provisions of Chapter III (Employment of Househelpers) of the Labor Code, as
amended. All laws, decrees, executive orders, issuances, rules and regulations or parts
thereof inconsistent with the provisions of R.A. No. 10361 were repealed or modified
(R.A. No. 10361, Sec. 44).
Q: Who is a kasambahay under R.A. No. 10361?

ANS: Domestic worker or kasambahay refers to any person engaged in domestic work
within an employment relationship such as, but not limited to, the following: general
househelp, nursemaid or yaya, cook, gardener or laundry person, but shall exclude any
person who performs domestic work only occasionally or sporadically and not on an
occupational basis. The term shall not include children who are under foster family
arrangement, and are provided a essItrtdcreaticAr dndgiven
school
an allowance
activities incidental
to education, i.e. baon, transr1 ation, h olivjec (R.A. No.
10361, Sec. 4, par. (d)).
Q: What are the b 4f-g?id rights ailablehtjot:Ap s es

r under the Batas
Kasambahay?
ANS: The rights crt -nvil ges op d- egtiU work r o hay are as follows:
(S2BC—G02—WAPI.:TE PDFM) _14
1. Stan of eatm t. — Tie - . • er or an me e household shall
not s b ed dome tic v,ker oft/rale baha to an Ondko abuse nor inflict
any rm o hysica violet p(dr iafas ent •r any a t ten i g to degrade the
digni • ome orker _ -
2. Board, L g, -. . - p er II provide for the
basic - ties dom ▪ er to • `bi de e adequate meals
per d and um tha ensures safety, and shall
provid appro.ate a--1st he •omesti worker in case of
illnesse and injti4es s s • 41 .*"". ice ithout I s of benefits. At no
instance all the vfe. hj in abe, nce the provision of
these basic ce411 n onks,a action to the domestic
worker (Sec.
3. Guarantee of PrIS'acxgAespe t 1131, of the domestic worker shall
be guaranteed at all tot d enarto all forms of communication and
personal effects. This guarantee equally recognizes that the domestic worker
is obliged to render satisfactory service at all times (Sec.7);
4. Access to Outside Communication. — The employer shall grant the domestic
worker access to outside communication during free time: Provided, that in
case of emergency, access to communication shall be granted even during
work time. Should the domestic worker make use of the employer's telephone
or other communication facilities, the costs shall be borne by the domestic
worker, unless such charges are waived by the employer (Sec. 8);
5. Right to Education and Training. — The employer shall afford the domestic
worker the opportunity to finish basic education and may allow access to
alternative learning systems and, as far as practicable, higher education or
technical and vocational training. The employer shall adjust the work schedule
of the domestic worker to allow such access to education or training without
hampering the services required by the employer (Sec. 9);
6. Prohibition Against Privileged Information. — All communication and
information pertaining to the employer or members of the household shall be
treated as privileged and confidential, and shall not be publicly disclosed by
the domestic worker during and after employment. Such privileged information
260
shall be inadmissible in evidence except when the suit involves the employer
or any member of the household in a crime against persons, property,
personal liberty and security, and chastity (Sec. 10);
7. Daily Rest Period. — The domestic worker shall be entitled to an aggregate
daily rest period of eight (8) hours per day (Sec. 20);
8. Weekly Rest Period. — The domestic worker shall be entitled to at least twenty-
four (24) consecutive hours of rest in a week. The employer and the domestic
worker shall agree in writing on the schedule of the weekly rest day of the
domestic worker: Provided, that the employer shall respect the preference of
the domestic worker as to the weekly rest day when such preference is based
on religious grounds. Nothing in this provision shall deprive the domestic
worker and the employer from agreeing to the following:
a. Offsetting a day of absence with a particular rest day;
b. Waiving a particular rest day in return for an equivalent daily rate of pay;
c. Accumulating rest days not exceeding 5 days; or
d. Other similar arrangemerlist(Sec. 21);
9. Assignment to Non-House d ork. — No domestic worker shall be assigned
to work in a commercial al or agricultural enterprise at a wage rate
lower than that provided tural or nonagricultural workers. In such
cases, the domestic wor paid the applicable minimum wage (Sec.
22);
10. Leave Benefits. — 44ClomestiO oge dered at least 1 year of
service shall bekyitifled to nnual service ince ve leave of 5 days with
pay: Provide at any upd,s.e portion of said ual leave shall not be
cumulative orrifed ovellet succeeding.ye used leaves shall not
be convertibj5sto 0R:fli(ted. 29);
11. SociaL_ ateotherpeaefits. — A estic work has rendered at least 1
mont.015f service 'hall dayprAby the SS hilHtalth, and the Home
Dearrried,;141titual fund or frk G-IBIG itled to all the
benefits in accordelice wAttle pea inent prop rail 4 0 CQZ:e0 y law; (Sec 30).
Note: sltmmidtaReymenre7 6r 2 ntributions s e shouldered by the
employer4deeveag the /Tome rc worker is receiving a wage of P5,000 and
above peli.'inonth, tg domestic all pay the proportionate share in the
premium paytegtsidi• contributi 'ded b law; (Sec 30)
12. Rescue and 412;phabilitatie IV* se a •-i) ees rn orkers. — Any abused or
exploited donetic w r shall be immediately rescued by a municipal or city
social welfare o 1.a social welfare officer from the DSWD in coordination
with the concern tfobAiangay officials. The DSWD and the DILG shall develop
a standard operating procedure for the rescue and rehabilitation of abused
domestic workers, and in coordination with the DOLE, for possible subsequent
job placement (Sec. 31);
13. Right to Form, join, or assist labor organization (IRR of R.A. 10361, RULE IV,
Sec. 1);
14. Right to be provided a copy of the Employment contract (IRR of R.A. 10361,
RULE IV, Sec. 1);
15. Right to Certificate of employment (IRR of R.A. 10361, RULE IV, Sec. 1);
16. Right to Terminate the employment (IRR of R.A. 10361, RULE IV, Sec. 1);
• 17. Right to exercise their own Religious beliefs and cultural practices (IRR of R.A.
10361, RULE IV, Sec. 1);
18. Minimum Wage — the monthly minimum wage of Kasambahay shall not be
less than P3,500 for those employed in the NCR (Wage Order No. NCR-DW-
01), P2,000 for those employed in cities and first municipalities, and P1,500 for
those employed in other municipalities. (IRR of R.A. 10361, RULE IV, Sec. 2);
19. The domestic worker shall be entitled to all Other benefits under existing laws
(Sec. 30);
261
Note: The definition of a "househelper" cannot be interpreted to include househeip or
laundrywomen working in staff houses of a company, like petitioner who attends to the
needs of the company's guest and other persons availing of said facilities. By the same
token, it cannot be considered to extend to then driver, houseboy, or gardener
exclusively working in the company, the staffhouses and its premises. They may not be
considered as within the meaning of a "househelper" or "domestic servant" as above-
defined by law. (Apex Mining Company, Inc. v. NLRC, G.R. No. 94951, April 22, 1991).
Q: What are the rules on the termination of house helpers under the Batas
Kasambahay?
ANS: The rules on the termination of house helpers are as follows:
1. Neither the domestic worker nor the employer may terminate the contract
before the expiration of the term except for grounds provided for in Sections 33
and 34 of the Act;
2. If the domestic worker is unjustly dismissed, the domestic worker shall be paid
the compensation alreakaarned.plus the equivalent of 15 days of work by
way of indemnity; Foo'
3. If the domestic Ofkert avesIty.t.j OifiA ble'r „ ason, any unpaid salary due
not exceedir9 5 diys Nork.shall ortieite‘d,In
f dition, the employer may
recover fromj, he sic worker costsVfie e aled to the deployment
expenses( if ii:,Prsvidedrth"Urtlie'-seed9.e4k?.. bee terminated within 6
months( 4 don)etic mork0 employm nt;
4. If the d rat f th'domestici
k s:elzicd'is not eter iqed ei er in stipulation or
by th a ur of th service, th'eeroployer o the o era worker may give
notic the w mg rei a io ship 5 ays before t e • t nded termination
of th s rvic ; and I1
5. The o § *c worker an s payer m gee upon written
noti re-te mi e the cdrira wq.
h of em the employment
relati s A.
Q: May the do estic ork en relatirhip at any time

before the expir Lion of e c rky
ANS: As a genera le, the ode t te minate tie contract before the
expiration of the te
The exceptions are as Ildv
1. Verbal or emotiana_ rker by the employer or any
member of the housZhe - . . . . ..
2. Inhuman treatment includin abuse of the domestic worker by the
employer or any member of the household;
3. Commission of a crime or offense against the domestic worker by the
employer or any member of the household;
4. Violation by the employer of the terms and conditions of the employment
contract and other standards set forth under this law;
5. Any disease prejudicial to the health of the domestic worker, the employer, or
member/s of the household; or
6. Other causes analogous to the foregoing (R.A. No. 10361, Sec. 33).
Q: May the employer terminate the services of the domestic worker at any time
before the expiration of the contract?
ANS: As a general rule, the employer may not terminate the contract before the
expiration of the term.
The exceptions are as follows: (MGFC-VAO)
1. Misconduct or willful disobedience by the domestic worker of the lawful order
of the employer in connection with the former's work;
262
A
2. Gross or habitual neglect or inefficiency by the domestic worker in the
performance of duties;
3. Fraud or willful breach of the trust reposed by the employer on the domestic
worker;
4. Commission of a crime or offense by the domestic worker against the person
of the employer or any immediate member of the employer's family;
5. Violation by the domestic worker of the terms and conditions of the
employment contract and other standards set forth under this law;
6. Any disease prejudicial to the health of the domestic worker, the employer or
member/s of the household; or
7. Other causes analogous to the foregoing (R.A. No. 10361, Sec. 34).
Q: XYZ Mining Co. employed A to perform laundry services. A suffered injuries

due to an accident while performing her assigned task, causing her absence from
work. XYZ Mining Co. offered P5,000.00 as compensation to persuade her to leave
her job but A refused. XYZ Mining Co. ycl not allow her to return to work and later
on, dismissed her. A sought asittORge with DOLE alleging that she should be
granted benefits since she shtAiWbsAonsidered as a house helper, and not a
regular employee of XYZ Mining.--IttAApnsidered a house helper?
ANS: No. Rule XIII, Section 1 (b):1#14445Ahe Labor Code provides that househelpers
shall refer to persons, whether tqle,..
1,1irkpriA9Mio rendeaservices in and about the
employers home and whieseligsWareiganmedessary or desirable for
maintenance and enjoynterethereof, dndilninisters exclusive', to the personal comfort
and enjoyment of the ptfiployers farrily4e definition canri6 be interpreted to include
househelper or laund4prflan worljnidT Ataff houses who ate ds to the needs of the
company's guests afitlgoRerxpersons agiling of the acili 'es The criterion is the
personal comfort061(1 enicyrnent of the fajAily of the ertylonr. T'e mere fact that the
house helper"orking within the premises of the business of e employer and in
relation to orepc$oue,stioNvith tip busing, warragtitqw,TOplmtpihat said house
helper is and should be doggidereil% a reNiar emplOefti4Argtenpoyer (Apex Mining
h.v.s
Co., Inc. v. Natio al La$orfZelations supra).
HOMEWORKERS
Q: Who is a homewoi;,e
.44%
ANS: One who performtin or about his home, any processing of goods or materials, in
rf .
whole or in part, whichilt been furnished, directly or indirectly, by an employer and
thereafter to be returned tq..bellatter (IRR of LABOR CODE, Book Ill, RULE XIV, Sec. 2,
par. (b), as amended by D.O. No. 5, dated February 4, 1992).
•
Q: Define Industrialized Homework.
ANS: It is a system of production under which work for an employer or contractor is
carried out by a homeworker at his/her home. Materials may or may not be furnished by
the employee or contractor. It differs from regular factory production principally in that, it
is a decentralized form of production where there is ordinarily very little supervision or
regulation of methods of work (D.O. No. 05-92„ Sec 2).
Note: Do not confuse a homeworker from a domestic helper (D.O. No. 05-92, February
4, 1992).
Q: What is considered as home for purposes of employment of homeworkers?

ANS: Home means any room, house, apartment or other premises used regularly, in
whole or in part, as dwelling place, except those situated within the premises or
compound of an employer, contractor or subcontractor and the work performed therein
is under the active or personal supervision by or for the latter (D.O. No. 05-92, Rule XIV,
Sec. 2).
263
Q: What are the rights and benefits accorded to homeworkers?
ANS: The following are the rights and benefits given to homeworkers:
1. Right to Self-Organization - Homeworkers shall have the right to form, join or
assist organizations of their own choosing, in accordance with law (D.O. No 5-
92, Sec. 3);
2. Registration of Homeworkers' Organization - Any applicant homeworker
organization or association shall acquire legal personality, and shall be entitled
to the rights and privileges granted by law to legitimate labor organizations
upon issuance of the certificate of registration (D.O. No 5-92, Sec. 4); and
3. Payment for Homework - Immediately upon receipt of the finished goods or
articles, the employer shall pay for the work performed less corresponding
homeworkers' share of SSS, MEDICARE, and ECC premium contributions
which shall be remitted by the employer to the SSS with the employers' share
(D.O. No 5-92, Sec. 6).
Q: What are the prohibited homeworks2--,,,

ANS: The following homewor all no bepe:prcned
1. On explosives, f[ lc bs gke h faqter;
2. Drugs and pgisrorcpose'""„0
. . .
3. Other artic14,,the
- p sing of which re i 09stitbre to toxic substances
(D.O. Nyg-g2i'Se 13 k,
.4211. To) k 7*
Q: What are th. coact ions for the- de pctidb fro a ho eworker's earnings for
A
the value of the matTals hich hal/0;8bn lost, de troye (. 61 ed or, otherwise,
damaged?
:.. ..-. I
ANS: No dedutt4hall be aadiu 1es iheROVing conditions et: (ROF-20)
1
1. The hbmevidrker co eme Isac arlp
_ -Shown o be Rgslaonlible for the loss or
..,,,t.ili.
damAg -
2. The. qppa ifpl how cause why
dedu
'41)7
3. The a ount ouch air e and s all not exceed the
actual lass orRage,
4. The dedu ion is m de 6t4tic unt dedied does not exceed
20% of the omewor '-i-'ek.ni of 'Ire LABOR CODE, Book
Ill, RULE XI , el
NIGHT WORKERS
R.A. No. 10151 repeals Article 130 and 131 and adds a new chapter to Book Ill, Title M
of the Labor Code. The new chapter, which shall now constitute Articles 154 to 161 of
the Labor Code, specifically regulates the employment of night workers.
Q: Who is a night worker?

ANS: A night worker is any employed person whose work requires performance of a
substantial number of hours of night work which exceeds the specified limit by the SOLE
after consulting the workers' representatives/labor organizations and employers
(LABOR CODE,- Art. 154, as amended by R.A. No. 10/51).Under the Rules
Implementing R.A. 10151, a night worker means any employed person whose work
covers the period from 10:00 P.M. to 6:00 A.M. the following morning provided that the
worker performs no less than seven (7) consecutive hours of work (D.O. No. 119-12,
Sec. 2).
Q: Who are covered under the Night Workers Act?

ANS: It covers all persons, who shall be employed or permitted or suffered to work at
night, except those employed in agriculture, stock raising, fishing, maritime transport
and inland navigation, during a period of not less than 7 consecutive hours, including the
264
interval from midnight to five o'clock in the morning, to be determined by the DOLE, after
consulting the workers' representative/labor organizations and employers (LABOR
CODE, Art. 154, as amended by R.A. No. 10151).
Q: What are the rights of night workers under the Labor Code?
ANS: The following are the rights of night workers:
1. Right to free health assessment (LABOR CODE, Art. 155 as amended by R.A
10151):
a. Before taking up assignment as night worker;
b. At regular intervals during such assignment; and
c. If they experience health problems during such an assignment, which
are not caused by, factors other than the performance of night work.
Note: With the exception of the finding of unfitness for night work, the
finding of such assessments shall be confidential and shall not be used
to their detriment, subject to applicable company policies (D.O. No.
119-12, Sec. 3)
2. . Right to be transferred to azt4i4lar job which they are fit to work, whenever
practicable, if found unti, tqc1Pwdr due to health reasons (LABOR CODE, Art.
157); 1.1. W C'Os
aì- t 1 .
Note: If such transfer to; so,p clp is not practicable, these workers shall be
granted the same bengifts,4deo 'brio .arkers whdrare unable to work, or to
secure employment duringstIcjI am'
3. Right to safe RckOorking cOdiions and other m datory facilities (LABOR
CODE, Art. 1 56yr
.04 4firuzi
Note: The enplders areirequned under the apt° provide the following,
subject to e...x,eptrs-Ja€may be ovided by DOLI: •.
a. SuliAle fipeikid•and em ency facilitiel(LA OR ODE, Art. 156);
• .-,.
b_ actativtation in requi companies D.O. o. i 9-12, Sec. 4);
epapteSglet
Ae f‘Filities f en an a a t
,tw-,,, , '4,..- 19-1Z Sea 4);
Facility for ating 1 7 po e drinking .„. - K` O. 119-1Z Sea 4);
e. .tapiro - stidb uart in the establis trfen and •
f. Titspdrtailai frorry the •rk premises to the nearest point of their
residepce (LIBOR COD 5
r.,-- '
4. Right of pregr1, 40wiiinen to alte 'ght work;
5. Right of pregnant wonisf: gainst is i a s n • diminution of benefits on
. account of *nen • child birth, and childcare responsibilities (LABOR
.CODE, Art. 158);
6. Right to Social Se nty Benefits such as paid maternity leave in accordance
with R.A. No. 8282 and other existing conipany policy or-collective bargaining
agreement (D.O. No. 119-12, Sec. 6); and• . . . •
7. Right of regular workers to be consulted before introduction of night work
Note: R.A. No. 10151 repealed Articles 130 and 131 of the Labor Code, which prohibit
women from working at night. Instead of the blanket prohibition, the new law limits the
ban to pregnant and nursing mothers.
Q: What should the employer do if the employee is found unfit for night work?
ANS: Night workers who are certified as unfit for night work, due to health reasons, shall
be transferred, whenever practicable, to a similar job for which they are fit to work. If
such transfer to a similar job is not practicable, these workers shall be granted the same
benefits as other workers who are unable to work, or to secure employment during such
period. A night worker certified as temporarily unfit for night work shall be given the
same protection against dismissal or notice of dismissal as other workers who are
prevented from working for reasons of health (LABOR CODE, Art. 158).
265
BEDAN RED BOOK:,.
Q: What are the alternative measures to night work for pregnant and nursing
employees?
ANS: As far as practicable, pregnant and nursing employees shall be assigned to day
work, before and after childbirth for a period of at least 16 weeks which shall be divided
between the time before and after childbirth. Where transfer to day work is not possible,
a woman employee may be allowed to extend, as recommended by a competent
physician, her maternity leave without pay or using earned leave credits of the worker, if
any (D.O. No. 119-12, Sec 6).
APPRENTICES AND LEARNERS

Q: Who is an apprentice?
ANS: A person undergoing training for an approved apprenticeable occupation during
an established period assured by an apprenticeship agreement (R.A. No. 7796,
otherwise known as the Technical Education and Skills Development Authority (TESDA)
Act of 1994, Sec. 4 (k)).
Q: Define Apprenticeship. 11, 1,

ANS: "Apprenticeship" xearis itrejning with'
7931qm ent with compulsory related
theoretical instruction,soinvolvircotiffgardtWeetaniapOre`htice and an employer on
an approved apprerktiCeable'decupation(13.4.A94.1Z96r.4,15 ec4 ,
Q: What is an AppreOc shilAgreFme,ilt?X

ANS: It is a contras wherbin a irosif.ative ernpl yer vglsrlAnself to train the
apprentice wh accelas-the_terifiXLtraining or a re6ogrfifed apprenticeable
occupation em wri•i g the ights,,,clutiesil:prxtreeponsibilities opedc (R.A. No. 7796,
s IIY
Sec: 4 (I)).
Q: What is an ppreilti.cesql? =pie

ANS: It is an of 631Apon\ nd approved for
apprenticeship `the TESDAs
Note: Apprentic ship pq.)gra rfor ap royal, for else apprentice
becomes regular‘e , mployee if en al""Ê rfae d ark" espite on-approval of the
apprenticeship agrkement rkratk e',009ralion v. A, G.R. No. 152894,
August 17, 2007). \
Q: When is there no valid pp entices-%

ANS: There is no valid apprentice-shi
1. The Agreement submitted to the TESDA was made long after the workers
started undergoing apprenticeship;
2. The workers were made to undergo apprenticeship for occupations Different
from those approved by TESDA;
3. The workers undergoing apprenticeship are already Skilled workers; or
4. The workers were required to continue undergoing apprenticeship beyond six
co months (Atlanta Industries Inc. v:Sebolino, G.R. No. 187320, January 26,
2011).
Q: Who are learners?

ANS: Learners are persons hired as trainees in semi-skilled and other industrial
occupations which are non-apprenticeable and which may be learned through practical
training on the job in a relatively short period of time which shall not exceed three (3)
months (LABOR CODE, Art. 73).
Note: Learnership programs must be approved by the TESDA (R.A. No. 7796, Sec. 4).
266
• • •1 • • • • •t ?. 41 "• ì5 • ••• • •• ••,
•; • -• •••••• *2 4.. „ ; !. •• iii • 1

,• .a..• t • ••:•
Q: Does an employer have an obligation to hire learners as employees?

ANS: Yes. Unlike in the case of apprentices where the participating enterprise is given
only the option to hire the apprentice even prior to the completion of the apprenticeship
period, under TESDA Circular No. 16, series of 2004, it is expressly provided that "the
enterprise is obliged to hire the learner after the learnership period."
Q: What are the distinctions between learnership and apprenticeship?

Learnership Apprenticeship
As to Practical Training
Both learnership and apprenticeship involve practical training on-the-job

• As to Training Agreement "
Governed by a learnership agreeNenp„ Governed by an apprenticeship

agreement
.• As to Occupation
. t c17 t
Involves learnable occupation's consisting '6orrearks_d_p enticeable occupations
of semi-skilled • and, &her industrial or any trade form of employment or
occupations whie.: 4, are occupation I approved' for
apprenticeable. apprentices iji
1 by the DOLE
4 ei
Secretary
• As to Th9oietical Instructions
May or may not be—siippleAeted

related theoretical intrians.
-%-,,t42v*Y. Nfth
• As to Ratid oftheoreticalinstructions and on-the-job training
The normal ratio is400 how:With-dorsAr1-46

r4- h esffrrf n t or every 2,000 hours of -
practical on-the-job faininggeoretical instructions time for occupations requiring
less than 2,000 hours Vrpficiency should be computed on the basis of such ratio.
•..• As,to Competency.-,based System
It is required that it be implemented based Not required

on the TESDA-approved competency-
based system.
As to Daaiiiin of Training •• • •?' • •
Involves practical training on the job for a Requires proficiency of more than 3
period not exceeding 3 months. months but not over 6 months of
practical training on the job.
slolQualifidatiOnt. •:•••
The law does not mention. The following qualifications are

required to be met by apprentices
under Article 59 of the Labor Code:
267
1. Be at least 15 years of age;
2. Be physically fit for the occupation
in which he desires to be trained
3. Possess vocational aptitude and
capacity for appropriate tests; and
4. Possess the ability to comprehend
and follow oral and written
instructions (IRR of LABOR
CODE, Book II, RULE VI, Sec. 11).
. As to Circumstances Justifying Hiring of Trainees
Article 74 of the Labor Code, expressly Not required

prescribes the pre-requisites before
learners may be validly employed
As to Limitations on the Number of Trainees

./
A participating ende n wed to Noostmttar ca imposed
take in learners QM 0:2, ma . mum-of--
20% of its totalg&Ida ce.
1)3 n
As to Option to Employ
t , .
The enterprs to.,:Atre...1_z_
tgp .111p• e • terprise§iven only an
learner after- the la e learnetshi
ks• ". • action to hir ptiprentice as an
period. emplo ee
•f-,
5)
The wage rat of a lea,finer tkian'sp re ticvs- tutory minimum
(1 CHAN, Bar ReviAr on .1xL2Lps,09

201 fter CHAN
REVIEWER 2017].
I
PERSONS WITHDISABILITIES'k.,....„,
Q: Who are persons with disability (PWDs)?
ANS: They are those suffering from restriction or different abilities, as a result of a
mental, physical or sensory impairment, to perform an activity in the manner or within
the.range considered normal fora human being (IRR of R.A. No. 9442, Sec. 5.1).
Q: Who is a qualified individual with a disability?

ANS: A qualified individual with a disability or a qualified handicapped worker is an
individual with a disability who, with or without reasonable accommodations, can
perform the essential functions of the employment position that such individual holds or
desires. However, consideration shall be given to the employer's judgment as to what
functions of a job are essential, and if an employer has prepared a written description
before advertising or interviewing applicants for the job, this description shall be
considered evidence of the essential functions of the job (R.A. No. 7277, otherwise
known as the Magna Carta for Disabled Persons, Sec. 4(1)).
Q: What is impairment? •
ANS: It refers to any loss, diminution or aberration of psychological, physiological, or
anatomical structure or function (R.A. No. 7277, Sec. 4(b)).
268
Q: What is disability?
ANS: It means (1) a physical or mental impairment that substantially limits one or more
psychological, physiological or anatomical function of an individual or activities of such
individual; (2) a record of such an impairment; or (3) being regarded as having such an
impairment (R.A. No. 7277, Sec. 4(c)).
Q: What is handicap?
ANS: It refers to a disadvantage for a given individual resulting from an impairment or a
disability, that limits or prevents the functioris activity, that is considered normal given
the age and sex of the individual (R.A. No. 7277, Sec. 4(d)).
Discrimination
Q: What is the rule on discrimination against employment of PWDs?
ANS: No entity, whether public or private, shall discriminate against a qualified disabled
person .by reason .of disability in regard to job application procedures, the hiring,
promotion, or discharge of employeew loyee compensation, job training, and other
terms, conditions, and privileges of„..t..rripl ent (R.A. No. 7277, Sec. 32).
e- t•er
SOVA
Q: What are the acts of discriminamontwmployment?
ANS: The following constitute actsb(diit'' at nation (LQU-LF.• eD-FE):
6-v.
1. Limiting, segregating oriclassp :!elicant in such a manner
that adversely affects is wo clifilsortunities,
2. Using Qualifi tiOstandards ecpployment tests or er selectior. criteria that
screen out o end to scrept a disabled pe • nless such standards,
tests or other- lection criteria shown to be ja) ted for the position on
question a d=are s stent with siness necessity;
3. Utilizin -,standara'‘, cnreria,ar. m ods of admi istra "o n tat:
artave tt fa effect of discrim Lion on the f asis f disa ility; or
b3
40Perpe lthe biscrimin h n of o abject to common
l-Kh
admi is b hide coprril
t
4. Providirtg tsg‘qmpensition,54:-..uch as salary, wage or other forms of
remunerat benefit--.1' o a qualified disabled employee, by reason
of his disa trqd the amou au a non-disabled person performing
the same worlds ttititled 0 c•
•';1-;-'1?
;
5 Favoring a ni? -disab -amp ogee over a qua ied disabled employee with
respect to pro otion itl aining opportunities, study and scholarship grants,
solely on acco tb e latter's disability;
6. Re-assigning or transferring a, disabled employee to a job or position he
canitot perform by reason of his disability; •
7. Dismissing or terminating the services of a disabled employee by reason of his
disability unless the, employer can prove that he impairs the satisfactory
performance of the work involve to the prejudice of the business entities;
Provided, however, That the employer first sought provide reasonable
accommodations for disabled persons;
8. Failing to select or administer in the effective manner employment tests which
accurately reflect the skills, aptitude or other factor of the disabled applicant or
employee that such test purports to measure, rather than the impaired
sensory, manual or speaking skills of such applicant or employee, if any; and
9. Excluding disabled persons from membership in labor unions or similar
organization (R.A. No. 7277, Sec. 32).
269
Q: Are PWDs eligible as apprentices or learners?
ANS: Yes, PWDs shall be eligible as apprentices or learners, provided, that their
handicap is not as much as to effectively impede the performance of job operations in
the particular occupation for which they are hired; provided further, that after the lapse of
the period of apprenticeship, if found satisfactory in the job performance, they shall be
eligible for employment (R.A. 7277, Sec. 7).
Q: What are the prohibitions on verbal or non-verbal public ridicule and

vilification?
ANS: The prohibitions are:
1. No individual, group or community shall execute any acts of ridicule against
persons with disability in any time and place which could intimidate or result in
loss of self-esteem of the latter (R.A. No. 7277, Sec. 40, as amended by R.A.
No. 9442);
2. Any individual, group, or community is hereby prohibited from vilifying any
person with disability which_could.rese into loss of self-esteem of the latter
(R.A. No. 7277, Sec .,.42;as aniendediby,RA,Vo. 9442).
,,, tk ' 1p i 'i- -,
Q: Complainants are,daarmute t olaW-era,:hited.-4orivirib‘s periods from 1988 to
1993 by respondery/Far EaOBank and Trust Clir,as'IVIorerSorters
'N .ti NA
and Counters
through a uniforniryOko de0=,--agranielit-called,
,; ..., EmplVment Contract for
-,
e. ye --
Handicapped Wo br .A. ublsequenjly, theyvwere yismisisedAhey maintain that
they should b con, pere regular b, employees iqeca4c" thet task as money
sorters and ounters wa necessary -and desirable fo usiness of the
respondent b IA latte su miglQat petitionei's were Mired nly as "special
workers and ould not n alijiliy411beZbisiccered as' pa of the regular
complement of thofilank." ether*C0e,,Ospec'arl wor arses der Article 80 of
the Labor Co ciielLFVBT,Ci ontentit,iliAlifect?
ANS: No. The 19a9nalII Cal*.'• Disa p t ersons mates thato ualified disabled
employee show &Vett en tee e tee_ ,alice.to mpl0 ent as a qualified
able-bodied person. T e fadc'dh tiferi enipjti ;Yeda`svere ualifie f disabled persons
necessarily remot the ployavibk cowers frt the bit of Article 80 on special
workers. Since th Magna arlaSarcsrf m had:rights of qualified able-bodied
persons, they are thas,covece .y:Arlider4a0ADPI....s-' e tam odelon regular employment
(Bernardo v. NLRC, G.R11IVt7411 uly42-4'999 \, ..."
Incentives for employers

Q: What are the adequate incentives given to private entities, which employ
disabled persons?
ANS: The following are the incentives:
1. Priyate entities that employ disabled persons who meet the required skills or
qualifications, either as regular employee, apprentice or learner, shall be
entitled to an additional deduction, from their gross income, equivalent to 25%
of the total amount paid as salaries and wages to disabled persons: Provided,
however, that such entities present proof as certified by the DOLE that
disabled persons are under their employ: Provided, further, that the disabled
employee is accredited with the DOLE and DOH as to his disability, skills, and
qualifications;
2. Private entities that improve or modify their physical facilities in order to
provide reasonable accommodation for disabled persons shall also be entitled
to an additional deduction from their net taxable income, equivalent to 50% of
the direct costs of the improvement or modifications (R.A. No. 7277, Sec. 8).
Note: Improvements and modifications of facilities required under B.P. Blg. 344 are
excluded (R.A. No. 7277, Sec. 8)
270
IV. SOCIAL WELFARE LEGISLATION
SSS LAW (R.A. No. 8282)
Coverage and Exclusions
Q: Who are compulsorily covered by SSS Law?
ANS: The following are compulsorily covered:
1. Employees:
a. All private sector employees, whether permanent, temporary, or
provisional, who are not over sixty (60) years of age (R.A. No. 8282,
Sec. 9);
Note: Employee is any person who performs services for an employer
in which mental and physical efforts are used and who receives
compensation for such services, where there is an employer-employee
relationship (R.A. No. 8282„ Sec. 8, par. (d)).
b. Domestic helpers whsiagot over sixty (60) years of age with a monthly
income of not lesUhangn,e thousand pesos (R.A. No. 8282, Sec. 9,
par. (a)) and haWride'reld at least one month of service (R.A. No.
10361, Sec 30);Valka FA,
c. A Filipino seafarer, ii13.2„n igninog_of the stapilard employment contract
and actual d5ployksj anninffliggency and the foreign
principal, who are "'scoffs ered as-beirLemp oyers (SSS Guidebook,
2017, Ar
d. All er0yrs of a VeigI n government, irlemational organization, or
their Wifolly,pywed4instrVentality whichi feriteled into an agreement
wittAL goverhnent for the inadon%f such employeesin
4he SSS 8282, c. 8, par. 0)( ).
2. Emascaers:
' 4nrper§,trt; near or jund cal, domest
at'4•L'A1
1 ho carries on in
the PhilViWes ally de usiness, in , ing, and uses the
,,itts
segicevotonotherff per who is under His orders as regards the
em13,Mment* except tIL. Government and any of its political
suliolivisionsRR.A. No. 8k- ;f 8, 'ar. (c))
g, oitt .
b. A sociat civico prpfe, r " ritab. e, and other non-profit
organiotion, wbr,;e&hirel e services oremployees, are considered
"emplatrf: (S)§, Guidebook, 2017, p. 4.).
c. Any foreigwvernment. international organization, or their wholly
owned instrumentality which entered into an agreement with the SSS
for the coverage of its.Filipino employees (R.A. No. 8282, Sec. 8, 0)).
d. A household employer whip engages and controls the services of a
domestic worker (R.A. No. 10361, Sec. 3, (e)).
3. Self-Employed Persons: Such persons as may be determined by the SSC,
under such rules and i'egulations as it may prescribe, including but not limited
to the following:
a. All self-employed professionals;
b. Partners and single proprietors of businesses, and Directors or
Trustees of the Board of corporations duly registered with appropriate
government agencies;
c. Actors and actresses, directors, scriptwriters and new correspondents
who do not fall within the definition of the term "employee" under
Section 8, par. (d) of R.A. No. 8282;
d. Professional athletes, coaches, trainers and jockeys;
e. Individual farmers and fisher folks;
271
f. Workers in the informal sector such as market and ambulant vendors,
watch-your-car-boys, transport workers, and those similarly situated
(SSS Guidebook 2017, p. 5);
g. Contractual and job order personnel engaged by the Government
through a Contract of Service and who are not coverable under the
GSIS Law; and
h. Any other person as determined by the Social Security Commission
under such rules and regulations as it may prescribe (R.A. No. 8282,
Sec.9-A).
Q: Who are voluntarily covered?

ANS: The following may be covered on a voluntary basis:
1. Non-working spouse (NWS), who is legally married to a member who has at
least one (1) posted contribution, who devotes full time to managing the
household and family affairs and has never been a member of SSS (R.A.
No.8282, Sec. 9 (b));
2. Overseas-based Fili•iniffg*°M —'—'rig'tdruitzi in the Philippines by foreign-
based employer_or e sloyreep r a r d,pr !basting a source of income in a
foreign coun, r r s din „,permanean a lopirlcountry (R.A. No. 8282,
Sec. 9, par.)*
3. Volunta e ).orOWdon-prevesIK-c2veredkas an SSS member
who ha es posteVorlibu4n anatis n IprOryorking as either an
EE, SEfor , or has no inconedfor a given &nod, and opts to continue
payin fcontri• ution to maintpinAis right t• full heeRsi(SSS Guidebook,
2017
Q: Who may e ed by greeditk

ANS: Any fo eigny ov a t, intern tiorral organt7aTtjpn, or the r wholly owned
instrumentality ng in tin hailippines }7/enti !Ante n agreement with
the Philippine nt • I c I qo ,614; c dyee in the SS except those
already covere by the r res• - • cfirefnentysyste (R. A. No. 8282,
Sec. 8 0(4)).
Q: Enumerate the knployrn ch clo ticep,pled from compulsory

coverage under the SSS ld
ANS: The following areaernpiteTfrommAti coderage under the SSS law: (C-
VPFT)
1. Employment purely Casua an or the purpose of occupation or business
of the employer (R.A. No. 8282, Sec. 8 0(1));
2. Service performed on or in connection with an alien Vessel by an employee if
he is employed when such vessel is outside the Philippines (R.A. No. 8282,
Sec. 8 0(2));
3. Service performed in the employ of the Philippine government or
instrumentality or agency thereof (P.A. No. 8282, Sec. 8 (j)(3));
4. Service performed in the employ of a Foreign government or international
organization, or their wholly-owned instrumentality, except service performed
in the employ of any foreign government, international organization, or their
wholly-owned instrumentality which entered into an agreement with the SSS
for the coverage of its Filipino employees (R.A. No. 8282, Sec. 8 (j) (4) ; and
5. Other services performed by Temporary and other employees, which may be
excluded by regulation of the Commission (R.A. No. 8282 Sec. 8 0(5)).
Note: Employees of bona fide independent contractors shall not be deemed employees
of the employer engaging the services of said contractors (R.A. No. Sec. 8(j)).
272
Q: When does the coverage of members take effect?
ANS: Effectivity of coverage varies based on whether a member's coverage is
compulsory or voluntary.
Effectivity of Compulsory Coverage:

1. For an employee — on the first day of employment (R.A. No. 8282, Sec. 10);
2. For an employer — on the first day of his operation (Id.);
3. For self-employed persons — upon his registration with the SSS (Id.);
Note: Registration shall mean payment of the first contribution (Id.).
4. For self-employed — on the month and year of first monthly contribution (Id.).
Effectivity of Voluntary Coverage:

1. For a non-working spouse — on the applicable month and year of the first
contribution payment (SSS Guidebook 2017, p. 7);
2. For a separated member — on the month the person resumed payment of
contribution (R.A. No. 8282, Semi 1).
Q: The owners of Falcon Factotv,a4g9mpany engaged in the assembling of

automotive components, decida, b0a ilheir building renovated. Fifty persons,
composed of engineers, architetOgi -Ther construction workers, were hired by
the company for this purpose. Theloo estrtr tOle completed in 3 years.
-4puttr
-
The employees contended
contendedthat sir o w lakOR completed after more
than 1 year, they shoulckbe subjectfo ompulsory cove ge under the SSS Law.
Do you agree with theF qecintentiorg x lain. (Bar 2002)
ANS: No. The engineers, alchitectant ether.constructiootters are not subject to
compulsory coverage rdeath.eltocial S urity Law. The r 4rnpyment in the Falcon
factory, which iv,pgaged4rtherassembl of automotile pornts, is not regular,
but purely casual. (R.AA W 8282, Sga-,, 8, bar. j) An em Toym nt sh01 be deemed to be
regular wher fie maloye has een e ed to pe 'fid w ich are usually
necessary or esirable i usu ,14pusi or trade • er. ( 3.a No. 442
Art. 295) Such ergeto men t s not fo e pose of the nes of the company. They
were not even hireolpfiTgAr maintenance personnel; their employment was limited to
the renovation of the alcorl factory balin alcon's business is not to renovate
buildings (ALCANTARA- sqpira at 934).
AASiz =.!-RtTglic
Dependents and Beneficiaries
Nie
Q: Who are the benefici ties under the SSS Law?
ANS: The following are the beneficiaries:
1. Primary beneficiaries:
a. The dependent spouse until he or she remarries; and •
b. The dependent legitimate, legitimated or legally adopted and
illegitimate children.
Note: The dependent illegitimate children shall be entitled to fifty
percent 50% of the, share of the legitimate, legitimated or legally
adopted children. In the absence of the dependent legitimate,
legitimated or legally adopted children of the member, his/her
dependent illegitimate children shall be entitled to 100% of the benefits.
2. Secondary beneficiaries (in the absence of primary beneficiaries):
a. Dependent parents; and
b. In the absence of the dependent's parents, any person designated by
the covered employee as secondary beneficiary (R.A. No. 8282, Sec.
8, par. (k)).
Note: The person designated by the member shall be one who has a right to claim for
support from the deceased member under the Family Code, including dependent
children who have reached the age of majority (SSS Guidebook 2017, p.81)
273
`SEDAN BRED f BOOT
Benefits
Q: What are the benefits available under the SSS Law?
ANS: The SSS Law grants the following benefits to its members: (M2RS-PD2F)
1. Retirement Benefits (R.A. No.8282, Sec. 12-B);
2. Death Benefits (R.A. No. 8282, Sec. 13);
3. Permanent Disability Benefits (R.A. No. 8282, Sec. 13-A);
4. Funeral Benefit (R.A. No. 8282, Sec. 13-B);
5. Sickness Benefit (R.A. No. 8282, Sec. 14)
6. Maternity Leave Benefit (R.A. No. 8282, Sec. 14-A);
7. Monthly Pension (R.A. No. 8282, Sec. 12); and
8. Dependents' Pension (R.A. No. 8282, Sec. 12-A).
Retirement Benefit
Q: What is a retirement benefit?
ANS: The retirement benefit is a cash benefit aid either in monthly pension or as lump
sum to a member who can no,Jonger vor dtk tokold 4„.age (SSS Guidebook, 2017, p.
65). 0`” p.\ , L , 4. r,,, t ---,-,,
, ,4
Q: What are the type t ement'firg?,
bra" 4
ANS: The types of r- nttelefits arelpg followlrig;., ,,,,,,.1\
1. Monthly — .aliRime,,licast —ib-ehefit Md to Ikretiree on a regular
month! \ '4:=P \
11.1Ni - 7
2. Lump, um airtoun — one- imftayii-lent grdpted 1,21.) eticee. The amount is
equal the* total C.0.11iCiblisLby_the me4nbbrl And/or by his/her
empl•y,p4ludin int est. parried (S$S.Guldeboo . 201-7,1p. 65).
' / . 111111il .>-.4
Ilk - 'f7
Q: Who may 11§ or a_r_e tremeWileauFri?ii J
ANS: The foll ali rfR retirem—nt- e-nsio •
1. Mem st h v g 1;1 20 ri), y vnitrions prior to the
seme tire ,oli.0151o;:tyi g, w icheA s applicable:
a. eci m e ploymrt or has ceased to
( ptiopal retirement);
b. At least 6eitlp Kmilt rie? ,still emped/SE, working as
0 jphtlibalrfe ent);
c. At leas CoolnAd.separVbp loyment or has ceased to
be 0
d. An SE, if an "uncle rou mini6et'k s orke (optional retirement);
e. At least 50 years ol w ether still employed/SE or not, if an
"underground or a surface mineworker" (technical retirement); or
f. A total disability pensioner who has recovered from disability and is at
least 60 years old (or at least 55 years old, if an underground
mineworker).
2. A former retiree-pensioner whose monthly pension was suspended due to re-
employment/self-employment and is now separated from employment or has
ceased to be an SE.
3. A member who is 60 years old and above, but not yet 65, with 120
contributions or more may continue paying as voluntary member (VM) up to 65
years old to avail of the higher amount of benefit (SSS Guidebook, 2017, p.
65).
Q: Who is an underground mineworker?
ANS: An underground mineworker is any person employed to extract mineral
deposits underground or whose workplace is beneath the ground, which includes
muckers, miners, bull-gang workers, and any other person working underground
regardless of position such as geologist, security guards, mechanics or sampler.(SSS
Guidebook, 2017, p. 66).
274
Note: To qualify for retirement, an underground mineworker must have been employed
as such for at least five (5) years (either continuous or accumulated) prior to the
semester of employment. The actual date of retirement should not be earlier than March
13, 1998, and the employer must be duly registered with the Bureau of Mines (SSS
Guidebook, 2017, p. 66).
Q: Who is a surface mine worker?

ANS: Surface mine workers only include mill plant workers, electrical, mechanical and
tailings pond personnel (R.A. No. 10757, Sec. 2).
Note: To qualify for retirement, a surface mine worker must have been working as such
for at least five (5) years, continuous and/or accumulated, immediately prior to or earlier
than the semester of retirement (D.O. 167-16, Sec. 4 (b)).
Death Benefit
Q: What is Death Benefit?
ANS: The death benefit is a cash beneR 'aid either in monthly pension or lump sum to
the beneficiaries of a deceased mernlite(SSS Guidebook, 2017, p. 86).
.(t.4.
Q: What are the types of death konFfits,
ANS: The types of death benefits 4ife win&
1. Monthly pension — grara%. _lip ma beneficiaries oft's.
of a deceased
member who had s4j efi6 month contribu ionsibdfore the semester of death;
2. Lump sum a o nt — grarited to the primary b i ficiaries of a deceased
member whOWadyaid atle41 : ff ess than 36 mon, Veontributions before the
semester of trgatq: In case of secondary beneficiaries) they are paid a lump
sum benqfiginly AS-e
'irsVhs
Guideboo 2017, p. 86).
a;
Q: Which bergficiarieSof a deceased ember ars eligible to receive the death
benefit? 61' ••=:" It 14t.
. v
ANS: The deaf beneANO tot e pma eneficiariet*Aggceased member. The
••m • •,o
following are thee_ambeaficiane":
1. The legiti%die—depeadent gpous until he/she remarries; and •
2. The dependetit le kfirnate, legi r legally adopted, and illegitimate
children of the egbereamtr -qrs old or over 21 years old,
provided they. are incapacitated an. incapa • e oelf-support
rs due to physical
or mental disab is congenital in nature or acquired during minority.
In the absence of primary • eneficiaries, the following are the secondary beneficiaries:
1. The dependent. parents; or
2. In their absence, any other person designated by the member in his/her SSS
records. • '
If there is no designated beneficiary, the benefit shall be paid to the deceased

member's legal heirs in accordance with the law of succession under the Family Code of
the PHL (SSS Guidebook, 2017,-p. 81).
asabilityBenefit
Q: What is the New Disability Benefit Program?
ANS: Adopting the World Health Organization's .definition of "disability" as "any
restriction or lack (resulting from impairment) of ability to perform an activity in the
manner or within the range considered normal for a human being," the SSS redesigned
the granting of disability to its members with the objective of improving the delivery of
services without compromising the need to ensure that the appropriate disability benefit
is paid to deserving members (SSS Guidebook, 2017, p. 62).
275
•••
BEDAN RED BO
Q: What are the salient features of the new disability program?
ANS: The salient features of redesigned disability program are:
1. The use of the new Manual on Medical Benefits (Disability, Sickness and
Maternity), which is a compilation of 3 medical benefits granted by SSS to its
members. It adopts the International Classification of Diseases and Related
Health Programs codes (ICD-10) and includes the most recent medical
management of illnesses/injuries and their corresponding ratings. It has been
validated internationally and locally by the different Medical societies; and
2. The evaluation guidelines of illnesses/injuries also consider the current
physical state of the member, thus, allowing several claims to be evaluated
first based on supporting documents (SSS Guidebook, 2017, p. 62).
Q: Who is qualified for disability benefit under the new program?

ANS: A member who suffers partial or total permanent disability, with at least one (1)
monthly contribution paid to the SSS prior to the semester of contingency, is qualified
(SSS Guidebook, 2017, p.62). 0.,„,„„.........,
.0-"<
Q: What are the types ofedisab lit be
ANS: The types of disablfi b fit,are-the•fo.
s,
ir
1. Monthly pe sicn fagh benefit paid to 4 ab10‘,. ember who has paid at
least 36 tionS16:FSSS.p
riaktet% s ester of disability;
2. Lump graqWd lir those wh illy et the required 36
month . If thdrappitivedisabil pl. is,,p able for less than
twelv t is also giyaip lump su (SS•• GLUde ook, 2017, p. 58).
Funeral Benefit
Q: What is a Le
ANS: The fungal burial expenses of the
deceased me e an10 nt of the funeral
grant was increased t nimu of P20, 000 to a
maximum of P4 000, epen contributions and credited
years of service (SASS Guideboo
Maternity Leave Benefit in

. .‘&. _.,./1
Q: What is a maternity leave Den
ANS: The maternity leave belief t Jawa ce granted to a female member
who was unable to work due to c i birth-via-Trormal delivery or caesarean section or
miscarriage (R.A. No. 8282, Sec. 14-A)).
Q: What are the qualifications for entitlement to the maternity benefit?

ANS: The qualifications to avail maternity benefits are:
1. She has paid at least 3 monthly contributions within the 12-month period
immediately preceding the semester of her childbirth or miscarriage; and
2. She has given the required notification of her pregnancy through her ER if
employed, or directly to the SSS, if SE or VM•or separated from employment
(SSS Guidebook, 2017, p. 53).
Q: Is the self-employed (SE) or voluntary member (VM) also entitled to the
maternity benefit?
ANS: Yes. The SE or VM is entitled to the maternity benefit provided that she meets the
qualifying conditions (SSS Guidebook, 2017, p. 53).
276
Q: How much is the maternity benefit?
ANS: The maternity benefit is equivalent to 100% of the member's average daily salary
credit (ADSC) multiplied by 60 days for normal delivery/miscarriage/ectopic pregnancy
without operationlhydatidiform mole (H-mole) and 78 days for caesarian section
delivery/ectopic pregnancy with operation (SSS Guidebook, 2017, p. 53).
Q: How many deliveries are covered under existing laws?
ANS: The maternity benefit shall be paid only for the first four (4) deliveries or
miscarriages (R.A. No. 8282, Sec. 14-A(d)).
Q: Can a member still recover sickness benefit if she has been paid the maternity
benefit?
ANS: No. The payment of maternity benefits shall be a bar to the recovery of sickness
benefits for the same period for which daily maternity benefits have been received. (R.A.
No. 8282, Sec. 14-A(c))
Q: Is it necessary to notify the SSS ,so l i
ember's pregnancy?
ANS: Yes. As soon as a member'sjpSeg2R cy is confirmed, she must immediately notify
her ER (if employed) or the SSS,,Wo loyed/SENM) of such pregnancy and the
probable date of her childbirth atilpag. 01' ys from the date. of conception. She must
accomplish Maternity Notification Ion
The ER must, in turn, notify tvess thcg e s blni io 'of the Maternity Notification
Form immediately after efreceipt fron th EE.
,,e
If the member gives b or suffers isca riage but contribution were not remitted by
the ER, the benefits* lite' efiibers wo d have been titred o shall be paid by the
ER (SSS Guiclapo6k7 201ri —55).
Q: Luisa is n noAVr other with 44%3 c ren fr. - ers. In 2004, she
-.E _it
became a member ofnne Sodas ec ty Sjfste ame year, she
suffered a miscqgg JA babript o edlock froO.1'.4." -at er of her third child.
She wants to clatKinffiry benplits Eider the SSS Act. Is she entitled to claim?
(2000, 2007, 2010, his Bar''
r '1.1. ,,,,..- *
ANS: Yes. The law iti isl4t1 'd that a fern- -0.-_ o- -._ ho has paid at least 3 monthly
contributions prior to t.gtt ildbirthlWitsta - . . 9 1:-. 6, .id a daily maternity benefit
(R.A. No. 8282, Sec. 1'4`.
.A). It eVnot qualify the term to mean legally married woman
as it only used the term e'pa employee". As to the fact that she got pregnant outside
wedlock, as in her past thre p gnancies, this will not bar her claim because the SSS is
non-discriminatory as assured by the policy under the Magna Carta of Women (R.A. No.
9710, Sec. 2). ' '
Sickness Benefits
Q: What is a sickness benefit?
ANS: The sickness benefit is a daily cash allowance paid for the number of days a
member is unable to work due to sickness or injury (SSS Guidebook, 2017, p. 40).
Q: How does an SSS member qualify for sickness benefit?

ANS: A member is qualified to avail of this benefit if: (UPUN)
1. He/she is Unable to work due to sickness or injury and confined either in a
hospital or at home for at least four (4) days;
2. He/she has Paid at least three (3) months of contributions within the 12-month
period immediately before the semester of sickness or injury;
3. He/she has Used up all current company sick leaves with pay; and
4. He/she has Notified the ER, or directly the SSS, if separated from
employment, VM, or SE regarding his/her sickness or injury (SSS Guidebook,
2017, p. 40).
277
Q: How many days in a year can a member avail of the sickness benefit?
ANS: A member can be granted sickness benefit for a maximum of 120 days in one (1)
calendar year. Any unused portion of the allowable 120-day sickness benefit cannot be
carried forward nor added to the total number of allowed compensable days for the
following year. The sickness benefit shall be paid for not more than 240 days on account
of the same illness. If the sickness or injury still persists after 240 days, his claim will be
considered a disability claim (SSS Guidebook, 2017, p. 42).
Monthly Pension
Q: How is the monthly pension determined?
ANS: The monthly pension shall be the highest of the following amounts:
1. The sum of the following:
a. Three hundred pesos (P300.00); plus
b. Twenty percent (20%) of the average monthly salary credit; plus
c. Two percent (2%) of the average monthly salary credit for each
credited year otorvictisiraCess4a ten (10) years; or
2. Forty percent (40%)4r e ave ag t ly alkry credit; or
3. One thousandOro f POO. e monthly pension shall in
no case be god igberreaTn'btint% sixty (60) months.
Note: The minimu „shall be2.1.
' folr‘m h at least 10 credited
years of service 0.00-16TthosL ith 2Thbr dit of service (R.A. No.
8282, Sec. 12). X
De • endents P t"V1
Q: How is the nsio.T.del Flitle1.1?"1
ANS: Where is pal/able In-account o nt total disability
or retirement, nsion 6"61T.E 6-int to thly pension or
P250.00, whic .- ild conceived on
or before the ginning with the
youngest andNthout there are legitimate and
illegitimate childr , the 282, Sic. 12-A).
Q: Can an employee who Tid the private sector,

combine the years o
ANS: Yes. Under the Li may combine the years of
service in the private secto ution to the SSS with his/her
government service contributions o satisfy the required years of service
(R.A. No. 7699, Sec. 4).
B. GSIS LAW (R.A. No. 829.1)

Coverage and Exclusions
Q: Who are covered by GSIS?
ANS: The following are covered:
1. All government personnel, whether elective or appointive, irrespective of status
of appointment, provided they are receiving fixed monthly and who have not
reached thee mandatory retirement age of 65 years, (IRR of R.A. No. 8291,
RULE II, Sec. 2.1.1).
Note: An employee who is already beyond the mandatory retirement age of 65
shall be compulsorily covered and be required to pay both the life and •
retirement premiums under the following situations:
a. An elective official who at the time of election to public office is below
65 years of age and will be 65 years or more at the end of his term of
office, including the period/s of his re-election to public office thereafter
without interruption.
278
b. Appointive officials who, before reaching the mandatory age of 65, are
appointed to government position by the President of the Republic of
the PHL and shall remain in government service at age beyond 65 (IRR
of R.A. No. 8291, RULE II, Sec. 2).
2. Contractual employees including casuals and other employees of the PHL
government are included under compulsory coverage provided that the
conditions that determine an employer-employee relationship exist (IRR of
R.A. No. 8291, RULE 11, Sec. 2.1.2).
Q: Who are not qualified?

ANS: The following are not qualified: (BACE)
1. Uniformed members of the Armed Forces of the PHL (AFP), the Bureau of
Fire Protection (BFP), and the Bureau of Jail Management and Penology
(BJMP) whose coverage by the GSIS has ceased effective June 24, 1997;
2. Barangay and Sanggunian Officials who are not receiving fixed monthly
compensation;
.41b . .
3. Contractual employees %pre not receiving fixed monthly compensation;
and
4. Employees who do no(ige thly regular hours of work and are not
receiving fixed monthly comp. ion. (IRR of R.A. No. 8291, RULE II,
Section 2.4)
Q: Does membership, with;"GSIS cea once a mem is separated from the

service?
ANS: No. The occurrelt_pl a contip (i.e. dismissal f rvice prior to reaching
n+
retirement age) shOnarkeprive a m ber of money, icIlconsists of personal
contributions ankgremiu :Azle by him, at belongs tokim It should be remembered
that the GSISAMs are in the nature\of *al legislaf3n, toy be literally construed in
A 04 s.
favor of the gepoentV)Aloyees (Ca to Lledo ,Atty o, A.M. No. P-
95-1167, Febkary 9, 201U •1/4,
Dependents and Bene iaanes

"SA
Q: Who are the benefitiarie? illu-it,--
: r;w
.„?... 7;,--,
_-,,---,
Tair .... .
ie
ANS: The following are_t Iftrnefic'aras• ,'-'5= 3a rwilv-.*
a
1. Primary bene codes m depen • en spouse tin it he/she remarries, and the
dependent chi ren (I .Plof R.A. No. 8291, RULE I, Sec. 1.8); and
I... An
2. Secondary bene gran s - dependent parents and, subject to the restrictions on
dependent children, the legitimate descendants (!RR . of R.A. No. 8291, RULE
1, Sec. 1.9).
Benefits
Q: What are the benefits available under GSIS (R.A. No. 8291)?
ANS: The following are the benefits: (TRUMP2S2-FL) •
1. Monthly Pension (Sec. 9);
2. Separation Benefits (Sec. 11);
3. Unemployment or Involuntary Separation Benefits (Sec. 12);.
4. Retirement Benefits (Sec. 13);.
5. Permanent Total Disability Benefits (Sec. 16);
6. Permanent Partial Disability Benefits (Sec. 17)
7. Temporary Total Disability Benefits (Sec. 18);
8. Survivorship Benefits (Sec. 20);
9. Funeral Benefit (Sec. 23); and
10. Life Insurance Benefits (Sec. 24).
279
Monthly Pension
Q: How is the monthly pension computed?
ANS: The basic monthly pension is equal to:
1. Thirty-seven and one-half percent (37.5%) of the revalued average monthly
compensation; plus
2. Two and one-half percent (2.5%) of said revalued average monthly
compensation for each year of service in excess of 15 years: Provided, that
the basic monthly pension shall not exceed 90% of the average monthly
compensation (R.A. No. 8291, Sec. 9).
Note: The basic monthly pension for those who have rendered at least 20 years of
service after the effectivity of R.A. 8291 shall not be less than P2,400.00 a month (Id.).
Separation Benefit
Q: Who are entitled to separation benefit?
ANS: A member who has rendered a Tlaimulf three (3) years creditable service shall
be entitled to separation benefit-upon re ignairdit4,or separation under the following
terms:
1. For a MembsV ith te atjbme.(3, than fifteen (15): A cash
payment evoijvale 13.4W% of the average srrontfti ompensation for every
year of seVvic 5,4ne.0aer-hasTaid-coariatiorieb t_t•V less than P12,000,
payable/6 reachifg 60 yqampf age or Upon eparatio , whichever comes
later; ( A. NO. 8291fRUIEllaec. 41) rr
2. For a embe withseparation.1pi
at least fift 5) years of serve' less than sixty (60)
years pon
h paymentvoitvalo t4d.eighteen (18) Imes e basic monthly
Sin, pay ble at4116-ti4e-otr.sign
o in paraion;
ald-a nsion equa o,J a asial Olonthly pension,
Vont owac .47 (IRR of R.A. No.
S c. ge*-
Unemployment enefit
Q: Who are entitle\ to unem
ANS: A member sha be e t in the form of monthly
cash payments if the fo
1. He/she was a perman • _.,p aration;
2. His/her separation wa eotirthe abolition of his/her office or
position resulting from reorganiza ion; and
3. He/she has been paying the required premium contributions for at least one
(1) year prior to separation. (IRR of R.A. No. 8291, RULE IVI, Sec. 22.1)
Note: A member who has rendered at least fifteen (15) years of service will be entitled
to Separation Benefits instead of Unemployment Benefit (R.A. No. 8291, Sec. 11).
Retirement Benefit
Q: What are the types of retirement benefits?
ANS: Retirement benefit is either one of the following:
1. Lump sum amount — equivalent to sixty (60) months of the BMP payable at
the time of retirement plus an old-age pension benefit equal to the BMP
payable for life, starting upon the expiration of the five years covered by the
lump sum; or
2. Monthly pension — a cash payment equivalent to eighteen (18) times his
BMP plus monthly pension for life payable immediately. (IRR of R.A. No. 8291,
RULE 1W, Sec. 20.2)
280
Q: What are the conditions for entitlement for retirement benefit?
ANS: A member shall be entitled to retirement benefits on the condition that: (SAM)
1. He has rendered at least fifteen (15) years of Service;
2. He is at least sixty (60) years of Age at the time of retirement; and
3. He is not receiving a Monthly pension benefit from permanent total disability
(IRR of R.A. No. 8291, RULE IV, Sec. 20.1).
Note: Unless the service is extended by appropriate authorities, retirement shall be
compulsory for an employee at sixty-five (65) years of age with at least fifteen (15) years
of service (IRR of R.A. No. 8291, RULE IV, Sec. 20.).
Disability Benefit
Q: What is a disability benefit?
ANS: Disability benefits are the benefits which are granted to a member due to the loss
or reduction in earning capacity caused by a loss or impairment of the normal functions
of his/her physical and/or mental faculties as a result of an injury or disease (IRR of R.A.
No. 8291, RULE IV, Sec. 23.1). pf,-(
Note: The loss in earning capacityl
i e determined not only on the basis of the
member's actual loss of incomcifff ntisl er usual occupation but also on his/her
capacity to continue engaging froiti er gainful occupation because of the
impairment (IRR of R.A. No. 8291:1KINTVWSec.
Q: What are the kinds of disebtlity

ANS: A disability may4e4bIrbe perm artial or temporary total,
as determined by the‘QSISfbased onAiegablished medical r dards (IRR of R.A. No.
8291, RULE IV, Sec. 23t7)
Note: Total Disabjje is :1;e complet incapacity to co time with his present
employment okeleage inTalegainful oc pation due t• the oss r impairment of the
normal functiqr4,of theplysical or ni faculties o he (IRR of R No.
.A.
8291, Ride 1,VSeb.1:119
The following arNhca disabilL

' 1. Permanernotal isabllity TD) — due to injury or disease causing
complete, irreyersilt and perm-ro -a-rnIL
- ,ns acity that will permanently disable
a member to 'Woe& to engage' ° • occupation resulting to loss of
income (IRR o .A. 0029 t, ec.
4f eR
Note: A merVertecomes permanently, and totally disabled shall be
entitled to the rta-- income-benefit for life equivalent to the BMP effective
from the date of disability when:
a. He/she is in the service at the time of the disability; or
b. If separated from service,
i. He/she has paid at least thirty-six (36) monthly contributions
within the five-year period immediately preceding his-her
disability; or
ii. He/she has paid a total of at least one hundred eighty (180)
monthly. contributions, prior to his/her disability; and
c. He/she is not receiving the old-age retirement pension benefit.
2. Permanent Partial Disability (PPD) — accrues or arises upon irreversible loss
or impairment of certain physical faculties, despite which the member is able to
pursue a gainful occupation (IRR of R.A. No. 8291, Sec. 23.3.2.).
A member whose disability is partial shall be entitled to a cash payment
equivalent to the basic monthly pension to be paid in accordance with the
schedule of disabilities or Table of Loss Percentages if he satisfies the
conditions.
281
3. Temporary Total Disability (TTD) - accrues or arises when the impaired
physical and/or mental faculties can be rehabilitated and/or restored to their
normal functions (IRR of R.A. No. 8291, RULE IV, Sec. 23.4.3).
A member who suffers temporary total disability shall be entitled to 75% of his
current daily compensation for each day or fraction thereof of temporary total
disability benefit (R.A. No. 8291, Sec. 18).
Survivorship Benefit
Q: What are the survivorship benefits?
ANS: The survivorship benefits payable to the beneficiaries entitled under the conditions
stated in Section 103 shall consist of either or both of the following:
1. Survivorship pension, as follows:
a. A Basic Survivorship Pension of 50% of the BMP; and, in case the
member is survived by dependent children; and
b. Dependent children's pension not exceeding 50% of the BMP. (R.A.
No. 8291, Sec. 3(45,-'''!'
ir "'""
2. Cash payment eqUfkent tg '490% 'Of the, member's average monthly
a.; -,,,
compensation loce -Nhigesr of'servideve paid,cdntributions, but not less than
.,if .1--
P12, 000.00 i5'.111t/9: 8 91f ST6771):4,%.., # -- .
Funeral Benefit </1

.**W
Q: Whose cleat wi klq 'de heir be,.eficiane%to funeral beliefits)?
ANS: The following deps entitled theirWpective benIficiane ral benefits:
1. An a ember;
li w....-4
2. A marn el.( has beeti-seplaked0rOm heir service ut who may be
. . entitlid tolure berl'efit; ora;-CI
' --Yo, r.I,'A .
3. An °I t( ei o dis ily pensidga?
if
4. A yeti o w sA:ie ,nsio , able age bUf- o`f to Roll under R.A. No.
y ,t., /
1616; kj \
5. A mem ier wh pretir pnd rgA 08P , 1997
Q: To whom are the funerakbe egtp aya191

ANS: The funeral beic.it f-the o '(he order in which they
appear:
1. Surviving spous ; , 9,01 1a AIN- \1
2. Legitimate child who pest for tbe/LieForviees; or
3. Any other person who cM - how-irtC6firrovertible proof of having borne the
funeral expenses (IRR of R.A. No. 8291, RULE VI, Sec.
• 25.1).
Q: Who are not entitled to funeral benefit?

ANS: The following are not entitled to funeral benefits:
1. All survivorship pensioners; and
2. Those who have optional life insurance coverage only (IRR of R.A. No. 8291,
RULE X, Sec. 10.8). 1
Life Insurance Benefit
Q: What are the types life insurance benefits?
ANS: Life insurance benefits can either be compulsory or optional. (R.A. No. 8291,
Secs. 24 and 26).
Q: Who are compulsorily covered by the life insurance?

ANS: Life insurance shall be compulsory for all employees, including the members of
the Judiciary and the Constitutional Commissioners, but excluding the uniformed
members of the AFP, PNP, BFP, and BJMP (IRR of R.A.
• No. 8291, Rule Xl, Sec. 11.1).
282
BEb N RED BOOK
Q: To whom are life insurance benefits payable?
ANS: The benefits are payable under the life endowment policy in any of the following
instances:
1. Maturity Benefit — Upon maturity of the life insurance, the face amount less
any indebtedness against the policy, shall be paid to the member;
2. Death Benefit — When a member dies prior to the maturity of his/her
insurance and during its continuance, the GSIS shall pay to the designated
beneficiaries or to his/her legal heirs, as the case may be, the face amount
less any indebtedness thereon;
3. Accidental Death Benefit (ADB) — When the death of the member is
accidental, the GSIS shall pay the designated beneficiaries or the legal
heirs, as the case may be, an additional amount equivalent to the face amount
of his/her compulsory insurance;
4. Waiver of Premiums — When a member is separated due to total and
permanent disability, the contributions that may become due and payable
during the period of disability shall be deemed waived and considered paid;
5. Cash Surrender Value (CWIBAfter his insurance shall have been in force
for 1 year, a member se ray „tom the service prior to the maturity of the
insurance may be paid alue less any indebtedness thereon unless
the terms of his separation a, therwise;
6. Insurance Loans — Upgh :agftpFlaraember• it has been insured for at
least 1 year may tiOnteCtta 71146-ancitgatimpa'n amount not exceeding
50% of the cash4albe of his ns ance at the time offplication; or
7. Dividends -,.4t1 annual clivken :_ may be granted to, all members of the GSIS
whose life ins ,arfee is in force f0 at least 1 year asaOc on records submitted
by the emploTerpOividend Allocation Forenp Eha I be determined and
circularize'` 6y th -fops for this Vurpose (IRR o R. N •. 8291, Rule X/, Sec.
11.5). V '''N
c,. •Lr.04. +'tir./ 'St?, ,
Q: May an employee, lzyjumself,Aply fo • an optional urifife ?
ANS: Yes. A meekeF6ma' t any tune, ly for optional-li e= n urance and pre-need
coverage for himiarafigror is dependentet R.A. No. 8291, Sec. 26).
"
c,1,0
C DISABILITY AND DBENEFITS
Under the Labor Co 4 It
Coverage
Q: Who are compulsorily covered by employee's compensation?
ANS: The following are covered by employee's compensation: (EN-BO)
1. Every Employer shall be covered;
2. Every employee Not over 60 years of age shall be covered;
3. An employee who is coverable by Both the GSIS and SSS shall be
compulsorily covered by both Systems; and
4. An employee Over 60 years of age shall be covered if he had been paying
contributions to the System (SSS or GSIS, as the case may be) prior to age 60
and.has not been compulsorily retired (IRR of P.D. 626, Rule I, Sec. 2).
Q: What sectors of employees are covered by the Employment Compensation

Program (ECP)?
ANS: Employees belonging.to either of the following sectors shall be covered:
1. Public sector — employed workers who are covered by the GSIS, including
the members of the AFP (Circular No. 06-709, July 24, 2009), elective officials
who are receiving regular salary, and any person employed as casual,
emergency, temporary, substitute or contractual;
283'
2. Private sector - employed workers who are covered by the SSS (IRR of P.D.
626, RULE I, Sec. 4).
Q: Are Filipinos working abroad covered by the ECP?

ANS: Filipinos working abroad in the service of an employer shall be covered by the
System and entitled to the same benefits as are provided for employees working in the
PHL (IRR of P.D. 626, RULE I, Sec. 5).
Q: When does the coverage of members take effect?

ANS: The coverage under the ECP of employees in the private sector takes effect on
the first day of employment (SSS Guidebook 2017) while that of employees in the public
sector takes effect upon the employee's assumption of duty (IRR of R.A. No. 8291,
RULE I, Sec. 2.3).
When Compensable
Q: When is it compensable?
ANS: It is compensable in pp o ',the follkigsErvt7 t•
1. For the injury,d4hq-hpulti g bijity oildeath to be compensable, the
injury must be tffe rsJaiti,orVEiTeirrariginq IDueb?4and in the course of the
employme 4t6yees' Compensation -Co' nyebal4Resolution No. 2799,
July 25, 9 4
2. For the and the r ultin cff'sbility r drat b compensable, the
sickne s mu e th result of Ooc6Gbational dis8b e Uti. under Annex "A"
of th n ed R as no Frafillres:_Comphnsati 'it he conditions set
there nAs4s ed, of erwb,?r,p.rok rpu,skt2e shown th thek sk of contracting
the d sease incre ed 6tt.p0WprkirWondi ons; and 1
Note compensation sfial[st.-,gtilltivVed
,...- to h_e_Rmployeelo his dependents
.1
whe the fh ury, ess,-clisablity-3--or-d s o asio d by any of the
follow\8 ( 0)
a. Intoxic tian; IP *
kld
b.Willful in entio o n e o kil
,--.
sel or a ther;
C. gaatorious eglig n
d. as'Otherms r vt • 41320 rs-
3. Only injury ocsic es3/4tb.L -5 "tr-january 1, 1975 and the
resulting disabili o h sM=o Ogl.!pb e/Onder these Rules (IRR of
P.D. 626, RULE
Benefits Under the Employees'Compensation Program

Q:• What are the benefits under the ECP?
ANS: The benefits under the ECP are in the form of income or services and consist of
the following (IRR of P.D. 626, RULE VII, Sec. 1): (MRT-P2DF-C)
1. Medical services, appliances and supplies;
2. Rehabilitation services;
3. Temporary total disability benefit;
4. Permanent total disability benefit;
5. Permanent partial disability benefit;
6. Death benefit; and
7. Funeral benefit.
8. Carer's Allowance (BR No. 90-12-0090, dated December 20, 1990 and E.O.
No. 134 "Granting of Carer's Allowance to EC PPD and PTD Pensioners in the
Public Sector, date of effectivity: May 31, 2013).
284
Disability Benefits
Q: What are the types of disability covered by the ECP?
ANS: The types of disability covered by ECP are the following:
1. Temporary Total Disability (TTD) - if as a result of the injury or sickness the
employee is unable to perform any gainful occupation for a continuous period
not exceeding 120 days, except as otherwise provided;
2. Permanent Total Disability (PTD) - if as a result of the injury or sickness the
employee is unable to perform any gainful occupation for a continuous period
exceeding 120 days.
3. Permanent Partial Disability (PPD) - if as a result of the injury or sickness
the employee suffers a permanent partial loss of the use of any part of his
body-(Amended IRR of P.D. 626, RULE VII, Sec. 2).
Q: How is the disability compensated?

ANS: The resulting disability or death from injury or sickness is compensable (1) by
income benefit, except for permanent Fitotql disability (Amended IRR of P.D. 626, RULE
VII, Sec. 3); and/or (2) by medicaJZOwees, appliances, supplies, and rehabilitation
(Amended IRR of P.D. 626, RULEAVYP Sec
Death Benefits
Q: What are the conditions IA 4:tisii y 0- e,enftledthn income benefit?
ANS: The beneficiaries 0W-deceased a loyee shah% ed to an income benefit if
tne following conditionslait satisfied:Ake- D)
1. The employeFiaebeen di, orted bathe sys ,
2. He Died asApstitof•ati injury d ickness; and
3. The sotem hVs„been duly Notified of his i deat as well as the injury or
sickness, V ter
11
whieptauzega eath IRR of gx. 626, f
... ..7.t.. ,- -
Note; If the employee hasa)een eeiving mo ...f. — : 'eeft from PTD at
the time of hit-oith, theltivivingspouse mus s o ha the marriage has
beenval
AkIps,fitia
id ig at the ti f his disability (Id.).
1 ,
...:•,,,r. 41,
Q: What are tha perioas,Oentitlement D i n ome benefit?
ANS: The following are,* periopfiertti .e'm ''''''.-
P I- 1 2,,,:A.2.1tAiltie-•
1. For Primary Be'neficsriies - as long as the beneficiaries are entitled thereto;

Note: The motastrijy_iggome benefit shall be guaranteed for five years, which in
no case be les31.17757F 15, 000.00. Thereafter, the beneficiaries shall be paid
the monthly income benefit.for as long as.they are entitled thereto. ..
For Secondary Beneficiaries - the income benefit shall be 60, times the .
monthly income benefit of the primary beneficiaries, which in no case be less
than P 15,000.00 ..
Dependents
Q: Who are the specific dependents under the Labor Code?
ANS: Under the Labor Code, the term "dependent" includes the following:
1. Legitimate, legitimated or legally adopted or acknowledged natural child who is
unmarried, not gainfully employed, and not over twenty-one years of age or
over twenty-one years of age provided he is incapacitated and incapable of
self-support due to a physical or mental defect which is congenital or acquired
during minority;
2. Legitimate spouse living with the employee; and
3. Parents of said employee wholly dependent upon him for regular support
(LABOR CODE, Art. 173 (i)).
285
t•z.;:.-,•••••••.,••
• ••:. •';.•
Q: What is dependency?
ANS: The term "dependency" does not mean absolute dependency for the necessities
of life but rather, that the dependent looked to and relied on the contribution of the
claimant, in whole or in part, as a means of supporting and maintaining himself in
accordance with his station in life. Under this concept, a person may be considered a
dependent although he is able to maintain himself without any assistance from the
decedent (Castillo v. Cadwallader, G.R. No. 41261, September 26, 1934)(1 AZUCENA,
supra at 623).
Q: What is the test of dependency?
ANS: The test of dependency is not merely whether the contributions were necessary to
bare subsistence. Dependency may exist although the dependents could have
subsisted without the assistance he received, if such contributions were relied on by the
claimant for his means of living as determined by his position in life. There may be
dependency notwithstanding the fact that the employee did not work steadily or was
absent from the home at the time of his ci ental death (Malate Taxicab v. Del Villar,
G.R. No. L-7489, February 29.„„4•956):Ilie -test.° eRendency is not whether claimants
could support life without;AfribMons, etflerrnAkpend on such contributions
as part of their income orrrransidfllyiag.r UCE#A, up kratat 624).
/ VA,•?••\,
Beneficiaries
Q: Who are the boeficiprie under,[the , lcibsp-/Code
ANS: Beneficiaries either prilnarft g
r eonda , d eter fined at the time of
employee's de4 h.
1. The followin bene icianes s a , •e cons!•e -d prism RR of P.D. 626,
Rule ;Se?. 1, pa (b),v
a. itrate ,Sp use irrOsiffiarries.
tai T e u ivin. se ouse'found living "th the covered
Fp twee tim die •Istkop be entitled to
emprolees 'ad, pen roviged trcif the separation
ccurre owin ;circumstances: (C2HRzIS-BL1D2)
ILtetisal 9 s• oyaterto continue living with the
sun,71vog(sRespQ bprl ab ndonment of the said
spotisei %vette tifi
ii. Atterrrit/(9
. ove o e against the Life of the
survOnb4ouselcornA dren of the spouse;
iii. gom sio of t al abuse against the surviving
spouse, commo fir c ildren or child/children of the spouse
by the covered employee;
iv. Covered employee's Recurrent commission of physical
violence, or grossly, abusive conduct, against the surviving
spouse, common child/children or child/ children of the spouse;
v. Covered employee's Infliction of physical violence, or imposition
of moral duress, to compel the surviving spouse, common
child/children or child/children of the spouse to change their
religious or political affiliation;
vi. Attempt of the covered employee to Corrupt, or induce the
surviving spouse, common child/children or child/ children of the
spouse to engage in prostitution, or to make them connive with
the employee in such an act of corruption or inducement;
vii. Drug addiction or habitual alcoholism of the covered employee;
viii. lesbianism or Homosexuality of the covered employee;
ix. contraction of Bigamousmarriages by the covered employee,
whether in the PHL or abroad;
x. Sexual infidelity or perversion of the covered employee;
286
xi. Covered employee’s act of allowing the surviving spouse, common child/ children of the spouse
to be subjected to acts of lasciviousness; or
xii. Covered employee’s contraction of serious, sexually transmitted Disease extra-maritally (Board
Resolution No. 97 – 09 – 0500, September 4, 1997)
b. Legitimate, legitimated, legally adopted or acknowledged natural Children,
i. Who are unmarried not gainfully employed;
ii. Not over 21 years of age, or over 21 years of age, provided that he is incapacitated and incapable
of self – support due to physical or mental defect which is congenital or acquire during minority
(LABOR CODE, Art. 173 (i)
Note: A dependent acknowledged natural child shall be considered as a primary beneficiary only
when there are no other dependent children who are qualified and eligible for monthly income benefit;
provided finally, that if there are two or more acknowledged natural children, they shall be counted
from the youngest and without substitution, but not exceeding five (ECC Resolution No. 2799, July
25, 1984)
2. The following beneficiaries shall be considered secondary: (Amended Rules on Employee’s Compensation, Rule
XV, Sec. 1, par. c): (PI)
a. The legitimate Parents wholly dependent upon the employee for regular support; or
b. The legitimate descendants and Illegimate children who are unmarried, not gainfully employed, and not
over 21 years of age, or over 21 years of age provided that he is incapacitated and incapable of self- support
due to physical or mental defect which is congenital or acquired during minority.
Under POEA- Standard Employment Contract
Q: Who are covered by the rules provided under the POEA- SEC?
ANS: The rules provided under POEA- SEC cover all Filipino seafarers on board ocean- going ships.
Note: The employment contract between the employer and the seafarer shall commence upon the actual departure of
the seafarer from the PH airport or seaport in the point of hire and with a POEA approved contract. It shall be effective
until the seafarer’s date of arrival at the point of hire upon termination of his employment (2010 POEA- SEC, Sec. 2).
Disability Benefits
Q. What are the liabilities of the employer when the seafarer suffers work- related injury or illness during the
term of his contract? (MWS)
ANS: The liabilities of the employer are as follows: (S-WA-M)
1. To continue to pay the seafarers his Wages, during the time he is on board the ship;
2. To be held liable for the cost of such Medical, serious dental, surgical and hospital; treatment until the
seafarers declared fit to work or to be repatriated, if the injury or illness requires medical and/ or dental
treatment in a foreign port;
3. To pay Sickness allowance in an amount equivalent to his basic wage computed from the time he signed
off until he is declared fir to work or the degree of disability has been assessed by the company- designated
physician.
Note: The allowance shall not exceed 120 days. (2010 POEA- SEC, Sec. 20 (A)).
287
Q: What is the post-employment medical examination?
ANS: It is the examination conducted by a company-designated physician within 3
working days upon the return of the seafarer. (2010 POEA-SEC, Sec. 20 (A))
Death Benefits
Q: What are the liabilities of the employer in case of death of the seafarer?
ANS: The following are the liabilities of the employer in case of death of the seafarer:
1. In case of work-related death (B20T)
a. Payment to deceased's Beneficiaries of PH currency equivalent to the
amount of US $50,000, and an additional amount of US$7,000 to each
child under the age of 21 but not exceeding 4 children, at the exchange
rate prevailing during the time of payment;
b. Payment of all outstanding Obligations due to seafarer under this
contract;
c. Transportation expenses of the remains and personal effects of the
seafarer to the P
d. Payment t eceased. rbe a ci H currency 'equivalent to the
amoun 1 7,,,
e. for Bu pen
2. In case if feat caused,-by—wgra payment of doubled
compenli OgcSEC t ec. 26"(B)
• iff'‘
Q: Can the sgafarer aim both he 4 gnehts un er the poc -SEC and those
provided undetthe,P law e Funk?) "
ANS: Yes, theiqeg§rier can -lairn, ynKitgloitlaq,, th Th' bene *Erred& the POEA-SEC
is separate aid dish ct fro • an411'14 ifi4ition to wha enefits which the
seafarer is ent leo-1
14 nd r--tf PH rdws 2021CFPOEA- 5Se (A (7)).
Coverage
. -411,
Q: What is the employe t p self-or
g aniz aV 93 ,1
ANS: It is the right of the &ip oyes to sifinfibib, - assist in the formation of a labor
organization of their own choo ingurposts of collective bargaining through
representatives of their own choosing and to engage in lawful concerted activities for
purposes of collective bargaining or for their mutual aid and protection (LABOR CODE,
Art. 253). It also includes the freedom not to join a labor union (ALCANTARA, supra at
361).
Q: Who may exercise the right to self-organization?

ANS: The following are entitled to exercise the right to self-organization:
1. -All persons employed in commercial, industrial and agricultural enterprises and
in religious, charitable, medical or educational institutions whether operating
for profit or not; and
2. Ambulant, intermittent and itinerant workers, self-employed people, rural
workers and those without any definite employer (LABOR CODE, Art. 253).
Note: Ambulant, intermittent and other workers, the self-employed, rural workers and
those without any definitive employers may form labor organizations for their mutual aid
and protection and other legitimate purposes except collective bargaining (IRR of the
LABOR CODE, Book V, Rule II, Sec. 2).
288
Q: What is the scope of the right to self-organization? •
ANS: The rights to organize and to bargain, in general sense, are given not exclusively
to employees. Even workers who are not employees of any particular employer may
form their organizations to protect their interests. The lawful organization enjoys
protection under the Bill of Rights. The right to form, join or assist a labor organization is
granted to all kinds of employees of all kinds of employers — public or private, profit or
nonprofit, commercial or religious. Their usual form of organization is a union and the
usual purpose is collective bargaining with their employers (AZUCENA, Vols. Il-A and II-
B, The Labor Code with Comments and Cases, (2016), pp. 250-251) [hereinafter 2
AZUCENA]. The right to self-organization is not limited to unionism. Workers may also
form or join an association for mutual aid and protection and for other legitimate
purposes (Samahan ng Manggagawa sa Hanjin Shipyard v. BLR, G.R. No. 211145,
October 14, 2015).
Q: What is a labor organization?

ANS: It refers to any union or associggp of employees in the private sector which
exists in whole or in part for the pyr9,,op,,t f collective bargaining, mutual aid, interest,
cooperation, protection, or other la " 0 4)(1 uses (D.O. No. 40-03, Rule 1, Sec. 1).
Q: What are the modes of laborra ment interactions?. .

ANS: The following may serve aslieksko erg o. er-ample e interaction:
1. Union - refers to amillabottir &Risotto h ate sector organized for
collective bargejOnnd for aft I legitimate purp
'2. Legitimate 075-6r Organjzitict - refers .to an a or organization in the
private sectoi- Oterecl (Tie° 6,ed with the DOLE ..
3. Independen,,,Unpwrefers to -l abor organizatn pe ating at the enterprise
level t Ocquirsd*gal persona ity through i deptrident registration under
Artiste 40 of111_abor Cod
Excl gikligrg ng Represe tive - re e at abor union duly
wily. ti.o,
recogpized or ed a.ns-tte and exc i; 19`: ii - representative or
agent oftl the ployeElp a b aining unit. 4.4 " ""•
5. Worker''slks on - refers an association of workers organized for the
mutual aid and protection of its ber or for any legitimate purpose other
than collectivl bardaining.
Legitimate W ho ,A"st n association of workers
organized foriutual aiand protection of its members or for any legitimate
purpose other ttkiLcctllective bargaining registered with the DOLE (D.O. No.
40-03, Rule 1, SeWIY:' . .
Q: Who may unionize for purposes of collective bargaining?

" ANS: All persons employed in the following may unioniie for collective bargaining
(CRC)
1. In Commercial, industrial and agricultural enterprises;
2. In Religious, charitable, medical or educational institutions whether operating
for profit or not (LABOR CODE, Art. 253); and
3. Employees of GOCCs without original charters and established under the
Corporation Code (LABOR CODE, Art. 254).
Q: Who cannot form, join or assist labor organizations?

ANS: They are: (I-AM-CHANGES)
1. Employees of International organizations with immunities such as UN, IRRI,
and International Catholic Migration Commission (ICMC v. Calleja, G.R. No.
85750, September 28, 1990);
2. Members of the AFP, including police officers, policemen, firemen and jail
guards (E.O. 180, Sec. 4);
289
•%.-..,•.;•.,F;,..;k%
4. Whose functions are normally considered as policy-making or managerial; and
5. Whose duties are of a highly confidential or highly technical in nature;
6. Confidential employees (Metrolab Industries, Inc. v. Confesor, G.R. No.
108855, February 28, 1996);
7. High-level or managerial government employees (E.O. 180, Sec. 3);
8. Aliens without valid working permits; or Aliens with valid working permits but
are nationals of a country which do not allow Filipinos to exercise the right of
self-organization and to join or assist labor organizations (D.O. No. 9 (1997),
Rule II, Sec. 2).
9. Non-Employees (Rosario Bros., Inc. v. Ople, G.R. No. L-53590, July 31,1984);
10. Government employees, including Government-owned and controlled
corporations with original charter (Arizala v. CA, G.R. Nos. 43633-34,
September 14, 1990);
11. Employees of cooperatives who are its members (Benguet Elec. Coop. v.
Ferrer-Calleja, G.R. No. 79025,<Decemper 29, 1989); However, they may form
a worker's associatio NEECC)Egipli Ps44,ss'n. v. NLRC, G.R. No. 116066,
January 24, 200p); —1/4, k,.,_.) -t. ,,, . i A•
12. Subversives orihfise gaped4n-,sub.v.e sqe (LABO , CODE, Art. 250 (e)).
/.... .0
Q: May governmefnidnti orm.urtions?,, -k,„„-e'r
N._
ANS: Yes. The ge2eyal Tyle that al) glern,raent e ploy0,91:Ca form, join or assist
employees orga,nizafigrks of eir o\kn clIpsisitig for t e falthfranc and protection of
their interests (E.O. No. 180, ec. 4. This rige applies o all 6 Jine s of all branches,
subdivisions, iitstiVe talitie ;-and-agefics 'uf-the-Go ernme% li:) fling GOCCs with
original chartersiSc. , Sbc0),-: fteptrZgY
I1
1. HigllevelA g ploye s whgiste.,\-,-‘I nerv tipn$ are normall .cortsrd . ered as policy-
makinArianags-ila or whose, duties are o pirly onficlihtial nature (E.O.
No. IVO, Sep 3);
2. Membeiz? of he 2-64 P Lp_pines
."--)/ incl di g police officers,
policeken, fir s'0 . dg90, . ec. 4)./
Note: EmployeesI
Note: ttof gov rated nder tie Corporation Code
and Registered wi SEC a (not by E.O. No. 180.
Q: Discuss the eligibky Reel rgnewrsngla ,pko g "nations.
ANS: Aliens, working irPtiki-c fp wit validf Vigued by DOLE, may exercise
ii . I.
the right to self-organization 'b oin or , v bor o ganizations of their own choosing
for purposes of collective bargai Inp.promidedr at said aliens are nationals of a
country which grants the same or similar rights to Filipino workers. This embodies the
Principle of Reciprocity (LABOR CODE, Art. 284).
Q: May employees whose religious belief prohibits formation/joining of unions,

still form the same?
ANS: Yes. The right of members of the INC sect not to join a labor union for being
contrary to their religious beliefs does not bar the members of that sect from forming
their own union, for the recognition of the tenets of the sect should not infringe on the
basic right to self-organization granted by the Constitution to workers regardless of
religious affiliation (Kapatiran v. Ferref-Calleja, G.R. No. 82914, June 20, 1988).
Q: What are the rights of members in a labor organization?
ANS: The rights of members in a labor organization are:
1. Deliberative and Decision-Making Right — the right to participate in the
deliberations on major policy questions and decide by secret ballot;
2. Right to information — the right to be informed about:
a. the organization's constitution and by-laws; and
b. the collective bargaining agreement and labor laws.
290
3. Rights over money matters — the rights of the members:
a. against imposition of excessive fees;
b. against unauthorized collection of contributions or unauthorized
disbursements;
c. to require adequate records of income and expenses;
d. to access financial records;
e. to vote on officer's compensation;
f. to vote on special assessment; and
g. to be deducted a special assessment only with the member's written
authorization. •
4. Political right — the right to vote and be voted for, subject to lawful provisions
on qualifications and disqualifications (LABOR CODE, Art. 250).
Q: What is the nature of the relationship between the union and its members?
ANS: The union has been evolved as an organization of.collective strength for the
protection of labor against the unjust exactions of capital, but equally important is the
requirement of fair dealing betweenAanion and its members, which is fiduciary in
nature, and arises out of two factors :'b , the degree of dependence of the individual
employee on the union organizgottfAnh the other, a corollary of the first, is the
comprehensive power vested in the'4ilatlwi h respect to the individual. The union may
be considered but the agent of its '.itiet(NA'agleapurpose,sfffecuring for them fair and
just wages and good working coriditiftFAC7,agenf ftataigto subject to the obligation
of giving the members,Oir principPs2all information re ernt to union and labor
matters entrusted to itlblerrs
., of Teogolo. Cruz v. Court q Oustrial Relations, G.R.
No. L-23331-32, DecerAer07, 1969)1 .1° AP a
412:11 *re' i0
'h
Q: What is the nature ofvzselationsh" between thetunron apd the federation to
which it is affiliared? „t, ' (EN
ANS: The reffednshdpbekeen a local o hapter a hi.,l igiFfedekation or national
1) " -
union is generty underatod to
'_
iTq that 'agency, exiiaffeaarethe principal and
---,----5-
:
the federation the,,egetiNOZUCE 6, su at 202).
Note: A local union does-not Wexist ce to the federation with which it is affiliated.
It is a separate ancAttinctAoluntary as ci tio owing its creation to the will of its
members. Mere affiliatimOods not divestp _peal 'Aim of its own personality; neither
does it give the mothees:ederatio41 ,011rebeettkae ttritWelidently of the localunion. It
only gives rise to a co k:, act ofAency, where the former acts in representation of the
latter (Insular Hotel EmpV,„ei:Union-NFL v. Waterfront Insular Hotel Davao, G.R. No.
.174040, September 22, 2 '10
Q: What is the Substitutionary Doctrine?

ANS: Where there is a shift in the employees' union allegiance after the execution of a
collective bargaining contract with the employer, the employees can change their agent
(the labor union) but the collective bargaining contract which is still subsisting continues
to bind the employees up'to its expiration date. they may, however, bargain for the
shortening of said eRpiration date. The employees cannot revoke the validly executed
collective bargaining contract with their employer by the simple expedient of changing
their bargaining agent. The new agent must respect the contract (Benguet Consolidated,
Inc. v. Employees' and Workers' Union-PAFLU, G.R. No. L-24711, April 30, 1968).
InellgibNtyofManagerialEmployees
Q: Who are managerial employees?
ANS: A managerial employee is one who is vested with the powers or prerogatives to
lay down and execute management policies and/or to hire, transfer, suspend, lay-off,
recall, discharge, assign or discipline employees (LABOR CODE, Art. 219(m)).
291
Note: Managerial employees shall not be eligible to form, join, or assist any labor unions
for purposes of collective bargaining (IRR of the LABOR CODE, Book V, Rule II, Sec.
2).
Q: Who are confidential employees?

ANS: Confidential employees are defined as those who:
1. Assist or act in a confidential capacity; and
2. Are the persons or officers who formulate, determine, and effectuate
management policies in the field of labor relations (Sugbuanon Rural Bank,
Inc. v. Laguesma, G.R. No. 116194, February 2, 2000).
Note: The two criteria are cumulative, and both must be met if an employee is to be
considered a confidential employee, that is, the confidential relationship must exist
between the employee and his supervisor, and the supervisor must handle the
prescribed responsibilities relating to labor relations. The exclusion from bargaining units
of employees who, in the normal course of their duties, become aware of management
policies relating to labor relations iuprincip ob'ective sought to be accomplished by
the "confidential employee juld'(Sag Mig el ods v. San Miguel Corporation
Supervisors, G.R. No. 146266, Abgust 112011 3/7
Thi, 1 ,
zs-)P--.---------,,
Q: Are confidential empl pesveligible to join a nig "? \,.
ANS: It depends. rreolt 5(.0 he-rabir CodeATitsk,10,. • ineligibility of confidential
employee to joi ssist ppy ibo.yrganizatiOntsto6Aagerial employeei,
jurisprudence has ex coed t is proffibiticirttaf.eonfide tial eeloyeets or those who by
reason of their
if)ositio ature of wii k4re requir d to as0,, sif.Viact in .a• fiduciary
manner to ma a%fia ees an• eKce, are 1 e se priVt, o sensitive and highly
confidential r Olds( b firelPyall c! i7' N eves liorldari- onfesor, supra).
However, if th agye . to co dentialtf 8t -relations
sir: i • formati :HI rely incidental in
the performanrof.4 thei tions, t 4 o' not h- trea et as confidential
employees (S i g Su E 4guesma, G.R. No,
110399, Augus e,
(.5'
Q: A group of ccoun iqg paysb dio felegrabh o eratorg,'Who have
access to confidaqtial infiknatio Rt-So_mbajmf, the company they work in,
decided to create tfie4r own,rarga • attorrcalled gmbral Union in which they
affiliated with a rankv‘,r(dtriftionv-Whelelhalr tia successfully done so,
Cerebral Union filed a petiti jor cettifirpatia' eijo with the Med Arbiter for
them to be the exclusive 6arg&ingllepttel'e tatrve. This was opposed by the
NHRI Company on the ground thM, re. confidential employees. How should
the Labor Arbiter decide?
ANS: The Labor Arbiter should decide in favor of NHRI Company and oppose the
organization of Cerebral Union. A confidential employee is one entrusted with
'confidence on delicate matters, or with the custody, handling, or care and protection of
the employer's property. Article 255 of the Labor Code singles out managerial employee
as ineligible to join, assist or form any labor organization, under the doctrine of
necessary implication, confidential employees are similarly disqualified. This doctrine
states that what is implied in a statute is as much .a part thereof as that which is
expressed. In applying the doctrine of necessary implication, the rationale behind the
disqualification of managerial employees should be taken into consideration, thus if
these managerial employees would belong to or be affiliated with a Union, the latter
might not be assured of their loyalty to the Union in view of evident conflict of interests.
Collective bargaining in such a situation can become one-sided. It is the same reason
that impelled the Court to consider the position of confidential employees as included in
the disqualification found in Art. 255 as if the disqualification of confidential employees
were written in the provision. If confidential employees could unionize in order to bargain
for advantages for themselves, then they may become the source of undue advantage.
292
Said employee(s) may act as spy or spies of either party to a collective bargaining
agreement (Pepsi-Cola Products PHL, Inc. v. Secretary of Labor, G.R. No. 96663,
August 10, 1999).
Q: May legal or executive secretaries join the rank-and-file union?

ANS: No. While legal secretaries are neither managers nor supervisors as their work is
basically routinary and clerical, they nonetheless fall under the category of confidential
employees and are ineligible to join a labor union (Metrolab Industries v. Con fesor,
supra).
Right of Supervisory Employees

Q: Who are supervisory employees?
ANS: Supervisory employees are those who, in the interest of the employer, effectively
recommend such managerial actions if the exercise of such authority is not merely
routinary or clerical in nature but requires the use of independent judgment (LABOR
,g
CODE, Art. 219(m)).
Q: What are the rights of Supervisory.pm loyees?

ANS: Supervisory employees shall -riPqRaeligible for membership in the collective
bargaining unit of rank-and-file employees .b4f17,may joi90,.assist or form separate
collective bargaining units and/or legitirfAtgilit grag_ap,iptilAs of their own. The rank
and file union and the supery,iscirs' union pperating'williihlifiejsame establishment may
join the same federation_orl- ational union (LABOR CODE, Art -h55).
-TaPil
Effect of Inclusion of Employees Outsidebf the Bargaining nit
..4?-; !:,,,;-q. . DZ1 1 4 '‘
Q: When is there,catimitigljpg or mixtugof memberspip??'
ANS: There is0Aminglira or mixture,.of tembership when q collective bargaining unit
consists of bliAtstiobirety employees rAd rank-l and (Coastal Subic
Bay Terrninalqbefit.-of Lab or, GR:Vo. fg' 117, Nogilloerl20060,#)?.
'AMidatk
5'-art* theri
Q: What is theiffecVviraen 11 1
is cmcommingling of membership in a labor
tEi 9-
union? •
•'••
ANS: The inclusion astuni*members o,Arggketeutside the bargaining unit shall
not be a ground for thAaZlicellatiqp4oRthtregisttgaikorE% union (R.A. No. 9481, Sec.
9). Employees that squid notirge been included in membership are automatically
deemed removed from rlelp.stil membership (2 AZUCENA, supra at 281).
Note: Any mingling betweenrsOervisory and rank-and-file employees in its membership
cannot affect its legitimacy for that is not among the grounds for cancellation of its
registration, unless such mingling was brought about by misrepresentation, false
statement or fraud (SMCC v. Charter Chemical and Coating Corp., G.R. No. 169717,
March 16, 2011).
Non-abridgement
Q: What is the non-abridgement of the right to self-organization?
ANS: It shall be unlawful for any person to: (RCDI)
1. Restrain;
2. Coerce;
3. Discriminate against; or
4. Unduly interfere with employees and workers in their exercise of the right to
self-organization (LABOR CODE, Art. 257).
Note: No "person"—inside or outside of government, employer or non-employer, unionist
or non-unionist—may abridge these rights. If abridged in the workplace, the
abridgement is unfair labor practice (2 AZUCENA, supra at 295)
293
B. BARGAINING UNIT
Q: What is a bargaining unit?
ANS: Bargaining unit refers to a group of employees sharing mutual interests within a
given employer unit, comprised of all or less than all of the entire body of employees in
the employer unit or any specific occupational or geographical grouping within such
employer unit (D.O. No. 40-03, Rule I, Sec. 1).
Q: What are the tests to determine the constituency of an appropriate bargaining

unit?
ANS: There are four tests in determining the appropriate bargaining unit:(CGEH)
1. Community of Interest Doctrine / Substantial Mutual Interest Rule -
reflected in groups having substantial similarity of work and duties or similarity
of compensation and working conditions. The following are factors that may be
considered:
a. Similarity in the scale and manner of determining earnings;
b. Similarity in the em to me benefts, hours of work and other terms
and condif o f empl
c. Similari y hods o rk er,Torme ;
d. Simile ty ualifica ions, skills anc tra"mirluf the employees;
e. Fr c o ontsLocirit ange hee ployees;
f. G 0 a rapt.
l pso dEity; 1E
g. O'n ityc or ntegra bn 9 rOWction
h. /Comm su ervision an4. eterminatio elations policy;
i. Hi59 'of co ectivelargviih , g•
j. es r s of th affe9lecLegal2y.ege;or 1,..'-i 1
k. t of union orA iztt gh(g..t4ZUC -NA, suga amt 0-461).
2. Glob ..Cr ct me -4 express, r_r; ensire o itl em loye si
The esire's of ,. e-employe --ar-e-reiivga to e determination of the
appro liarfe) arg •k i nit. h tdf:eV,n9 60 e fishes f the employees
conce ing their Incowe dluatok aproposed bargaining unit is
inhere kin thelasic O, elf runi, ,
3. Prior Nlectiv Bar ing`NL -li,sto tv ) precedent istory of collective
bargainingketween ftigt Oin2,61and t e employer.
4. EmploymentSta4trs;yszz Li ........,,,,„.....-0 -i
a. Temporaek Q 1
b. Seasonal; atid,,,......-4
c. Probationary employ-
i \1
a uct East Commercial Corporation v.
Secretary of Labor and Employment, G.R. No. 162355, August 14,
2009).
C BARGAINING REPRESENTATIVE
Q: What is an exclusive bargaining representative?
ANS: Exclusive bargaining representative means any legitimate labor union duly
recognized or certified as the sole and exclusive bargaining representative or agent of
all the employees in a bargaining unit. The bargaining agent is the union as an entity,
not the union officers (D.O. No. 40-03, Rule I, Sec. 1).
Q: What does it mean when a labor union is recognized or certified as the "sole
and exclusive bargaining agent"?
ANS: A union which garnered majority of the valid votes cast in a valid certification
election shall be certified as the sole and exclusive bargaining agent and it shall solely
represent its members in bargaining the terms and conditions of their employment with
the employer.The labor organization designated or selected by the majority of the_
employees in an appropriate bargaining unit shall be the exclusive representative of the
294
employees in such unit for the purpose of collective bargaining (LABOR CODE, Art.
267)
Q: May a non-recognized or non-certified union collectively bargain with the

employer?
ANS: No. Not being a legitimate labor organization, it is not entitled to the rights granted
under Article 250. Aside from being registered, the local union should further be
designated or selected by the majority of the employees in the bargaining unit and the
bargaining representative (Abaria v. NLRC, G.R. No. 154113, December 7, 2011).
Q: What are the methods to determine the bargaining representative?

ANS: The methods of determining the bargaining representative are: (SC-RRC)
1. Request for SEBA;
2. Certification election;
3. Run-off election;
4. Re-run election; and
5. Consent election.
Q: What is- a Request for ';Sp, Exclusive Bargaining Agent (SEBA)

Certification?
'
ANS: Request for SEBA Certificatiorj,ww. p afivuest ipren the DOLE Regional
Director is under mandate to.-ieiaelikpuaft trfk-AtifipdtOn upon showing by the
requesting union of com.p0g with the 14a1 requiremeil.: quest is granted only to
an unorganized estab is meyt with opl*Re legitimate union AWN REVIEWER 2017,
supra at 510). ef
Q: Where is ths,,riatest g
ANS: RequestAr§ filed„in Ithe DOLE1-..Re ional Office hicf iss ed its certificate of
registration oOrtifota,Tcreation of cha ed loca s 'type
t (D.O. No. 40-
03, as amend-4 by D.O.:4A4 40_,I(N,..,
Q: What is the effecti

To'PSEILLA certiiicati
ANS: The certificaVo shall bar the Iii etition for certification by any labor
organization for a penoA;tione (1) year," tad its issuance (D.O. No. 40-03,
as amended by D.O. N5r40-I-15 4-41,41gEWIV 0-1101'
Q: What are the Docuhntary Requirements for the Request?

ANS: The Request shouldilidate:
1. The name and address of the requesting legitimate labor organization;
2. The name and address of the company where it operates;
3. The bargaining unit sought to be represented;
4. The approximate number of employees in the bargaining unit; and
5. The statement of the existence/non-existence of other labor organization/CBA.
The certificate of registration as duly certified by the president of the requesting union or
certificate of creation of chartered local as duly certified by the president of the
federation of the local is required to be attached to the Request (D.O. No. 40-03, as
amended by D.O. No. 404-15).
Q: Define certification election.

ANS: Certification •election means the process of determining through secret ballot the
sole and exclusive representative of the employees in an appropriate bargaining unit, for
purposes of collective bargaining or negotiation (IRR of LABOR CODE, Book V, Rule I,
Sec. 1(h), as amended by D.O. No. 40-03).
295
• •••••••••
•'t
AN RED:.
Q: What is the nature of certification election?
ANS: A certification election proceeding is not a litigation but an investigation of a non-
adversary, fact-finding character in which the Bureau or the Med-Arbiter plays the part of
a disinterested investigator seeking merely to ascertain the desire of the employees as
to the matter of their representation (Furusawa Rubber PhiL, Inc. v. Secretary of Labor
and Employment, G.R. No. 121241, December 10, 1997).
Q: When is certification election mandatory on the part of the BLR?

ANS: The certification election is mandatory on the part of the BLR in the following
instances:
1. Upon the filing of a verified petition by a legitimate labor organization including
a national union or federation which has already issued a charter certificate to
its local chapter participating in the certification election or local chapter which
has been issued a charter certificate by the national union or federation
(LABOR CODE, Art. 269); or
v
2. Upon the filing of a petition by.the„ernployer when such employer is requested
by the employees to bairain colleqtively. LABOR CODE, Art. 270).
dr; Nu/
Q: What are the requisites toibe floe-the.conductfof.a'tertification election?
%, --. g%
ANS: The followinthe,rsqtlisites to conductaacertillOpon election: (60-VC)
1. That the 'et ffr ertffiatirEleatioa '11=44C3,Ey qAstioning the majority
status of0-' baTmbhnt bargaini:g a ant isl iled4ledreAhe DOLE within the
60-dayereedo perild; if ./A At.
2. That s ch PC is V rifled; and --4:„.•N \ f)
3. That he C is su poi e y i e written _opsent ca at .east 25% of all the
empl will the b rgriffiau
nyie ,,T,iir( geviJnions of tli Philippines and Allied
Sery es rid Feratiorigif-T
ck ,dplUnions Lagu Sma4 G.R. No. 102350,
June
Q: What requi e petition i‘gfiled by a national

union or federa
ANS: In cases w ere the ,etiti s on or federation, it shall not
be required to disc ose the ns
r*
, (1
1:1 fficers avid members; the 25%
consent signature ratkiremsn may be filed any time,
subject to the One-Elecron4P9- ule4IAB 268).
Q: Is consent needed?
ANS: Yes. The petition must be supp e written consent of at least 25% of all
the employees in the appropriate bargaining unit (LABOR CODE, Art. 268).
Q: When must a petition for certification election be filed?

ANS: The period for filing a petition for certification election depends on whether or not
there exists a CBA.
1. When there is a CBA, the labor organization can file a petition for certification
election within the 60-day freedom period (Contract Bar Rule); or
2. When there is no CBA, then the labor organization can file a petition for
certification election at any time, subject to the deadlock bar rule (2
AZUCENA, supra at 440-441).
Q: Who is a forced intervenor?

ANS: The incumbent bargaining agent shall automatically be one of the choices in the
certification election as forced intervenor (IRR of the LABOR CODE, Book V, Rule VIII,
Sec. 7, as amended by D.O. No. 40-F-03).
296
Q: What are the grounds for the dismissal of a petition for certification election?
ANS: The Med-Arbiter may dismiss the petition for certification election on any of the
following grounds:(NUN-12-ANEL)
1. Non-appearance — Non-appearance of the petitioner for two consecutive
scheduled conferences before the Med-Arbiter despite notice;
2. Unregistered Union — The petitioner is not listed in the Department's registry
of legitimate labor unions or that its legal personality has been revoked or
cancelled with finality;
3. No Charter — Failure of a local/chapter or national union/federation to submit a
duly issued charter certificate upon the filing of the petition for certification
election;
4. Absence of Employment Relationship — Absence of ER-EE relationship
between all members of the petitioning union and the establishment where the
proposed bargaining unit is sought to be represented;
5. 12-Month Bar Rule — The petition was filed within 1 year from entry of
voluntary recognition or a valid..oertification, consent or run-off election and no
appeal on the results oftInertification, consent, or run-off election is
pending; ,
6. Negotiation or Deadlock, Atec a duly certified union has commenced and
sustained negotiations Vii0,1)3,11ccordance with Art 260 of the Labor Code
within 1-year period refe„riel of thelaR;
7. Existing CBA — ThAipetiticik aglfiled4rdoTelciger the freedom period of a
duly registerelcoyettive bargei g agreementòr
8. Lack of Sup,p,pfe In case rganized establis fnt, failure to submit the
25% supporttesplement fo ffi filing of the petiid for certification election
(D.O. No. 103, R:bleAVIII,Sec. ). 4 4X
Ii 3
Q: Define cottract bar e. ti
ANS: The coligt buinireprovVes tha hile a valid CBA of a fixed
duration is subsisting,at
tha" is Otello to hold atio.esting the majority
status of the Inca e if):duringthe fi year term ofthe43Prexcept during the 60-
day period immedi V174fiofilp the eXpirabon of the CBA (LABOR CODE, Art. 265).
Q: What is a deadloc
-t,
ANS: A deadlock is my onymilejWit ti pa sse—o .standstill which presupposes
reasonable effort at goo'faith
1 . bWaining but despite noble intentions does not conclude
an agreement betwee%ladies (Tabangao Shell Refinery Employees Assn. v.
Pilipinas Shell, G.R. No. 7'000P, April 7, 2014).
Q: Define the deadlock bar rule.

ANS: The deadlock bar rule provides that a petition for certification election cannot be
entertained if, before the filing of the petition for certification election, a bargaining
deadlock to which an incumbent or certified bargaining agent is a party, had been
submitted to conciliation or arbitration or had become the subject of a valid notice of
strike or lockout (National Congress of Unions in the Sugar Industry of the PHL — TUCP
v. Trajano, G.R. No. 67485, April 10, 1992).
Q: Define negotiation bar rule.

ANS: This rule provides that a petition for certification election cannot be entertained if,
before the filing of the petition for certification election, the duly recognized or certified
union has commenced negotiations with the employer (2 AZUCENA, supra at 489).
297
izr...x;5,...:...7,•.::-....;- ,.:.1:.r).g1:•;;;e-41nVio =4;;•';'- %:-.1.-"•,FP,.:-..:.
;',.. • -'
...,
...4...‘
Q: Define certification year rule.

ANS: Certification year rule provides that no petition for certification election may be
filed within one year from the date of a valid certification, consent, or run-off election or
from the date of entry of a voluntary recognition of the union by the employer (2
AZUCENA, supra at 486).
Q: What are the requirements for a valid certification election?

ANS: The requirements are as follows: (LRN-VM)
1. The petition for certification should be filed by a Legitimate labor organization
or any employer, when requested to bargain collectively while the majority
status of the union is in doubt;
2. The petition should be filed with the Regional Office which issued the
petitioning union's certificate of registration or certificate of creation of
chartered local. It shall be heard and resolved by the med arbiter;
3. If the CBU has No CBA, the petition may be filed any time outside the 12-
month bar. If it has a CBA Acaa,be,R c, 1,5)nly within the last sixty (600 days of
the 5th year of the CBA, -r
4. The petition is Venfied nd Wrap q. 9"Nerpekconsent of at least 25% of
all the employeecptii .b0tgaining.unita-the coppacity is organized;
5. To have a valid eleptiaiirat least a Majori lI efjible voters in the unit must
have casithei
6, The wigWilon ust avegathefed allVlajqpV e valid votes cast
(LABOR COE, Art. 268). 4tfk
(.1)
Q: What is DolibliN jority u
ANS: To be a Odild rtificatio
1. At le st jority o all eligible oterS,lin the sargaini §-wit should have cast
their o nd J..c.9 I
2. Majori cast4requ di order-4
e 1) chosen as the
SEBA1 B C k-1
1,r%g7s
'\\•
Q: Discuss the les on rotes
ANS: Any party-in- gterest a fi
election. Such proteS kfilt
shalt
Protest not so raised s . all _Pep d-waive . 1
2=2rd
• n e condulfor mechanics of the
in to f. te election proceedings.
-,Fi!9stia§ party must formalize its
protest with the Med-Arb vtfith peci u3"cl an#/elidence, within five (5) days
after the close of the election cirocaling . ot_10•rded in the minutes and formalized
within the prescribed period, the proMrsligleemed dropped (D.O. No. 40-03, Sec.
12, as amended by D.O. No. F-03).
Q: When does run-off election take place?

ANS: It takes place between two unions which received the two highest number of votes
in a certification election with three(3) or more choices, where not one of the two unions
obtained the majority of the valid votes cast, provided that the total union votes are at
least 50% of the total votes cast (LABOR CODE, Art. 268).
Q: What are the requirements of a run-off election?

ANS: The requirements of a run-off election are as follows (VV-MUCH)
1. Valid election took place because majority of the collective bargaining unit
members voted (first majority);
2. The said election presented at least three Choices (e.g., union one, union two
and no union);
Note: "no union" shall not be a choice in the run-off election.
• 298
RED BOOK. 71*
3. Not one of the choices obtained the Majority (50%+1) (second majority) of the
valid votes cast;
4. The total Votes for the unions is at least 50% of the votes cast;
5. The two choices which garnered the Highest number of votes shall participate
in the election
6. There is no Unresolved challenged votes or election protest which if sustained
can materially alter the results (2 AZUCENA, supra at 512-513).
Q: When is there a failure of election?

ANS: In failure of election, the number of votes cast in the certification consent election
is less than the majority of the number of eligible voters and there are no challenged
votes that could materially change the results of the election (D.O. No. 40-F-03).
Q: Define re-run election.

ANS: It refers to any of the following:
1. An election conducted to brea,kta tie between contending unions, including
between "no union" and on$01:40 unions; or
2. An election conducted af,4raijaaure of election has been declared by the
election officer and/or .:.efi#001 by ,1. the mediator-arbiter (D.O. No. 40-1-15,
series of 2016, Sec. 1(ta .''
. .4 ,1N11 , ,r
,, icept'AVP.•
Q: Discuss the procedure once-run tection. ... ..ial
licqt
ANS: When a certificaticOonsent oy r if • -off election rdsuj r to a tie between the 2
i r shall imrishebip ely notify the parttes bf a re-run election. The
choices, the election Rfiffeb
election officer shall caase the postingttrae notice of re-rig diection within 5 days from
op- ka ., - .
the certification, consent orienloff electon. The re-runFeleEtioti shall be conducted
within 10 days &tent; poaffiglof notice .00. No. 40-1-1 se es of 2016,Sec. 18).
• t, 4kk 1
441- A‘ ii
Q. What is theVie.91,94No-Uri winrag the elec ion,TwA,
r '.0 .
ANS: If the lif6ctions dis iise LatheltiTajority of,w _o grs o not wish to be
represented by any urfrinil4o union ay Oproperly ce ifirelli-and-the minority workers
who wish to have Onion represent. he v` collective bargaining may not impose their
will upon the majofity,upolthe plea t t re being denied the right to self-
organization and colleletiyWargaining (it Wan° G.R. No. 84433, June Z
1992). Furthermore, nizticertificagOlgefloWban e'rdonducted within 1 year from the
date of issuance of a fal certilleajion election result (one-year bar rule). Thus, there will
be no collective bargai in a,,grOnt within the company for a period of time (2 POQUIZ,
supra at 262).
Q: What is consent election?

ANS: An election voluntarily agreed upon by the parties with or without the intervention
of the DOLE, to determine the issue of majority representation of all the workers in the
appropriate collective bargaining unit (D.O. No. 9, Rule I as amended by D.O. No. 40-
03; Algire v. De Mesa, G.R. No. 97622, October 19, 1994).
Q: How does it differ from certification election?

ANS: Although not specifically mentioned in the Code, consent election is authorized
and detailed in the Implementing Rules. Like a certification election, its purpose is the
same, namely, to find out which union should serve as the bargaining agent. The
difference is that a certification election is ordered by the Department while a consent
election is voluntarily agreed upon by the parties, with or without the intervention of the
Department (2 AZUCENA, supra at 515).
299
Q: Among the 400 regular rank-and-file workers of ABC Company, a certification
election was ordered conducted by the Med-Arbiter of the Region. The contending
parties obtained the following votes:
Union 1: 55
Union 2: 101
Union 3: 124
No Union: 104
Spoiled Votes: 16
No objections were raised by any party on the result of election. How should the
election officer proceed to achieve the purpose of the certification election?
ANS: Pursuant to the IRR of LABOR CODE, Book V, Rule X, Sec. I, the election officer
should conduct a run-off election on the two unions that received the highest number of
votes. As a rule; run-off election takes place between the unions who received the two
highest number of votes in a certification election with 3 or more choices, where not one
of the unions obtained the majority of the valid votes cast, provided that the total union
votes is at least 50% of the total votes,,castALL.e case at bar, there are 384 valid votes
cast and none of the contexli unions gar er9cOmpjority of such valid votes cast.
Therefore, a run-off electioreghodl be ciikAbct in arde"" o,determine the SEBA.
,, ,"- i'
D. RIGHTS OF LABOR'ORitilZAri5;7''''''''''''
.. if '111/42‘ '(.1C\
Q. What are the rig ts o a rerganizOtron s?
ANS: The rights f4a o rgazatioriParekJSU-F0
1. To Un ertak ctivit es for ffie behefiecil the or anl its members;
2. To S %awl bp sue ' le T
3. To 170 tXt_flusive eprepentetiy of..all,,inpl • yees; 1,.....-i
4. To Repres tat union ern1% , ___
;-__LL ,
5. To a F ni hedrbyimployer4Xiigdited fin eja sta erreFlts;
6. To 0 n pr ertiese a
::::--..7..-, ; :- :,
7. Exem ki) 1-Ir m tae LABO
31 •Dgi Art 2
K\
Check Off Assessment • ee
Q: Define union • ttes.
ANS: These are Oxinentsi Zhqz=o0,0 g era an current obligations (2
AZUCENA, supra at 23-
'( 90i
Q: What is an assessment?
ANS: Assessments are the paymen tsed4er pecial purpose, especially if required
only for a limited time (2 AZUCENA, supra at 237).
Q: What are the requirements for the validity of a special assessment?

ANS: The requirements are as follows (RAGS):
1. There must be a written Resolution;
2. The resolution must have been Approved by a majority of all the members;
3. The approval must be at a Gertralmembership meeting duly called for the
purpose;
4. The Secretary of the organizatio 1.1all record the following: (a) minutes of the
meeting; (b) list of all members present; (c) the votes cast; and (d) the purpose
of the special assessment or fees and the recipient of such assessment or
fees; andshall be attested to by the president (LABOR CODE, Art. 250(n)).
Q: Define agency fees.

ANS: Agency fees are equivalent to union dues which a non-union member pays to the
union because he benefits from the CBA negotiated by the union (2 AZUCENA, supra at
241).
300
Q: What are the requisites for the assessment of agency fees?
ANS: The requisites are as follows: (PNB-U)
1. The employee is Part of the bargaining unit;
2. He is Not a member of the union;
3. He partook of the Benefits of the CBA; and
4. He is not a member of another Union (LABOR CODE, Art. 259(e)).
Q: Define check off.

ANS: It is a method of deducting by the employer from the employee's pay at prescribed
periods the amounts due to the union for fees, fines or assessments (A. L. Ammen
Transporation v. Bicol Transportation Employees Mutual Association, G.R. No. L-4941,
July 25, 1952).
Q: What is the nature and purpose of check off?

ANS: Union dues are the lifeblood of the union. All unions are authorized to collect
reasonable membership fees, union dues, assessments and . fines and other
contributions for labor education and Psearch, mutual death and hospitalization
benefits, welfare fund, strike fund •and•,Credit and cooperative undertakings (LABOR
CODE, Art. 292(a)). :,r
, .....,..1
Q: What are the proper subjects,,of.,64C, 1,3% . ,1-,tta,.
ANS: The following may be subject tdWepWafg'"(MSMICIR:e
• ..1 ,..W44.,./..q".
1. Mandatory actly,itleg'U` nder the Code;
2. Special assessments;-4,..7iZ; . •
3. Attorney's fees;, . 4.1' \
4. Negotiation,s:iihdo a
.
5. Other ext6ordindees (LABOCCODE, Art. 25o(o)J. 1̀
,,,f4gf-
_,, ? . •,,4.,, osi
-W.'
Q: What arertKeWe,g9A-Ne. ts fora chec Toff?

ANS: No special assessment;"-1,-•attorne fees, ees or any other
extraordinary feesearrL checkeircff frpin any amoun d eari employee without an
individual written attratizaVon duly sigered by the employee (LABOR CODE, Art.
250(o)).
Are there exceptiopp to theAtiffernen 11:3Peccitniiir ritten authorization from

the employee before check or?,
ANS: Yes. A written artizettbn is not required when the amounts to be checked off
are for:
1. Mandatory activities; or
2. When non-members of the union avail of the benefits of the CBA (LABOR
CODE, Art. 250(o)).
Q: How may non-union members avail of the privileges enjoyed by union

members under a collective bargaining agreement?
ANS: Non-union members may avail of the privileges by payment of the agency fee.
This is an amount, equivalent to union dues, which a non-union member pays to the
union because he benefits from the CBA negotiated by the union. Such is an allowable
deduction from wage (2 AZUCENA, supra at 24/).The collection of agency fees in an
amount equivalent to union dues and fees from employees who are not union members
is recognized by Article 259(e) of the Labor Code (Holy Cross of Davao College, Inc., v.
Holy Cross of Davao College Union KAMAPI, G.R. No. 110007, October 18, 1996).
301
Q: Is an individual written authorization necessary for the collection of agency
fees from a non-union employee?
ANS: No. It is not necessary. No requirement of written authorization from the non-union
employee is imposed. The employee's acceptance of benefits resulting from a collective
bargaining agreement justifies the deduction of agency fees from his pay and the
union's entitlement thereto. In this aspect, the legal basis of the union's right to agency
fees is neither contractual nor statutory, but quasi-contractual, deriving from the
established principle that non-union employees may not unjustly enrich themselves by
benefiting from employment conditions negotiated by the bargaining union (Holy Cross
of Davao College, Inc., v. Holy Cross of Davao College Union KAMAPI, G.R. No.
110007, October 18, 1996, citing ALCANTARA, supra at 211).
Q: Can the company continue to make deductions after separation or disaffiliation

of the employee from the union?
ANS: The employees' check-off authorization, even if declared irrevocable, is good only
as long as they remain members 91.111,,e,union concerned because as such members,
they were obliged to pay thg,,,b8rrespondingiduies,,a0 assessments to their union.
However, the moment th,tAllieytnparat99frokanirlerffT union and joined another
labor organization, then .A.1 werng,..no-longser7 obltgvd. .toy-pay the said dues and
assessments; naturafry; thka,,w6rald be no longeNany r.pam-1 or occasion for the
company to conti5,4114ipg' dgducticitirpandard c7) /Wed Erapk Employees Union
(NUBE) v. ConfesorG? iNo.114974,2 J00 16,,,,-2004
k ,t .8.1. %1.)
t 'ks
Collective Bar 'ping ‘ (f)
Q: Discuss the diTrei o barg in gptlecti 91y.. .-..,, p.,...4
ANS: The
The dutr9Irgain dillecilti 'rt4affs,,th6 performanceutual of a obligation
between employpld tpel plofeeV2Ltiajytitli unidibto, meerTrill convene for the
::,,--7- y.:-0/ I
purpose of: \ ,
1. Nego 'StQait ag* wt relpe'bt et' h 1' '-
424 ;, oursWork and all other
terms .. nd co ditid v.', •, rtiji,.
.4rtiel3yj cl\allirg petposals, for adjusting any
grievatibes or est lks i\. Kull:Igo' . gree ent; and'
2. Executing. a contract thcorpoLakig:sut agreetnents if requested by either
party (LABOR CODOE-ENTI‘i
Note: SuchNtyldh-ffot,glop-el-any„pa o a proposal or to make
any concessio 0 IODE -Ar263):(
Q: What are the jurisdictionekpreco

ytI'
V''
rt itignS,to- set the collective bargaining in
motion?
ANS: Back to enterprise level, the employer is not under any legal duty to initiate
contract negotiation. The mechanics of collective bargaining are set in motion only when
the following jurisdictional preconditions are present, namely: (MPD)
1. Possession of the status of Majority representation of the employees'
representative in accordance with any of the means of selection or designation
provided for by the Labor Code;
2. Proof of majority representation; and
3. A Demand •to bargain under Article 261, paragraph (a) of the Labor Code (Kiok
Loy v. NLRC, G.R. No. 54334, January 22, 1986).
Q: What is the effect if the employer refused to negotiate with the union?
ANS: It- states that the CBA proposed by a Union may be imposed lock, stock, and
barrel on an employer who refused to negotiate a CBA. An employer who violates the
duty to bargain collectively loses its statutory right to negotiate or renegotiate the terms
and conditions of the draft CBA proposed by the union (General Milling Corporation .v.
Court of Appeals, G.R. No. 164728, February 11, 2004).
302
EDAN RED BOOK
Q: ABC Union, having been duly elected to be the exclusive bargaining
representative of the rank-and-file employees, submitted to its employer a draft of
the CBA for the employer to revise if he wishes to and for them to negotiate with.
After months of repeated attempt to communicate with the employer, the
employer gave no reply, nor answer, nor even a counter proposal to ABC Union.
Thereafter, the Union filed a Notice of Strike on the ground of refusal to negotiate.
Attempts to an amicable settlement also failed. The case was brought to the
NLRC for compulsory arbitration. Decide.
ANS: The employer company is guilty of unfair labor practice for refusal to bargain.
Under the Labor Code, it is an unfair labor practice for an employer to refuse "to meet
and convene promptly and expeditiously in good faith for the purpose of negotiating an
agreement with respect to wages, hours of work, and all other terms and conditions of
employment including proposals for adjusting any grievance or question arising under
such an agreement and executing a contract incorporating such agreement, if requested
by either party." Under the CBA proposed by a Union may be imposed lock, stock, and
barrel on an employer who refused to rlepptiate a CBA. An employer who violates the
duty to bargain collectively loses its, statutory right to negotiate or renegotiate the terms
and conditions of the draft CBA prOpO4by the union. Hence, the proposals of the
union may be adopted as the CE34.00*9o pstrequently, imposed on the employer, lock,
stock, and barrel (Kiok Loy v. NLRC, 4iii.7470
Aitk r ..,%.-
Q: Discuss the duty to bargAigaolle4VslyIn‘ hei#4§:en„Csr CBA.
ANS: In the absence ot,,eq','etreemeriCoNother voluntary arrangement providing for a
more expeditious marit'Sji collective:bargaining, it shall b49 duty of employer and
representatives of thepixployees.,.to bArgain collectivity accordance with the
provisions of the laborlod008.80i" CODE1 Art. 262).
.,...
Q: Discuss thetiuty t9„,1?argain collegtive when there exits a CBA.
ANS: When herel is aioirdctive bargainin afgreeme41/4et OkIsjitqA)Aation of the parties
not to terminate, modifyre• CBtytIringit, lifetime. '60Kaiffrnaarty can serve a
written notice to4infinfelor modify t e agreement a ledst'60 days prior to its
expiration date. It shailialiVuty ofboth arties to keep the status quo and to continue
in full force and effect tDe tenth's and condo I rthe existing agreement during the 60-
day period and/or untilla ne Jagreement4 ____,,..a._ G:ed-ty the parties (LABOR CODE, Art.
264). „
,,o,
, 4*-gigl • :,.,,,
,:,,..-„:tr..
Note: The 60-day perioldrundeAr. 264 refers to submission of proposal to renegotiate
the nonrepresentational" oldrls of the CBA (2 AZUCENA, supra at 386).
Q. What is a Collective Bargaining Agreement?

ANS: It is a contract executed upon request of either the employer or the exclusive
bargaining representative of the employees, incorporating the agreement, reached after
negotiations with respect to wages, hours of work and all other terms and conditions of
employment in a bargaining unit, including proposals for adjusting any grievances or
questions arising under such agreement (Davao Integrated Port Stevedoring Services v.
Abarquez, supra).
Q: What is the nature of a collective bargaining agreement?

ANS: Labor contracts such as employment contracts and collective bargaining
agreements are in personam and are binding only between the parties and are not
enforceable against a transferee or a buyer in good faith of an enterprise, unless
expressly assumed (Barayoga v. Asset Privatization Trust, G.R. No. 160073, October
24, 2005).
303
Vc•-c!'"41.14 4= • •
EDAN REG
Q: What are the mandatory provisions of CBA?
ANS: The mandatory provisions of CBA are as follows: (HW- VBPT-GREWULS-VFR-
MP)
1. Wages;
2. Hours of work;
3. Vacations and Holidays;
4. Bonuses;
5. Pensions and retirement plans;
6. Seniority;
7. Transfer;
8. Lay-offs;
9. Employees Workloads;
10. Work rules and regulations;
11. Rent of company houses;
12. Union Security arrangements (BPI v. BPI Employees Union, G.R. No. 164301,
August 10, 2010); Akar
13. Grievance machine

14. Voluntary arbitraVon;
15. Family plane g`
16. Rates of pa
17. Mutual otpe h4cfau
18. Provisio, ga'ns ,lar use in,worikpla (R.iet% 9$65 ~Seo 9
Q: When is sin le ent prisf bargaining available?

r.)
ANS: Any voluptaril recoUd-or-certifialabor-unioy may qeman negotiations with
its employer foLte s andso ditio,r1R,cfmohrls coveting mployees'irittPe bargaining unit
concerned (D. . No 0-03, ule 4. 1se
Q: When is m Iti=bM loyeyrp aining-Eavailable
ANS: LegitimateitajFq ) ‘d e ep--rx‘i,ay,a;grte n wpm ome together for
the purpose of irectiv* P ecigYAS .
1. Only legitimate Vor`tinlo and pcu entAlusivg• bargaining agents
may partibipate o erljprgaining(
2. Only empl ers cc... At kifif?l'A labor union who are incumbent
bargaining a ents..eni- EllcLp!=d,pAegt5tiat4in, dlti-employer bargaining;
and
3. Only those legitima I Oci unio • r asoto employer
. units wh.o. consent
to multi-employer bargai i a Nrticip.ateSi multi-employer bargaining (D.0.
No. 40-03, Rule XVI, Sec. 5).
Q: What is the no strike-no lockout clause?
ANS: A 'No Strike Clause' is a provision in a collective bargaining contract which
prohibits employees from striking during the life of the agreement. On the other hand, a
no lock out clause is also a provision in a collective bargaining agreement which
prohibits the employer from locking out the employees during the life of the agreement.
A no-strike-no-lockout stipulation generally deserves respect by the parties to the CBA
and by the labor authorities. Such stipulation applies even to a deadlock in renegotiating
the economic provisions of the CBA. Where the CBA stipulates that the disputes
between the parties should be resolved through grievance machinery, including
voluntary arbitration, a notice of strike filed by the union violates that agreement. The
NCMB should consider such notice as not duly filed and then direct the union to avail
itself of the grievance machinery and voluntary arbitration. A similar posture should be
taken by the Secretary of Labor instead of assuming jurisdiction over the dispute (2
AZUCENA, supra at 401-402).
Note: A no-strike prohibition in a CBA is applicable only to economic strikes. In other
words, ULP strike is not covered and workers may go on strike based on ULP despite
the no-strike provision (PH Metal Foundries v. CIR, G.R. No. L-34948, May 15, 1979).
304
Q: Discuss the Labor Management Council.
ANS: The Labor Management Council deals with the employer on matters affecting the
employee's rights, benefits, and welfare. Its purposes are: (1) to promote gainful
employment; (2) to improve working conditions; and (3) to achieve increased
productivity (2 POQUIZ, supra at 282).
Individual representation in dealing or bargaining with the employer is weak. For this
reason, the law provides another forum — the Labor Management Council aside from or
instead of a union. It can exist where there is no union or co-exist with a union. It must
not replace a union. It can represent employees across the enterprise, present
grievances regardless of the grievant's rank, and proffer proposals unhindered by
formalities. The LMC, in short, can deal with the employer on matters affecting the
employees' rights, benefits and welfare (2 AZUCENA, supra at 457).
Q: When is the effectivity date of the CBA?

ANS: If the CBA is the first ever in thelimaining unit, the effectivity date is whatever
date the parties agree on — perhapAth7 date the negotiation started, or ended, or
whatever. If the CBA is a renegoti9giqp; o replace the expired one and the new CBA
is concluded within six months frOitt;.t,Ve expiry date of the old one, then the new CBA
starts to take effect on the date'fal of such expiry date. If no new CBA was
completed within that six-month p,,Ori455. 44990PA.,wheiltekone, will not automatically
retroact. If it will retroact at all rattgatiar-drelkeigeo be agreed upon by the
negotiating panels (LABOR-LODE, Art,; '26. ).
Note: Article 265 on retraction doesi' pply if the provisl s were imposed by the
Secretary of Labcr of 9 'tra on. It applies pnly the agreement was
voluntarily made byte ' ar-re.s,-='(St. Lukej Medical Ceriter,' Inc, v. Ton-es, G.R. No.
99395, June 29,093).
Q: Discuss t
ANS: With respect to the re resit -4°n ect, the a a or five (5) years. With
respect to othertgrovraMgeconol iDic a non-economic , esame may last for a
maximum period I thigeN,, ) ye9rs a the execution of the CBA (San Miguel
Corporation employees UNId -PTGWO a e or, G.R. No.111262, September 19,
1996).
Note: While the partieumay gam., xtiVe anginal five-year term despite
an agreement for a CWwith pill; of more than five (5) years, the bargaining union's
exclusive bargaining staktis effective only for 5 years and can be challenged within 60
days prior to the expiratiorigtAhe CBA's first 5 years (FVCLU-PTGWO v. SANAMA-
FVC-SIGLO, G.R. No. 176249, November 27, 2009).
Q: What does "the representation aspect" refer to?

ANS: Representation aspect refers to the identity and majority status of the union that
negotiated the CBA as the exclusive representative of the bargaining unit (San Miguel
Corporation Employees UNION-PTGWO v. Confesor, supra).
Q: What does "all other provisions" refer to?

ANS: "All other provisions" refers to the rest of the CBA, economic or non-economic,
other than representational (Id.).
Q: What economic provision may be included in the CBA?

ANS: Economic provisions may include monetary value of wage increases, loan
benefits, bonuses, allowances, retirement plan, and other fringe benefits (Economic
Provisions of Collective Bargaining Agreements in 2016, Philippine Statistics Authority,
December 2018).
305
Q: What non-economic provisions may be included in the CBA?
ANS: Non-economic provisions may include union security clauses, grievance
procedures, labor-management cooperation schemes, and other provisions without
monetary value (Id.).
Q: What is the 60-day period under Article 264?

ANS: Under Article 264 of the Labor Code, the notice of intention to terminate, amend
or alter: the provisions of the CBA shall be filed within the 60-day period immediately
prior to the expiration of the CBA. During this period and/or until a new agreement is
reached, it shall be the duty of both parties to keep the status quo and to continue in full
force and effect the terms and conditions of the existing agreement.
Q: What is the freedom period under Article 265?

ANS: The representation aspect of the CBA shall be effective for a term of 5 years. A
petition questioning the majority status of the incumbent bargaining agent or a petition
for certification election may be entertained and a certification election may be
conducted within the 60-day ....erictri niMigt61 .prior to the expiration of the CBA
, d-N
All other aspects of the pkp_pverirarte-renp„,gotlAted ot later than 3 years after
their term as fixed ,theN$BAi
otherwise, the e I'D
4
its execution. Those'iconprnicTwovOonsireatered u:iiitWn.v6 months from the expiry of
sheretroa , tto the daKiriirpediatekfollowing such date;
dater by afee . \Int Whe pd ieNI VIBORCODE, Art. 265).
.
Q: What is the e of (SBA continuiW
ncipiti r. Ti,
ANS: Despite a se of Ithe,,Vaal of he e xii
sting4gBA, the law still
considers the pame fas conf ingifvfpilitni4.e.ffect ntil a n v CBI shall have been
validly executdd here the ciaiti-491 -jle i'ille stil pplies (v OU v. Ferrer-Calleja,
G.R. No, 89609, i an Va2)—Itilo ' tffe:Liatordsiffth6ug
„ a CB has expired, it
continues to Om al e tt% as b ie,nrthe I ee un a CBA has been
entered into, andi is the du ,(c other e'S:(64h B to keep th status quo and to
continue in full I me a effeCP er sad on Lionof the xisting agreement
during the 60-da 14freedo ew reemen IS reached by the
parties (Pier 8 A stre and St V0118q.KerP s Confesor, G.R. No. 110854,
February 13, 1995).
1:9
Q: What is union secun
ANS: "Union security" is age'rre
' ril
term,Whc s plied to and comprehends "closed
shop," "union shop," "maintenance o me ership" or any other form of agreement
which imposes upon employees the obligation to acquire or retain union membership as
a condition affecting employment (InguNo v. First PH Scales, Inc, G.R. No. 165407,
June 5, 2009).
Q: What is a closed-shop agreement?
ANS: A closed-shop agreement is an agreement whereby an employer binds himself to
hire only members of the contracting union who must continue to remain members in
good standing to keep their jobs. It is "the most prized achievement of unionism." It adds
membership and compulsory dues. By holding out to loyal members a promise of
employment in the closed-shop, it welds group solidarity (BPI v. BPI Employees Union,
supra).
Q: Who are not bound by the closed-shop agreement?

ANS: The following are not bound by the closed-shop agreement: (RMCE)
1. Employees belonging to any Religious sect which prohibit affiliation of their
members with any labor organization (Victoriano v. Elizalde Rope Workers
Union, G.R.. No. L-25246, September 12, 1974);
306
2. Members of the Minority unions (Kapisanan ng mga Manggagawa ng Alak v
Hamilton Distillery Cp., et al, G.R. No. L-18112, October 30, 1962);
3. Confidential employees excluded from rank and file bargaining unit; and
4. Employees Excluded by express term of the agreement (2 AZUCENA, supra
at 356-357).
Q: When is there a union shop?

ANS: There is a union shop when all new regular employees are required to join the
union within a certain period as a condition for their continued employment (National
Union of Workers in Hotels, Restaurants and Allied Industries-Manila Pavilion Hotel
Chapter v. NLRC, G.R. No. 179402, September 30, 2008).
Q: When is there a maintenance of membership shop agreement?
ANS: There is a maintenance of membership shop when employees, who are union
members as of the effective date of the agreement, or who thereafter become members,
must maintain union membership in good standing as a condition for continued
employment until they are promoteUptiansferred out of the bargaining unit or the
agreement is terminated (AlabanC041y r Club, Inc. v. NLRC, G.R. No. 170287,
February 14, 2008).
5ri,
, .;c:-11,1b
Q: How is employment terminated 4 ps ant to a union security clause?
ANS: For such termination to be,,Alie; r."' 04.0),.
, 4i
1. The agreement last expressed in ace'eleridAt equivocal way so as not
to leave room cr-Ihterpretation because it is a limitgtion to the exercise of the
right to self-ckenkation; 4, ti gA
.q%
2. Any doubtdoubt mast; be „res6Ive against the e istence of a closed-shop
ti.. \
3. wady fiT ii. pective application a d cannot •be applied
retroactively;
4. It canlYilrb-AxeSecribuivin e empinefffks e process;
4.1
5. The employvaba : e righ tsfy himself thAttteaare sufficient bases for
the reqbeggiltypion; i ,
6. The terrniution orthe
44 service f the employee is not automatic upon the
request of tTielunio ;land
7. It cannot be Rpplio to e.mpto‘yees,
_,f:g3‘.4teaearly members of the rival union
or to the emplf ees bat,traheir -eligious berigfs.
4 ri
Q: May an employee be inatIVIled to become a member of a labor organization?
ANS: No. The right to self-organization includes the freedom not to join a union. For a
"right” comprehends at least two broad notions, namely first, liberty or freedom, i.e., the
absence of legal restraint and second, power, whereby an employee may, as he
pleases, join or refrain from joining an association (Victoriano v. Elizalde Rope Workers
Union, supra).
Q: Define grievance machinery.
ANS: It is a machinery for the adjustment and resolution of grievances arising from the
interpretation•or implementation of their CBA and those arising from the interpretation or
enforcement of company personnel policies (LABOR CODE, Art. 273).
Q: Define grievance procedure.
ANS: It is the series of formal steps that parties to a CBA agreed to take the adjustment
of grievances or questions arising out of the interpretation or implementation of the CBA
or company personnel policies including voluntary arbitration as the terminal step.
(National Conciliation and Mediation Board Primer on Grievance Machinery and
Voluntary Arbitration (hereinafter NCMB on Grievance Machinery and Voluntary
Arbitration]).
307
Q: What are the implementing rules on grievance procedure?
ANS: In the absence of applicable provision in the collective bargaining agreement, a
grievance committee shall be created within 10 days from signing of the CBA. It shall be
composed of at least 2 representatives each from members of the bargaining unit and
the employer, unless otherwise agreed upon by the parties. The representatives from
among the members of the bargaining unit shall be designated by the union (LABOR
CODE, Rule XIX, Sec. 1).
Q: Discuss the procedure in handling grievances.

ANS: In the absence of a specific provision in the CBA or existing company practice
prescribing for the procedure in handling grievance, the following shall apply:
1. An employee shall present his grievance or complaint orally or in writing to the
shop steward. Upon receipt thereof, the shop steward shall verify the facts and
determine whether or not the grievance is valid;
2. If the grievance is valid, the shop steward shall immediately bring the
complaint to the employee,:,s,imrnediAte supervisor. The shop steward shall
exert efforts to settle,thrgllevincerattherlevel; and
3. If no settlement is reaed, the rieAlce a IV referred to the grievance
committee wDrchks01 jia e :10= aysao Tiole6idelte 6 se (D.O. No. 40-03, Rule
XIX, Sec. _ yr - _AP\
=,,,
Q: What is voluV oaf anon • P) 1.6 •T• •
ANS: it is the Ede ettlin4 labor-.tnanaemeht disp hichthe parties select a
competent, trai gd an impactial third Rek69 who is t. dcala on the merits of
the case and *hose decis'on tinai Ia n execu o dyised Procedural
Guidelines in t A-on uct of oltkitr v -Arb?ttViaff6roc Octoyer 15, 2004, Rule
MO
II, Sec. 1(d)). w.A 1
•Va.,114.11.,..
Where the grie,ancelem sep/e.Qthipe upon the other
of its decision to hillarfii the 2 A ,UCEIVA1, supra at 540).
E UNFAIR LABORfRA
Nature and Aspeas
Q: Define unfair lablo'i-tprae5 MA)
ANS: ULP is defined as:
1. Any unfair labor pra • Is expAALAenedsby the Code; or
2. Any act which opposes the nght to organize or acts which connotes
anti-unionism (1 AZUCENA, supra at 300).
Q: Discuss the nature of ULP.

ANS: Unfair labor practices are inimical to the legitimate interests of both labor and
management, including their right to bargain collectively and otherwise deal with each
other in an atmosphere of freedom and mutual respect. It disrupts the industrial peace
and violated the constitutional right of workers and employees to self-organization. It
does not only violate civil rights alone but also constitute criminal offenses against the
State (Bankard v. NLRC, G.R. No. 171664, March 6, 2013).
Q: When does an act constitute ULP?

ANS: The act complained of as ULP must have approximate and causal connection with
any of the following three (3) rights:
1. Exercise of the right to self-organization;
2. Exercise of the right to collective bargaining; or
3. Compliance with CBA.
308
7
BEDAN RED BOC

Q: Who may commit ULP?
ANS: A ULP may be committed by an employer or by a labor organization. Article 258
describes the ULPs that may be committed by an employer, while Article 259
enumerates those which may be committed by a labor organization (LABOR CODE,
Arts. 258-259).
Q: Who may be held criminally liable in case of ULP?

ANS: In the case of employers, Article 258 of the Labor Code provides that only the
officers and agents of corporations, associations or partnerships who have actually
participated in, authorized or ratified unfair labor practices shall be held criminally liable.
While in labor organizations, Article 260 of the same code provides that only the officers,
members of governing boards, representatives or agents or members of labor
associations or organizations who have actually participated in, authorized or ratified
unfair labor practices shall be held criminally liable.
Q: What are the elements of ULP?

ANS: Before an employer or labor oratilation may be said to have committed ULP,
the following elements must concullac•
1. There should exist an er§1010-zo ployee relationship between the offended
party and the offender; kir
2. The act complained of Ai vwt1 ore§s mentiori9_dt and defined in the Labor
Code as an unfair laborepr4ce r •
10 5-
Q: What are the asperifULP? A
ANS: Under Article 25a aLp has 9.4 I aspects — civil asp and criminal aspect.
Civil Aspect 1 Criminal Aspect
As to persons liable
1. Officers agen empp er k7.67 1. The • agents of

2. Labor ord izafio ocers rd corporations, associations or
agents partnerships who have actually
rticipated in, authorized or
al un ir labor practices
ce , embers of governing
boards, representatives or agents or
members of labor associations or
organizations who have actually
participated in, authorized or ratified
unfair labor practices
As.to jurisdiction
Labor Arbiter Regular Courts
As to quantum of proof
Substantial Evidence Proof Beyond Reasonable Doubt
As to prescriptive period .
One year from the accrual of ULP One year from the accrual of the ULP
however it will be suspended once the
administrative case has been filed and
would only continue running once the
administrative case has attained finality
309
Q: May the administrative proceedings and the criminal prosecution for unfair
labor practices be instituted and held simultaneously? Why?
ANS: No. A final judgment of the labor arbiter, finding that an unfair labor practice was
committed, must first be obtained before a criminal prosecution for the same can be
commenced. This is to prevent the criminal action from being utilized as a means of
harassment. The final judgment rendered by the labor arbiter is not however binding in
the criminal case nor can the same be considered as evidence of guilt. This is because
mere substantial evidence, not proof beyond reasonable doubt, is sufficient to support
the decision of the labor arbiter (CHAN REVIEWER 2017, supra at 65).
Q: What are the four (4) forms of ULP in bargaining?
ANS: The following are the 4 forms of ULP in collective bargaining: (FEB-G)
1. Failure or refusal to meet and convene;
2. Evading the mandatory subjects of bargaining;
3. Bad faith in bargaining (boulwarism), including failure or refusal to execute the
CBA, if requested; and
4. gross violation of the GB''
Note: Violations of the collective4IRrgairtng age.ggnept'e.)‘cept those which are gross in
character, shall no longe,6ertrp ted-a%,ga, airlatrr pled' c but as a grievance under
the Collective Bargai919g 4ree ehrLABOR DE 4rt(27 'Iva v. NLRC, G.R. No.
110226, June 19, 1997),<>
Q: What is bargain' in ba faithr L
if a m X
ANS: Bargainin must'be in good faith. T ele is Tio fixed tes ifaith in bargaining.
Good faith or al) is atinferenc ' ." om the sl The effect of an
employer's or IS actin s irtiity.idtAatil ,i,s_051411
. e rst of opd-Fai bargaining, but
the impact of occasions If_pfitir'iside ed as who (General Milling
Corporation v. . 1 672671 F0mater, 200
Q: When is antuptair b rr •
es) 8.
strative offense
and not a trim 'a1 (c '0
• <5.
ANS: The unfair:Labor practice%
ii
inistreve offense and not
a criminal act Mien the cts questio/ of interpretation or
implementation 4vmbig ation or implementation of
ambiguous provision :,of an rgefnent. By reason of the
ambiguity in the contrast aigor practice may claim to
have acted in good faith (CH 593).
Q: What is refusal to bargain?
ANS: An employer is guilty of an unfair labor practice in refusing to bargain with the
representative of a majority of his employees. To bargain in good faith, an employer
must not only meet and confer with the union which represents his employees, but also
must recognize the union for purpose of collective bargaining. In addition, he must
recognize the union as the bargaining representative of all the employees in the
bargaining unit, even if they are not all members of the union (2 AZUCENA, .supra at
387).
Q: Is individual bargaining allowed?
ANS: Individual bargaining is not prohibited per se but an employee belonging to a
union. is expected to bargain through his union (LABOR CODE, Sec. 267). The
employer is prohibited from dealing with employees belonging to a union surreptitiously
to turn the latter against their union (2 AZUCENA, supra at 421).
Q: Are violations of a collective bargaining agreement considered unfair labor
practices?
ANS: No. Under Article 261 of the Labor Code, as amended by R.A. No. 6715,
violations of a collective bargaining agreement, except those which are gross in
310
character, shall no longer be treated as unfair labor practice and shall be resolved as
•grievances under the collective bargaining agreement. Gross violations of a collective
bargaining agreement shall mean flagrant and/or malicious refusal to comply with the
economic provisions of such agreement (CHAN REVIEWER 2017, supra at 592).
Q: May separation pay, in lieu of reinstatement, be awarded to an employee who

was dismissed by reason of an unfair labor practice? Explain.
ANS: No. Otherwise, the employer would still get what he wants and the unfair labor
practice is condoned (Gubac v. NLRC, et aL, G.R. No. 81946, July 13, 1990).
By Employers
Q: What are the unfair labor practices that may be committed by employers?
ANS: Under Article 259 of the Labor Code, the unfair labor practices of employers are
the following: (RAF-C3D3)
1. To interfere with, restrain or coerce employees in the exercise of their Right to
self-organization; .I
2. To pay negotiation or Attlitslfees to the union or its officers or agents as
part of the settlement oTlall; o!gsttaki collective bargaining or any other dispute;
3. To initiate, dominate, iSsistIOROtherwise interfere with the Formation or
-;,) -g
administration of any laborwfV6
.,v Wk64 1 ation, qp.including,the
other support to it or itvrgai,lizeelep °frets' 14
. . I es, t., giving of financial or
4. To require as a Condition of tW loymen fik" rson or an employee shall
not join a labouganization Or s all withdraw from e to which he belongs;
5. To ContractO ut services •9, Unctions being pe , n‘ed by union members
when such v iVinferferq, with,
w restrain or coerce 9m d es in the exercise of
their rightso, ' 4 Offization; g
6. To grno,ly violatela t ollecti41 bar 4aining agreement
7. To Disc iminatin regard to Ikages, hours workother terms and
w-.-,so
condIfionmff6Kir• ymer43in ord "t1 o encora- e membership in
any labor organiz ,on. klolhing rrthis Code o ATo..... er law shall stop the
parties'from;rie7diOg memBers in a recognized collective bargaining agent
.'A., tY
as a condition forAmploymen except those employees who are already
members of 0_ not)" union a pa- of the signing of the collective
bargaining Waif-tent. Emloyeesto _o w: osopqate bargaining unit who are
not memberil-fthe relnize co ec rve •argaming agent may be assessed a
reasonable fee*equivaTgOt
, to the dues and other fees paid by members of the
recognized coltdirlargaining agent, if such non-union members accept the
benefits under tie collective bargaining agreement: Provided, that the
individual authorization required under Article 242, paragraph (o) of this Code
shall not apply to the non-members of the recognized collective bargaining
agent;
8. To Dismiss, discharge or otherwise prejudice or discriminate against an
employee for having given or being about to give testimony under this Code;
or
9. To violate the Duty to bargain collectively as prescribed by this Code.
Q: What is the test in determining whether an employer is guilty or not of ULP?

ANS: The test is whether the employer has engaged in conduct which, it may
reasonably be said, tends to interfere with the free exercise of the employee's right and
it is not necessary that there be direct evidence that any employee was in fact
intimidated or coerced by the statements of threats or the employer if there is a
reasonable interference that the anti-union conduct of the employer does have an
adverse effect of self-organization and collective bargaining (De Leon v. NLRC, G.R.
No. 112661, May 30, 2001).
311
k ::,YZ.y..± • • .. •
Q: Define interference.
ANS: Interference is used to embrace both restraint and coercion. It may be direct, as
when an employer requires a contract not to join a union. The test of whether or not an
employer has interfered with and coerced employees is whether the employer has
engaged in conduct that would reasonably tend to interfere with the free exercise of the
employee's right to self-organization (2 POQUIZ, supra at 189).
Q: What is the totality of conduct doctrine?

ANS: It is where the culpability of an employer's remarks is to be evaluated not only on
the basis of their implicit implications, but are to be appraised against the background of
and in conjunction with collateral circumstances (The Insular Life Assurance Co., Ltd,
Employees Assoc-NATU v. The Insular Life Assurance Co., Ltd., G.R. No. L-25291,
January 30, 1971).
Q: Does retrenchment initiated by an employer constitute an unfair labor
practice?
ANS: It depends. While the rigDL-of'grernp oykrtoALniss an employee is conceded in
a valid retrenchment, the ers fro ndfshpuld not be confused with the manner
in which such right is ep'Eigegi. here e•retreich4d e ployees were members of
.."-
a particular union, tZr,e bin ..no,latisfactorreVanation y said employees were
singled out, the cgficlqlo einev' ble-l.hat-the eniN9y0 ).haNs liscriminated against
membership in the a' 1i i n n act whi0 to'145e,ren e in the employees'
exercise of their self- ganizaliOnippt4 Ship areandYengi eeting Co., Inc. vs
NLRC, et al., G No. 8604, May 9,198B)::
Q: What is a dog contracts? ,...,:l jjli, .......7,:i 10'4
ANS: It is or of unfair labor:Trac cesircbmmi ed by n employer against an
applicant by r4q it n froi -th latteras.;aicondiVon o ffnploy t: (1) he is not a
member of a union; if Jri ber-i-hei -- -esigni-a d'i(3, /he oin a labor union
(2 AZUCENA, &IP" •\3: ),":a .
Q: What is contracting out?

ANS: It means to ontract erformed by union members
when such will interf re with, s in t /exercise of their right
to self-organization ( AZUC- EN
Q: What is company dorm,

ANS: It means to initiate, domin th wise
" interfere with the formation or
administration of any labor organization, including giving of financial or other support to
it or its organizers or officers (2 AZUCENA, supra at 335).
Q: When is there discrimination of employees?

ANS: There is discrimination of employees when benefits or privileges given to one are
not given to the other under similar or identical conditions when directed to encourage or
discourage union membership (2 AZUCENA, supra at 338).
Q: What is blue sky bargaining?

ANS: It refers to the act of making exaggerated or unreasonable proposals. Whether or
not the union is engaged in blue-sky bargaining is determined by the evidence
presented by the union as to its economic demands. Thus, if the union requires
exaggerated or reasonable economic demands, it is guilty of ULP (NUBE v. Confesor,
supra).
Note: The Labor Code does not authorize the employer to close down the
establishment on the ground of excessive demands of the Union. Instead, aside from
the remedy of submitting the dispute for voluntary or compulsory arbitration, the
employer may file a complaint for ULP against the union for bargaining in bad faith (St.
312
" • •••
EDAN :RED BOOK
John Colleges, Inc., v. St. John Academy Faculty and Employees Union, G.R. No.
167892, October 27, 2006).
Q: What is surface bargaining?
ANS: Surface bargaining is defined as "going through the motions of negotiating"
without any legal intent to reach an agreement (Standard Chartered Bank Employees
Union (NUBE) v. Confesor, supra).
Q: What is a run-away shop?
ANS: It is an unfair labor practice of the management which usually takes place by
effecting the transfer of ownership, the plant itself, or its equipment and machines or by --Ng!
temporarily closing its business purposely to bust the union or to evade payment of its
legitimate obligations (NAFLU v. Ople, G.R. No. L-68661, July 22, 1986).
Q: What is the procedure for filing a ULP case?
ANS: Under Article 258 of the Labor Code, ULP has civil as well as criminal aspects.
The civil aspect may include liability ccirwlciimages and these may be passed upon by a
labor arbiter. To prosecute ULP agtipital offense is not possible until after finality of
judgment in the labor case, findkigiaiA ondent indeed committed ULP. But such
judgment will not serve as evide449"d L in the criminal case; the criminal charge
must be proved independently frorii therla case 2 AZUCENA, supra at 300-301).
ffla
ext.
Q: Differentiate the quantureof evidence requ reda ultzla or case of ULP with a
criminal case of ULP?,, ,'X' v;
ANS: In a labor casatib fore the only substantialk vi ence is required, while
proof beyond reasonallOqubt ise neated o convict in the cririiinal case of ULP (Id.).
By Labor Organilations <to

--
Q: What are ocULPsVilabor cerganiiall:ns (LO)?
ANS: Under *26076riliabor, de, tWunfair lab9 A=sr = oor organizations
are the followinkGR#DEV
1. To nrosglyi violateA collective ba gaining agreement.
2. To Restraki or col ice ermplo ees in the exercise of their right to self-
organization. ow r, a labor offla i 3 i. all have the right to prescribe its
own rules wittOrespect tg_lw,c :_aptigp of membership;
3. To Ask for or-Accept negotiation or attorney's fees from employers as part of
the settlemenWanype in collective bargaining or any other dispute;
4. To cause or Wtelr.11) to cause an employer to Discriminate against an
employee, including discrimination against an employee with respect to whom
membership in such organization has been denied or to terminate an
employee on any ground other than the usual terms and conditions under
which membership or continuation of membership is made available to other
members;
5. To cause or attempt to cause an employer to pay or deliver or agree to pay or
deliver any money or other things of value, in the nature of an Exaction, for
services which are not performed or not to be performed, including the
demand for fee for union negotiations; or
6. To Violate the duty, or refuse to bargain collectively with the employer,
provided it is the representative of the employees;
Q: Before a labor organization may be declared to have violated the duty to
bargain collectively, what must first be established?
ANS: It must be established that the labor organization is the bargaining representative
of the employees. A union that has not been selected as the representative of the
employees has no obligation to collectively bargain with the employer. After all, its acts
cannot bind the employees (CHAN REVIEWER 2017, supra at 590).
• 313
AN.
Q: What are the elements of the ULPs that may be committed by labor
organizations (LOs)?
ANS: The elements of unfair labor practice committed by labor organizations are the
following:
1. The labor organization must represent a collective bargaining unit of the
employer; and
2. Acts done is expressly defined in the code as an act of unfair labor practice.
Q: What is featherbedding?
ANS: It is an unfair labor practice of a union which causes or attempts to cause an
employer to pay or deliver or agree to pay or deliver any money or other things of value,
in the nature of an exaction for services which are not performed or not to be performed,
including the demand for a fee for union negotiations (LABOR CODE, Art. 260(d)).
Q: What is the sweetheart doctrine?
ANS: It provides that it is ULP for a labor organization to ask for or accept negotiation or
attorney's fees from employersaoas-13T o d''settement of any issue in collective
bargaining or any other dipufg( BOR C D . ?e0(e) .
.d09—N t -t
F. PEACEFUL CONCERTEDA:7177Er-'4'' I
6,
1
Forms of Concertthi 1\3'
1 r
Q: What are the tor's`‘gf co certedIctlieW
it .,/iN ins
ANS: The follow nq he di erent torm9 o concerted
1. Strikes
2. Locklut•
3. Picketing BOR
Q: Define con.terted?ctT*,,
ANS: It is a joirit "de aki J.- —d
bgttervrins and conditions
of employment inin and negotiations for their
mutual benefit and
Strikes
Q: What is a strike?
ANS: A "strike" mean filipora fir by concerted action of
employees as a result of an In Wel or SOR CODE, Art. 219).
Note: Strike in its broad sense Firefe e c ai pute between the employer and his
workers, in the course of which there is a concerted suspension of employment (2
AZUCENA, supra at 574).
Q: What are the characteristics of a strike?
ANS: A strike has the following characteristics: (ED-CoW-CoS)
1. There must be an established Er-Ee relationship between the strikers and the
person or persons against whom the strike is called;
2. The existence of a Dispute between the parties and the utilization by labor of
the weapon of concerted refusal to work as a means of persuading, or
coercing compliance with the working men's demands;
3. The contention advanced by the workers that although work ceases, the
employment relation is deemed to Continue albeit in a state of belligerent
suspension;
4. There is Work stoppage, which stoppage is temporary;
5. The work stoppage is done through Concerted action of the employees;
6. The Striking group is a legitimate labor organization and, in case of bargaining
deadlock, is the employees' sole bargaining representative (2 AZUCENA,
supra at 574-575).
314
Q: Who may declare a strike?
ANS: Any certified or duly recognized bargaining representative may declare a strike in
cases of bargaining deadlock and unfair labor practice. In the absence of a certified or
duly recognized bargaining representative, any legitimate labor organization in the
establishment may declare•a strike but only on the ground of unfair labor practice
(NCMB Primer on Strike, Picketing, and Lockout).
Q: What are the kinds of strike?

ANS: The kinds of strike are as follows (END-P):
1. As to the Extent:
a. General — extends over to a whole community, province, state or
country; and
b. Local or particular — by workers in a particular enterprise, locality or
occupation.
2. As to the Nature of the Act:
a. Strike proper; lb
b. Sit down strike 47:,'gr,oup of employees or others interested in
ke in a particular business forcibly take over
obtaining a certaikkOt
possession of the',710030:, of such business, establish themselves
within the plant, 6tobiltgirauction and refuse access to the owners or
to the others desjfind'a.
WANT
c. Partial or quiFkie gkiite arseg-takerp termittent, unannounced
work stopp'age, includin slowdowns, unaul • orized extension of rest
periosigarid walkouts4gilortions of a shift Cr* entire shifts; and
d. Goodiggip Strike.:4S.a ttrike justified byfijiietin good faith that the
employer :ys:xiOrnmittingknfair labor pra'ctice ,, dt the time the strikers
went tfikaRoGood faitri,:swies the strAe fComleing declared illegal
,,rgnd the sirikers 'frail:, bee declared Co h4e lott their employment
4;v49011. .tft
3. As o,kthe De reelRf Emoyee peInterest
a. ,gpla fee — one declared by the employees who have a direct
andlifif elate interest, itgether economic or otherwise, in the subject
of 'ffie Flispuewhich existetwee them and their employer;
b. Seconftryfarike — a ,. .._ o rc117: easure adopted by workers against
pin
an eriieyer corte-drde =employment with alleged unfair
labor caiditioAr practices; and
c. Sympaglege, strike — this is carried on by workers in sympathy to
another grafi:Alf workers who are on strike.
4. As to.the Purpose or Nature of Employee Interest:
a. Economic strike — intended to force wage and other concessions from
the employers which he is not required by law to grant. Usually, this is
the consequence of a deadlock in collective bargaining negotiations;
and
b. Unfair labor practice strike — called against the unfair labor practices
of the employer, usually for the purpose of making him desist from
further committing such practices (2 AZUCENA, supra at 539-541).
Q: What are the issues over which the labor organization may not call a strike?
ANS: The non-strikeable issues are as follows: (VIS-DAEN-PP)
1. Violations of the CBA which are not gross in character shall be resolved via
the grievance machinery (LABOR CODE, Art. 274);
2. Inter-union or intra-union disputes (LABOR CODE, Art.284, par. (b));
3. Labor Standard cases such as wage orders (R.A. No. 6727, Sec. 16);
4. Issues involving wage Distortion caused by legislated wage orders;
315
5. Those issues which had already been brought to voluntary or compulsory
Arbitration (D.O. 40-03, Rule XXII);
6. Execution and enforcement of final orders, decisions, resolutions or awards in
the cases mentioned above;
7. Any issue covered by a No-strike commitment in a duly executed CBA;
8. Physical rearrangement of office (Reliance Surety v. NLRC, G.R. No. 86917,
January 26, 1991); and
9. Company's Sales Evaluation Policy (GTE Directories Corp. v. Sanchez, G.R.
No. 76219, May 27, 1991).
Q: What is a lockout?
ANS: The temporary refusal of an employer to furnish work as a result of an industrial
labor dispute (LABOR CODE, Art. 219).
Q: What is boycott?
ANS: As applied to labor unions, boycott refers,to an attempt, by arousing a fear of loss,
to coerce others, against their,wi is
withhold fror:r,
one4enominated "unfriendly to labor"
their beneficial business iptercou e (2 AZS,C
I EP4/ stip "at.687).
_,,....... ...,._....: ,,,..
Q: What is a slowdatm? ''.,' <00- --s"''. „...,,"\
) .4.4-
ANS: It is a "strike ihstallmen4plarr.—ItTralt-o•.a acbvjty Fey w ikh workers, without a
complete stoppa g.:;oficick,r-etard.D.prOdpctiop or efNee.rfOr ance of duties and
functions to compeillti k management/4o. gPant their defR"ands. This is generally
condemned as inhere fly ill* and unjditifiable (IBM '. NLRO:LPTP: No. 91980, June
27, 1991). r--- i
'OP 1,--'
-4 t
r'9----i t \c,.--;.,,
Q: What is a cpILective letter? -g.:1-ki. - i
,4-Li-
ANS: It is a corrfEekte,e acfiVAAthich iii`WW'informal,Lailifins articipited in by at least
two employees yyrimlitual\did,ok proVticini"Antreg rd.to)ifieir interests, such as acting
in concert with thdr"etloasto,itv..o16. 4.0V,.,drie ank president by
a letter signed knd pu tishe \II• hdfn (k'pra c''' CIR, G.R. No. L-
20303, September 27, 19.80.
N
Q: What is a sympgthetic sjrik
lbh
ANS: It is one in whicTiqher rig rnployeestavg o‘ 5,1 nds or grievances of their
own, but they strike for trib•qp4trocke of dkeptItp,tiraldi ectl• aiding others, without direct
relation to the advancement ollt i.li2;:
t.dlrikel"S—(AZUCENA, Everyone's Labor
Code, supra at 294).
Q: Who may declare a strike or lockout?

ANS: Any certified or duly recognized bargaining representative may declare a strike in
cases of bargaining deadlocks and unfair labor practices. The employer may declare a
lockout in the same cases. In the absence of the former, any legitimate labor
organization in the establishment may declare a strike but only on grounds of unfair
labor practice (IRR of the Labor Code, Book V, Rule XIII, Sec. 2).
Q: Maya minority union strike?

ANS: No. A minority union cannot demand collective bargaining with the employer
because such right properly belongs to the union that commands the majority.
Moreover, the defeated union cannot lawfully undertake a strike against the employer, if
one is being done, it must come to a halt (United Restauror's Employees and Labor
Union-PAFLU v. Torres, G.R. No. L-24993, December 18, 1968).
316
Q: What are the factors that affect the legality of a strike?
ANS: The factors that affect the legality of strikes are as follows: (SPP-LIA)
1 Statutory Prohibition;
2. Procedural Requirements of the Law;
3. Purpose must be ULP and economic;
4. Lawful means and methods;
5. Injunction; or
6. Agreement of the parties (2 AZUCENA, supra at 591).
Q: What are the requisites for a valid strike and lockout?

ANS: To be lawful, a strike or lockout must satisfy the following: (SNC-7-CBP)
1. It must be based on serious and Substantial grounds involving a bargaining
deadlock and/or unfair labor practice and these have not been brought to
voluntary or compulsory arbitration;
2. A Notice of strike or lockout, as the case may be, must be filed with the NCMB
at least 30 days (in cases of bargaining deadlocks) or fifteen (15) days in case
of ULP (cooling-off period),40Welthe intended date thereof;
3. The notice of strike mustWifte:04y the Certified or duly recognized bargaining
representative but in cerisloagir labor practice and in the absence of a
duly certified or recognizec46ergIng representative, the notice may be filed
by any legitimate labor ofgtilitfe 441 pall of itsaembers;
4. The decision to striisemu4e aPprOvie rity of the total union
membership inieebargainingjunit concerned—okained by secret ballot
meetings or referenda; and*, cision to declareplOkikout must be approved
by a majorir4the boyd o directors of thp l entployer corporation or
association,rloftkevgrtners partnership Obtained, by secret ballot in a
meeting/gig:I fob?t murpose. Q report of theptrik or ockout vote must be
filedatith theol1CMB at least -n (1) dayebef•I e th- intended strike or
lockOutV
5. The ,cooling-o period o% l ay ) or fifteeq. as lapsed and the
disputewmaLus nse devite efforts a a - ion and conciliation.
However:iCta e o dismissal o nion officers duly elected in accordance with
the union iibutitutio and by-la k may constitute union busting where
the existencebt nion is thr - &r '4) _ fifteen (15)-day cooling-off period
shall not apple nd the, uffion a• =ke'' ion mmediately;
6. The union declaring tigrrike or the employer declaring the lockout must have
been complieakb itsidily to Bargain collectively; and
7. The strike must liedtdged and conducted by Peaceful means (ALCANTARA,
supra at 501-502).
Note: A union's claim of good faith is not a valid excuse to dispense with the procedural
steps for a lawful strike (Sukhothai Cuisine and Restaurant v. Court of Appeals, G.R.
No.150437, July 17, 2006).
Q: What are the tests in determining the legality of a strike?

ANS: The tests are as follows:
1. Purpose Test — the strike must be due to either:
a. Bargaining deadlock; and/or
b. Unfair labor practice.
2. Compliance with procedural and substantive requirements of law:
a. Notice of Strike — must be filed prior to the intended date of strike,
taking into consideration the cooling-off period.
Note: The failure of the union to serve the company a copy of the
notice of strike is a clear violation of Section 3, Rule XXII, Book V of the
Rules Implementing the Labor Code — the constitutional precepts of
due process mandate that the other party be notified of the adverse
317
11'1
'; '`;! *WJe
..:7"p•v-ZP11'
action of the opposing party (Filipino Pipe and Foundry Corporation v.

NLRC, G.R. No. 115180, November 16, 1999).
b. Cooling-off Period before the intended date of actual strike
subject to the 7-day strike ban.
i. Bargaining deadlock — 30 days
ii. ULP —15 days
iii. Union Busting — cooling-off period need not be observed, and
the union may take action immediately after the strike vote is
conducted and results submitted to regional branch.
Note: Cooling-off period is that period of time given the NCMB to
mediate and conciliate the parties. It is that span of time allotted by law
for the parties to settle their disputes in a peaceful manner, before
staging a strike or lockout.
c. Strike Vote — a requirement wherein the decision to declare a strike
must be:
i. Approved by.,a ,majority ,of the total union membership in the
bargaining.unit concerned (not of the whole bargaining unit);
and' Pk.
,,Ob(kied1.0secret ballot in ineetingiror referenda called for the
/purpose:0' •
3. Means Eltiptbyetl•oTesL--a'strik§" rnayteslebalAt ipception but eventually
be des14,r,e'd-Malfif the strike ip acctpagiqdf:Wvolence which is
widesrireacNervasi e and adOted as a ryattgof poll i y and not merely
r
violence which is sporadic which- normally occurlin a,fltrike area (LABOR
CODE,
Q: What is thg good faith strike dOcfri.n0 111

ANS: A strikelmaMe cons leddLithitiOe the 005) believed t at the company
committed ULP prIchith „e Stances: arraqte suclubeliepin gtipd faith, although
subsequently stiekialla@atio', ULR r tfoiand
• cW(A-8/not erue acus v. Ople, G.R.
No. L-56856, Ojtober 23 198
r /
Q: What is the doctrine o ipurposgV)
ANS: A strike is legal when a alz:n3gAsl-eblicu I purpose (GOP-CCP
Workers v. CIR, G.R. No L45801 terriber10,
Q: What is the 7-day strike

ANS: The 7-day waiting period befi:WthVItae of the purported strike, within which the
union intending to conduct a strike must at least submit a report to the Department as to
the result of the strike vote, intended to give the Department an opportunity to verify
whether the projected strike really carries the imprimatur of the majority of the union
members in addition to the cooling-off period before actual strike (IRR of LABOR CODE,
Book V, Rule XXII).
Q: Should the strike vote be taken within or outside the cooling-off period?
ANS: The law does not specify but NCMB's Primer on Strike, Picketing and Lockout
states that if the strike vote is filed within the cooling-off period, the 7-day requirement
"shall be counted from the day following the expiration of the cooling-off period in effect,
the 7 days are added to the 15 or 30 days (NCMB Primer on Strikes or Lockouts)
Q: What are the grounds for a valid strike or lock-out?

ANS: A strike or lockout may be caused either by a:
1. Collective bargaining deadlock; or
2. Unfair labor practice (LABOR CODE, Arts. 278 & 279(a)).
318
Q: What are the distinctions between strike caused by CBA deadlock and ULP?
Economic Strikel.(CBA Deadlock) ULP Strike

As46 Nature
A voluntary• strike because the An involuntary strike as it is an act of
employee will declare a strike to compel self-defense since the employees are
management to grant its demands. being pushed to the wall and their only
remedy is to stage a strike.
As to who initiates
The collective bargaining agent of the Either:

appropriate bargaining unit can declare 1. Collective bargaining agent; or
an economic strike. 2. The legitimate labor organization in
behalf of its members
As to Cooling—off Period
iv''1461;•t",.
30 days from the filing of the ilaitice4o 15 days from the filing of the notice of
strike before the intended date 01 aatiA .g,strike. ubjectti:iithe 7-day strike ban.
strike subject to the 7-day strike barime
sw Jatt‘1444
Exception to the Cooling-Off Period •
M. &I Cooling off enod may be dispensed
No exception, mandatpryr,
with and the unipn , ay take immediate
action incase of dismissal from
employmof their officers duly elected
3 in a rtIgilte the union's
'constitutiowatbj" a s, which may
constitute union busting where the
existence of the union is threatened.
As to Strike Duration Pay.in Case of A Legal Strike

Not entitled to said Tray
base rn—tiTe Said pay may be awarded in the
principle that a lair cigieswde accrues discretion of the authority deciding the
only fora•fair day's labott'' case. . • •
Q: Are striking workers entitled to compensation during the time that they were
on strike?
ANS: No. Striking workers are not entitled to compensation during the period of strike
under the principle of no work no pay. The only instances where workers are entitled to
compensation is when the workers have been illegally kicked out, when the employer is
guilty of the grossest form of ULP, when the employer committed discrimination in the
rehiring of strikers refusing to readmit those against whom there were pending criminal
cases while admitting non-strikers who were also criminally charged in court or when the
workers who staged a voluntary ULP strike offered to return to work unconditionally but
the employer refused to reinstate them (PH Diamond Hotel v. Manila Diamond Hotel
Employees Union, G.R. No. 158075, June 30, 2006)..
However, in order that the employees may be entitled to compensation, the following
conditions must be present: (LUR)
1. The strike must be a Legal strike;
2. There was an Unconditional offer by the striking employees to return to work;
and
319
,
BEDAN RED
3. The employer unjustifiably Refused their reinstatement (PH Diamond Hotel v.
Manila Diamond Hotel Employees Union, supra).
Q: What is the extent of freedom of expression in strikes?

ANS: Strikers may resort to any form of expression and speech provided the contents
thereof are not libelous or otherwise unlawful. Wearing armbands and putting up
placards to express one's views without violating the rights of third parties, are legal per
se and even constitutionally protected (Bascon v. CA, G.R. No. 144899, February 5,
2004).
Note: The following acts have been held to be prohibited activities:
1. Where the strikers shouted slanderous and scurrilous words against the
owners of the vessels;
2. Where the strikers used unnecessary and obscene language or epithets to
prevent other laborers to go to work, and circulated libelous statements
against the employer which show actual malice;
3. Where the protestors used .abusiv.e.,ald threatening language towards the
patrons of a place f.t-usine or a aii§Scp-employees, going beyond the
mere attempt tojo rsuaFIR,cust m rs ititOr eir patronage;
4. Where the strIket-rformeLga.human cordon and locked all the ways and
approacherfci, the4rfeKes and vessels oft e vjeiri:Ity of the workplace and
perpetrate! Ae iolenCWIT:fr-coerc.o tOre work from being
• performay d ID) X. 7(
5. Where the !ricers hook Aheiph.fistsdand thr atery non\riking employees
with b ily ham ifey persistaitiproceed t the likq;Qc
6. Wher t t n workers o strut e ccess rgAtemers (Sukhothai
, supra . k'
Q: When is st i Jut . al
ANS: There is trik o °T. Oances. A'e
1. Strike tabard +n eabile g NLlp, G. No. 119293, June
10, 20
2 Striker' urpos is tri i rqi j d u lea onabi(Philip ine Marine Officers'
Guild v. mparir a ,"[1 0406g2'8, L-206 3, March 19, 1968);
3. Strike stag for , rign e arretift, ‘nts (Acda v. Minister of
Labor, G.R.k- L mberts1 1-9 );
4. Strike staged i iol ofei rqkgtrike di se in the CBA (GOP-CCP
Workers v. C1R, G.RV L-330 V5 r 10, 1979);
5. Strike becomes illegal if vic3lee s pervasive and widespread (Shell Oil
Worker's Union v. Shell Co. of the PHL, Ltd., G.R. No. No. L-30833,
September 10, 1979);
6. Strike staged despite the issuance of an assumption or certification order
(LABOR CODE, Art. 278(g));
7. Strike staged without availing of the grievance machinery procedure and
voluntary arbitration clause in the CBA (2 AZUCENA, supra at 610);
8. Strike staged by a minority union (United Restauror v. Torres, G.R. No. L-
24993, December 18, 1968);
9. Strike staged in violation of "preventive mediation order" (SMC v. NLRC,
supra);
10. Strike staged in violation of Article 270 €; and
11. Strike staged without giving the employer reasonable time to consider and act
on the demands made by the union or premature strike (Almeda v. CIR, G.R.
No. L-7425, July 21, 1955).
320
Q: Compare a valid strike from an illegal strike.
ANS: The following provides for the comparison between a valid strike and an illegal
strike:
Valid Strike Illegal Strike

As to nature
One called for a valid purpose and One staged for a purpose not
conducted through means authorized by recognized by law or if for a valid
law purpose, it is conducted through
means not sanctioned by law
As to its effects on the union officers

Officers are not liable for resulting Officers are liable for resulting
damages. They will notlose employment damages. Those who knowingly
by reason thereof. ;.t participate in an illegal strike may lose
employment by reason thereof.
ha,
As to its effects to the Inembers otthe union
.‘11 .4g.V4vt
They are not civilly liable for paqicpattro ];hey are civilly liable for personally
in a valid strike. kikanzing 'articipating in unlawful
. --0-044116,
acts dunng fib strike and they may
lose employ% k by reason thereof (2
=kif AZUCENA, sD at 721).
7. ...I. La
Q: What is the of leers of theRI

i
•.nion in cases of i legalstrikes?
ANS: Where trircts
0m ta
k
or unions-ant • eir membe are nlawful and tortious, the
officers particwa ingai She unlawful athns are; tt esulting damages
irrespective ofklhe fac t theyo,w4e ac,_ttgg in beha Officers of labor
unions are alsoVab ifor urpwful and tEuous acts done rsuant to conspiracy to
which unions are alp (2 AZUCEkA, sb"ra at 721). Any union officer who knowingly
participates in an illegal stri may lose mRja ent by reason thereof (NUWHRAIN-
R.
APL-IUF Dusit Hotel Nikko= apter v. CA; 2 November 11, 2008).
Q: Can ordinary workers be liable for illegal strikes?

ANS: Members of labor _r not subject to civil liability for the acts of the unions
or its officers as such, unle ra is shown that they personally authorized or participated
in the particular acts, and the liability of a member of a labor union for the wrongful acts
of his associates done without his knowledge or approval is not to be inferred from mere
membership in the union. But the members are liable for damages resulting from
particular unlawful acts which they participated in or which are performed at their
direction pursuant to a delegation of authority to them (2 AZUCENA, supra at 721).
Note: For a worker or a union member to suffer the consequences of loss of
employment, he must have knowingly participated in the commission of illegal acts
during the strike, such as: infliction of physical injuries, assault, breaking of truck side
and windows, etc. (International Container Terminal Services, Inc. v. NLRC, G.R. Nos.
98295-99, April 10, 1996).
Q: Are the employees reinstated after an illegal strike entitled to backwages?

ANS: No. Such reinstated employees shall not be entitled to backwages as they should
not be compensated for services skipped during the illegal strike (Lapanday Workers
Union v. NLRC, G.R. Nos. 95494-97, September 7, 1995). The principle of a fair day's
wage for a fair days labor remains as the basic factor in determining the
award thereof. If there is no work performed by the employee there can be no wage or
321
';•-*:!..,..ivr.-..1.: .-.5 ,P!.::1.•.-,..
Iii4.:ft,'
1k\g',...,;',.7 :'-..,.. n• is.1... -4 :
pay unless, of course, the laborer was able, willing and ready to work but was illegally
locked out, suspended or dismissed or otherwise illegally prevented from working (G&S
Transport Corporation v. Infante et aL, G.R. No. 160303, September 13, 2017).
Q: Can an employer waive the issue of illegality of the strike?

ANS: Yes. When an employer accedes to the peaceful settlement brokered by the
NLRC by agreeing to accept all employees who had not yet returned to work, it waives
the issue of the illegality of the strike (Reformist Union of R.B. Liner, Inc. v. NLRC, G.R.
No. 120482, January 27, 1997).
Note: Furthermore, reinstatement may render moot the question of illegality. In Citizens
Labor Union v. Standard Vacuum Oil Co., G.R. No. L-7478, May 6, 1955, the SC upheld
the granting of the court of industrial relations the motion to dismiss the proceedings on
illegal strike because the letters previously addressed to them by the employers which
invited them to return to their posts without making any reference to the pending case,
or imposing any condition or alteration of the terms of the employment, and was thus a
waiver of any right to consider the strikers ,as wrongdoers; and as observed, the
invitation was accepted by thee,striers.
Picketing
Q: What is picketiq
ANS: It is a devic9rused thefunibr ISTIsreilheir to outside patrolling
or marching to a '&745' heastrikert t)f,e cqr,npany- ually accompanied
by the display o plac r s and otheelsigrpnaing kn nvolved in a labor
dispute (IBM v.1 RC, upra)
1,11 V.rn't
Q: What are the reg rsites for laWful,Pic•hetine
ANS: Picketirt ,2aq. cone ed aeti41'Brect iiations as strike,
particularly astto—favvtul the e ent that it is an
instrument of coerF5‘ rat ,e,.. ,‘sr
r`t n ofij.pi
l irj!P' 111/ 101y1 e entitled to the
protection assoUged with rT-k, (SexcOy loyee§ Union v. Security
Bank and Trust, R. N L-28.36, Ape 1,3 1471
Note: Article 279;) of th 4.abo cie'p tribi a n enga ed in picketing from
obstructing the free *ngress tbk .„ei3C yer's ymises.
Q: Can strikers make spe .p siMIca TrII9 ickets?

ANS: Yes. It is not unla- f kkta lat n a labor broadcast, without
employing threat or intimidation, idsi opinion as to the fairness of an
employer. Nor is it unlawful to cause to •e driven through streets vehicle which bears
signs that are not unlawful and is equipped with apparatus for broadcasting music.
However, the use of loudspeaker in front of a picketed place of business has been
condemned as a form of intimidation (2 AZUCENA, supra at 685).
Lockouts
Q: When is lockout in the course of collective bargaining proper?
ANS: In the course of collective bargaining, a lockout is proper only when the following
requisites are met:
1. Notice of intention to declare a strike/ lockout has been filed with the DOLE;
2. At least 30 days has lapsed since the filing of the notice before lockout is
declared;
3. An impasse has resulted in the negotiations; and
4. The strike/ lockout is not discriminatory (San Pablo Oil Factory v. CIR, G.R.
No. L-18270, November 28, 1962).
322
Q: What are the instances when no strike or lock-out can be declared?
ANS: No strike or lock-out shall be declared:
1. After assumption of jurisdiction by the President or the Secretary of Labor
(LABOR CODE, Art 278 (g));
2. After certification or submission of the dispute to compulsory or voluntary
arbitration; or
3. During the pendency of cases involving the same grounds for the strike or
lock-out (LABOR CODE, Art. 279).
Q: What is the notice or cooling off period in Article 278?

ANS: The notice or cooling off period is 15 days for ULP strike/lockout and 30 days for
bargaining strike/lockout (LABOR CODE, Art. 278).
Assumption of Jurisdiction by the DOLE Secretarg

Q: When may the Secretary of Labor assume jurisdiction or certify the labor
dispute to the NLRC for compulsorx4tration?
ANS: When in his opinion, there exiAlWor dispute causing or likely to cause a strike
or lockout in an industry indispertljeate national interest, the Secretary of Labor
and Employment may assume juilscilgrogRer the dispute and decide it or certify the
same to the Commission for dimittlIWO arbitration (L4ROR CODE, Art. 277(g);
Operational Guidelines of DO No,140)01,0PSW!S?ries oft 010).
• ,
Q: Discuss the plenarmOwer of theASeiretary of Labor to assume jurisdiction.
ANS: Article 277(g) olh? Labor CodXg" is plenary powlirs t‘the Secretary of Labor
to assume jurisdiction:031e alabor,dispute. in an industry nd sp‘nsable to the national
interest, or to certi tljtea 181the NLRC4 or compulsory arb tration.
614,
Q: What constitutes arnational interest ase?
ANS: A labofic7TeeisiSat d be 8 f,Vion
4 4-iterest • e17 that such labor
disputes wouIVI cause ely cage a ike and lo nvolves industries
indispensable tc3httLe interegt.4 constitutes "in• ispensable industries" is
based upon the clUretion f the/Sectary of Labor (Philtread Workers Union v.
Confesor, G.R. No. Pt 7469, arch 12, 19
-
Q: What are the exam les of inds vies in • ispensa • e o the national interest?
ANS: The following are ra of industries indispensable to the national interest:
(HE-WAS)
1. Hospital sector;
2. Electric power industry;
3. Water supply services, to exclude small water supply services such as bottling
and refilling stations;
4. Air traffic control; and
5. Such other industries as may be recommended by the National Tripartite
Industrial Peace Council (NTIPC) (D.O. No. 40-H-13, Series of 2013, Sec. 2).
Q: What is the rule on strikes and lockouts in hospitals, clinics and medical
institutions?
ANS: It shall be the duty of the striking union or locking-out employer to provide and
maintain an effective skeletal workforce of medical and other health personnel, whose
movement and service shall be unhampered and unrestricted, as are necessary to
ensure the proper and adequate protection of life and health of its patients, most
especially in emergency cases for the duration of the strike or lockout (D.O. No. 40-H-
13, Series of 2013, Sec. 3).
323
DAN RED.BOOK
Q: What are certified labor disputes?
ANS: Certified labor disputes are cases certified to the Commission for compulsory
arbitration by the Secretary of Labor and Employment if in his opinion, there exists a
labor dispute causing or likely to cause a strike or lockout in an industry indispensable to
the national interest (2011 NLRC Rules of Procedure, as amended, Rule VIII, Sec. 2).
Q: What is the nature of assumption of order or certification order?
ANS: The power to issue assumption or certification orders is an extraordinary authority
granted to the President and to his alter ego, the DOLE Secretary, the exercise of which
should be strictly limited to national interest cases. It is in the nature of a police power
measure. This is done for the promotion of the common good considering that a
prolonged strike or lockout can be inimical to the national economy (Union of Filipro
Employees v. Nestle PHL Inc., G.R. No. 88710, December 19, 1990).
Q: What is the effect of assumption of jurisdiction or certification by of the labor
dispute?
ANS: The following are the effec , crertna
1. The intended o „Amp, ding str ke 19ckeut is automatically enjoined,
notwithstandirj f an ottod for reporiticteration of the certification
or the non-Aolu lop,)o „a y such mo oris-w icfl-thfra Tiave been duly submitted
to the Offict4oitth ecretary-of-Labor-ag&L,E, p.loy ent.
2. The em oyal I trdriedialtelgesume opgratioinel re-admit all workers
under pbc4ba 'fitftert andonskon revailing IRV th strike and lockout
(Ope tion G delin s of D.O. 46e:R-03, Sec. 2010) ct)
3. All c sb een t whet he edification order
spec erwise, theissues,silibmitted,for drbitratiddVffic are already filed
or m y be led, an are elevantiorar are proper npideT of the certified
case s all e n *dered sdlityadjbel or ab abed b the rtified case, and
shall e ecdea b pprgpriat Apis ion (International
Phaicfrutioals, 6 Sec to o L o . 929 4-83, January 9,
1992). •CC\
Q: What is the etfect if r r isi riot exioressly stated in the
assumption or certification c CIEN11-
ANS: The mere is ance as ',the Secretary of Labor
automatically carries wit to-wor r e hgdirective to return to work
is not expressly stated in th eLumption e fury n Semiconductors Employees
Union v. Court of Appeals, G.R. De ember 18, 2000).
Q: What is the nature of the return-to-work order?

ANS: It is mandatory and executory in nature. The very nature of a return-to-work order
issued in a certified case lends itself to no other construction. The certification attests to
the urgency of the matter, affecting as it does an industry indispensable to the national
interest (PH Airlines Employees Ass'n. v. PH Airlines, Inc., G.R. No. L-32740, March 31,
1971). Returning to work in this situation is not a matter of option or voluntariness but of
obligation. The worker must return to his job together with his co-workers so the
operations of the company can be resumed, and it can continue serving the public and
promoting its interest (Sarmiento v. Tuico, G.R. No. L-75271-73, June 27, 1988).
Q: What is the effect of defiance of assumption or certification orders?

ANS: Non-compliance with the certification order of the Secretary of Labor and
Employment shall be considered as an illegal act committed in the course of the strike
or lockout, and shall authorize the NLRC to enforce the same under pain of immediate
disciplinary action, including dismissal or loss of employment status or payment by the
locking out employer of backwages, damages and other affirmative relief, even criminal
prosecution against the liable parties (2005 NLRC Rules, Rule VIII, Sec. 4).
324
Q: What is the procedure to be followed in certified cases?
ANS: The following must be complied in certified cases:
1. When there is no need to conduct a clarificatory heari-g - the Commission
shall resolve all certified cases within 30 calendar days from receipt by the
assigned Commissioner of the complete records, which shall include the
position papers of the parties and the order of the Secretary of Labor and
Employment denying the motion for reconsideration of the certification order, if
any; or
2. Where a clarificatory hearing is need-d - the Commission shall, within 5
calendar days from receipt of the records, issue a notice to be served on the
parties through the fastest means available, requiring them to appear and
submit additional evidence, if any. All certified cases shall be resolved by the
Commission within 60 calendar days from receipt of the complete records by
the assigned Commissioner.
Note: No motion for extension or postponement shall be entertained (2011 NLRC Rules
of Procedure, Rule VIII, Sec. 5).
Injunctions
Q: What is the rule on injunctions? ,, ,
ANS: No temporary or permanentrgnciio r straining o der in any case involving or
growing out of labor disputes sh_afill 4,-V „„ • ourt o o er entity, except:
,,,,,,
,,,,,,,,,
1. To enjoin or restrain any Mal or threatens commission of any or all
prohibited orfinful acts qlequire the perfor ce of a particular act in
any labor dis to which, ilof ttstrained or perfo forthwith, may cause
grave or irreparable damage to any party or render e ectual any decision in
favor of whIpa IrBOR CODE Sec. 225(e)gan 0
2. When fifthe opinioinf Secreta .--i, of Labor aid Epplo o ent, there exists a
s' .
labor, isputeq:ausing or likely o cause a trike for loc out in an industry
indir ensgbleVIN natio al int est, the S- ftath -Thafei:Ond Employment
1
may assumeAuOctionst ,er th pg. ispute an:1 =1"41,4)1. ., certify the same to
r ••'`f-
the CoilirViggp46;ompulory i - itrat o on (LABOR CODE, Sea 278(g)).
Note: The Commission shal ave 'the of er to issue temporary restraining orders in
such cases but only a er du otice and 31'...04 ! ex parte restraining order issued
by the Commission, or s c airman or i•-le , ,,I 4,,,, -7:
, 8k e
, A e the commission is not in
it a psi4 not-exceeding
session, shall be vali 4for exceeding twenty (20) days (D.O. No. 40-03,
not-
Rule XXII, Sec. 14).
Q: What is the basis for the grant of injunction in ordinary labor disputes?
ANS: A preliminary injunction or restraining order may be granted, when it is established
on the basis of the sworn allegations in the petition that the acts complained of, if not
restrained or performed forthwith, may cause grave or irreparable damage to any party
or render ineffectual any decision in favor of such party.
Note: The grant writ of preliminary injunction or temporary restraining order shall
become effective only upon posting of the required cash bond (2011 NLRC Rules of
Procedure, as amended, Rule X, Sec. 1).
Q: When may the Commission grant a preliminary or permanent injunction in

strikes or lockouts?
ANS: The Commission may only grant an injunction after hearing the testimony of
witnesses and with opportunity for cross examination in support.of the allegations of the
complaint or petition made under oath, and testimony by way of opposition; and, only
after a finding of fact by the Commission: (TIGNU)
1. That prohibited or unlawful acts have been Threatened and will be committed
and will be continued unless restrained;
325
2. That substantial and irreparable Injury to petitioners property will follow;
3. That as to each item of relief to be granted, Greater injury will be inflicted upon
the petitioner by the denial of relief than will be inflicted upon respondents by
the granting of relief;
4. That petitioner has No adequate remedy at law; and
5. That the public officers charged with the duty to protect petitioner's property
are Unable or unwilling to furnish adequate protection (2011 NLRC RULES OF
PROCEDURE, Rule X, Sec. 2).
Note: No injunction or temporary restraining order shall be issued on account of any
threat, prohibited or unlawful act, except against the person or persons, association or
organization making the threat or committing the prohibited or unlawful act or actually
authorizing or ratifying the same after actual knowledge thereof.
4
P
--..
A. EMPLOYER-EMPLOYERe47 T /PA1
k:Orri '.,.
L
lhi> .1,
Tests to Determine En*fitim foeskItotA
Q: What are the kV( of es o deter i e employer-emplo ee relationship?
ANS: They are: / r4
1. Four-fo ti te,, do k Big 1N 'dg 1 any
''''')c.VGison,
l'4‘tq: G.R. No. 169510,
Augur 8, 20 • .
2. Two-ti d test (Fra • C.i&COS..-tie \G.JR 1Z0.0.87, Au WI 2006).
1
Q: What is thifour-fpld test?
. kv-TN-- . _h.-4 4
-4. -----,' a.
ANS: It is a to t drto d to ine t eicAtgoud-of e Viezer-e prcii relationship and
by considering wig ars:_(SP
,-. P...c1
1. Selec c
enJ ent oppe N.
2. Eaymeji of w ges,
3. Power bf Dismtssal; I
a
4. Power i4' Contr.814he sect apf he means and methods by
which the work is'to bO.ccitErVikil Atok Big W 6ge Company Inc. v.
Gison, sup iji4..t....,
Q: What is the control test?""44

., 1 ----'' W
ANS: It is a test where an employ. rely ionship is deemed present if the
person for whom the services are performed reserves the right to control not only the
end achieved, but also the manner and means to be used in reaching that end (Id.). It is
said to be the most important test our courts apply in distinguishing an employee from
an independent contractor. This test is based on the extent of control the hirer exercises
over a worker. The greater the supervision and control the hirer exercises, the more
likely the worker is deemed an employee (Sonza v. ABS-CBN Broadcasting Corp., G.R.
No. 138051, June 10, 2004).
Note: The control test calls merely for the "existence" of the right to control and not the
"actual exercise" of the right (Zanotte Shoes v. NLRC, G.R. No. 100665, February 13,
1995).
Not every form of control that a hiring party imposes on the hired party is indicative of
employee-employer relationship. Rules and regulations that merely serve as guidelines
towards the achievement of a mutually desired result without dictating the means and
methods of accomplishing it do not establish employer-employee relationship (Royal
Homes v. Alcantara, G.R. No. 195190July 28, 2014).
326
( ....:•,......, ..„.•,....:„..,:„...,..„•....
g.P Ats)::..13.,.. D
Q: What is the two-tiered test?003
ANS: Under the two-tiered test, the following determines the existence of an employer-
employee relationship:
1. The putative employer's power to control the employee with respect to the
means and methods by which the work is to be accomplished; and
2. The underlying economic realities of the activity or relationship (Francisco v.
NLRC, supra).
Q: Are jeepney drivers, taxi drivers, and barbers considered as employees?

ANS: Yes. The fact that the drivers do not receive fixed wages but get only that in
excess of the so-called "boundary" they pay to the owner/operator is not sufficient to
withdraw the relationship between them from that of employer and employee (Jardin v.
NLRC, G.R. No. 119268, February 23, 2000).
Kinds ofEmployment
Q: What are the kinds of employmenp
ANS: The Labor Code and jur41416 r e has identified the following as kinds of
employees:
galtit
1. Regular employees rdrefrjpg hose who have been engaged to perform
activities which are usutlygi sgaryor desirab ein the usual business or
trade of the employerfLa/3e% V-29,§);,
2. Casual employmtefernngio ose whi;TeVotnqular, project, or seasonal
employees (LABOR CODE, A,rt. 95), and as a gerigal rule, those performing
activities note sually necesgrry- • r desirable in th O'e Qloyer's usual business
or trade are 'seal e plofees BMA Network v. P b ga, G.R. No. 176419,
November 2*,
3. Probatto ary enipliles mployment oes of teed six (6) months
froreple datepthe employee gaited workin is covered by an
appcptice-snip,sogreement stip ihng a Ion R CODE, Art
296);'
441p
4. Projecte ees refernbg to Jlpse whose employment has been fixed for a
specific p ect or rertaking, ihe completion or termination of which has
been determred a e time of 1.-fts. -,,ement of the employee (Gapayao v.
Fulo, G.R. No "3493, Jul
5. Seasonal enTloyees e erring to those who work or perform services which
are seasonalVtut, nd the employment is for the duration of the season
(LABOR CODE, rE*.. -95);
6. Fixed-term employees refer to those whose employment contract specifies
that the same will last only for a definite period (Brent School v. Zamora, G.R.
No. L-48494, February 5, 1990);
7. Security guards referring to any person who offers or renders personal
service to watch or secure a residence, business establishment, building,
compound, any other area or property; or inspects, monitors, or performs body
checks or searches of individuals or baggage and other forms of security
inspection (D.O. No. 150-16, Sec. 2(h));
8. Floating status means an indefinite period of time when employees do not
receive any salary or financial benefit provided by law (Agro Commercial
Security Services Agency, Inc. v. NLRC, G.R. Nos. 82823-24. July 31, 1989).
Q: Can there be a regular employment with a fixed term contract?

ANS: Yes. An employee can be a regular employee with a fixed-term contract. The law
does not preclude the possibility that a regular employee may opt to have a fixed-term
contract for valid reasons. This was recognized in Brent: For as long as it was the
employee who requested, or bargained, that the contract have a "definite date of
termination," or that the fixed-term contract be freely entered into by the employer and
327
the employee, then the validity of the fixed-term contract will be upheld (Fuji Television
v. Espiritu, December 3, 2014).
Regular Employment
Q: When is employment deemed regular?
ANS: It is deemed regular where the employee:
1. Has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer; or
2. Has rendered at least one year of service, whether such service is continuous
or broken, with respect to the activity in which he is employed (Mehitabel
Furniture Co., Inc. v. NLRC, G.R. No. 101268, March 30, 1993).
Q: How can an employee become regular?

ANS: The following are the instances when an employee is considered as a regular
employee:
1. Regular Employee b ,,Natafrbl'Work — when an employee has been
engaged to perfoi71 .1 cpvities hi ke)us'itallynecessary or desirable in the
usual business ci— r4or defolNthe m lo4e?' 4 " N
2. From Casual to e oyephas re dered at least 1 year of
service, servic or k , with respect to the
activity i is p oyed ,(L'ABOR't09 , )1/4,
Note: of regulfernkyNnt under egory attaches to the
casua n th day imme,diajefy after t e en is,trst year of service
as su I emp ayee_OKaj,840ducts CA, /Va 162472, July 28,
2005 mploy e skaliboANidejf5,1, a gular rpploAe with respect to
the which he lgya
i n f his mploy ent shall continue while
such ex, asa ra*tiggd j ang Coca-Cola-CFW
Loca A, t.59 a6r;
3. From to e ta plo tinuously rehired
even sati sks d by the alleged
"projec ee" nd is able to the usual
busines s deemed regular
(Maragui 22, 1998);
4. From Cont and the continuing need
for the service once of the necessity and
indispensability o I y s business or trade (Baguio
Country Club Corp. v. 64, February 28, 1992);
5. From Seasonal to Regular — when an employee is engaged in work or
services seasonal in nature and the employment is for more than one season
(Hacienda Fatima v. National Federation of Sugarcane Workers, G.R. No.
149440, January 28, 2003);
6. From Apprentice to Regular — when the apprenticeship program is not
approved by the DOLE (Nitto Enterprises v. NLRC, G.R. No. 114337,
September 29, 1995); and
7. From Probationary to Regular —
a. When a probationary employee is engaged to work beyond the
probationary period of 6 months, as provided under Article 296 of the
Labor Code (Dusit Hotel Nikko v. Gatbonton, G.R. No. 161654, May 5,
2006);
b When a probationary employee is repeatedly rehired after her first 6-
month probationary period (Octavio v. NLRC, G.R. No. 88636, October
3, 1991);
c. When the employer extended a regular or permanent appointment to
an employee once he finds that the employee is qualified for regular
employment even before the expiration of the probationary period; and
328
d. When the employer did not apprise the probationary employee of the
standards by which he will qualify as a regular employee (A.M. Oreta &
Co., Inc. v. NLRC, G.R. No. 74004, August 10, 1989).
Q: What is the primary standard in determining regular employment?

ANS: The primary standard of determining a regular employment is the reasonable
connection between the particular activity performed by the employee in relation to the
usual business or trade of the employer. The connection can be determined by
considering the nature of the work performed and its relation to the scheme of the
particular business or trade in its entirety. Also, if the employee has been performing the
job for at least one year, even if the performance is not continuous or merely
intermittent, the law deems the repeated and continuing need for its performance as
sufficient evidence of the necessity if not indispensability of that activity to the business.
Hence the employment is also considered regular, but only with respect to such activity
and while such activity exists (Gapayao v. Fulo, G.R. No. 193493, June 13, 2013).
Q: May a part-time employee be dee*i4 .)regular?

4,
ANS: Yes. An employee worked ot#Ria -time basis does not mean that he is not a
regular employee. One's regulariftilip, ayment is not determined by the number of
hour's one works but by the natweore the length of time one has been in that
particular job (Perpetual Help CreyiaGo'• tiv_qi4 nc., v. Iaburada, G.R. No. 121948,
October 8, 2001).
404
Casual Employment
Q: Define casual emp gyment.
ANS: It is an emploineriMcrafigement here an emplbyee engaged to perform
activities which a, of n'''.'sary or de able in the tAual tra or business of the
employer (LILLOR_ COD Art. 295). 'IN,
1. Theu*..9& Viler ewploym attach I loyee who has
rendered at ,le .60 yeal se ce, wheth is continuous or
broken, *Act fo- 'the o ivity in whicn s employed and his
employ shall eldsitinueAhile ch activity exists.
2. A casual em oyee only casu4 ar, and it is the passage of time that
gives him a re uiai atus (KASA CA, G.R. No. 159828, April 19,
2006).
Probationary Employment
Q: What is probationary e ao'yment?
ANS: Probationary employment is that which shall not exceed six (6) months from the
date the employee started working, unless it is covered by an apprenticeship agreement
stipulating a longer period. The employment may be terminated with just cause or if he
fails to qualify as a regular employee in accordance with the reasonable standards
made known by the employer to the employee at the time of his engagement (LABOR
CODE, Art. 296).
Q: What is the length of time of probationary employment?

ANS: As a general rule, the period for probationary employment is 6 months, except:
(L3A)
1. Where the work is Learnable or apprenticeable, the probationary employment
period shall be limited to the authorized learnership or apprenticeship period;
2. Three (3) years in case of teachers (Escudero v. Office of the President, G.R.
No. L-57822, April26, 1989); and
3. When parties Agree to a longer term by virtue of company policy or when the
same is required by the nature of the work (Buiser v. GTE Yellow Pages
Directories, G.R. No. L-63316, July 31, 1984).
329
•
DAN
.• RED :BOOK
Q: What is the effect if the probationary employee is allowed to work beyond the
period of 6 months?
ANS: A probationary employee engaged to work beyond the probationary period of 6
months or for any length of time set forth by the employer shall be considered a regular
employee (LABOR CODE. Art. 296).
Q: What are the grounds to terminate probationary employment?

ANS: The services of a probationary employee may be terminated in the following
instances:
1. For any just cause;
2. For cause authorized by existing laws;
3. When he fails to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time of the
engagement (Abbott Laboratories v. Alcaraz, G.R. No. 192571, July 23, 2013).
Note: In all cases, the employer shall inform the employee the standards under which
he will qualify as a regular employee Whe
...,..-- time of his engagement. A probationary
- -,,,,,
employee enjoys security of tspurrwhilp op prtion. He can be dismissed only for a
just or valid cause or when "e,, fails to) qd 'Cy for `regular employment (Athena
International Manpower en/Ibe /ha v "Ilaitcp2G.A. 0:.13 303, April 15, 2005).
.• .;,...00‘..--,'
'S.a"- . ..iN
Q: What are the lip-1469s 0 the termination,of prolKt!zpa s mployees?
ANS: The limitation a‘a fol dW—s:(P-DU.I)
1. The errii)lo s$Po er to t&mingte it irobati n:Om-1)) o ent contract must
...s [1.1 •:.! 1 it
be exccised gf acc rdance with(the specific r quire enrp the contract;
2. Thei rrIpIG e s Dis atisfaetion-d it nd in Ged la th, not feigned so
as to j ent theicont!zgt-or I jaw,Ny
Therl be rio Urialtifil ICitsplininaVon in -1:1 smissal (Univac
Deveio Inc li8otiano,\GiM016. 820713r4une 9, 20h ); and
4. If a partic aiiiirrkeawescribgd, tielermirla t.t.9ihtus - in such time and
if fo endtme W".cr , §qt.fred,r5e fia1,19t: st (DACODECO v.
Pasa , G.R. . ir, ),....,.I.01.0 2009)::',,..
Q: Jose is em ro as ai-ert d fot 3 months. Although the
employer is not sa *VEtilii_lc_103;4e "iallowe fto work after the end
.of the 3-month perio
(a) Has Jose become a
ANS: Yes. An employee 0, • llowe probationary period shall be
considered a regular employee EIABOIL_ rt!'"296). By allowing Jose to work after
the expiration of the probationary period, the employer is deemed to have approved of
his qualifications for regular employment.
(b) Assuming that a few days before the expiration of the probationary period of 3
months, the parties agreed to extend the same for another 3 months, would your
answer be the same? Why?
ANS: The answer would be the same. The employer should not be allowed to delay the
regularization of the employee. Three months is a sufficient time within which the
employer can really ascertain whether the employee is qualified for the job. Extension of
the probationary period will not serve any useful purpose (ALCANTARA, supra at 627).
(c) Can Jose's employer successfully maintain that the probationary period
provided for in Article 296, is 6 months, which would be Jose's total employment
on a probationary basis?
ANS: No. Article 296 of the Labor Code provides that the probationary employment
"shall not exceed 6 months from the date the employee started working unless it is
covered by an apprenticeship agreement stipulating a longer period." This means that
the period mentioned therein is the maximum period that an employer may fix as the
330
probationary period. If he opted to fix a shorter period, he should be bound by the same;
otherwise he can delay the regularization of his employees and deprive them of the
benefits arising therefrom (Id.).
Q: Is it necessary that the probationary employee, at the time of engagement, be

apprised of, the reasonable standards that will qualify him/her to regular
employment?
ANS: Yes. In all cases of probationary employment, the employer shall make known to
the employee the standards under which he will qualify as a regular employee at the
time of his engagement. Where no standards are made known to the employee at that
time, he shall be deemed a regular employee (Clarion Printing House, Inc. v. NLRC,
G.R. No. 148372, June 27, 2005; IRR of the Labor Code, Book VI, Rule I, Section 6).
Q: X, was employed as a probationary employee on April 21, 1997. On October 23,

1997, she was terminated from employment on the ground of retrenchment. At the
time of her termination, was X a proINttnary employee?
ANS: No. It is interesting to note AdOptarted as a probationary employee on April
1997. There being no stipulation toith4.'Oritrary, her probation period had a duration of 6
months from her date of employitiAti:0after the end of the probation period on 22
October 1997, she became a regglaMfil yee as of October 23, 1997 since she was
allowed to work after the end 9f shificeiedskLalso ajar that her probationary
employment was not terminaVet the .dcofrig-Lp.rmatoperiod on the ground that
the employee failed to queWin accorcJe e with reasonableAandards made known to
' ent (Clariod(?n ting House, Inc. IA •RC, supra).
her at the time of engag"tri
Project Employment,.
Q: What is pirp; 'mpleiment?
ANS: It is an ',.Oloymp9, hich hasSeen fixed for a spy cific rojec • or undertaking, the
completion 4,rminatioh ottvithidkrhas bee deterrnirdsokei or of
the employeeNLABOR.v.-coriE, Ait-V95) includes kciRioyi e Of work or service
which is seasonki,n,,, ttu cid is perform for the duration e season (Gapayao v.
Fulo, G.R. No. 1930 • .1.3, 2013).
'
Q: What is a project? as s w.
ANS: Project could refepto at 19,Oltgedigti" burs lakYres of activities:
1. A particular jo4a, or 951Makirig that is within the regular or usual business of
the employer ca9dip, a,14,1ut which is distinct and separate, and identifiable as
such, from the oftierundertakings of the company. Such job or undertaking
begins and ends at determined or determinable times; or
2. A particular job or undertaking that is not within the regular business of the
corporation. Such job or undertaking must also be identifiably separate and
distinct from the ordinary or regular business operations of the employer. The
job or undertaking also begins and ends at determined or determinable times
(PAL, Inc., v. NLRC, G.R. No. 125792, November 9, 1998).
Q: What are the indicators of project employment?
ANS: Either one or more of the following circumstances, among others, may be
considered as indicators that an employee is a project employee: (DuDe-CORU)
1. The Duration of the specific/identified undertaking for which the worker is
engaged is reasonably determinable;
2. Such duration, as well as the specific work/service to be performed, isDefined
in an employment agreement and is made clear to the employee at the time of
hiring;
3. The work/service performed by the employee is in Connection with the
particular project/undertaking for which he is engaged;
331
4 The employee, while not employed and awaiting engagement, is free to Offer
his services to any other employer;
5. The termination of his employment in the particular project/undertaking is
Reported to the DOLE Regional Office having jurisdiction over the workplace
within 30 days following the date of his separation from work, using the
prescribed form on employees' terminations/dismissals/suspensions; or
6. An Undertaking in the employment contract by the employer to pay completion
bonus to the project employee as practiced by most construction companies
(D. O. No. 93-19).
Q: What is the principal test to determine whether employees are "project

employees" as distinguished from "regular employee?"
ANS: The test is whether or not the project employees are assigned to carry out a
specific project or undertaking the duration and scope of which are specified at the time
the employees are engaged for that project (Dac/es v. Millenium Erectors Corporation,
G.R. No. 209822, July 8, 2015) anstbaLthe • II i letion or termination of such project or
undertaking has been deterffiingl at 'tie -time • he of the employee
1- --N,
(PNOC v. NLRC, G.R. No ef6935.8 April 13 2c1b. -
.,....
-----....,
Q: When is employ ent keDeg-non-project?
. .,-1 X
ANS: An employ ACT dr'fied,nontprOFErWhertti en e,,Mploy es are employed by a
construction co AP•liv i hourreferaricel au- partibug per e hor a phase thereof
(Alcatel PHL, Inch v. Ref s, G. . No. t643A, Jtily 3, 26199).
Q: Anastacio, isr-56-st , and, an:ion werol Irecd byÀi cool ervice, Inc. to work on
specific projects-of he latter. Tfik.ivqelire-d- in wor ool, r" and were free to
leave anytim a d loffer ttir seT-0$ •,-7-jt they emplo *rsr-B:ecause of their
employment' tVerAinativ ey filek:a
• .' ' legal di r.,",alpomp aint alleging that
t
they were reg 17 lo enie roc s.;.Arei) byoeofisidered regular
employees? NY
ANS: No. Work 0 in th wor pp "ianpime an offer their services
to other employer prbjpct e ees gdmlSla y a sompany ' a particular project
or in a phase theyof (Rikcor of v. NL , G.R. No. 114290,
September 9, 1996).
Seasonal Employment
Q: Define seasonal employment:
ANS: It is an employment arrangement where an employee is engaged to work during a
particular season on an activity that is usually necessary or desirable in the usual
business or trade of the employer.
Note: During off-season, the relationship of employer and employee is not severed; the
seasonal employee is merely considered on leave of absence without pay. Also,
seasonal workers who are repeatedly engaged from season to season performing the
same tasks are deemed to have acquired regular employment (AZUCENA, Everyone's
Labor Code, supra at 325-326).
Q: Agricultural workers were hired by the owners of a rice and sugar land to
perform particular phases of the agricultural work necessary in rice production
and/or, sugar cane production, after which they were free to render services to
other farm owners who need their services. Considering that they rendered
services for many years, is their employment, though seasonal, deemed regular
under the provisions of Article 295 of the Code? Why?
ANS: No. A duration on the job is not pertinent to a seasonal or project employee. The
passage of time does not make a seasonal worker regular or permanent (Mercado v.
NLRC, G.R. No. 79869, September 5, 1991).
332
Fixed-Term Employment
Q: Define fixed term employment.
ANS: It is a contract of employment for a definite period that terminates by its own terms
at the end of.such period (Brent School v. Zamora, supra).
Q: What are the requisites for the validity of a fixed-term employment?
ANS: The requisites are as follows: (VEC)
1. The fixed period of employment was knowingly and Voluntarily agreed upon by
the parties without any force, duress, or improper pressure being brought to
bear upon the employee and absent any other circumstances vitiating his
consent (E. Ganzon, Inc. v. NLRC, G.R. No. 123769, December 22,1999);
2. It satisfactorily appears that the employer and the employee dealt with each
other on more or less Equal terms with no moral dominance exercised by the
former or the latter (Brent School v. Zamora, supra); and
3. Stipulations, clauses, terms and conditions should not be Contrary to law,
morals, good customs, public...prder, or public policy (Oxales v. United
Laboratories, supra).
Security Guards
eirk
Q: When are security guards corlsLes,e44.pr employees?
ANS: Any security guard or other.prin
Wwecurk q viz° is allowed to work after
the probationary period o, rrthe abse of a vali r7iba ionary contract shall be
considered a regular emp,(EiVee.
Note: Security guards affected by iMp6ated hiring-firing e ing scheme for short
periods of time, the aggi'qgate slura ion f which is at legs • si (6) months, shall be
considered regular ertifiroyO YD.O. No. 1,50-16, Sec. 3.31
Q: What is th140"-
rerobationlry periodlif s rity guards?
ANS: The p o6ationary pirgid securi qkco ,d fiatyyprivate security
. DA
personnel, in the private ecurity ipastry shall not exceea*I ') ,:linths.
Rooting Status War f

Q: For how:long may an embloyee's flopttng.ts atus last?
ANS: The "floating stafersAf an e _ploye h las y for six (6) months. When it
exceeds such period, 11,Imay bcVsidered to have been constructively dismissed from
service. ThUs, he is ,cAled!Ito the corresponding benefits for separation (Agro
CommerciatSecurity Serk,V4,gency, Inc. v. NLRC, supra).
Note: In the case of security guards, an assignment of the security guard and other'
private security personnel as a reliever for less than one-month shall not be considered
as an interruption of the six (6) months period (D.O. No. 150-16, Sec. 10.3).
Legitimate Subcontracting vs. Labor-Only Contracting
Q: Who is a Contractor? .
ANS:A contractor refers to any person or entity engaged in a legitimate contracting or
subcontracting arrangement providing services for a specific job or undertaking farmed
out by principal under an agreement (D.O. No. 174-17, Sec. 3).
Q: What is subcontracting?
ANS: Contracting or subcontracting refers to an arrangement whereby a principal
agrees to farm out to a contractor the performance or completion of a specific job or
work within a definite or predetermined period, regardless of whether such job or work is
to be performed or completed within or outside the premises of the principal (Id.).
Note: Under D.O. No. 174, the distinction between contracting and subcontracting is no
longer underscored in the definition of terms. Thus, it appears that the foregoing terms
may be used interchangeably (CHAN REVIEWER 2017, supra at 243).
333
AN RED BQOKA.
Q: What are the conditions that must concur in legitimate job contracting?
ANS: The following conditions must concur: (IC2S)
1. The contractor or subcontractor is engaged in a distinct and Independent
business and undertakes to perform a job or work on its own responsibility,
according to its own manner and method;
2. The contractor or subcontractor has substantial Capital to carry out the job
farmed out by the principal on his account, manner and method, investment in
the form of tools, equipment, machinery and supervision;
3 In performing the work farmed out, the contractor or subcontractor is free from
the Control and/or direction of the principal in all matters connected with the
performance of the work except as to the result thereto; and
4. The Service Agreement ensures compliance with all the rights and benefits for
all the employees of the contractor or subcontractor under labor laws.
Absence of any of the foregoing requisites makes it a labor-only contracting
arrangement (CHAN REVIEWER 2017, supra at 249).
Q: What are the effects of the-faminqticip of employment when there is a Service

Agreement?
ANS: The effects are 90tellarivp: .1
1 In case thetermiri9tidnrtif 'employment iS`bR,LOddl*ffie pre-termination of the
Service Preeruilt,
. golduetrailfhlirized.c ‘ps'es(1 /41-erticle 298, the right of
the contegeto074SUbc,Ontracfpr's kriiplpre to\unjaidApees and other unpaid
benefitt runremitted4Ogar,,mandator t con notions, e.g. SSS,
, ECC, sha
PhilHfaZ ll`;be bornel by t e(Lfet‘A at fault, without
prejudice„td the solidary.liabilitSrlo, ithe [Ladies o the s rvimagreement.
2. WhekfAetterminatibn re4113fripiiiwth'e:Itelmi ation °One qdrvice Agreement,
or frarn the t ompletkn of .thezpAse‘3:inijob o work fdpwhi6 the employee is
engage " later opt tii'Weittor re-e 19Yfrie t within three (3) months
to reTnLaryt( trabge0o anoArricgritract9 *eye tRfei. No. 174-17, Sec.
13). LI it VA !'?
Note: Failure of the contractor td provide' nelke J11 ent fdr the employee shall entitle
the latter to payrilent of seeratice- enefi s. aye e Kovidedb law or the Service
Agreement, which i ver is rug eriontlf6-*-63 rTjicirpelo igher,enlj lement to completion
bonuses or other ts~i 'reale?" w,,ftenever applicable. The
mere termination of the Set -4- reement-slig -rp ofegmed as a termination of
employment of the contractqo su•contrIVM''tp Who are regular employees of
the latter (D.O. No. 174-17, Se
Q: What is labor only-contracting?

ANS:It is an arrangement where the contractor or subcontractor merely recruits,
supplies or places workers to perform a job or work for a principal, and the elements
enumerated hereunder are present:
1. The contractor or subcontractor does not have investments in the form of
tools, equipment, machineries, supervision, work premises, among others
AND the contractor's or subcontractor's employees recruited and placed are
performing activities which are directly related to the main business operation
of the principal; or
The contractor or subcontractor does not exercise the right to control over the
performance of the work of the employee (D.O. No. 174-17, Sec. 35).
Q: What are the effects of finding that there is Labor-Only Contracting?

ANS: The effects are as follows:
1. The labor-only contractor will be treated as the agent or intermediary of the
principal. As such agent, the representations made by the labor-only
contractor to the employees will bind the principal;
334
2. The principal will become the employer as if it directly employed the workers
supplied by the labor-only contractor to undertake the subcontracted job or
service. The principal will be responsible to the workers for all their
entitlements and benefits under the law (SMC v. MAERC Integrated Services,
Inc., G.R. No. 144672, July 10, 2003);
3. The principal and the labor-only contractor will be solidarily treated as the
direct employers; and
4. The employees will become the employees of the principal, subject to the
classification of employees under Article 295 of the Labor Code.
Q: Discuss the meaning of the term "Trilateral Relationship"

ANS: "Trilateral relationship" refers to the relationship in a contracting or subcontracting
arrangement where there is a service contract for a specific job, work or service
between the principal and the contractor, and a contract of employment between the
contractor and its workers (CHAN REVIEWER 2017, supra at 244).
. gdf
Q: What is the liability of the prinplat?
ANS:In the event of violation of anitoVjgon of the Labor Code, including the.failure•to
pay the wages, there exists a toil Villaility on the part of the principal and the
contractor fOr. purposes of enforcing tbdifedgisions of the Labor Code and other social
legislations, 'to the extent of the vib lielamegyaier thegmployment contract (D. O.
No. 174-17, Sec 9).
Q: Nestor, Jose, Felipe; and Feling,.werg security guards? ired by Tagapagtanggol

Security Services tolEvo for DOrBoa,po Colleges, Inc. They filed a complaint
against the latterlop..nolvcorliplianceivith the cuivn mimum wage order.
TagapagtanggVecuritiSmices alleg d that Don posc • should exclusively be
liable for thejpaymenteof wage. inateages. Is Don Bosco ioliclarily liable? If yes,
can it seek 144-
gnireeimk.irse ent?
ANS: Yes. Tnq principal olidarityjiab ith the 'agony violation of any
provision of the 14borCrt incleah th ilure to pay wagewever, this will not
prevent the. princtrelOG claiming reimbursement from the contractor (Alpha
Investigation and Security Age cy, Inc. v. CMG R. No. 111722, May 27, 1997).
ratontrac
Q: What is the difference betweelr,s abor-only contracting?
ANS: The following. We the, ifferences between subcontracting and labor-only
contracting: ttl
. . ,
`Subcontracting/Job Contracting - Labor-Only Contracting :
As to nature of employerrprincipal ' •
The employer or principal is merely an The employer or principal is treated as a

indirect employer, by operation of law, direct employer of the contractor's
of his contractor's employees ' (PCI employees in all instances (contractor is
Automation Center, Inc. v. NLRC, G.R. deemed agent of the employer) (Manila
No. 115920, January 29, 1996). Water Company v. Pefia, G.R. No.
158225, July 8, 2004).
. . . . . .. .
As to Existencq of .Er: Ee Relationship with Employer/Principal •, ,, •
The law creates anEr-Ee relationship for The statute creates an Er-Ee
a limited purpose (i.e., to ensure that relationship for a comprehensive
the employees are paid their wages) purpose (i.e., to prevent a circumvention
of labor laws)
335
As to Liability of the Principal
The principal becomes solidarity liable The principal becomes solidarily liable with
with, the contractor in the event the the contractor not only for unpaid wages
latter fails to pay the employees' but also for all rightful claims of the
wages and for violation of labor employees under the Labor Code and
standard laws. The liability, however, ancillary laws.
does not extend to the payment of
backwages or separation pay of
employees who are illegally
dismissed
Akto Validity
Permissible Prohibited by law
A4. to Capital
There is a presence .4)

r
irh ienjraclork% subcontractor does not
capital or investmen ?lave ubstptial capital (D.O. No. 174-17,
Sec. 5).
.
Q: Do the implemen if rules govinin.;&corl'acting or s ractmg apply to all
industries?
ANS: No. The implemegting Articles) 106-1094D. . No. *41-,746f the Labor Code
apply only to a I relatid shifi3vIjrc crkteriz s contrfctin or subcontracting
arrangement. pi of copt mple e o.leo,yej; i4orm9 n teclirk ogenabled services
involving and entire-o ci U_ C/D
1. Busitt s es zurci
Knowre, Igge P n ices s•urgiug
3.1 Legal P ocess utso
4. IT infras cture utso
5. Applicatio Develo eh SC/ p
6. Hardware a d/or
.
7.' Medical Transe
1
8.1 Animation Servic
9. Back Office OperatioritiSug p . Circular No. 01-17).
B. TERMINATION BY EMPLOYER
Just Causes
Q: What are the just causes for the termination of employment?
ANS: The following are the just causes for the termination of employment by the
employer: (FC-SWAG)
1. Serious misconduct or willful disobedience by the employee of the lawful order
of his employer or representative in connection with his work;
2.1 Gross and habitual neglect by the employee of his duties;
3. , fraud or Willful breach by the employee of the trust reposed in him by his
1 employer or his duly authorized representative;
4. Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized
representative; and
5. Other causes Analogous to the foregoing (LABOR CODE, Art. 297).
336
Q: What is serious misconduct or willful disobedience?
ANS: Serious misconduct is an improper or wrong conduct. It is the transgression of
some established and definite rule of action, a forbidden act, a dereliction of duty, willful
in character, and implies wrongful intent and not mere error in judgment. For misconduct
to be considered serious, it must be of such grave and aggravated character and not
merely trivial or unimportant (lmasen PH Manufacturing v. Alcon, G.R. No. 194884,
October 22, 2014).
Q: What are the requisites of serious misconduct?
ANS: The following are the requisites of serious misconduct: (SRUW)
1. It must be Serious;
2. It must Relate to the performance of the employee's duties (Lakpue Drugs v.
Belga, G.R. No. 166379, October 20, 2005);
3. It must show that the employee has become Unfit to continue working for the
employer (Austria v. NLRC, G.R. No. 124382. August 16, 1999); and
4. It must have been performed wi ji Wrongful intent (Imasen PH Manufacturing
v. Alcon, supra). Al
)
Q: What are the requisites of willfutdis% edience?
ANS: The following are the requiJitd9 I disobedience:
1. The employee's assailedhra s been willful cOntentional, the willfulness
being characterized bpd "w1,91!.,fi .erse,a Mde"; and
2. The order violatedpust havelob
a. ReasoLidbfe and lawfti •
b. Madeliiior to the .4Enri o ee; and
'c. In codhebt on toythe dutih which he had/ pen engaged to discharge
eakra teti&Age Grap Ics, G.R. No. 921t'0, Apr1125, 2012).
' 1.43-rpr
rkti.
Q: What is gEsszjanthtibbitual neglect o, uties?
ANS: Grossgligencin
% e, tylieN4ant o,,_ 'f are in of one's duties.
Habitual neglect impaps,paatedaffjureR perform one or a period of time,
depending on th'eti cu stances. Tlid ne• t of duties must not only be gross but also
habitual (Cavite Ap _are v. Ms a quezif G.R. o. 172044, February 6, 2013).
' A _rtvi
Q: What are the requiks-of -
ANS: The following are Me requiskeslor tin etround of fraud! (ABEW)
1. There must bc9rOct, omission or concealment;
2. The act, omissionitd concealment involves a Breach or legal duty, trust, or
confidence justly reposed;
3. It must be committed against the Employer or his/her representative; and
4. It must be in connection with the employee's Work (D.O. No. 147-15, Sec.
5.2(d)).
Q: When is there loss of confidence?
ANS: There is loss of confidence when the employer has reasonable ground or has
some basis to believe that the employee is responsible for the misconduct and the
nature of his participation renders him unworthy of the trust and confidence demanded
by his position. Proof beyond reasonable doubt is not required (Jerusalem v. Keppel
Monte Bank, G.R. No. 169564, April 6, 2011).
Q: What is breach of trust?

ANS: It is a willful violation of trust. A breach is willful if it is done intentionally knowingly
and purposely without justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly and inadvertently (Austria v. NLRC, G.R. No. 124382, August
16, 1999). But loss of trust or confidence can be based on gross negligence (School of
the Holy Spirit of Quezon City v. Taguiam, G.R. No. 165565, July 14, 2008).
337
i
Q: What are the requisites of willful breach of trust leading to loss of trust &
confidence?
ANS: The following are the requisites: (PAW)
1. The employee concerned holds a Position of responsibility or trust and
confidence. He must be invested with confidence on delicate matters, such as
custody handling or care and protection of the property and assets of the
employer;
2. The Act complained of must be work-related and shows that the employee
concerned is unfit to continue to work for the employer; and
3 It must be based on a Willful breach of trust and founded on clearly
established facts (Jerusalem v. Keppel Monte Bank, supra)
Q: What are the guidelines for loss of confidence as ground for termination?
ANS:the following are the guidelines:
1. That the employee concerned must be one holding a position of trust and
confidence; and ,,........i..,:,..,,,,
2. There must be an a,9tgtria would list theA ss of trust and confidence. Loss
of trust and confideince,to be a v lidc Lisrefo 1)3
'dismissal must be based on a
Is r ,14,
willful breach,ortft\prdThciunded-orhd early e ta liSIV facts.
Note:;The basis for tife,disrqinermust be clearly a d nvi di9g established but proof
beyond reasonablidni l evs...v.071—pH, u Assurance Employee
Labor Union v. NL4,?„GZI . (Nir: 185339, June 3; 201 \
, It . *. A
Q: What are the 2 classes of positions-OArust?
ANS: The two ses ofFrsitions ofilit,rustT mane ega p ployees and (2)
those ,who in th rmal and ?dtiiiffe‘: Oer9iSpof t eir fu lions regularly handle
significant am • untS more for prdp-W0eajerial mploye S-ar ose vested with
the powers or p‘i-og tiv s 41, ay dowjbedatiageme J e and/ to hire, transfer,
suspend, lay- ffr fe II, '9 grge, Ass gps-9r d clpl plof5es or effectively
recommend su 11,m aDeri sa t'bqs. Xliei ,441ta on rsts oft e management of
establishment in which key ar,ere 'p oye• or9 6rtm t or a ubdivision thereof,
and to,other officeor maltber :t e - ge T ff. T ajley cus omarily and regularly
exercise discretion nd inde- en eata. ~re F e gt com n examples of those
1 I
who in the normal arkd rougne e hetriun lo44e arty handle significant
amounts of money or'okoob....graro shieFratraiSit rs" custodians, etc. (M+W
Zander PHL, Inc. v. Enriele C-1,4No. 1 6,91M31) 15;10c9).
Note: It is not the job title bu. the a616a11.10,0thlt the employee performs that
deterMines whether he or she occupies Ilion of trust and confidence (Bluer Than
Blue JOint Ventures Company v. Glaiza Esteban, G.R. No. 192582, April 7, 2014).
Q: On December 4, 1987, Gale, a room boy in the Century Park Sheraton Manila,
was dismissed for blurting out against his supervisors in their absence but
promptly reporfd to them, the following offensive remarks: "Buaka ng Tha
lahat sila pasipsipan" (Curse them, they are all sycophants).
(a) Is the dismissal of Gale on this ground justified? Why?

ANS: No. The discharge of an employee who uttered infelicitous remarks against his
supervisors, in general, for strictly enforcing company rules against union members, but
who thereafter apologized, is too harsh. It was held time and again that it is cruel to
unjustly mete out the drastic penalty of dismissal if it is not proximate to the gravity of
misdeed (Maranaw Hotels and Resorts Corporation v. CA, G.R. No. 103215, November
6,- 1992).
338
DAN REDBOc
(b) May Gale's reinstatement to his former position be excused on the ground of
"strained relations"? Why?
ANS: No. The doctrine of "strained relations" cannot be applied with impunity;
management should not be allowed to indiscriminately dismiss employees and
thereafter provided with a convenient and a ready excuse not to reinstate them.
"Strained relations" may be invoked only against employees whose positions demand
trust and confidence, or whose differences with their employer are of such nature or
degree as to preclude reinstatement. The relationship of Gale, a room boy, did not
occupy such a sensitive position as would require complete trust and confidence, where
personal ill will would preclude reinstatement (Id.).
Q: May an employer dismiss an employee for theft or misappropriation despite
the fact that the latter has been acquitted of the crime of theft or misappropriation
in a criminal prosecution involving the same acts?
ANS: Yes. An employee's acquittal in a criminal case does not automatically preclude a
determination that he has been guilty of ants inimical to the employer's interest resulting
in loss of trust and confidence. As,%49,quence, the ground for the dismissal of an
employee does not require procacyzill reasonable doubt, the quantum of proof
required is merely substantial evid n e (I er
., gars v. NLRC, G.R. No. 117196, December
5, 1997).
Q: What is abandonment? 404- "54—‘
--.,4*
d7-
ANS: It is the deliberatwhd unjus ified refusa o 'FfVployee to resume his
employment (NEECO rAILRC, G.IVN1157603, June 23005).
Q: What are the eleriLeRtsgOf 0,andonmgpt?
ANS: To constitute(alSdndonLrigt, the folloXing elements rus4concur:
1. Failure o-i -eportIVOTk or,_ absePse without valid or lustiffable reason; and
2. Clea iplentiotillo4sever emOtoyeelemployer relationship eing manifested by
sows diretVat ZRt'lriElystri Colam 001, August 28,
2013).,
Q: What is the tes o eter ine Wheth the cause for terminating employment is
analogous to the justcause enumerated law?
ANS: The determinatiWw ethe the ca o nating employment is analogous
to any of those enumerated by t e '64 wii s 6 n e ircumstances of each. To be
considered analogousyitie itacauses, a cause must be due to the voluntary and/or
willful act or omission o f4k98)loyee (Nadura v. Benguet Consolidated, Inc., G.R. No.
L-17780, August 24, 1962).
Note: No act or omission shall be considered as analogous cause, unless expressly
specified in the company rules and regulations or policies (D.O. No. 147-15, Sec.
5.2(g)).
Q: What are cases analogous to those enumerated in Article 290 of the Labor
Code according to jurisprudence?
ANS: Based on jurisprudence, the following may be cited as just causes:
1. Violation of company rules and regulations (Sampaguita Auto Transport
Corporation v. NLRC, G.R. No. 197384, January 30, 2013);
2. Theft of property owned by a co-employee as distinguished from company-
owned property which is considered as serious misconduct (John Hancock
Life Insurance Corp. v. Davis, G.R. No. 169549, Sept. 3, 2008);
3. 1nCompetence, inefficiency or ineptitude (International School Manila v.
International School Alliance of Educators (ISAE), G.R. No. 167286, Feb. 5,
2014);
4. Failure to attain work quota (Aliling v. Feliciano, G.R. No. 185829, April 25,
2012);
339
5. Failure to comply with weight standards of employer (Yrasuegui v. PAL, Inc.,
G.R. No. 168081, Oct. 17, 2008); and
6. Attitude problem (Reyes-Rayel v. PH Luen Thai Holdings Corp, G.R. No.
174893, July 11, 2012).
Authorized Causes
Q: What are the authorized causes for the termination of employment?
ANS: The following are the authorized causes of termination: (IRR-C)
1. Installation of labor-saving device or automation;
2. Redundancy;
3. Retrenchment (Downsizing); and
4. Closure or cessation of operation of the establishment or undertaking (LABOR
CODE, Art. 298).
Q: What is installation of labor-saving device?

ANS: The law authorizes an emplgyerrto4ermin49 the employment of any employee
due to the installation of labote itving lievTce Theirkstallation of these devices is a
management prerogativV/Ad i.. codas) wir itoti lintPeke with its exercise in the
absence of abuse or ditcr9ti .5,,arbltrariness,,,,,-.-or naticibusness on the part of
management (MagnottQatreprbducts v. NLRC, Gli4No.4-.19,52, January 29, 1996).
The installation of abortifigAlei7IFercgrairplat-q thg;instalration of machinery to
effect economy a daffioe cyjfn the (ilethT4 ofsproducton(EerAl3pare/ v. NLRC, G.R.
No. 121314, Fe ruarPf ,199 ). A ./R 46. ( k
If'VsIk
Q: What are t tali sites or t e insta
, lation_of
1-4''70 labor-savi 9..d.e.yrces to be a valid
ground for to rn Pion? ,,A 9
ANS: The foll i a st be • - serif5 )-la
1. Ther ma t e i tr 3 ction of imae Ines eau e t o other devices;
2. The i tro u on • clomp g,990 faitO, ,( 1/4,-' i
3. The p ose .or tie rodRtiff-160-9.tr, 4.2:yalid uch alto save on cost,
enhan eft' cy a cilb st fArib66AoTnicseasonsi
4. There i no oth z op 19 v lie • et remp o ye r thafi the termination of
employm Qt of tho1 at get 0
5. There musl be faireas-bildb ate is issele5ting employees to be
terminated (D.
Q: What is redundancy? 1-
ANS: Redundancy exists where the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the enterprise (Wiltshire File Co.,
Inc. v. NLRC, G.R. No. 82249, February 7, 1991). A position is redundant where it is
superfluous, and superfluity of position/s may be the outcome of a number of factors
such as over hiring of employees, decreased volume of business, or dropping of a
particular product line or service activity previously manufactures or undertaken by the
enterprise (Coats Manila Bay, Inc. v. Ortega, G.R. No. 172628, February 13, 2009).
Q. What are the requisites of a valid redundancy program?

ANS: For a redundancy program to be valid, the following requisites must concur:
(NPGC)
1. Written Notice served on both the employee and the DOLE at least one month
prior to the intended date of termination;
2. Payment of separation pay equivalent to at least one month pay or at least one
month pay for every year of service, whichever is higher;
3. Good faith in abolishing the redundant position; and
4. Fair and reasonable Criteria in ascertaining what positions are to be declared
redundant (SPI Technologies, Inc. v. Mapua, G.R. No. 191154, April 7, 2014).
340
Q: What is retrenchment?
ANS: Retrenchment is an exercise of management's prerogative to terminate the
employment of its employees - en masse, either to minimize or prevent losses, or when
the company is about to close or cease operations for causes not due to business
losses (Andrade v. NLRC, G.R. No. 173231, December 28, 2007).
Note: Lay-off, used interchangeably with retrenchment, is the termination of
employment resorted to by the employer, through no fault of nor with prejudice to the
employees, during periods of business recession, industrial depression, seasonal
fluctuations, or during lulls occasioned by lack of orders, shortage of materials,
conversion of the plant for a new production program, or the introduction of new
methods or more efficient machinery, or of automation (Philippine Telegraph &
Telephone Corporation v. NLRC, G.R. No. 147002, April 15, 2005).
Q: What are the requirements for valid retrenchment?

ANS: Retrenchment is an exercise of management prerogative which the Court upholds
if compliant with certain substantive and cedural requirements, namely: (N2SGC)
1. That retrenchment is NecAs to prevent losses and it is proven, by
sufficient and convincingM1Msuch as the employers financial statements
audited by an independel dirdible external auditor, that such losses are
substantial and not mere d actual or reasonably imminent; and that
retrenchment is the only, ectijr easy to prey n such imminent losses;
2. That written NoticeOsent.49 o e o. ees nd the DOLE at least 1
month prior to theijntended dee f retrenchment;
3. That the retre red employees. ceive Separation) 5y equivalent to 1 month
pay or at leaWmonth pay for every year of tp 4 whichever is higher
(Manila PatcAllftEtriployees )pion v. Manila Pglo Club, Inc., G.R. No.
17284601Y 24,1041,q);,
4. That emOyer exercises, its jerogative retrench mployees in Good
o • ttLaidencement of its interact a d.. ot circumvent the
employees' righrtSecuftof te e; and
5. The emelo hfair ticl?rea able Criteria s'wining who would be
dismissedl )wouldike r fined among the employees (Asian Alcohol
Corp. v. N1R „; No. 131108
G. 13 5, 1999).
Note: The employer m 'st.p,riove complian he foregoing requirements. Failure
to prove the first requirement witlAgrid-01 re 4legal and make the employer
liable for the reinstatemght of iWmployees and payment of full backwages. However,
where the retrenchmenKiM4Itiken by the employer is bona fide, the same will not be
invalidated by the latter's Taildrito serve prior notice on the employees and the DOLE;
the employer will only be liable in nominal damages, the reasonable rate of which the
Court en banc has set at P50,000 for each employee (Manila Polo Club Employees
Union v. Manila Polo Club, Inc., supra).
Q: What are the criteria in selecting employees for dismissal?

ANS: The following are the criteria:
1. Fair and reasonable criteria in ascertaining who would be dismissed and who
would be retained among the employees, such as less preferred status,
efficiency, seniority, physical fitness, age and financial hardship for certain
workers (Asian Alcohol Corp. v. NLRC, G.R. No. 131108, March 25, 1999); or
2. Last in, First out (LIFO) Rule — What is contemplated in the LIFO rule is that
when there are two or more employees occupying the same position in the
company affected by retrenchment program, the last one employed will
necessarily be the first to go (Flight Attendants and Stewards Association of
the Philippines (FASAP) v. PAL, G.R. No. 178083, October 2, 2009).
341
3EDA.N RED .BOOK
Q: Distinguish retrenchment from redundancy.
ANS: The differences are as follows:
. Retrenchment Redundancy
•'As to Nature
Linked with losses; a cost cutting Results from the fact that the position of
measure the employee has become. superfluous
(Smart Communications v. Astorga, G.R.
No. 148132, June 28, 2008)
As to Separation Pay
Lower separation pay than redundancy Higher separation pay than retrenchment
As to Kinds
Either permanent or temporary does not provide for different
(Andrade v. NLRC, supra) 1 kidspriLeV±lancy
4. V
Q: Discuss the Prince ocAloorption.
ANS: Under the pncile Abs .ptionqa-chan.ge of,bpsjn s ownership does' not
create an obliga4op.p e p ofAhe ew owdeNeabso e employees of the
previous owner. Dnle expre sly asOrneik laNT conttactk nj g irtpersonam, are not
enforceable against a rans eree of anfenterprise (AIPC D MA) NPC, G.R. No.
156208, Nove 2017)
_1" ‘• rr.-`4
Q: Define clo
ANS: Closure sation-ol bueosi com fete or artial cessation of the
operations an or sh t-drhyri;òkthe-est-ab ECimp yer. _d l is carried out to
either stave o andia or qo oWthe .".•,/ •42) ssinEi -
e ,' of the employer.
Unlike retrench ent, osu 45 esgati n•Kojou , as an 1 horized cause of
termination of e ployment, n oLd pe9dtss yalidityfon ence of actual or
imminent reverse of theemplo e(*,fat P fo Club tEmployees Union v.
Manila Polo Club In • supra . °C/ENT\N
Q: Discuss the rules o cfe:Pie)
ANS: The following are the ruletV
1. Where closure is dalo.seriousgi4. J es, no separation pay is required
(North Davao Mining Corp. v. 1‘17M7t.R. No. 112546, March 13, 1996);
2. Where closure is not due to serious business losses, workers are entitled to
separation pay; and
3. Where closure was due to an act of the government, the workers are not
entitled to separation pay (National Federation of Labor v. NLRC, G.R. No.
127718, March 2, 2000).
Q: Who has the burden of proving the existence of a valid or authorized cause for
dismissal?
ANS: The Labor Code provides that the burden of proving that the termination of an
employee was for a just or authorized cause lies with the employer. If the employer fails
to meet this burden, the conclusion would be that the dismissal was unjustified and,
therefore, illegal (ALPS Transportation v. Rodriguez, G.R. No. 186732, June 13, 2013).
Q: What are the requisites for the termination of employment on the ground of
disease or illness?
ANS: The requisites are as follows: (CCNS)
1. The Continued employment of the employee is prohibited by law or prejudicial
to his health as well as to the health of his co-employees;
342
7.1.R.eAtty.:>msr-7415;44
2. There is a Certification by a competent public health authority that the disease

is of such a nature or at such stage that it cannot be cured within a period of 6
months, even with proper medical treatment;
3. Notice to the employee and the DOLE at least 1 month prior to the intended
date of termination; and
4. Separation pay of one month or one-half month for every year of service,
whichever is higher, a fraction of six months or more being considered as one
year (Sevillana v. I.T. Corp., G.R. No.99047, April 16, 2001).
Q: In case the disease of the worker can be cured within six months, what is the
employer required to do?
ANS: The employer shall not terminate the employee but shall ask the latter to take a
leave. Upon the restoration of the employee's normal health, the employer shall
immediately reinstate him to his former position (IRR of LABOR CODE, Book VI, Rule I,
Sec. 8).
: ,:a!
Q: Distinguish authorized-cause diSibissal from just-cause dismissal.
ANS: Authorized-cause dismissal is f a form of terminating employer-employee
relationship with a liability on th:VjAig0,the employer to pay separation pay as
mandated by law. It does not nedes84001y delinquency or culpability on the part of
the employee. Instead, the dismisKpessftriftted by employers exercise of
his management prerogative,,,pliCh 'asslharabiontafjlkape,Oving devices, closure of
business or implementingizerstrenchrKel program (AKA Food •., Processing v. Pacot,
G.R. No. 151378, Marci2.
.. 6, 2005). '..
itLe
..•••_ 11\
On the other hand, a jdst-caWd uismiss implies that thdemplOyee has committed, or
is guilty of, somgAiii8lationtibgainst the employer, that isithel'emPloyee has committed
some serious, 7"Isconduct is guilty ofirgurgainst the employ r or %e has neglected his
duties such fqs 4 bandoitnent. Thus, t Vemployeeihimsd,yoL ti&ted the dismissal
process. Payment of sp - filion pa t4, le, is ni:IfWatrlel Myrtecause dismissal.
However, wherettUp effirjake is disTisseg or causes othe,INNerious misconduct or
those reflecting oni sift fcirat'c a reeler, .serration pay may be allowed as a measure of
social justice (2 POOLI1Z, La or Standang w with Notes and Comments, (2012), p.
;, .,*... Kt,. -
425) (hereinafter, 2 POQUIZmabor
— Standa a -,, ,,__,,
.a.
SO "girT7.r.' ‘-‘-1
,:,
.
Due Process
Q: Distinguish substantlyth...ue process and procedural due process?
ANS: Substantive due process mandates that an employee can only be dismissed
based on just or authorized causes. On the other hand, procedural due process requires
further that he can only be dismissed after he has been given an opportunity to be
heard. The import of due process necessitates the compliance with these two aspects
(Maneja v. NLRC, G.R. No. 124013, June 5, 1998).
Q: Discuss the twin-notice requirement to be followed in the dismissal of an

employee based on just causes.
ANS: As defined in Article 297 of the Labor Code, the requirement of two written notices
served on the employee shall observe the following:
1. The first written notice should contain:
a. The specific causes or grounds for termination, and company policies, if
any;
b. Detailed narration of the facts and circumstances that will serve as
basis for the charge against the employee. A general description of the
charge will not suffice; and
c. A directive that the employee is given opportunity to submit a written
explanation within a reasonable period (0,0. No. 147-15, Sec. 5.1).
343
Note: "Reasonable Opportunity" means every kind of assistance that
management must accord to the employees to enable them to prepare
adequately for their defense. This should be construed as a period of at
least five (5) calendar days from receipt of the notice to give the
employees an opportunity to study the accusation against them,
consult a union official or lawyer, gather data and evidence, and decide
on the defenses they will raise against the complaint (King of Kings
Transport, Inc. v. Mamac, G.R. No. 166208, June 29, 2007).
2. After serving the first notice, the employer should afford the employee ample
opportunity to be heard and to defend himself. A formal hearing or conference
becomes mandatory only when requested by the employee in writing or
substantial evidentiary disputes exist or a company rule or practice requires it
(Perez v. PT&T Co., G.R. No. 152048, April 7, 2009).
Note: "Ample opportunity to be heard" means any meaningful opportunity
given to the employee to answer the charges against him and submit evidence
in support of his defense, w ather.inAlezZg, conference, or some other fair,
just and reasonablea TT
3. After determinir.290tffe t inatiojjf 9.1-fioyAt.Nustified, the employer shall
serve the employe')vi-it)p.notice.o erdnaitiopAritiicating that:
a. All cir ,tfmsjagoer involving the ".6h r adaihst the employee have
beernc esti re ;..and
b. !fOrperufds ave keelpst ishe • o I spty,„jne severance of their
mpftV ent D.O. / ec. 5. ).
Note: The twin equire ents of notice cfri-0 paring co titut t sential elements of
due process. .ite,„ )o ess o aw simp y k leargivin • oppo uniW be heard before
sIT
.
judgment is rqriffere There is Tfciptcl u.—of 6e ctrocess ven I no hearing was
conducted, wh'bre party as give6, ante. to e lain hi Sid+ the controversy
(Perez v. PT& Lop sc'D
Q: Discuss tlo ii: th s of an employee based
on authorizeduses. .(C\.
ANS: For term ion of m • plo - ithoriz d caus s defines in Article
.4•
298 of the Code, t require • lEen s •• re sWialjae deemed complied with upon
service of written n • e to t 5 - II • 6 agpropte96LE Regional Office at
least thirty (30) days b f2rp5ectivitya„tlae.te itiati pacifying the ground/s for
termination (D.O. No. 147K.4.. e .3).
Note: If the termination is brbuu ht abo y4y§tt etion of the contract or phase
thereof, no prior notice is require . he.term is brought about by failure of an
employee to meet the standards of the employer in the case of probationary
employment, it shall be sufficient that a written notice is served the employee within a
reasonable time from the effective date of termination (IRR of LABOR CODE, Book V,
Rule XIII, Sec.2).
Q: Segismundo and Montalvo, driver and loader/helper, respectively, were
dismissed by a freight forwarding company, due to their well-documented
involvement in pilferages. Prior to their dismissal, they were called to the meeting
of all delivery personnel of the company to discuss pilferage incidents. During the
meeting, they were allowed to inspect the records gathered by the company. They
denied involvement therein. They were preventively dismissed barely a month
later. Was their dismissal effected in violation of their right to due process? Why?
ANS: Yes. The employer did not comply with the twin notice requirement of notice and
hearing. The meeting called by the company to inform the delivery personnel about the
result of the investigation on the pilferages does not qualify as the hearing required by
law. Since the employees denied any involvement in the pilferages, a separate hearing
should have been conducted to enable them to air their side.
344
Segismundo and Montalvo are not however entitled to reinstatement since they were
dismissed for a valid cause. They are merely entitled to damages, for failure of the
employer to conduct a hearing prior to their dismissal (Segismundo & Montalvo v.
NLRC, et al., G.R. No. 112203, December 13, 1994).
Q: Define contractual due process.

ANS: Contractual due process is the due process procedure prescribed in the company
rules. The employer's failure to observe its own company-prescribed due process will
make it liable to pay an indemnity in the form of nominal damages. The contract is the
law between the parties and thus, breaches of the same impel recompense to vindicate
a right that has been violated (Abbot Laboratories, PHL v. Alcaraz, G.R. No. 192571, "•11114
July 23, 2013).
Q: What are the guiding principles in connection with the hearing requirements in
dismissal cases?
ANS: The following are the guiding ,principles in connection with the hearing
requirement in dismissal cases: (Pereabc rine)
1. Ample opportunity to beaerd eans any meaningful opportunity (verbal or
written) given to the employ siAo swer the charges against him and submit
evidence in support of lijr491,08, whether in a hearing, conference or some
other fair, just and reasptifty;, A
2. A formal hearing or confajfewelleroteamegcla_ ry only in the following
instances: EfAv •zt
a. Whenegfested by t b e ployee in writing;
b. WherVlbstantial evi en i ry disputes exist!
c. WheaMmy rureor p actice requires' I/1; o
d. W en-simWircumstan justify it. ,
ae op oriunifY to be;..he (d standard it the
The rkIl Code prevails over
the earing o.,confeKence ° r irement I the enting rules and
regdil onsrete . Pred4Co., No. 1 00•).
Q: What is theNlitewhe dismiss al islor a just or authorized cause but due

process was not okserved •
ANS: When the dismIsal is4for just or Wiz— d cause but due process was not
observed, the dismissa td be pyel ege_ployer should be held liable
for non-compliance wiltif the pmettiral requirements o due process, i.e., damages
(Agabon v. NLRC, G.R4415,693, November 17, 2004). The employer's liabilities are
as follows: -Z4
1. If based on a just cause (LABOR CODE, Art. 297) but the employer failed to
comply with the notice requirement, the sanction to be imposed upon him
should be tempered because the dismissal process was, in effect, initiated by
an act imputable to the employee; or
2. If based on an authorized cause (LABOR CODE, Art. 298) but the employer
failed to comply with the notice requirement, the sanction should be stiffer
because the dismissal process was initiated by the employer's exercise of his
management prerogative (JAKA Food Processing v. Pacot, supra).
3. If the authorized cause is due to losses, the penalty to the employer who
disregarded due process may be lighter than if the authorized cause has no
relation to losses (Industrial Timber Corp., v. Ababon, G.R. No. 164518, March
30, 2006).
The following are the factors to consider in assessing the penalty of employer, to wit:
1. The authorized cause invoked, whether it was a retrenchment or a closure or
cessation of operation of the establishment due to serious business losses or
financial reverses or otherwise;
2. The number of employees to be awarded;
345
3. The capacity of the employers to satisfy the awards, taken into account their
prevailing financial status as borne by the records;
4. The employer's grant of other termination benefits in favor of the employees;
and
5. Whether there was a bona fide attempt to comply with the notice requirements
as opposed to giving no notice at all (Id.).
Note: In cases of termination for just causes, the employee is entitled to payment of
indemnity or nominal damages in a sum of not more than P30,000.00 (Agabon v. NLRC,
supra). In cases of termination for authorized causes, the employee is entitled to
P50,000.00 (JAKA Food Processing v. Pacot, supra).
C. TERMINATION BY EMPLOYEE
Q: Can an employee terminate his employment?
ANS: Yes. The termination could be as follows:
1. Without just cause — By serving a written notice on the employer at least one
month in advance. The emplq_er p jr-whom no such notice was served may
hold the employeg,li IRfor datna e5. i 1.,.'N,,,_
2. With just cause n-ja q mayliu tan.ferild.4e his employment without
serving any.pice,o STe,,errifilgerfaran.,fil i 1 owing just causes:
a. Sen6uNreisgby l the einploye_uLhiNepts yen tive on the honor and
1 4' „II
pier/son , „the rnfroyee; ,-.)S, . ---
b. 1-M1 arlancli. unbel aTrabVe,trqment het employee by the
employer or11 is represerfthlive;
0 (
Gowryission f-a-crimeibisefense-by-t e emp oyclAkiis representative
,,agTrLst the erson„Rflbe iernpl9y9e o any o ttile.lenTediate members
of hilig family; bnd `" i 11 : _d1 ";„
&--t,..... ,--,6--
d. er causes' analogous,sto. •ny of th 19, egotng
-7.5- OR CODE, Art.
/"..,
Q: Define voluntary re ignapk.\,
ANS: Voluntary Pesignat n is't i qs•of a er p ,ewho
**r
.S- nds hi elf in a situation in
which he believes hat per znal ,4a6qs _ •t e's'acriff ed in fa or of the exigency of
the service; thus, e hasN \loth...es/014;6F\ Ut)to, 'sassoyate himself from his
employment (Villarue lla uati,-G
, 1646. 91 Ju ft 2011).
...y
Q: What is required fgeignition
or to Ile ifPcttv
-
ANS: The following are require"'
1. Resignation must be unconditional and with the intent to operate as such;
2. Intent to relinquish a portion of the term of office accompanied by an act of
relinquishment (Azcor Manufacturing, Inc. v. NLRC, G.R. No. 117963,
February 11, 1999); and
3. Acceptance of a resignation tendered by an employee is necessary to make
the resignation effective (Reyes v. CA, G.R. No. 154448, August 15, 2003).
Note: A verbal resignation tendered by an employee and accepted by the employer can
no longer be withdrawn as it was already "fait accompli' (2 POQUIZ, Labor Relations
Law with Notes and Comments (2012), p. 440) (hereinafter PO QUIZ, Labor Relations].
Q: Give the effects of a quitclaim in relation to an employee's resignation.

ANS: Once an employee resigns and executes a quitclaim in favor of the employer, he
is thereby estopped from filing any further money claims against the employer arising
from his employment. Such money claims may -be given due course only when the
voluntariness of the execution of the quitclaim or release is put in issue, or when it is
established that there is an unwritten agreement between the employer and employee
entitling the latter to other remuneration or benefits upon his or her resignation (PH
National Construction Corporation v. NLRC, G.R. No. 117246, October 2, 1997).
346
Q: Define constructive dismissal.
ANS: It is defined as quitting because continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving demotion in rank and a diminution in pay
(Jo Cinema Corporation v. Abellana, G.R. No. 132837, June 28, 2001). Constructive
dismissal occurs when there is cessation of work because continued employment is
rendered impossible, unreasonable, or unlikely as when there is a demotion in rank or
diminution in pay or when a clear discrimination, insensibility, or disdain by an employer
becomes unbearable to the employee leaving the latter with no other option but to
quit(The University of the Immaculate Conception v. NLRC, G.R. No. 181146 January
26, 2011).
Note: After the 30-day period of preventive suspension, the employee must be
reinstated to his former position because suspension beyond the maximum period
amounts to constructive dismissal (Hyatt Taxi Services, Inc. v. Catinoy, G.R. No.
143204, June 26, 2001).
Q: Is an employee with a floating statusgusceptible to constructive dismissal?
ANS: Yes. In case of a floating stalus;,1
he is also constructive dismissal if a bona fide
suspension of the operation of thettisr ss or undertaking exceeds six (6) months
.(Pido v. NLRC, G.R. No. 169812,r 14 - a i"-;
-23, 2007).
RC'
Q: What is floating status? 3 k:
ANS: Floating status occurs when
_ .,.%%-kz. de $ &0e sion of the operation of
the business or undertake a peno ot excee ing> siths, or the fulfillment by
the employee of a mililapor civic dutytwh h shall not terrain, employment. In all such
cases, the employer s6g ifinstate ,,f40 eseployee to his fo a.osition without loss of
seniority rights if he inaateg.vdestre to), esume his wor n t I ter than 1 month from
4
the resumption of ttircipepilris of his -1 .toyer or fro ihis reli f from the military or Iiki
civic duty (LAB 0-CODE, Areg1). The ting status o, an mpl em
legally presc egl pericifPo time.tpheA a, ating stat g of a erns si
eeshloeu
eltd
e la
fosrtm
foorre
a
than 6 month .4 eTmay; e congid ed a ave bee s

_ -1.
Wed from service.
Thus, he is entalg. toorses ondift en f, for his suss dez v. NLRC, G.R.
No. 125028, Feb
Q: What is the test of enstgictive dis
ANS: The test of crst&tive is Pr reasonable person in the
employee's position ould h t compe e' o give up his position under the
circumstances (McMerto .oration, Inc. v. NLRC, G.R. No. 193421, June 4, 2014).
Q: X, who worked in an advertising company as Vice-President and concurrently

head of the Account Management Group, was asked by C, the Chairman of the
Board, to join him in organizing a new advertising agency. The latter was then at
odds with E, the majority stockholder of the company. X expressed reluctance to
the idea and instead suggested that the owners should reconcile their
differences. P, the company president expressed his disappointment over the
non-committal stance of X. The faction of C & P later bought out the
shareholdings of E. A major reorganization of the agency followed. The position
of X was abolished and he was made to merely head a division of the Account
Management Group, but he continued to receive the same salaries, benefits, and
privileges. He thereafter served on the company a notice that he considered
himself constructively dismissed and then filed a complaint about the illegal
dismissal. Is the complaint of X meritorious? Why?
ANS: Yes. Constructive dismissal does not always involve diminution of salaries or
benefits or demotion in rank. An act of clear discrimination, insensibility, or disdain by an
employer may become so unbearable on the part of the employee that it could foreclose
any choice by him except to forego his continued employment (PH Advertising
Counselors, Inc. v. NLRC, G.R. No. 12008, October 18, 1996).
347
Q: What is preventive suspension?
ANS: Preventive suspension is a disciplinary measure for the protection of the
company's property pending investigation of any alleged malfeasance or misfeasance
committed by the employee. The employer may place the worker concerned under
preventive suspension if his continued employment poses a serious and imminent threat
to the life or property of the employer or of his co-workers (Gatbonton v. NLRC, G.R.
No. 146779, January 23, 2006).
Resignation versus Constructive Dismissal

Q: Differentiate resignation from constructive dismissal.
ANS: The following are the differences between resignation and constructive dismissal:
Resignation I Constructive Dismissal
As to Type of Resignation
Voluntary Forced
. As t(i•Control of Employer
Employer has Q catk,10A-•-'6r m•loyte wits pekause employment is
resignation rre dered4S poqble1/4 unreasonable or
nlikely by th Imployer
Siff. %
As to Requirement of a Written Notice •
Requirement/ tiWritt411-140ti- 4 II .4b-wri •tice is I d
Resigning em °yet musk selv.„.„ - t
6"a:z
written notic4 on 4
employ -r at Ide(t - -flat
1 month/ 30 Y 0 dvegb :17 s•
\••-clt
:As to Right to Receive Separation Pair
X
....--„,„0,,c,,,,
As a general rule, an e ploo 1 ry665, %4/ /has e rigito be reinstated
entitled to separation pa un ese'irb- Llivi 411 ossf f seniority. In lieu of such
the employment Nntral C trP tdvent emp Ojtee may be given
sanctioned by establ'she, ye separarovba e month pay for every
practice or policy. ear9W'se (Golden Ace Builders v.
alete,16.6ellio. 187200, May 2, 2010).
D. RELIEFS FROM ILLEGAL DISMISSAL

Q: What are the reliefs for illegal dismissal?
ANS: The reliefs are as follows:
1. Reinstatement or separation pay in lieu thereof; and
2. Payment of backwages (Aliling v. Feliciano, G.R. No. 185289, April 25, 2012).
Q: What is reinstatement?
ANS: Reinstatement is a restoration to a state from which one has been removed or
separated (Reyes v. RP Guardians Security Agency, Inc., G.R. No. 193756, April 10,
2013).
Q: What are the kinds of reinstatement?
ANS: Reinstatement may be:
1. Actual Reinstatement—The employee shall be admitted back to work; or
2. Payroll reinstatement — The employee is merely reinstated in the payroll
(University of Immaculate Concepcion v. Secretary of Labor, G.R. No. 151379,
January 14, 2005).
348
Q: Is reinstatement similar to re-employment?
ANS: Reinstatement and re-employment are not synonymous. Although both terms
refer to restoration of employment, the former connotes an obligation, while the latter is
discretionary on the part of the employer to place the employee affected in the position
he previously held (NSSC v. NSEWA, Case No. 12-IPA, November 13, 1958).
Q: Is the award for reinstatement by the Labor Arbiter immediately executory even
pending appeal?
ANS: Yes. The decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation or, at
the option of the employer merely reinstated in the payroll. The posting of a bond by the
employer shall not stay the execution for reinstatement provided herein (LABOR CODE,
Art. 229).
0, 4M
Q: What is the remedy if the positiopreviously occupied is already filled up?
ANS: If the position previously ogetrile, the dismissed employee has already been
filled up, it would be unjustified fftl
jetatayer to dismiss the person hired to replace
the dismissed employee just to ffiaKelifedilable the position for the latter. Under the
circumstance, the proper remedysWoli imoinpate hint* substantially equivalent
position (Magtoto v. NLRC, 484 985).
.40V
Q: What are the circumstances thaAa4einstatement?
ANS: The following areircamstanc5etliimay bar reinstate
1. Dismissal fgdauat4--
2. AbandogOnt ofafit-or laches;
3. Res'gration ofzeniployee; 11,;), ;RC
4. Ph " fearincapacj of eviloyee; ,74ri
161:
5. Employee .i acc ttetiretmit pa 4 41,,
6. When plocR kelatibrithip - es
7. Closure ormessatiotof buirnes
8. Transfer ofibusinesglo an innoc
9. Act of State;
10. Abolition of p
11. Prescription;
12. Conviction for atliiilea
13. Not conducive to industrial harmony;
14. Over-aged employee;
15. Fiduciary relationship;
16. Legal proscription; and
17. Supervening event (2 POQUIZ, supra at 371).
Q: Discuss Separation Pay In lieu of Reinstatement.

ANS: Separation pay is awarded in illegal dismissal wherein reinstatement is ordered
but cannot be carried out. The following are the instances when separation pay is given
in lieu of reinstatement:
1. When reinstatement cannot be effected in view of the long passage of time or
because of the realities of the situation (Vallacar Transit, Inc. v. NLRC, G.R.
No. 109809, July17, 1995).
2. When reinstatement would be inimical to the employer's interest (Velasco v.
NLRC, G.R. No. 161694, June 26, 2006);
3. When reinstatement may no longer be feasible (Unilever PHL v. Rivera, G.R.
No. 201701, June 3, 2013);
4. When it will not serve the best interest of the parties involved;
349
5. When the company will be prejudiced by the reinstatement;
6. When it will not serve a prudent purpose;
7. When there are resultant strained relations (Aliling v. Feliciano, supra);
8. When the former position of the illegally dismissed employee no longer exists;
and
9. When the employer's business has closed down (Manila Jockey Club v.
Trajano, G.R. No. 160982, June 26, 2013).
Q: What is the strained relation rule?

ANS: Strained relation rule is when the employer can no longer trust the employee and
vice-versa, or there were imputations of bad faith to each other, reinstatement could not
effectively serve as a remedy. This doctrine applies only to positions that require trust
and confidence (Globe Mackay v. NLRC, G.R. No. 82511, March 3, 1992).
Note: In instances where reinstatement is no longer feasible because of strained
relations between the employee and the employer, separation pay is granted (Tenazas
v. Villegas Taxi Transport, G.R. No. 998,9 12, 2014)
Q: Discuss the phrase " oss JtijnAry rig

ANS: The phrase "rei ut-lossse.ni -tilts and other privileges"
denotes that benefi issed employeZ'irtcl din 01 iority rights and other
privileges will not I - 0 stigp, employment brought
about by the un - a 1. AlthEugh "erEks-ras in faetTli of employment, the
law mandates c ntin0 ploynient fci ptitposes f enj ytnent f such benefits (2
POQUIZ, sup at 375 CP
Q: Define bac age
ANS: It is a re e.. ordin over w at+ 1as lost by reason
of the unlawful 64 al Tai J ua 8,2012)
Q: What are th ci
gh of a ally s
ANS:An illegall ismis -d e
1. Reinsta ment, viab
2. Separati pay, if lo
3. Backwage 'n bot No. 77205, May 27,
1991).
Q: What are the componen

ANS: The components are:
1. Transportation and emergency allowances;
2. Vacation or service incentive leave and sick leave; and
3. 13th month pay.
Note: The award of backwages is computed on the basis of a 30-day month (JAM
Trans, Co., Inc. v. Flores, G.R. No. 82829, March 19, 1993).
Q: What is the reckoning period in computing backwages if reinstatement is

possible?
ANS: Under existing law, the payment of backwages is computed from the time of the
illegal dismissal up to time of actual reinstatement (LABOR CODE, Art. 294).
Q: What is the reckoning period in computing backwages if reinstatement is not

possible?
ANS: If reinstatement is no longer possible, the backwages shall be computed from the
time of the illegal termination up to the finality of the decision (Bani Rural Bank, Inc. v.
de Guzman, G.R. No.170904, November 13, 2013).
350
Q: Is an employee entitled to full backwages without deduction in cases of illegal
dismissal?
ANS: Yes. The underlying reason for this ruling is that the employee while litigating the
legality (illegality) of his dismissal, must still earn a living to support himself and family,
while a full backwages have to be paid by the employer as part of the price or penalty he
has to pay for illegally dismissing his employee (Retuya v. Dumapra, G.R. No.148848,
August 5, 2003).
Q: May separation pay be deducted from backwages?

ANS: No. Separation pay and backwages being distinct and separate, a labor arbiter
cannot order that the separation pay be deducted from the backwages (Solis v. NLRC,
G.R. No. 116175, October 27, 1996).
Q: Is the failure to claim backwages in the complaint fatal?

ANS: No. It is evident that the award of backwages resulting from illegal dismissal of an
employee is a substantive right. Thus, !pgr ailure to claim backwages in a complaint for
illegal dismissal has been held to igeopr procedural lapse which cannot defeat a right
granted under substantive law (Gene— r01,B. °fist Bible College v. NLRC, G.R. No. 85534,
March 5, 1993). 5,01;1
E. MONEY CLAIMS ARISING FRO EIWO. E RELATIONSHIP

Q: What are considered aspnoney cla
ANS: Article 306 coverMims for ola, e pay, holiday ervice incentive leave,
salary differentials, ille detluctiongS% employer, and arising from seafarers'
contract (2 AZUCENA sue a 1079).
Q: When sholi f • mone

ANS: All mownelaim be filed within
three (3) yeatrfrom h ie they shall be
forever barred (LA43:)0S'' g Art 6).
f
Q: Who has jurisdiction o r money c not exceeding five thousand pesos
(P5,000)?
ANS: The Regional Dir etor of t *OD y authorized hearing officers
of the Department is enrwer9v grthrough summary proceeding and after due notice, to
hear and decide anyl iwiteriinvolving the recovery of wages and other monetary
benefits not exceeding fivelithousand pesos (P5,000). Such complaint should not include
a claim for reinstatement and claim is presented by an employee or person employed in
domestic or household service (LABOR CODE, Art. 129).
Note: If the claimant seeks reinstatement, the Labor Arbiter shall have original and
exclusive jurisdiction (2011 NLRC RULES OF PROCEDURE, as amended, Rule V, Sec.
1(c)).
Q: Does the five thousand pesos (P5,000) limitation apply to the visitorial and
enforcement power of the DOLE Secretary?
ANS: No. the DOLE Secretary is allowed to exercise its visitorial and enforcement
power for claims beyond P5,000. The only qualification to this expanded power of the
DOLE is that there still be an existing employer-employee relationship (Bombo Radyo
Phils., Inc. v. Secretary of DOLE, G.R. No. 179652, March 6, 2012).
351
Q: Who has jurisdiction over money claims exceeding five thousand pesos
(P5,000)?
ANS: The Labor Arbiter shall have original and exclusive jurisdiction over all claims
arising from employer-employee relations, including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000),
whether or not accompanied with a claim for reinstatement;
Note: The Labor Arbiter shall also have jurisdiction over all money claims arising out of
employer-employee relationship or by virtue of any law or contract, involving Filipino
workers for overseas deployment, including claims for actual, moral, exemplary and
other forms of damages (R.A. No. 8042, Sec. 10, as amended by R.A. No. 10022).
F. RETIREMENT
Q: What is retirement?
ANS: It is the result of a bilateral act of the parties, a voluntary agreement between the
employer and the employees whereby the latter, after reaching a certain age, agrees
and/or consents to sever his twiplo „e ittr•th former (Brion v. South PH Union
Mission of the Seventh Day dir fist Chu , .pl: N . 5136, May 19, 1999).
Q: What is the cove IRtipmeri ery ce6114 Labor Code?

ANS: It applies to pl§Yees juthe—pdygt se or,,irear• less of their position,
designation, and treof the. ethoMvht \the P ges are paid, except
those specifically (I R of LRBO C9RE, Bor 6, ec. 1).
O
Q: Who are e e_cover520iLthe_Labor Co Wregards retirement
from service?
ANS: The foll
1. Emp
A .w.
r' ' th (TV-- rage of the Lab co-ale:
tedN
ment, it Ric Vtitaililisions, including
GOC. il-Sew
2. Dom V, er s cirri( her; and
3. Emplo ees o retie dr-,g ' lishments or operations
regula an s (IRfi of LABOR CODE,
Book 6,
Q: What are the kin

ANS: Retirement schem
1. Compulsory and ulrylte
2. One set up by the agre me oyer and employee in the CBA or
other agreement between them; or
3. One that is voluntarily given by the employer (Gerlach v. Reuters Ltd., PHL,
G.R. No. 148542, January 17, 2005).
Q: What is the retirement age of employees?

ANS: Retirement age of employees may be:
1. 60 years of age or less than 65 years of age — optional but the employee
must have served at least 5 years; or
2. 65 years of age — compulsory (LABOR CODE, Art. 302).
Q: What are the benefits of a retiree under the Code?

ANS: A retiree is entitled to a retirement pay equivalent to at least 1/2 month salary for
every year of service, a fraction of at least 6 months being considered as one whole
year. 1/2 month salary means 22.5 days per year of service computed as follows:
1. 15 days plus 1/12 of the 13th month pay; and
2. The cash equivalent of not more than 5 days of service incentive leaves
352
•• • •
B.EDAN :RED .BOOK

VII. MANAGEMENT PREROGATIVE
Q: What is management prerogative?
ANS: Under the doctrine of management prerogative, every employer has the inherent
right to regulate, according to his own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods, the time, place and
manner of work, work supervision, transfer of employees, lay-off of workers, and
discipline, dismissal, and recall of employees (Peckson v. Robinsons Supermarket, G.R.
No. 198534, July 3, 2013).
Note: A company's management prerogatives must be upheld so long as they are
exercised in good faith for the advancement of its interest and not for the purpose of
defeating or circumventing the rights of the employees under special laws or under valid
agreements (Coca-Cola Bottlers, PHL, Inc. v. Kapisanan ng Malayang Manggagawa sa
Coca-Cola-FFW, G.R. No. 148205, February 28, 2005).
Q: What are the limitations on the exert e of management prerogative?

ANS: The limitations on the exercis,e,pfighagement prerogative are:
1. Must be in good faith;
2. Must be with due regardifONK9 s of labor;
3. Is subject to collective balgainiNteements;
4. The general principloNibfWisk,)jy,pticil -hi/ex Gold PHL, Inc. v.
PhilexBulawan Supetvisors Utuo G.R.
G o. 49758; August 25, 2005).
5. EmploymentoOtract;
6. Employmentloolicy; A'
cl
7. Employer practicepand
8. f • I American Life and
General,psnciples1:br fair play and justice (The4Philipprge
Gene Olfisurata—DiT7v. Goma G. R. No.106963
f NOV 11, 2004).
1%.
A DISCIPLINE
Q: What is the sqi9perempater's fight to discip me?
, tgatinto discipline covers the following:
ANS: The right or plir
1. Right to discipline;
2. Right to dismim:
3. Right to deter " e whoidWriis
4. Right to prompte r erand regulations;
5. Right to imposelm a j ; proportionality rule;
6. Right to chooseWhith' enalty to impose; and
7. Right to impose heavier penalty than what the company rules prescribe
(CHAN REVIEWER 2017, supra at 382-383).
Q: What is the limitation of the right of the employer to discipline his or her
employees?
ANS: Although the employer has the prerogative to discipline or dismiss its employee,
such prerogative cannot be exercised wantonly, but must be controlled by substantive
due process and tempered by the fundamental policy of protection to labor enshrined in
the Constitution. Infractions committed by an employee should merit only the
corresponding sanction demanded by the circumstances. The penalty must be
commensurate with the act (ABAD, Compendium on Labor Law, (2011)).
Note: The free will of management to conduct its own business affairs to achieve its
purpose cannot be denied. The only condition is that the exercise of management
prerogatives should not be done in bad faith or with abuse of discretion. Truly, while the
employer has the inherent right to discipline, including that of dismissing its employees,
this prerogative is subject to the regulation by the State in the exercise of its police
power (Sagales v. Rustan's Commercial, G.R. No. 166554, November 27, 2008).
353
B. TRANSFER OFEMPLOYEES
Q: What is the nature of the right of the employers to transfer his or her
employees?
ANS: It is the inherent prerogative of an employer to transfer and reassign its
employees to meet the requirements of its business (Veterans Security Agency, Inc. v.
Gonzalvo, Jr., G.R. No. 159293, December 16, 2005).
Q: What are the limitations on the transfer of employees?
ANS: The following are the limitations on transfer of employees:
1. The transfer must not be motivated by discrimination or bad faith;
2. The managerial prerogative to transfer personnel cannot be used by the
employer to rid himself of an undesirable employee;
3. Transfer, even if due to promotion, cannot be done without employee's
consent (PT&T v. CA, G.R. No. 152057, September 29, 2003);
4. The mere fact that it would be inconvenient does not, by itself, make the
transfer illegal (OSS Secu G.R. No. 112752 February 9, 2000);
and
5. It is the prerogati.,e of(the co qransfer or even demote its
employeerer ositio s.when.the,4_ er st ,af he company reasonably
demand it. 41essNh are circumstancesv.lI ich, ilre ly point to interference
by the 5 pat( itfi e-orilfrorFlight,0 -o ga ation, the transfer of
anemp o h d be corpidefpd asmithia tha4o s (lowed by law, e.g.
despit trap f' to lower-positionfahis on k salary remained
undi ished Rubb rworld P aNLRC, G. . No. 0.4, uly 19, 1989).
C PRODUCT/Vi -SANDA -D %',r,1r-- ,
--ty11f:r7 -4,V
Q: May an em ,lo,}}(( er mpos • .rodirolyi
1
aidard
ANS: Yes. A dtriplo. er s itled to;lin•ose •rod Vi st rilds as management
prerogative. F ob e • res bed i sjondar • WOr 1‘0 fulfill reasonable
work assignmegte to c,91-1 cm a.f.431 e, ust use or dismissal. This
management preiogativ of r •61n.N. .%ffindard" e av led of o long as they are
exercised in go faith or th- a• ts'oirr
.1 e eP ployer • interest. (Ailing v.
Feliciano, supra). CIENTVL\
Q: What are the effec o -complian. li
t.7..
ANS: Non-compliance m l ed wiqi a pf c Rt er ore severe than demotion.
Failure to observe prescn tandattlaEN or to fulfill reasonable work
assignments due to inefficiency m onstit e just cause for dismissal (Buiser v.
Leogardo, G.R. No. 63316, July 31, 1984).
D. BONUS
Q: What is a bonus?
ANS: By definition, a bonus is a gratuity or act of liberality of the giver and cannot be
considered part of an employee's wages if it is paid only when profits are realized or a
certain amount of productivity is achieved. If the desired goal of production or actual
work is not accomplished, the bonus does not accrue (Mega Magazine Publications, Inc.
v. Defensor, G.R. No. 162021, June 16, 2014).
Q: Generally, bonus is not a demandable or enforceable obligation. What are the

exceptions to this rule?
ANS: The exceptions are as follows:
1. When it was promised to be given without any conditions imposed for its
payment in which case it is deemed part of the wage;
2. When it has ripened into practice (Marcos v. NLRC, G.R. No. 111744,
September 8, 1995);
3. When it is made part of the vvage/compensation of the employee;
354
4. If given without any conditions; hence it is part of the wage or salary (Atok
Mining v. Atok Mutual Benefits Ass'n., G.R. No. L-5276, March 3, 1953); and
5. When it is integrated in the CBA (Lepanto Ceramics, Inc. v. Lepanto Ceramics
Employees Ass'n., G.R. No. 180866, March 2, 2010).
Q: Discuss the nature of a bonus.

ANS: Grant of bonus is a management prerogative (Producers Bank of the PHL v.
NLRC, G.R. No.100701, March 28, 2001).
E CHANGE OF WORKING HOURS

Q: Can an employer change the working hours of his or her employees?
ANS: Yes. The employer retains the prerogative, whenever exigencies of the service so
require, to change the working hours of its employees (Sime Darby Pilipinas, Inc. v.
NLRC, G.R. No. 199205, April 15, 1998).
F. BONA FIDE OCCUPATIONAL QUALIFICATIONS

trAY
Q: Discuss the Bona Fide Oci patonal Qualification Rule (BFOQ) and its
pertinent provisions under the Ltargeede.
ANS: Employment in particular joisImp, r be limited to persons of a particular sex,
religion, or national origin unlessIbAr o er can show that sex, religion, or national
origin is an actual qualification for,fie 9101 'gab Yrasu ' v. PAL, supra).
It shall be unlawful forzep 1oyer

1'11 to'any f the following act
1. To require a ,s ndition forrn oyment or cantina align of employment that a
woman emplqedhall not arried;
2. To stipulateeexprf foglyz6r facitly at upon getting m d a woman employee
shall lovferemed- signed or se ated; and
3. To atFally dika s, dischege, criminate o , othe wiserrejudice a woman
emaWeaecegby reas on of he arriag :,. ,.B0,0OD rt. 134).
- 1.iiwkr. --
The exception is terrue"fti he bong 'occupationa iti a t tiff-Tule. The requisites
for such qualificabiare,•a lows: •
1. The emploYment qurification is r asonabl related to the essential operation of
the job involved.01 _. p,,ftTa
i,
2. That there actual basisgo.42_ atia01,1or
, substantially all persons
meeting the malificat'oruld be unable to properly perform the duties of the
job (Yrasuega'.fA k s pra).
Q: Can an employer prohibit his employees from marrying employees of

competitor companies?
ANS: Yes. The prohibition against personal or marital relationships with employees of
competitor companies upon its employees is reasonable. Relationships of such nature
might compromise the interests of the company. In laying down the assailed company
policy, the employer aims to protect its interests against the possibility that a competitor
company will gain access to its secrets and procedure (Duncan Ass'n. of Detailmen v.
Glaxo Wellcome PHL, Inc., G.R. No. 162994, September 17, 2004).
Q: Grace was hired as a probationary employee by PT&T in September 1991. in

her job application form, she indicated that she was single although she had
contracted marriage a few months earlier. As PT&T had a policy of not hiring
married women, Grace was dismissed, just as she was about to complete her
probationary employment due to dishonesty in concealing her true marital status.
(a) Is the dismissal of Grace lawful?
ANS: No. It is a violation of Article 134 of the Labor Code which makes it unlawful for an
employer to require as a condition of employment or continuation of employment that a
woman not to get married or to stipulate expressly or tacitly that upon getting married, a
355
woman employee shall be deemed resigned or separated, or to actually dismiss,
discharge, discriminate or otherwise prejudice a woman employee merely by reason of
marriage (ALCANTARA, supra at 302).
(b) Should Grace be penalized for concealing her true marital status?
ANS: Yes. She committed dishonesty albeit under the compulsion or an unlawful
imposition of the employer. A 3-month suspension is appropriate. This is to obviate the
impression that such act should be condoned (ALCANTARA, supra at 303).
(c) Under what conditions may a requirement that a woman employee remain
unmarried be justified?
ANS: Such requirement may be valid if it reflects an inherent quality reasonably
necessary for satisfactory job performance. Only then may the same be a bona fide
occupational qualification (PT&T v. NLRC, supra).
Q: What is the "no-spouse employment policy?"
ANS: It is a policy banning onlysp.ousggIT ifiVorkigg in the same company (Star Paper
Corporation v. Simbol, sup )i ay ritt facikpio to rticle 134 of the Labor Code
but it creates a dispropqrtr to feet a d-thei .ohly aypt could pass judicial scrutiny is
a showing that it is re s'ona le eviteifiMami atoitaft* isproportionate effect.
G. POST-EMPLOY ESTRI
OWE /
"SV7
Q: What is "pos -emp) §r mept banr mgoossi
ANS: A post- ploy nt bin is the ,riirtuou f the e plo rctiape exercise of its
prerogative, to nt3t,op an arement4it"t, mployee for ohibitions to take
effect after the ermivdtion of eit;e4loyelIlir
,,i pinAloyee lation
Note: There ust b imitatioQ as ilt*the'la [See:land t de. A embodying such
prohibition tha r i ed etime ano a.els cons 0 re soni e, and therefore,
valid and enfo ea u $ . 6 12, F 28, 2007).
.
Q: What are th facto to rrtinel_ mph ymen restrictions in an
employment co tract arg reio
ANS: The factors q be co 'der -. .74 9 to g.
1. Whether the covena "tizi cElebliat ess interest of the employer;
2. Whether theNgve ateutaje4*.n )6 employee;
3. Whether the coteza ipjurioM) tpe4V10fie fare;
4. Whether the tima: -ferrito Iowa ontained in the covenant are
reasonable; and
5. Whether the restraint is reasonable from the standpoint of public policy.
Note: In cases where an employee assails a contract containing a provision prohibiting
him or her from accepting competitive employment as against public policy, the
-employer has to adduce evidence to prove that the restriction is reasonable and not
greater than necessary to protect the employer's legitimate business interests (Rivera v.
Solidbank Corp., G.R. No. 163269, April 19, 2006).
Q: What is the effect of restraints on post-retirement competitive employment in
pension and retirement plans?
ANS: An employee who accepts post retirement competitive employment will forfeit
retirement and other benefits or will be obliged to restitute the same to the employer.
The strong weight of authority is that forfeitures for engaging in subsequent competitive
employment included in pension and retirement plans are valid even though unrestricted
in time or geography. The reasoning behind this conclusion is that the forfeiture, unlike
the restraint included in the employment contract, is not a prohibition on the employee's
engaging in competitive work but is merely a denial of the right to participate in the
retirement plan if he does so engage (Rivera v. Sandbank Corp., G.R. No. 163269, April
19, 2006).
356
VIII. JURISDICTION AND RELIEFS
A. LABOR ARBITER
Jurisdiction
Q: Discuss the exclusive and original jurisdiction of Labor Arbiters.
ANS: The Labor Arbiters (LA) shall have original and exclusive jurisdiction to hear and
decide, the following cases involving all workers, whether agricultural or non-agricultural
(TV-CORD-U-DOE):
1. ULP cases;
2. Termination disputes;
3. If accompanied with a claim for Reinstatement, those cases that workers may
file involving wages, rates of pay, hours of work and other terms and
conditions of employment;
4. Claims for actual, moral, exemplary, and other forms of Damages arising from
employer-employee relations
5. Cases arising from any Vd14-tick =-of Article 270, including questions involving
the legality of strikes antiac ou
6. Except claims for Emplocsen pensation, Social Security, PhilHealth and
maternity benefits, all otge e ai A 'arising from e loyer-employee relations,
_
including those of person old service, involving an
amount exceeding -5;000 es g.a aless o w thetmccompanied with a claim for
reinstatement.
7. Monetary cfai tisoof Oversp.a ... contract workers icing from employer-
employee re at ors as yolked 7; Section 10 of o. 8042 amended by
R.A. No.10.0 '2;,
Note- pi order foi the LA-^qh to
,
a me jurisdiclon over e money claim, the
0 USt h a certificatio mom POEA (PN: bansag, G.R. No.
1570 , Jun 005)‘ 11,.Lfef
8. Wage Distortion reputep7.1 nized estar voluntarily settled
by the ova, r‘. ant to A. 6727;
Note: An toorganit establish nt is one where no union has yet been duly
recognized o certified as barg- ie.- • resentative (2 AZUCENA, supra at
447). 17,nItt.c4m,
9. Enforcement o Comp 0 Ise agreemen s w en here is non-compliance by
any of the p eq pu ant to Article 233 (non-compliance, or if settlement is
obtained throtiakitA, misrepresentation, or coercion) of the Labor Code, as
amended; and
10. Other cases as may be provided by law. (2011 NLRC Procedure, RULE V,
Sec. 1)
Note: Not every controversy or money claim by an employee against the
employer or vice-versa is within the exclusive jurisdiction of the labor arbiter.
Actions between employees and employer where the employer-employee
relationship is merely incidental and the cause of action precedes from a
different source of obligation is within the exclusive jurisdiction of the regular
court (Halagueria v. PAL, G.R. No. 172013, October 2, 2009).
Q: Does "original and exclusive jurisdiction" mean that the mentioned cases may
only be filed with the LA?
ANS: No, the voluntary arbitrators or panel of voluntary arbitrators, upon agreement of
the parties, may also hear and decide all other labor disputes, including unfair labor
practices and bargaining deadlocks (LABOR CODE, Art. 275). The State shall promote
the preferential use of voluntary modes in settling disputes, including conciliation, and
shall enforce mutual compliance therewith to foster industrial peace (1987 Constitution,
Article XIII, Sec. 3).
357
Q: What are the differences between a Labor Arbiter and a Regional Director in
terms of their jurisdiction?
Labor Arbiter Regional Director
As to Jurisdiction over money claims
Labor Arbiters have no jurisdiction over DOLE Regional Directors have

small money claims lodged under jurisdiction over claims amounting to
Article 129, except when the claim P5,000 or below, provided the following
includes a prayer for reinstatement requisites concur: (1) The claim must
(LABOR CODE, Art. 224). arise from employer-employee
relationship; (2) The claimant does not
The total amount of money claims seek reinstatement; and (3) The
must involve an amount exceeding aggregate money claim of each
P5,000(LABOR CODE, Art. 224). '''afftploy,g2 does not exceed P5,000.00
I-
oNpRpo s E, Art. 129).
, As to Jurisdiction over inspection of establishment
No original juris 4o
:yJ; Directors have
i\ juriVictio of inspection of
es~fblish en s of whether or
z its —
,74P'tiot the
e942yee
Coos A
•
or the
of claims per
,000 (LABOR
by the DOLE
ecreta,ry (ID uly authorized
,N.V.qh,r0 • E Regional
'Ow cl visitorial and
provided under
ollowing requisites
curs,
1,r •z ik 'icy rimployee relationship
0_1 tlst ;
M __W-.
.11114 -endings
e0 inf question
nepectenwere
by lmade
""- ►rr me cours labor
inspectors; and
3. The employees have not yet initiated
any claim or complaint with the DOLE
Regional Director under Article 129, or
the Labor Arbiter under Article 224
(People's Broadcasting Service v.
Secretary of DOLE, G.R. No. 179652,
March 6, 2012).
Q: What are the cases that must be referred to the grievance machinery and
voluntary arbitration?
ANS: The following are cases which must be disposed of by the Labor Arbiter by
referral to the grievance machinery and voluntary arbitration:
1. Disputes on the interpretation or implementation of CBA; and
2. Disputes on the interpretation or enforcement of company personnel policies
(2011 NLRC Rules of Procedure, RULE V, Sec. 1).
358
Requirements to PerfectAppeal to NLRC
Q: What are the grounds for appeal to the NLRC?
ANS: The appeal to the NLRC may be entertained only on any of the following grounds
(FAQS):
1. If the decision, award or order was secured through Fraud, coercion, including
graft and corruption;
2. If there is a prima facie evidence of Abuse of discretion on the part of the
Labor Arbiter or the Regional Director;
3. If made purely on Questions of law; and/or
4. If Serious errors in the findings of facts are raised which, if not corrected,
would cause grave or irreparable damage or injury to the appellant (2011
NLRC Rules of Procedure, RULE VI, Sec. 2).
Q: What are the requirements to perfect appeal to the NLRC?

ANS: The following are the requirements to perfect an appeal to the NLRC: (3R-MAV)
1. It must be filed within the Rqgfe" entary period, which is within 10 calendar
days from receipt thereof se of decisions or resolutions of the DOLE
Regional Director pursuilitl cle 129 of the Labor Code, within 5 calendar
days from receipt theredf.
Note: If the 10th or 5th 1:a im., case may be, falls on a Saturday, Sunday
or holiday, the last dtyrqopj ec ,.§1 s a !Abe the first working day
following such Saturday, Sun a Irt LRC Rules of Procedure,
Rule VI, Sec.401
2. It must be Vdpiedby the apPla t himself in acc ce with Section 4, Rule
7 of the RulesP Lout-Las/Alen d;
3. It shall b6einffretrTnif-a Memo dum of appe2 w hall state: (GRD)
GrounOtlied upon 4.t. a the arguments i ort thereof;
b e RelikfRrayed for, and
state-en-Mt of thq.Aate pealed decision,
awar0 er;
4. It musebt, ,in't ej.) legiblf typ ritten or printed copies; and
5. Accompa y: (4r) i „C.
a. proo dipaytent of the ri-w-si... a eal fee and legal research fee;
b. postingfra casti.g l su;,,,,t 64,.:4.2.; the decision of the Labor
,.
Arbite the Vdiona DIrec ves a monetary award as provided
in Sedidn5,131.irdi VI of the 2011 NLRC Rules; and
c. proof akiS9Sce upon the other parties (2011 NLRC Rules of
Procedure;Rule VI, Sec.
Q: Can the appellant seek the reduction of the required appeal bond?
ANS: Yes, but the same may be granted only upon meritorious grounds, and only upon
the posting of a bond in a reasonable amount in relation to the monetary award. The
motion must be accompanied by 10% of the amount of the judgment award (McBumie
v. Ganzon, G.R. Nos. 178034 & 178117, October 17, 2013).
Note: The 10% requirement pertains to the reasonable amount which the NLRC would
accept as the minimum of the bond that should accompany the motion to reduce bond in
order to suspend the period to perfect an appeal under the NLRC Rules. The 10% is
based on the judgment award and should in no case be construed as the minimum
amount of bond to be posted in order to perfect appeal. The NLRC retains its authority
and duty to resolve the motion and determine the final amount of bond that shall be
posted by the appellant, still in accordance with the standards of "meritorious grounds"
and "reasonable amount" (Sam Lee PHL, Inc. v. Macatlang, G.R. No. 180147, June 14,
2014).
359
Reinstatement Pending Appeal
Q: What is the effect of an appeal to the order of reinstatement by the Labor

Arbiter?
ANS: In any event, the decision of the Labor Arbiter reinstating a dismissed or
separated employee, in so far as the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal. The employee shall either be admitted
back to work under the same terms and conditions prevailing prior to his dismissal or
separation or, at the option of the employer, merely reinstated in the payroll. The posting
of a bond by the employer shall not stay the execution for reinstatement provided herein
(Baronda v. CA, G.R. No. 161006, October 14, 2015).
Q: What is the remedy should the employer refuse to reinstate the dismissed
employee?
ANS: The Labor Arbiter shall immediately issue writ of execution, even pending appeal,
directing the employer to immediately reinstate the dismissed employee either physically
or in the payroll, and to pajottre'T e as a consequence of such
reinstatement at the rates ecifie • in the de si .71%1 RC Rules of Procedure, Rule
Xl, Sec. 9).
B. NATIONAL LABO
Jurisdiction
„T&
Q: Discuss the diction o ffe:NERC.
ANS: The NL udsdictio pg ca JC)IV)
1. Cas he-qiigiC! 13comjaVsory! arbitrE iprri3 the Secretary of
Labet and 77 276. ftgLabo Code;
2. Injun ti r ArtickTzr—'6r278 t el La l idZ e;
3. Cont itted-ber der Article 25 of the Labor
Code
4. Verifie :f3 ule XIISec. 3).
Q: Discuss the NRC's

111,4 ap ella e RAQR.
ANS: The appellate • risdicti 1 oo NOT5JM-DC-31
1. Cases deci ez1 b on ice e OL:r' in the exercise of their
adjudicatory flibC OR er is 9¢pVpd eery claims of workers NOT
exceeding P5,000;
2. Cases decided by the brat r,dkAm.urtd r Article 224(b) of the Labor Code
and Section 10 of the Migrant Worker's Act;
3. Cases decided by the Labor Arbiters pursuant to Article 124 of the Labor Code
on wage Distortion problem in non-unionized establishment and cases
Certified by the Regional Director under Article 128(b); and
4. Denial of the claim of the 3rd party where property was levied by the Sheriff of
Labor Arbiter can be appealed to the NLRC (Yupangco Cotton Mills v.
Mendoza, G.R. No. 139912, March 3, 2005).
Q: What is the effect of the reversal of the Labor Arbiter's order of reinstatement?
ANS: If the Labor Arbiter ordered the reinstatement of an employee and the employer
opted to reinstate him in the payroll, such employee is not obliged to refund the amount
of salary received during the time he is reinstated in the payroll, should the NLRC
reverse said order of reinstatement on appeal (Garcia v. PAL, G.R. No. 164856,
January 20, 2009).
360
Q: Suppose there was a delay in the execution or implementation of the
reinstatement pending appeal and the decision of the Labor Arbiter reinstating
the employee to his former or an equivalent position is reversed by the NLRC, can
the employee still recover or collect his accrued or uncollected wages?
ANS: After the LA's decision is reversed by a higher tribunal, the employee may be
barred from collecting the accrued wages, if it is shown that the delay in enforcing the
reinstatement pending appeal was without fault on the part of the employer, that is:
1. There must be actual delay; and
2. The delay must not be due to the employer's unjustified act or omission —
otherwise, the employer may still be required to pay the salaries
notwithstanding the reversal of the Labor Arbiter's decision (Garcia v. PAL,
supra).
Q: What is the remedy from an adverse decision of NLRC?
ANS: The remedy from an adverse decision of NLRC is through the special civil action
of certiorari under Rule 65, to the Coda of Appeals. Thus, the 1997 Rules of Civil
Procedure should be observed, to vigtr ‘
1. The petition for certiorarioti6t,:l*pled not later than 60 days from notice of the
judgment, order or resd1,00011 motion for new trial or reconsideration is
timely filed, whether it ikgrW r-d, or not, the 60-day period shall be counted
from denial of such motidn;'1
.''at•
'—-
2. The petition should„fie accoma fag-% 4ai-,14e P true copy of the NLRC
decision and b1%Vorn certification of non-forum hopping as well as copies
of all relevant eadIngs an• documents; and
3. In observance,o e hieraOhy courts principle th,e petition must be filed in
Al^
the first instance itirthe CA r St. Martin F er51 Nome v. NLRC, G.R.
130866, eptemberai. 1998),)
IN
C JUDICIAL Rayikw,o OR ULI S
Court of Appeals
Q: When is ape tiot fo3certiorari vailable in cases decided by voluntary
arbitrators?
ANS: A petition for celvnItinder Rule_ ules of Court will lie only when a
grave abuse of discretion or anA o rein.ece-e Vjurisdiction of the voluntary
arbitrator is shown, whiqrmay %lied with the Court of Appeals.
1. The way to rkew ,LRC decisions is through the special civil action of
certiorari under F@Ie 5;
2. The jurisdiction over such action belongs to both the CA and the SC; and
3. Following the doctrine of hierarchy of courts, the petition should be initially
presented to the CA (St. Martin Funeral Home v. NLRC, supra).
1 [1
Appeal to Petition for Appeal by Certiorari
•
NLRC Certiorari in Court
•
in the Supreme
Decision/ within 10 of Appeals (via Court (via Rule 45)
Order of days from Rule 65) within 15 days from
the Labor receipt of
the within 60 days from notice of the
Arbiter judgment or final
decision/ notice of judgment,
order order, or resolution order or resolution
I I
Note: The Rule on the filing of a Motion for Reconsideration of the decision of the DOLE
Secretary, NLRC and BLR Director is mandatory and jurisdictional. The reason for the
rule is that, in labor cases, a motion for reconsideration is the plain, speedy and
adequate remedy from an adverse decision. Hence, when an administrative remedy is
361
D BOOK.
provided under the law, relief must be sought by first exhausting such remedy before
resort to judicial intervention may be had (Diamonon v. DOLE, G.R. No. 108951, March
7, 2000).
Supreme Court
Q: What is the proper remedy to appeal a CA final order or resolution?
ANS: The appeal from a final disposition of the CA is a petition for review under Rule 45
and not a special civil action under Rule 65 of the Rules of Court, now Rule 45 and Rule
65, respectively, of the 1997 Rules of Civil Procedure. Rule 45 provides that the
decisions, final orders or resolutions of the Court of Appeals in any case, i.e., regardless
of the nature of the action or proceeding involved, may be appealed to the Supreme
Court by filing a petition for review, which would be but a continuation of the appellate
process over the original case. The reglementary period to appeal is fifteen (15) days
from notice of judgment or denial of motion for reconsideration.
Q: Discuss the flow of procedureArctfirthliTabo rbiter to Supreme Court

ANS: The following is the Qo proc du el\aip7 • om the decision of the Labor
Arbiter (2011 NLRC Rul rdelocpre
D. BUREAU OFLAB Sk. -6\

Jurisdiction
Q: Discuss the
ANS: The BL er or both parties
in the followin nions, its officers
or member or
1. Intra
2. Inter
3. Othe Xl, Sec. 5)
Q: What is an i er-unio dis

ANS: An inter-un n disp re sit% • ic twe and a ong legitimate labor
r:firgny
unions involving re • esentati • uk):tr i,ir
ese collect' bargaining or to any
other conflict or clisp e be o. 40-03, Rule I, Sec.
1(x)).
Q: What is an intra-union disp

ANS: An intra-union dispute refers to any conflict between and among union members,
including grievances arising from any violation of the rights and conditions of
membership, violation of or disagreement over any provision of the union's constitution
and by-laws or disputes arising from chartering or affiliation of union (D.0 No. 40-03,
Rule I, Sec. (bb)).
Q: What are other related labor relations disputes?

ANS: They shall include any conflict between a labor organization and the employer or
any individual, entity, or group that is not a labor organization or worker's association.
This includes:
1. Cancellation of registration of unions and worker's associations; and
2. A petition for interpleader (D.0 No. 40-03, Rule Xl, Sec. 2).
Q: May the parties opt to settle by agreement?

ANS: Yes. The parties may, by agreement, settle their differences by referring their
unresolved issues to voluntary arbitration (R.A. No. 10396, Sec. 1, inserted as Art. 234
of the LABOR CODE).
362
Q: What is the venue for complaints involving independent unions, local chapters
or workers' associations?
ANS: Complaints or petitions involving labor unions with independent registrations,
"local chapters," workers' associations, or their offices or members should be filed with
the DOLE Regional Office that issued their certificates of registration or certificates of
creation of chartered local (local chapter). Complaints filed shall be resolved by:
1. DOLE Regional Director for petitions for cancellation of registration of labor
unions with independent registration, chartered locals (local chapters) and
workers' associations and petitions for deregistration of collective bargaining
agreements. For this purpose, he may appoint a Hearing Officer from the
Labor Relations Division; or
2. Mediation-Arbiter in the DOLE Regional Office for other inter-union or intro-
union disputes and related labor relations disputes (D.O. 40-03, RULE XI, Sec.
5).
Q: What is the venue for complainitOrpolving federations, national unions, or

industry unions, trade union cer2tWand their chartered locals (local chapters)
affiliates or member organizatioROS\
ANS: They shall be filed eitheaki0.1, Oegional Office or the Bureau of Labor
Relations. But the complaint or re.:111Colisittrall be heard and resolved by the Bureau
(D.O. 40-03, RULE XI, Sec.5). Y,
40ti-P t54.ko
Q: What is its appellatsitotgdiction? d
ANS: The decision ofilOe Med-Arbitka IRegional
I Director ay be appealed to the
Bureau of Labor Relart4by any oP-Fe parties within 10days from receipt thereof,
copy furnished to the4:3ppci§itig,Ip'a4. The. ecision of the Aureakdirector is appealable
to the Office of tbatSecretdrytall No. 40-$3, RULE XI, Sec.6)
Note: In petitions for cancellation ofilgio gistration, ' filedwith e Regional Office,
the appeal is giLe Lrebirector. If the ition for ca Ilat on,' ed directly with the
BLR, the appeal is with t e ecreia of or (D.O. NO kg XI Sec. 16).The
......v,- '
decision of the Bu ea e 0 icelpf this_ecretary shalltecome final and executory
after ten (10) da ,s RI" eceipt Ahere by the parties, unless a motion for its
reconsideration is filed by an arty there i e same period. Only one (1) motion
for reconsideration of Vecision of th%...,,..: .,.. afar. e Office of the Secretary in the
exercise of their appe e jurisdieficiM aNEV ciWee -(D . No. 40-03, Rule Xl, Sec.
20).
E. NATIONAL CONCILIATIO ft:AND MEDIATION BOARD (NCMB)

Nature ofProceedings
Q: What are the functions of the NCMB?
ANS: The NCMB shall: (For-Per-CF-Ad-Mo-ProP)
1. Formulate policies, programs, standards, procedures, manuals of operation
and guidelines pertaining to effective mediation and conciliation of labor
disputes;
2. Perform preventive mediation and conciliation functions;
3. Coordinate and maintain linkages with other sectors or institutions, and other
government authorities concerned with matters relative to the prevention and
settlement of labor disputes;
4. Formulate policies, plans, programs, standards, procedures, manuals of
operation and guidelines pertaining to the promotion of cooperative and non-
adversarial schemes, grievance handling, voluntary arbitration and other
voluntary modes of dispute settlement;
5. Administer the voluntary arbitration program; maintain/update a list of
voluntary arbitrations; compile arbitration awards and decisions;
363
6. Provide counseling and preventive mediation assistance particularly in the
administration of collective agreements;
7. Monitor and exercise technical supervision over the Board programs being
implemented in the regional offices; and
8. Perform such other functions as may be provided by law or assigned by the
Secretary (E.O. No. 126, Sec. 22 as amended by E.O. No 251, Sec. 4).
Q: Distinguish conciliation from mediation.

ANS: They may be distinguished as follows:
Conciliation Mediation
As to the Process •
Process where a disinterested third Mediation is the process wherein a

party meets with management and third-party studies each side of the
labor, at their request or okberwis7 'dispute then makes proposals for the
during a labor dispute °pilf . ollecti a clispotaptszto consider.
%
bargaining conferencese'-..
1 -
As to the Role of the Third Party
Yfie ;ii'. ---.,.
''--1 \-: ., A.\
The conciliatory(Res) an active role ins( The media to l ady,ises the parties or
assisting parties bb// trying to 'reeliV. Offers sokition to tilel broblems with an
disputants king, facilitating ottlpf ,•% end in view of dsliri them towards
9O
procedural nicelj.ee,icarryinb mes.egedli. volyntaril reachIngjheir own mutually
back and fortitetWeen the hartigk,..-,4 li e.-d6CeT5tabi settle rent of he dispute.
i .4e4 1 A hxrc:,,,f-#
\ E4 =- . '' •.
(CHAN REVIE - E1417, ChWAIIII, /
Q: What is coveredA . :1en''i4\
bypre iyeveI
..ja -iibliY
j.c%?'
ANS: This covets pote8tial lakbrses tii.,g,the s eject o ' formal or informal
request for conciliation aki,mearatik-lissistu soug . (by either or both parties or
upon the initiative afjhe NCNB `to9.dvCircPtlf,eld urre of actlal labor disputes. The
issues may either beVilcsibfbNgon-stri eabl • ,t %- annual of Procedures for
Conciliation and Preventivc...:‹In Cases ul4- e 20).
‘,../
' I
Q: Who has the authority to converts heel) Srike/Lockout into a Preventive
Mediation Case?
ANS: As provided in the Manual of Procedures for Conciliation and Preventive
Mediation Cases, Rule V, Secs. 2 and 3, the Conciliator (if strikeable) or the Conciliator
thru the Director II (if non-strikeable) has the authority to convert a notice of
strike/lockout into a preventive mediation case under any of the following instances:
1. When the issues in the notice of strike/lockout are non-strikeable;
2. When the party which filed the notice of strike or lockout voluntarily asks for
the conversion; or
3. When both parties to a labor dispute mutually agree to have it subjected to
preventive mediation proceeding.
Single Entry Approach

Q: Discuss the Single Entry Approach (SEnA).
ANS: SEnA is an administrative approach to provide an accessible, speedy, impartial,
and inexpensive settlement procedure of all Issues arising from labor and employment
through a 30-day mandatory conciliation-mediation (SEnA 1RR, Rule 1, Sec. 4(k)).
364
Q: What are the cases are covered by SEnA?
ANS: All issues arising from labor and employment shall be subject to 30-day
mandatory conciliation-mediation, except: (NCMB-CBA-WO-V-POEA-OSHS)
1. Notices of strike/lockout or preventive mediation cases with the NCM13.
2. Issues arising from the interpretation and implementation of the CBA, and
those arising from the interpretation and enforcement of company personnel
policies which should be processed through grievance machinery;
3. Applications for exemption from Wage Orders with the National Wages and
Productivity Commission (NWPC);
4. Issues involving Violations of:
a. Alien Employment Permit (AEP)
b. Private Employment Agency (PEA) authority or license
c. Working Child Permit (WCP) and violations of R.A. No. 9231 (Anti-Child
Labor Law)
d. Registration under D.O. 18-A s. 2011 (now D.O. No. 174-17)
e. Professional License issued by the PRC and the Professional Code of
, •
Conduct
•
f. TES DA Accreditation& .4, k
9. Other Similar Pernitjs, 4 :se or registrations issued by the DOLE or its
'
attached agencie
5. Violations of POEA a ,agulatiamAryolvirjA
a. Serious offense's 3* 'seWdffeTrOt 46'f:cancellation of license;
gv, .."4.1,SitA,V
b. DisciplinaOactions agai nst overseas workqs/ seafarers which are
considered .serious e es or which carry edipenalty of delisting from
the PC4EApegistry, irs ffense;
c. Complaints by th !POEA;
d. Omplainesqgginst an a ency whose license is evoked, cancelled,
Vixpirecl oFotherwisAtelis ; and
Oomp_ai categprized seder theAlCir R les ndvRegulations as
NOT sub ec •to SE
6. Issueso Op 1 ?a Anal Health Stand r•iriVelsiing imminent danger
situation:4 angerM occurren disabling injury, and absence of personal
protective -suipmeit(R.A. No. 1; LABOR CODE Ad. 234; SEnA
IRR, RULE 1, e ).
Q: What should be filato request for SEnA?

ANS: The party who "s to undergo SEnA may request for the conduct of
conciliation-mediation throu§ he filing of a Request for Assistance or RFA (SEnA IRR,
Rule 11, Sec. 1).
Q: Who may file the RFA?

ANS: Any aggrieved person/party, such as (WUGE):
1. Employer;
2. Workers including kasambahay, whether local or overseas;
3. Group of workers, whether local or overseas; or
4. Union, workers' association or federation.
Note: In case of absence or incapacity of the aggrieved person, his/her immediate
family with Special Power of Attorney (SPA) may file the RFA. In case of death, his/her
legitimate heir/s may file the RFA (SEnA IRR, Rule 11, Sec. 1).
Q: Where should the request be filed?

ANS: The request should be filed at any Single Entry Assistance Desk (SEAD) in
the region where the employer principally operates, except on the following instances:
1. In case of separated kasambahay or deployed workers or service providers or
subcontractor operating in the region other than where it principally operates,
365
the RFA should be filed at the nearest DOLE Regional Office or attached
agency;
2. In case of OFWs, at the nearest Philippine Overseas Labor Office (POLO)
in the country of destination or disembarkation, or at the nearest DOLE Office
or attached agency of preference when in the country; and
3. In case of union or federation representing a local chapter, at the DOLE Office
of registration in case of union or federation representing a local chapter
(SEnA IRR, Rule II, Sec. 2).
Q: Are lawyers of the parties required to appear during SEnA?

ANS: No. SEnA being an administrative approach for a conciliated settlement and not a
litigation, the parties shall represent themselves and lawyers are discouraged from
participating in the conference, except when they are the requesting patty (SEnA IRR,
RULE IV, Sec. 1).
Lawyers, agents, or attorneys-in-facLappearing in behalf of any of the parties should

submit a SPA/ Board Resolutiortrtecrgtary's ficale granting them the authority to
represent and enter inipnciii uipg adttqfneci tileir principal in following
circumstances: (DMD) r-c)
1. When the; presponding party is Ire-ady loyed abroad or out of
the counr o 2,161fecl4assigriTdrftligrated her,A gion;
2. When t erfequ iiespondift'pacty- is a Min 9.ritysically incapacitated;
and/or
ir zeL I \
3. if the leques ng/ relyonding pda.:Died durirt the Saiiy of the RFA, the
heir/sfcif eceased may appepr and shall p esent hglatioring:
a. 'Deal Certifikate;16a7s rLL
b. EVO of relationship7saqi rairiarriage contra • t,-arhor birth certificate
TSEtrt /RFisgR
, le IV, See*
F. DOLE REGIO LfraIR •C4A.

r
Q: Discuss the jurisdiction o~dh .•.
ANS: The DOLE D havevrigi usi n over the following
cases: IENTk
'1. Labor stanc acs .9433c eatoisCLIABOA'.‘ C rt. 128);
2. Small money elains-1 -11 from Ipbskr-$1'
- .An51,-ar iolations in the amount not
exceeding P 5,00111,ftand noMclolpalled
w y a claim for reinstatement
(LABOR CODE, Art.
Q: What is the remedy for the adverse order of the DOLE Regional Director?
ANS: An appeal to the Secretary of Labor and Employment within 10 days from receipt
of the order. (Rules on the Disposition of Labor Standard Cases in the Regional Offices,
RULE IV, Sec. 1)
G. DOLESECRETARY
Visitor/a/am/Enforcement Powers
Q: Discuss the visitorial and enforcement powers of the Secretary of Labor.
ANS: The visitorial and enforcement powers of the Secretary of Labor under Article 128
of the Labor Code include the following: (ICES)
1. Power to Inspect employer's records and premises at any time of the day or
night whenever work is being undertaken therein, and the right to copy
therefrom, to question any employee and investigate any fact, condition or
matter which may be necessary to determine violations or which may aid in the
enforcement of the Labor Code and of any labor law, wage order or Rules and
regulations issued pursuant thereto;
366
•
2. Power to issue Compliance orders to give effect to the labor standards

provisions of this Code and other labor legislation based on the findings of
labor employment and enforcement officers or industrial safety engineers
made in the course of inspection;
3. Power to issue writs of Execution to the appropriate authority for the
enforcement of their orders, except in cases where the employer contests the
findings of the labor employment and enforcement officer and raises issues
supported by documentary proofs which were not considered in the course of
inspection; and
4. Power to order Stoppage of work or suspension of operations of any unit or
department of an establishment when non-compliance with the law or
implementing Rules and regulations poses grave and imminent danger to the
health and safety of workers in the workplace.
Enforcement power is the power of the Labor Secretary to compel the employer to
comply with labor standards upon findtgii9f Iiiolations discovered in the course of the
exercise of the visitorial power (LABOR "'CODE, Art. 128, as amended by R.A. No.
7730).
The SOLE or his duly author4 412 sentatives are likewise empowered, in the
sir
exercise of its visitorial power inArelpiigeokqUent aeylacement of workers for
both local and overseas empAyfnendp nspectIthetralin, books of accounts and
records of any person R. entity cov re by Title I on recment and placement of
workers, require then td submit rqp4s,regularly on prescribed forms, and act on
violations of any of theRpyrsion of Title BOR CODE,
Finally, under trtg, 89 tie Labor Code, the SOLE or is duly authorized
representativOnpon the riling of adt9 11 int under th a d d ly supported by the
written consebtra,UpastiKi% okttle tota mberstN rt organizations, is
te,laor
empowered irAtie exerciie o its vidito 'al ver to (P
1. Prose te vi6 on,z of law not o union constiidif'an.•y-laws.
2. inquirecNipt
ir aq f legitimate labor organizations and
3. Examine their4bookVand accou nd. ot er records to determine compliance
and non-comfrith the la
A.
Q: Can the Labor SacretaN4determine the existence of employer-employee
relationship in exercispowers under Article 128?
ANS: Yes, the DOLE musTzfiNe the power 'to determine whether or not an employer-
employee relationship exists, and from there to decide whether or not to issue
compliance orders in accordance with Article 128(b) of the Labor Code, as amended by
R.A. No. 7730. The determination of the existence of an employer-employee
relationship by the DOLE must be respected. The expanded visitorial and enforcement
power of the DOLE granted by R.A. No. 7730 would be rendered nugatory if the alleged
employer could, by the simple expedient of disputing the employer-employee
relationship, force the referral of the matter to the NLRC (People's Broadcasting Service
v. Secretary of DOLE, G.R. No. 179652, March 6, 2012).
Power to Suspend Effects of Termination

Q: Can the Secretary of Labor provisionally order a reinstatement?
ANS: Yes, in the event of a prima facie finding that the dismissal may cause a serious
labor dispute as in a strike or lock-out, or is in implementation of a mass lay-off (LABOR
CODE, Art. 292 (b)).
367
Appellate Jurisdiction
Q: What are the cases falling under the DOLE Secretary's appellate jurisdiction?
ANS: These are (VBM-OP-RL):
1. Orders issued by the duly authorized representative of the Secretary of Labor
and Employment in the exercise of its Visitorial and enforcement power
(LABOR CODE, Art. 128(b));
2. Denial of application for union registration or cancellation of union registration
originally rendered by the BLR may be appealed to the Secretary of Labor and
Employment; and
Note: If originally rendered by the Regional Office, appeal should be made to
the BLR.
3. Decisions of the Med-Arbiter in certification election cases are appealable to
the DOLE Secretary (LABOR CODE, Art. 272).
Note: Decisions of Med-Arbiters in intra-union disputes are appealable to the
BLR.
4. Occupational Safety ap&HealtrStandards violations (LABOR CODE, Art.
128). J/1:1, I IS.
7 .
5. Decisions of theltiO,EtArbitra ion Branch/on k'recruitment violations and other
related case( afi—Oisc'plingralii6114cgseslanil otter special cases (2016
POEA Rul.¢std Rego ations Sec" S9
6. Denial oflicition for the4ssuaried-ot h ense,,authority to recruit, and
authority' rate bran:ph office7gSsue byVhe egional Director for
recrui " ent a pladement for !goal employm pt (DELE D-p., 141-14, Sec.32).
7. Orde su pension/c8W,Alatioa.oLlice, nse o rretrtii rent agencies for
Lace emao ment oefp,Q 11/7/4p,$ec.60.
VoluntaryA Itrodon Powers

).(/)
Q: Discuss the pjuptarmoMtionRovyewif`thep,94.: S ;rata' .
ANS: Either orktiothA em e an 40M1 i e ye ctiv barbai ing agent (or the
representative of the evil° here) a ertifi, d berg fining agent) may
voluntarily bring Ito the SOLE; thr or iptententidh, any potential or
ongoing dispute. g ch disp te made that tpay lead to a strike or
lockout or to massi labor fire subrecW gf complaint or notice of
strike or lockout at th tim 8".)eq est,for—laterve isVde
rnraa (DOLE Circular No. 1,
series of 2006 (1)).
The prerequisites for administra -Aintemention by the DOLE Secretary are the
following (V-NO-RA):
1. They Voluntarily submit their potential or ongoing dispute to intervention by the
Office of the Secretary of Labor and Employment;
2. There is NO pending notice of strike or lockout or any related complaint in
relation with their potential or ongoing dispute;
3. They shall Refrain from any strike or lockout or any form of work stoppage or
from filing any related complaint while the Secretary's intervention is in effect;
and
4. They shall Abide by the agreement reached, whose terms may be enforced
through the appropriate writs issued by the Secretary of Labor and
Employment.
Voluntary arbitration shall be limited to the issues defined in the parties' submission to
voluntary arbitration agreement and shall be decided on the basis of the parties' position
papers and submitted evidence (DOLE Circular No. 1, series of 2006 (4)).
368
',..IN, :,-7r.k6;14-g4iV. -4,4,i ikl:Si:M?W;42:g10.4:'•iV.''C413311: liWe
I ra7; - ..f1 4 14^1.,
icq.4'0...
"':.1.1,tv,riz ~l w
C1=.2,,>:;* i*.z.laxue2;!.1.7.,:;:44-..i.r? .a (-4.7(It.sz.AII&.Ai ;%:‹44;14/",.:,-43::
.
H. GRIEVANCE MACH/NERY
Q: What is grievance as referred to under the Labor Code?
ANS: Grievance is a dispute or controversy between the employer and the collective
bargaining agent arising from the interpretation or implementation of their CBA and/or
those arising from the interpretation or enforcement of company policies. (D.O. No. 40-
03, RULE I, Sec. 1(u))
Q: What is a grievance machinery?

ANS: Grievance machinery is a mechanism for the adjustment of controversies or
disputes arising from the interpretation or enforcement of company personnel policies.
(D.O. No. 40-03, RULE XIX, Sec. 1)
Q: What is grievance procedure?

ANS: Grievance Procedure refers to the series of formal steps that parties to a CBA
agreed to take for the adjustment of grievances or questions arising out of the
interpretation of the CBA or company RafAnnel policies. (NCMB Primer on Grievance
Settlement and Voluntary Arbitratio0V, .41
Q: How is the grievance proced0:74:4qachinery established?

ANS: It is established by the agr40,-6,rift rpagies in their, CBA. (LABOR CODE, Art
273) • .. -.4.•"..',1 ' . NI
F,0, 4, •
;:- , • --,l'stw4kitl,,,
•,•• ,atI:r.
fig
Q: Discuss the grievance` procedure,?. R s kl
ANS: Grievances arisir from interP 'eilr8 n or implementafion49f their CBA and those
arising from interpratecliOwnfoecemept of company Me0ortel policies, shall be
submitted to the gfjaVanceR4inery. T e grievance machine shall resolve or settle
the same withiOgeven ,(7)! cgendarday om the date of ts I submission. Failure to
kat.
resolve the gireV,anceOitbin the..7 days 41 result to the, ,r
gr's-P ?-
8 t e grievances to
voluntary arbitertion"at'preatibeChiVthe OBA. (LAW:YEW/DM ,73
• bcg„p•-
* A.- •41itit IS09.
I. VOLUNTARY ARS1t1:2‘TOP
Jurisdiction
Q: Discuss the original. ndexclu junsdictionuof- Iritntary arbitrators.
ANS: The voluntary agratomNanel of voluntary arbitrators shall have original and
exclusive jurisdiction ovektildgowing cases (G-E-WD-PIP-CBA-O-N):
1. All Grievances arising from the implementation or interpretation of the
collective bargaining agreements;
2. Interpretation or Enforcement of company personnel policies which remain
unresolved after exhaustion of the grievance procedure;
3. To hear and decide Wage Distortion issues arising from the application of any
wage orders in organized establishments; and
4. Unresolved grievances arising from the interpretation and implementation of
the Productivity Incentive Programs under R.A. No. 6971 (NCMB Revised
Procedural Guidelines, RULE IV, Sec. 1).
5. Violations of CBA which are not gross in nature (LABOR CODE, Art. 274);
6. Other labor disputes, including unfair labor practices and bargaining
deadlocks, upon agreement of the parties (LABOR. CODE, Art. 275); and
7. National interest cases (LABOR CODE, Art. 278(0).
Note: "All other disputes" under Article 274 of the Labor Code may include termination
disputes, provided that the agreement between the parties states in unequivocal
language that they conform to the submission of termination disputes and ULP to
voluntary arbitration. This is so because termination disputes are generally within the
exclusive and original jurisdiction of the Labor Arbiters by express provision of Law
369
(Viviero v. CA, G.R. No.138938, October 24, 2000). The disputes the parties may
submit to a Voluntary Arbitrator may include any or all the disputes mentioned in Article
224 of the Labor Code which otherwise fall under the exclusive jurisdiction of a Labor
Arbiter.
Remedies
Q: Where to appeal the decision of a voluntary arbitrator?
ANS: The decision or award of the voluntary arbitrator or panel of arbitrators may be
appealed through the following modes:
1. Petition for Review under Rule 43 of the Rules of Court. (Leyte IV Electric
Cooperative, Inc. v. LEYECO IV Employees Union-ALU, G.R. No. 157775,
October 19, 2007).
2. Petition for Certiorari under Rule 65 of the Rules of Court.
Note: The extraordinary remedy of certiorari may be resorted to despite the
availability of an appeal in the following significant exceptions: (NO-PJ)
a. When Public VfareVeipWelbivan, cement of public policy dictate;
b. When the breaclkr interest bf leistite Th-lequires;
c. When the'Svrits ia'ved a're-iluil; of I N
d. Whe q -6t'orretrggre-mo, nt l-Vppressive
tee exercise of
julicia ython y Le ,e-I.V n_ ectriC‘'epopecatiik Inc. v. LEYECO IV
pifiyi n-ALU, dipra . S..,,,e6
1t A ix ZA
Q: May an apps lant file fori motion for-reconsider tione
ANS: Yes. While4t • tale tha -mid tio\v-Art-27-6 make ktlievckluntary arbitration
award final an d e ory aft.r /04aysl Hiplrecieipt of opy o theqw rd or decision of
the parties, a rpotio r recorielder ipe reported t 'thin he 10-day period
in line with tti e f-elhaustro ,I dfflinistrat e-rem Deng v. Pahagac,
0
G.R. No. 1697Q4, ' 2040 4-
Q: What is the lkule w en a \e'' I e ecutoiy?

Ai
ANS: Upon motilv if an *ntereis‘, itrator of panel of Voluntary
is
Arbitrators, or the .1/4.abor A biterin ovant Lesides in case of the
absence of incapacity of theeb.- olbh rylE06t el of V pluntary Arbitrators, for
any reason may issue s a ril Fifes 'e
- - ether the sheriff of the
Commission or regular court-otr9 ubliv ,
e,parties may designate in the
submission of the agreemIn t xecuteki 1. V
eclgion, order or award (LABOR
CODE, Art. 276).
Q: Is the Rule absolute?

ANS: No. A writ of execution may be refused on equitable grounds as when there was a
change in the situation of the parties that would make execution inequitable or when
certain circumstances, which transpired after judgment became final, rendered
execution of judgment unjust (Jane Abalos v. Philex Mining Corp., G.R. No. 140374,
November 27, 2002).
Q: What is the remedy of an interested party after a judgment has become final
and executory?
ANS: It is well settled that when after a judgment has become final and executory, and
facts and circumstances transpire which render its execution impossible or unjust, the
interested party may ask a competent court to stay its execution or to prevent its
enforcement (Cruz v. Leabres, G.R. No. 99846, May 22, 1995).
370
DAN.,RED BOOK
J. PRESCRIPTION °FACTIONS
On Money Claims
Q: What is the prescription period for money claims?
ANS; The prescription periods for money claims are the following:
1. All money claims arising from employer-employee relations — filed within 3
years from the time the cause of action accrued; otherwise, they shall be
forever barred.
2. All money claims accruing prior to the effectivity of this Code - filed within 1
year from the date of such effectivity, and shall be processed or determined in
accordance with implementing Rules and regulations of the Code; otherwise,
they shall be forever barred.
3. Workmen's compensation claims accruing prior to the effectivity of this Code
and during the period from November 1, 1974 up to December 31, 1974, shall
be filed with the appropriate regional offices of the Department of Labor and
Employment — filed not lateMln March 31, 1975; otherwise, they shall be
forever barred. (LABOR CODE' rtt. 306).
Q: How is money claim institutes

ANS: Money claims shall be file tie, c:10, e appropriate entity independently of the
criminal action that may be lostitdreIty.s1 12W... roper itturts. Pending the final
determination of the merits o ynonegrafrirfiledfleir0 propriate entity, no civil
action arising from the ugyitause of,fictign shall be filed wi ny court. This provision
shall not apply to emplOyee compApsifion cases whicli all be processed and
determined strictly in LO:ccroldane ‘Witfi e pertinent prai s of the Labor Code
(LABOR CODE, Art. 06). Pte'
On Illegal dismissal cases

MP ; ''1)1 h..-
Q: What is thaipregaptiveperioder it Adal dism'is,_
salea. ses?
ANS: A complakt, founded ,p ille014dis ssal must befiledMairt years pursuant to
Article 1146 of the,dilif e whichwove s actions based upon an injury to the rights
of the plaintiff. AlthOugh it is e that ille al dismissal is a violation of the Labor Code,
the prescriptive period *sovide in Art. 29e 35) refers to illegal acts penalized
under the Labor Cod (Amola aLgtizrAllyS2MR. No. 175689, August 13,
2014).
On unfair IctborpractIces,cases
Q: What is the prescriptive period for filing of complaints involving ULP? .

ANS: All unfair labor practices arising from Book V shall be 'filed with the appropriate
agency within 1 year from accrual of such unfair labor practice (LABOR CODE, Art.
306).
On offenses under the Labor Code
Q: What is the prescriptive period for offenses under the Labor Code?
ANS: Offenses penalizes under the Labor Code, including the Rules and regulations
issued pursuant thereto shall prescribe in 3 years (LABOR CODE, Art. 305).
On Mega/Recruitment
Q: What is the prescriptive period for illegal recruitment?

ANS: Illegal recruitment prescribes in 5 years, except illegal recruitment constituting
economic sabotage such as syndicated or large-scale which prescribes in 20 years
(R.A. No. 8042 as amended by R.A. No. 10022, Sec. 12).
371
i,NIK411,41,Sist51-P:$,,_26 . ;;;;"*.1
Q: What are the instances where the prescription of an action is interrupted?

ANS: The prescription of an action is interrupted by (Filing-Ex-Ac):
1. The Filing of an action;
2. A written Extrajudicial demand by the creditor; and
3. A written Acknowledgment of the debt by the debtor. On this point, the Court
Ruled that although the commencement of a civil action stops the running of
the statute of prescription or limitations, its dismissal or voluntary
abandonment by plaintiff leaves the parties in exactly the same position as
though no action had been commenced at all (Intercontinental Broadcasting
Corp. v. Panganiban, G.R. No. 151407, February 6, 2007).
Q: The Company ABC lead Juan to believe that upon resignation, he will be paid
of his benefits after the settlement of the money claims of rank-and-file
employees. Should the prescriptive period for filing prescribed while Juan waited,
can Juan still recover from Company ABC?
ANS: Yes, the action has not yet prescribed,.., The principle of promissory estoppel is a
recognized exception to the tilredfirear firescriplivelieripd enunciated in Art 291(306) of
the .Labor Code. In ordectoliiakOvut a95rn Ofdlrorhisiory, estoppel, a party bears the
burden of establishingliefCirdwih-Olements41,ifp.prro Isp.ikas reasonably expected to
induce action or fo ,eafan • 9441 such promise did,'in tabNinduce such action or
forbearance; and k theoiirty,s,ufferad"atfithent,40:441111( ( tcessories Specialist,
Inc. v. Alabanza, /RM0.45166§85, July 23i.200)
I}
372
CIVIL LAW
MA. CRISTINA D. ARROYO
Subject Chair
MARY CHERWYN L. CASTRO

JAYSON P. HIQUIANA
SUBJECT HEADS
Conflict of Laws MARIA ANGELICA R. LOVERIA

Persons and Family Relations SOPHIA VICTORIA E. MINA
Property and Land Titles and Deeds JOANNA ELIZABETH KAMLA C.
MALCONTENTO
Wills and Succession KEVIN CHRISTIAN A. PASION
Obligations and Contracts JAMIL P. DALIDIG
Sales and Lease KEIRVIN ANTHONY B. VIAD 0
Partnership and Agency KORINA CES M. CUEVA
Credit Transactions MARIA ANA ANGELA T. SIMPAO
Torts and Damages GIZELLE KARINA D.C. MONTERO
SUBJECT MEMBERS
ELLAIN G. PEPITO GERARD CEASAR S. BAGUIO

MERRYL KRISTIE M. FRANCIA CAMILLE C. CELZO
CHARMLE ROSE DYNE R. ROMANO MORRIS MEDEL F. SOLANO
JANINE CAMELLE T: GASCON ' JOSE MAURICE ROMEO V. SALVACION
MA. CHERIE JANE G. LABANGCO LOIS RENEE R. TUBON
MARIELA MAE B. MAMARIL CZESKA JOHANN G. CO
JEMMA Z. OYALES JEANNE PAULINE F. RESURRECCION
BENISE D. MADAMBA MARIA EMILIA A. SIBAL
DONNA KRIS. B. GOMEZ JERRIC B. CRISTOBAL
JASON JEREMIAH G. RUNES
ADVISERS
Dean ED VINCENT S. ALBANO Atty. JOSEPH FERDINAND M.

Atty. MANUEL P. CASINO DECHAVEZ
Atty. DANTE 0. DELA CRUZ Atty. THERESA GENEVIEVE
Atty. ROWELL D. ILAGAN NUEVE-CO
CIVIL LAW
I. GENERAL PRINCIPLES
A. EFFECTANDAPPLIC4T/ON OF LA WS
Q: When do laws take effect?
ANS: Laws shall take effect after fifteen (15) days following the completion of their
publication either in the Official Gazette, or in a newspaper of general circulation in the
Philippines, unless it is otherwise provided (CIVIL CODE, Art. 2).
Q: What does the phrase "unless it is otherwise provided" as stated in Article 2 of
the Civil Code, mean?
ANS: The phrase "unless othpisaliroTAFTeferslc a different effectivity date other
than after fifteen days followingkhe co(r.iplati9n tilaglav's publication in the Official
Gazette. It does not imop19tthat fhe.)xexteXeltoffiubffIcalios,i may be dispensed with:
Publication is an indisgengatikgeqUiMe, as a conditki eior tNir effectivity (Tailada v.
Tuvera, G.R. No. L- 3945,4ecem)e29r1;986)...,„
Q: What is a ney.ischsvof general rculatiiiril
a p er of enera circula iongre which: BIL)
ANS: A newspa
1. Has Bona de su dption_liinprpaying-sub cribe
2. Is publOgAii t regutartr4e4vat1;01,4---1
;r=f
Is ptiblislid for thq distkiina ioti-pg.ocal news auleral
• information
(Basa cadorG) . No. LV 2226z,1foly 26f-935). `--1
Q: What doesr 'Orr taorprovidfis that hall "take effect

Immediately"?
ANS: It means at it shall to
R 1e4s-e'
t4miruiatel r puication with the fifteen-day
period being disp sed with (S anVamily Relations Law (2015),
p. 4) (hereinafter A. MAN Qjr o syr, he immediate effectivity clause
does not preclude th requ prr rit4L • ublica sinc tte.,ple.4 object of the law is to
give the general public dcain We'df`th'narill? hich are to regulate their
actions and conduct as cities. ould h 3rg . t `vi justice to punish or otherwise
burden a citizen for the transgitss °fie faw ich he had no notice whatsoever,
not even a constructive one (Tariada v. uvera, G.R. No. L-63915, April 24, 1985).
Q: What is the reason for the rule that, "ignorance of the law excuses no one from
compliance therewith"?
ANS: It is a principle founded not only on expediency and policy but on necessity, that
ignorance of the law does not excuse from compliance therewith (Zulueta v. Zulueta,
G.R. No. 428, April 30, 1902).To allow a party to set up as a valid defense the fact that
he has no actual knowledge of a law which he has violated is to foment disorder in
society (STA. MARIA, Persons, supra at 5). The application of Article 3 is limited to
mandatory and prohibitory laws (D.M. Consunji, Inc. v. C.A., G.R. No. 137873, April 20,
2001).
Q: What is the difference between ignorance of the law and ignorance of the fact?
ANS: While ignorance of the law is no excuse for not complying with the law, ignorance
of the fact eliminates criminal intent as long as there is no negligence (1 PARAS, Civil
Code of the Philippines Annotated (2016), p. 23) (hereinafter 1 PAPAS, Persons].
Mistake on a doubtful or difficult questions of law may be the basis of good faith (CIVIL
CODE, Art. 526). Mistake of fact may, furthermore, vitiate consent in a contract and
make it voidable (Art. 1390, Id.) (1 PAPAS, Persons, supra at 25).
374
1:V3t:J:.k.3-:;.q:tn-.4..' Y."
74f1,:fdi.
Q: Do laws have retroactive effect?

ANS: No. As a general rule, laws shall have no retroactive effect (CIVIL CODE, Art. 4).
The exceptions therein are: (OFTEN-PIC)

1. When the law Otherwise provides (CIVIL CODE, Art. 4);
2. Penal laws Favorable to the accused (REVISED PENAL CODE, Art. 22.);
3. Tax laws, when the same is expressly declared or when it is clearly the
legislative intent. (Cebu Portland Cement Co. v. Collector of Internal Revenue,
G.R. No. L-20563, October 29, 1968);
4. Emergency laws (1 PARAS, Persons, supra at 33);
5. Laws creating New rights (Bona v. Briones, G.R. No. L-10806, July 6, 1918);
6. Procedural or remedial laws (1 PARAS, Persons, supra at 34);
7. An administrative rule Interpretive of a statute, which is not declarative of
certain rights and corresponding obligations (Commissioner of Internal
Revenue v. Reyes, G.R. No. 159694, January 27, 2006); and
8. Curative laws (1 PARAS, Persgps, supra at 34).
Q: What is the nature of an act that is. contrary to mandatory or prohibitory laws?
ANS: Acts contrary to mandatory-aid OfiiAlbjtory laws are void, as a general rule (CIVIL
CODE, Art. 5).
1014
The exceptions are: (V-MAN)„,'' ftrakaan
1. Where the Jaw4-Merely makes ;the act Voidable te.g. marriage celebrated
through violeme);
2. When the lawLMales the SC vplid, but punisheet , e violator (e.g. marriage
••
solemnized yip ersonAthout le i authority);
3. When th, aw itselAythorizes itialidity (e.g. lo. o s eepstakes); and
4. Wherei e law4leclares theact II and void gut recognizes the legal effects
aris ngtWomitOg. void ,marriaR under 4FLL3§A&-53Aiildren conceived
‘4,,,t,
.01
thertitnder are o
co
.. e (RABUIVM079450:1"Family Relations
(2017);4p 19f. 'VeinafteliABUl, Persons].
Q: Can rights be aived?

ANS: Yes. The generall_rpletA that rights e.ftityt.e/IL CODE, Art. 6). Waivers
are not presumed, b bAfeydgilKiW68 wino gi shown, either by express
stipulation or acts admi' g noptlier reasonable explanation (STA. MARIA, supra at 9).
The exceptions are:

1. If the waiver is contrary to law, public order, public policy, morals or good
customs (CIVIL CODE, Art. 6);
2. If the waiver is prejudicial to a third party with a right recognized by law (CIVIL
CODE, Art. 6);
3. Alleged rights which really do not yet exist, as in the case of future inheritance
(Id at 41); and
4. If the right is a natural right, such as right to life (1 PARAS, Persons, supra at
40).
Q: What are the requisites in order for the waiver of rights to be valid?
ANS: The requisites in order for the waiver of rights to be valid are: (KIKACIe-FoNoNo)
1. That waiver is made Knowingly and Intelligently must be illustrated on the
record or by evidence (Consunji v. Court of Appeals, G.R. No. 137873, April
20, 2001);
2. The person waiving must be Capacitated to make the waiver;
3. The person waiving must Actually have the right which he is renouncing,
otherwise, he will not be renouncing anything;
375 .
4. The waiver must be made Clearly, but not necessarily expressed;
5. In certain instances, the waiver, as in the express remission of a debt owed in
favor of the waiver, must comply with the Formalities of donation;
6. Waiver must Not be contrary to law, morals, public policy, public order or good
customs; and
7. The waiver must Not prejudice others with a right recognized by law (1
PARAS, Persons, supra at 39).
Q: How are laws repealed?

ANS: Laws are repealed either:
1. Expressly; or
2. Impliedly, insofar as there are inconsistencies between a prior and a
subsequent law (1 PARAS, Persons, supra at pp. 45-46).
Note: Implied repeals are disfavored, as a rule in statutory construction (Javier v.
Commission on Elections, G.R. No. 215847, January 12, 2016). There are two
categories of repeal by implication. Tte,firsLis,.where provisions in the two acts on the
same subject matter are in opairreConcijablo 9n icts.The later act to the extent of the
conflict constitutes an icrriplied
., relval
„., ofItlie' earli r Otie;'47ke second is if the later act
covers the whole subjef o th eariler,one.an4 ct.earlyIntanded as a substitute, it will
operate to repeal th6rhar„,lai;veirnplied repeal tryAdecorjdilebje inconsistency takes
place when the twci't Jtitef overttiqrane—si,LbjacStatteNthey are so clearly
inconsistent and itfo Palibl witheadk other th;Iti til'otteaDno be reconciled or
harmonized; an both not be given eff&t,.that is, t at orip4raw cannot [be] enforced
without nullifyi the / ther Commissioh0N of Intent I Retkt Semirara Mining
Corp., G.R. No 5314, Decqm r, 2-0- pg.."
'
' -"IFT r 11i Ylc 3V
Q: What are t ej,g4ttisites o an inipliA, !! Te-al?

ANS: The folio ind.q thd r uisites oall_iti-i6lied re
1. The lavopoier the ae su•Act qtter; a.
2. The tettdrik inalilikent fliv: ,6.3-fi CA, G.R. No.
106560tAugus 23, 06) --
Q: In case of con 'ct between ich should prevail?

ANS: It depends:
1. If the genNtJai ecial law, the latter is
considered the,ce i toe, bta herefore, the general law
remains good law, 14 tchauco v. Apostol, G.R. No. L-
19628, December 4, 1922
2. If the general law was enacted after the special law, the special law
remains unless: (ICE)
a. The subsequent general law covers the whole subject and is clearly
Intended to replace the special law on the matter (In Re: Guzman, G.R.
No. 47790, June 30, 1941; Joaquin v. Navarro, G.R. No. L-576, August
4, 1948);
b. There is a clear, necessary and irreconcilable Conflict; or
c. There is an Express declaration to the contrary (Compania General de
Tabacos v. Insular Collector of Customs, G.R. No. L-21241, April 7,
1924).
Q: What Is the effect if the repealing law is itself repealed?

ANS: When the repealing law which provides for an express repeal of the prior statute,
is itself repealed, such subsequent repeal will not revive the original law, unless
expressly provided. But if the prior law Is Impliedly repealed, the repeal of the repealing
law will revive the prior law, unless the language of the last law provides otherwise (1
PARAS, Persons, supra at 49).
376
t ' ., ‘ • ., , Ig •
( 4-.;.'f':-l'-,,,'4.4.f:t'A-Z'%,9f•:".74.t i-YJ'.4r
nrn
6
g6
1kJ.-
Q: Are judicial decisions considered laws?

ANS: No. Decisions of the Supreme Court are not laws pursuant to the Doctrine of
Separation of Powers (Philippine Long Distance Telephone Company v. Alvarez, G.R.
No. 179408, March 5, 2014). Decisions of the Supreme Court, although in themselves
not laws, are nevertheless evidence of what the laws mean, and this is the reason why
under Article 8 of the New Civil Code, "Judicial decisions applying or interpreting the
laws or the Constitution shall form part of the legal system." The interpretation upon a
law by this Court constitutes, in a way, a part of the law as of the date that the law was
originally passed, since this Court's construction merely establishes the
contemporaneous legislative intent that the law thus construed intends to effectuate
(Columbia Pictures, Inc. v. C.A., G.R. No. 110318, August 28, 1996).
Q: What is the doctrine of Stare Decisis?
ANS: Stare decisis, or "adherence to precedents," means that once a case has been
decided in one way, then another case, involving exactly the same point at issue, should
be decided in the same manner (1 PARAS Persons, supra at pp. 67-68).
Note: The principle of stare decisis dot mean blind adherence to precedents. The
doctrine or rule laid down, which14%1:allowed for years, no matter how sound it
may be, if found to be contra
contrary§114yit' must be abandoned. The principle of stare
decisis does not and should not awrott%here is conflict between the precedent and
the law. The duty of the SupremelCoVtaloasake and abandon any doctrine or rule
found to be in violation of the law iri!!TO ttsrEari!V:ho le tar)/ of Labor, G.R. No.
47616, September 16, 19470'
00'
Q: How may judicial etisions be abrifg. ted?
ANS: Judicial decisiontna, be abrogtecqby either a:
1. Contrary 111g b1 rupreme durt. Provided, no doctrine or principle of
law 105t own by (Art dsion render-to en anc%or in division may be —"RR
modeor reversed exceprby e court s' g ban (CONST. Art. VIII,
SearP3); or sq,
2. Corrective leptslati e acts. sf•Co ss.
Note: Congresewf, however, a a Supreme Court interpretation of a
constitutional provisi for tktis would be unwarranted assumption of judicial power
(1 PARAS, Persons" ser ra d? 68-69; En David, G.R. Nos. L-6355-56, August
31, 1953).
Q: What will be the ffect icase the Supreme Court should adopt a ruling
contrary to a doctrine 11 käs eviously laid down?
ANS: When a doctrine ofee Supreme Court is overruled and a different view is
adopted, and more so when there is a reversal thereof, the new doctrine should be
applied prospectively and should not apply to parties who relied on the old doctrine and
acted in good faith (Philippine International Trading Corp. v. Commission on Audit,
G.R. No. 205837, November 21, 2017).
Q: If the law applicable to the case is silent, obscure, or insufficient, what should
the judge do in deciding a case?
ANS: The judge may apply any rule as long as the rule chosen is in harmony with
general interest, order, morals, and public policy. Among these are:
1. Customs which are not contrary to law, public order, and public policy (CIVIL
CODE, Art. 11);
2. Decisions of foreign and local courts on similar cases;
3. Opinions of highly qualified writers and professors;
4. Rules of statutory construction;
5. Principles laid down In analogous instances;
6. General principles of the natural moral law, human law and equity; and
7. Respect for human dignity and personality (1 PARAS, Persons, supra at
pp.82-84).
377
Q: What is a custom?
ANS: A custom is a rule of human action established by repeated acts, and uniformly
observed or practiced as a rule of society, thru the implicit approval of the lawmakers,
and which is therefore generally obligatory and legally binding (1 PARAS, Persons,
supra at 92).
Q: What are the requisites before the courts can consider the customs of the
place in deciding a case?
ANS: The following are the requisites:(PRUNIL)
1. A custom must be Proved as a fact, according to the rules of evidence;
2. There must be a number of Repeated acts;
3. The repeated acts must have been Uniformly performed;
4. It must Not be contrary to law, public order, or public policy;
5. There must be a juridical Intention to make a rule of social conduct; and
6. There must be a sufficient Lapse of time (Id. at 92).
Q: What are the rules in thesomputat* orrof er

ANS: When the laws speakye ss, m nt s, s orn'tghtp, it shall be understood that
years are of three hundre sixtykivplays.eac monthif, 9f thirty days; days, of twenty-
four hours; and nighsdi to sunrise. If montbs'arghesignated by their name,
they shall be cor pu th art ep `days,,wit 1Qhey espectively have. In
computing a perio0hf st ay shaJI lie-excluded, man t4,1.0t ay included (CIVIL
CODE, Art. 13).
Cr)
Q: In comput perio s as o ca gp avears, hich rWeltween Art. 13 of
the Civil Cod rtd4 e Admt istiraCi'ffie—pceitail?
ANS: Both A icl of the ivil R-' d%ection 31, Ch pte 1/ II, Book I of the
Administrative nde4 f 1 P1C
.eal wit h me su c er — computation of
legal periods. der) lade, a e r ,is, equi aien whether it be a
regular year or 'dap r‘th p ..p eo , owever, a year is
composed of lc,alen mo Need e etd;s 41,, nder he Ad inistrative Code of
1987, the numbe of day is it VeoNtz ',lib liSly e is a m ifest incompatibility
in the manner of mputin eg .. . eittie Cjy Code nd the Administrative
Code of 1987. Sec 31, e : ok''-r_,
of...tfie slpii strative Code of 1987,
being the more recen ver he.complita i • A le • I periods. Lex posteriori
derogat priori (Commissio oIJ mal eye . i t. orging Co. of Asia, Inc., G.R.
No. 184823, October 6, 2010
Q: What is preterition of holiday?

ANS: It depends:
1. In an ordinary contract, the general rule is that an act is due even if the last
day is a Sunday or a legal holiday. There are some exceptions, among them
are the maturity date of a negotiable instrument; or
2. When the time refers to a period prescribed or allowed by the Rules of Court,
by an order of the court, or by any other applicable statute, if the last day is a
Sunday or a legal holiday, it is understood that the last day should really be the
next day, provided that the said day is neither a Sunday nor a legal holiday (1
PARAS, Persons, supra at pp. 96-97).
Note: Where the sixtieth and last day to file an information falls on a Sunday or legal
holiday, the sixty-day period cannot be extended up to the next working day.
Prescription has automatically set in. The remedy is for the fiscal or prosecution to file
the information on the last working day before the criminal offense prescribes
(Yapdiangco v. Buencamino, G.R. No L-28841, June 24, 1983).
378
Q: What is the Principle of Territoriality?
ANS: The principle of territoriality implies that any offense committed within our territory
offends the state; therefore, any person, whether citizen or alien, can be punished for
committing a crime here (1 PARAS, Persons, supra at 99).
Q: What are the instances wherein the State cannot prosecute crimes committed
within its jurisdiction?
ANS: The exceptions are:
1. Treaty stipulations (e.g. Visiting Forces Agreement);
2. Laws of preferential application (e.g. prohibition of issuance of warrant of
arrest against ambassador); and
3. Principles of public international law (e.g. Universality Principle) (RABUYA,
Persons, supra at 40-41).
B. CONFLICT OF LAWS (PRIVATE INTERNATIONAL LAW)

Q: Define Conflict of Laws.
ANS: Conflict of laws (or Private In,teriIati nal Law) is that part of the municipal law of a
state which directs its courts and gtpiM. Otive agencies, when confronted with a legal
problem involving foreign elementOyAgkgt ey should apply a foreign law or local law
(PARAS, Philippine Conflict of La4 994 . 2) (hereinafter, PARAS, Conflict].
Otlar
Q: Distinguish Public InternaVoilacitAiv PrivAINVitational Law.
ANS: The following areWiRinctionsr
Public International Law Private International Law

As to source
Based (lb
ri --,:z.wp•
intermjional co%vetions, Based on flomItic and municipal
intemationajtpsto
i n0thtbRnertprinci of lawsv‘hict cludes the
law recogriized by;Nliked r1:.i 'ons nd constitution a s atutes adopted
judicial decisidn41„arlOreteachin ost by indiVid0 countries.
aa O a r i o us nab• s.
highly qualified pts
%
As to Subjects
Sovereign states and ;IiIntemational Private individuals and
organizations. Itr corporations.
As to transactions involved
Recognizes transactions in which sovereign Assumes control over transactions
states are interested. which are strictly private in nature.
As to remedies applied •
In case of violation of international law, the Resort to municipal tribunals
State may resort to peaceful or forcible
means.
Peaceful means: diplomatic protest,
negotiation, arbitration or adjudication by
'filing cases before international tribunals.
Forcible remedies: severance of diplomatic

relations, reprisals, embargo, boycott, or war.
(PARAS, Conflict, supra at 10- 11)
379
.,-„AvegiVPW•,:p0A ktt,11',4Y
Q: What are the three alternatives open to the court or administrative agency in
disposing a conflicts case, one involving a foreign element, brought before it?
ANS: The following are the three alternatives:
1. Dismiss the case, either because of lack of jurisdiction or refusal to assume
jurisdiction over the case;
2. Assume jurisdiction over the case and apply the internal law of the forum; or
3. Assume jurisdiction over the case and take into account or apply the law of
some other State or States (Hasegawa and Nippon Engineering Consultants
Co., Ltd.v. Kitamura, G.R. No. 149177, November 23, 2007).
Q: What is the principle of Forum Non Conveniens?

ANS: Literally means "the forum is inconvenient". This doctrine means that even if the
court assumes jurisdiction over the parties and the subject matter, it may decline to try
the case on the ground that the controversy may be more suitably tried elsewhere
(COQUIA& AGUILING-PALANGANAN, Conflict of Laws: Cases, Materials and
Comments (2000), p.36) Ihereinaftefi CO_QUIA,.Conflict].
Nv,
Q: Even if the applicablo4law forelon la ajcourt.,in the Philippines may be
constrained to applyyffilij3MRe 10,undemiihdt cjrctirrj.sfartoes?
ANS: Though a courtla ji.tkisOjction over a case, it nieClep,iing4o exercise it, in view of
any of the followingoteas50:413COINE1:97—'---,"
1. Belief tKhe Arttef can be better-Irjed and dacrideg)n\another jurisdiction,
either becaas of th main Ape* •
. e-•
of th /case transpiied there 9rt, .-.the material wane se have haVe their residence
$
there
2. To c rblbe Ivils of Forditiabp0 i,pg;":311"/ 1-
l ti
Cou dock+ of thWforumahayllreg-dY be -logged and-pprrnitting additional
1 -
case woulAtha p peedy 4ftiretration o ce,1
3. Othe coirts „an t r tripdgq4aid courts;
4. InadecrSaWof the o 45hine ;for- ffec uating. the right sought to
be maintained; Ct•Z,
5. Forum the No pticu acAhtpres he se, 1
6. Evidenceend witness ak*Irbe,-rppqily..a\tallable in theorum; and
7. Difficulty olvscertpinih l iotAnliavv" (SEMPIO-DIY, Handbook
on Conflict orLafil)
ws :-1)vjherei E rP 0-DIY, Conflict of Laws].
Nk
Q: What are the three conse*tvz.......• Uti65,05/ t- dived in judicial resolution of
Conflict of Laws problems?
ANS: The three consecutive phases are: Jurisdiction, Choice of Law, and Recognition
and Enforcement of Judgments (Raytheon International, Inc. v. Rouzie, G.R. No.
162894, February 26, 2008).
Q: What is a Long-arm Statute?

ANS: It is a law that allows a plaintiff to make a claim against a defendant who is a non-
domiciliary of a state, provided there are minimum contacts with the forum to justify
jurisdiction over him. These statutes specify the kinds of contacts upon which jurisdiction
will be asserted, such as the commission of a tortious act within the state, the
celebration of a contract there or presence of property owned by the defendant
(COQUIA, Conflict, supra at 36.).
Q: What is meant by the Minimum Contacts Test and Fundamental Fairness Test?
ANS: Minimum Contacts Test provides that personal jurisdiction is constitutionally
permissible when a defendant has minimum contacts with the state where a lawsuit is
brought such that notions of fair play and substantial justice would not be offended
(International Shoe Co. v. Washington, 326 U.S. 310, December 31, 1945). Such,
380
.............................................
contact, ties or relations may be evidenced by its doing or transacting business or

activities in the forum state. It protects the defendant against the burdens of litigating in
a distant or inconvenient forum (World-Wide Volkswagen Corp. v. Woodson, 444 U.S.
286, January 21, 1980). Fundamental Fairness Test serves to protect citizens generally
against unjust and arbitrary governmental action, and specifically against governmental
procedures that tend to operate arbitrarily. It serves as an augmentation of existing
constitutional protections or as an independent source of protection against state action
(Doe v. Poritz, 142 N.J. 1,108, July 25, 1995).
Q: Define Choice of Law.

ANS: Choice of law is an issue in conflict of laws case which seeks to answer the
following important questions:
1. What legal system should control a given situation where some of the
significant facts occurred in two or more states; and
2. To what extent should the chosen legal system regulate the situation
(Continental Micronesia, Inc. v..Basso, G.R. Nos. 178382-83, September 23,
2015). V
0
•;' ''. ..:,,Z6
Q: What should be considered,:.iki:04:14Ing the propriety of contracting parties'
choice of forum and its incident04L
ANS: The following should be corOld000,103tour,
6 .
1. The availability and OequaakOlfOoTitelitalown'tnbunal; and
2. The question 9tWtiere, as beleen the forum court and foreign court, the
balance of interests inherinzin,,,Aidispute weighs TA heavily (Saudi Arabian
Airlines v. Reesehcio, et al.111t.ig No. 198587, Jantkrk14, 2015).
4 {1:,4.-• e 1 ‘
Q: What is Scriveners
19-- Err&' : '
IF if
ANS: Scrivener'sErrocimeans failure of I agreement to evreA the intention of the
parties due teong„t4rViology„missingierminolo yi,490pca oestiiip Because there
is failure to express the teuelittentgitthe p ies, the agige dis interpreted according
to its plain or obvious meaning (PE BENI7r Conflict of La .2 6), p. 82) (hereinafter
.1fi.• .
PE BENITO, Conflretjedi-' , ,,
, 5. .
As it
A
Q: What are Conflict RilJesTP
.;.11.1ite. . .., . —0
ANS: Conflict Rules a e provistomModh_n ob i-oWn 'Taw which governs a factual
situation possessed o 41 foreig 'element. It is usually expressed in the form of an
abstract proposition that4gle legal question is governed by the law of a particular
country to be ascertaineoPin 'the manner indicated in the provision (SEMPIO-DIY,
Conflict of Laws, supra at 22).
Q: What are the two kinds of conflicts rules? Give examples for each.
ANS: The two kinds of conflicts rule are:
1. One-sided rule — indicates when Philippine law will apply, e.g. Art. 15 and Art.
818 of the Civil Code only apply to Filipinos; and
2. All-sided or multilateral rule — indicates whether to apply the local law or the
proper foreign law, e.g. Article 16par. 1 and Article 17 par. 1, Arts. 1763 and
1039 of the Civil Code (SEMPIO-DIY, Conflict of Laws, supra at 23).
Q: What is Characterization in reference to Conflict of Laws?

ANS: Characterization in Conflict of Laws is the process of assigning a disputed
question to its correct legal category such as torts, contracts, family law, or property. It is
also known as "classification" or "qualification (SALONGA, Private International Law,
(1995) p.140) (hereinafter SALONGA, Private International Law].
381
•-e
Q: What are the rules on characterization of procedural and substantive rules?

ANS: If the issue in the case is substantive, apply foreign law. If it is procedural, apply
the forum law or lex fori.
Note: The following are guidelines in determining as to whether the matter pertains to
substantive law or procedural law:
1. Questions of evidence — procedural matters governed by forum law;
2. Prescription of action and Statute of frauds — consider what the parties had in
mind at the time the transaction took place and proceed to apply the intended
law in its totality. An exception is if the subject-matter is property located in the
Philippines, in which case Philippine law, being the lex situs, applies
(SEMPIO-DIY, Conflict of Laws, supra at 27).
Q: What is a borrowing statute? Give an example of a borrowing statute under

Philippine law.
ANS: A borrowing statute is a legislative exception to the conflict-of-laws rule holding
that a forum state must apply its own atute.ofamitations; it specifies the circumstances
in which a forum state wily y another stpekstztute of limitation (Black's Law
Dictionary, 8th ed.,2004).,One fo .,45)f tkopwhii6tgtUtepcovides that an action barred
by the laws of the plaspKv 'er cquedrwill.co, bd enforced, the forum even though
the local statute hasiriot ru galfisi it. Section 4't 'bf,,?cfrCp'de\of Civil Procedure is of
this kind (LWV Co sfn?eh o ratiorrrTOpor,G4: No&I7 3 • July 13, 2009).
Q: What is Dep# gage?

p zs\!.
ANS: From the french ord Fleceper" m601pg "to dis4ct". ent aspects of the
case involving/ aor ign el ment malt 9overne by systems of law
(LIPSTEIN, Gerfgralrlfrincipl otAVatell tejigignal Law, (f 72) p. 214) [hereinafter
LIPSTEIN, Pig/late ritemationl I Lawk - )pamisri
Q: What is theLenv,
ANS: Renvoi Dtestli attabresepi ted is referred by
the conflict of lags rules the conflict of laws rule of which
in turn refers thenatter Kird state/ (COQUIA, Conflict,
supra at 102).
Reference is made back

to the law of forum:
MAr
ReLarenc_ e ta
thirettateies 3
That which occurs when
the local court, in
involves 2 laws; laws; adopting the foreign
court theory, discovers
that the foreign court
accepts the renvoi
(SEMPIO-DIY, Conflict
of Laws, supra at 62).
Q: What is the effect of the Renvoi Doctrine?

ANS: Since the conflict rule in the foreign country refers the matter back to the
Philippines (the place of domicile), our courts have no alternative but to accept the
referring back to us. If our courts will do otherwise and throwback the matter to the
foreign country, the problem will be tossed back and forth between states concerned,
resulting in "international football" (In the Matter of Testate Estate of the Deceased
Edward E. Christensen, G.R. No. L-16749, January 31, 1963).
382
Q: What is the Desistment Theory?
ANS: Also known as the Mutual Disclaimer of Jurisdiction Theory, it states that the
forum court upon reference to another state's law sees that such law is limited in
application to its own nationals domiciled in its territory and has no provision for
application to nationals domiciled outside of the territory. Hence, the local court will
apply local law. This has the same result as the acceptance of the renvoi doctrine but
the process used by the forum court is to desist applying the foreign law (PARAS,
Conflict, supra at 216).
Q: What is Processual Presumption of Law or Presumed Identity Approach?

ANS: Processual Presumption of Law or Presumed Identity Approach means that if the
foreign law is not properly pleaded or proved, the presumption of identity or similarity of
the foreign law to our own laws, otherwise known as processual presumption, applies
(Continental Micronesia, Inc. v. Basso, G.R. Nos. 178382-83, September 23, 2015).
Q: What are the exceptions to the requirement that foreign laws must be pleaded
and proved before they can be conSiared by the court?
ANS: The exceptions are: (FUL) ,45' 1 .. ..,:ig.'6
,i 4,
1. Presentation of a ForeAttkat'ed attorney who will testify in open court
concerning his/her knowre:dg$100 law in question;
2. Recognition of existencebfibldri ers I y,known lawTiand
3. Lack of objection to iglOrorighiles n a bent,;,';pmea ty (PE BE . NITO, Conflict,
supra at 80). ,,,.,0" .
A 1
.k5i.
Q: What is Personal Lpityt '''.
1 i
ANS: The law which,dttackes3tO'a'perso
. cAN...•• ..ii ,2, wherever he may go ' nd generally governs
his status, capaptseeconditkonNfamily.rela s and the 9 secluerkes of his actugions.
It allows court0 exerciselurisdictioftr ermine the over ing choice-of-law rule on
a specific situ,_ transaction,, involvi persoNg er ve ay be (SEMP10-
DIY, Conflictle Lam grajat 36,-COQ ConflicNezdag personal law of
an individual is hts,,qationOW.
V715° %
Q: Distinguish legislative jurisdiction from judicial jurisdiction over a person's
status.
ANS: Legislative jurisdpon ovekte at siis4he owe - f his personal law to govern
his status wherever he oes,h.We judicial jurisdiction is the power of the courts to
decide questions or coriteove
v.4. 4. les concerning one's status (SEMPIO-DIY, Conflict of
Laws, supra at 73).
Q: Distinguish Domiciliary Theory, Nationality Theory and Situs Theory on how

the Personal Law of an individual is determined.
• • Nationality Theory
- Domiciliary Theory • Situs Theory
(Lex National')
States that status and The status and capacity The particular place or
capacity of a person is of an individual are situs of an event or
determined by the law of determined by the law of transaction is generally
his domicile. his nationality or national the controlling law
law (CIVIL CODE, Art. (SEMPIO-DIY, Conflict of
15). Laws, supra at 30).
Note: The Philippines follows the Nationality Theory (SEMPIO-DIY, Conflict of Laws,
supra at 31).
383
Q: What is the theory of effective nationality?
ANS: Within a third state, a person having more than one nationality shall be treated as
if he had only one. Without prejudice to the application of its law in personal matters and
of any conventions in force, a third state shall apply the nationalities which any such
person possesses, recognize exclusively in its territory either the nationality of the
country in which he is habitually and principally a resident, or the nationality of the
country with which in the circumstances he appears to be in fact mostly connected
(Hague Convention on Certain Questions Relating to the Conflict of Nationality Laws,
Art. 5).
Q: What is derivative naturalization?

ANS: It is Philippine citizenship conferred on:
1. The wife of a naturalized husband;
2. The minor children of a naturalized father; and
3. The alien wife of a natural-born or naturalized citizen, the marriage having
taken place after the husbaRts.naturaligation (SEMPIO-DIY, Conflict of Laws,
supra at 45). 40.''.-.
k.
4. Minor child of those why:., Philippine citizenship after August 29, 2003
(RA No. 92,25;(ofhproig)„knii wm,kg..4.„„the Citizenship h .%
Retention and Re-
AcquisitionA t of2p03rSec. 5). At1 /4 „..1.• },, z)
, ." „.....tar,,,,,,,.
f 'Ni.t) ',,,, 4,,,- i, • ,.
...... ,. ----- . '4'4.,.\ _
Q: What are the"4,1_e ifron the domicile' of:A1) niindrs;,e(prharried women; (3)
„. , •
mentally disabled pasonsl (4) peoplOePt• under campulskin; compulsion; and (5) public
officials? ik e r'l
/—... I. I : •./;%- ..) '
ANS: The rules on domicile a e FgTallow follows;
. : • ti . 1
1 .,.,...'''k
1. Minois— A Icriinor olloWilie 114Flprtii6ireof is par nts. f1/4F domicile, once
acquired ib retaine untik*,:riAw4Vie is ained (Rovaldez-Marcos v.
ComPssio on ons, G.k4ki::12119976, bp rl8,. f995).
2. Married Imo en—, , prewri?tiorilt at 311 - e4 de, auterhptically gains the
husbg 6s do. id!' t,14, ''per (iifip pkrakup, l ' arria e cannot be inferred from
the us of the Naiab be” in 'Articf0, of the Civil9Code (Romualdez-
Marcos . Com iqsion•chkectithisf_t ..(RNtVo. 11,0676, S Iptember 18, 1995.).
3. Mentally Ilisabletkparsti`n iTeSurp,eff that of person with mental
disability cAnnot a•ciIireaorrtibilb-ort„.. h-oice bk,custof his inherent inability
to decide wlier,e to et: 'ke *;p"is4lomeA—MeN4c1.3.9.1show that a person with
mental disability'iskpeftake of ii.pdp;*Adinftspact and its consequences, he
may be able to acquire*Momicilefofichibibee(COQUIA, Conflict, supra at 231).
4 People kept under physialifirtagompulsion (e.g., military personnel,
prisoners, and persons with disabilities confined in institutions)—A
person who is under compulsion is in that place not as a result of his volition. If
he intends to remain even after the compulsion has been removed, such as
separation from service of a soldier or release from imprisonment of a convict,
then such person will be able to acquire a domicile of choice (COQUIA,
Conflict, supra at 232-233).
5. Public officials—Mere filing of certificate of candidacy does not constitute a
waiver of status as a permanent resident or immigrant of the United States.
The waiver should be manifested by some act or acts independent of and
done prior to filing his candidacy for elective office in this country (Caasi v.
Court of Appeals, G.R. No. 88831, November 8, 1990).
384
i,i'
: ;._ifiti.;.V..7.1,
Q: What law shall govern marriage as a contract?

ANS:
1. In determining the extrinsic validity of a marriage celebrated abroad, the
following are the rules:*
a. Between Filipinos, lex loci celebrationis shall apply without prejudice to
the exceptions under Articles 26, 35 (1), (4) and (6), 36, 37 and 38 of
the Family Code (bigamous, polygamous and incestuous marriages),
and consular marriages.
b. Between foreigners, lex loci celebrationis shall apply except if the
marriage is: (1) highly immoral (like bigamous and polygamous
marriages); or (2) universally considered incestuous, i.e. between
brothers and sisters (whole or half-blood, whether the relationship is
legitimate or illegitimate); and between ascendants and descendants;
and
c. Mixed. Apply the rules on (2) to uphold the validity of the marriage.
2. In determining the intrinsic validity of marriage celebrated abroad, the intrinsic
requirements are controlled.V.0 parties' personal laws which may either be
their domicile. 'or nationality4Vugh valid in a foreign country, certain
marriages may be void lq:t1,10:011111p,pines on grounds, of public policy, as those
enumerated in Article 38,:bfitifeAtriily
• Code (COQUIA,' Conflict, supra at 254-
262).
sag
Q: What law shall govern:the determination of the grounds forthe annulment and
declaration of nullity0piiiarriage?..,la
ANS: It is the law of trOpl4ce of ceiebfa ton or /ex loci celebrakonis that must govern,
subject to certain excAgiorig(CIVIL CODE. rt. 17). / •
0
. 0 1-poti,„
Q: What is thelislationattlifPrincipleor L 4 Nationaffil
ANS: The NaVirdlitkP,rinelple states that a,d s relatiqg to d duties, or the
status, conditiOn and leAt capOty, of persons dra ,mod on citizens of the
Philippines, everktipuAllying abrodifr, (CI). ° CODE, Art.
Q: What law shall Netwmingwhether th,04hildis legitimate or illegitimate?

ANS: Based on the natranggprinciple,,,ifaetftave a common national law, the
same shall apply .(CIVIitirbODE40775PrWaTett Whaa different nationalities, the
national law of the fatal' mustWconsulted (SEMPIO-DIY, Conflict of Laws, supra at
94). la
Aft
Q: What is the rule of Lex Rei Sitae?
ANS: The rule of Lex Rei Sitae states that the real property as well as personal property
is subject to the law of the country where it is situated (CIVIL CODE, Art. 16).
Q: What are the exceptions to the rule of Lex Rei Sitae? (CIAO)
ANS: The following shall be governed by the national law of the person whose
succession is under consideration and not by the law of the country where itiesittiated:
1. Capacity to succeed (CIVIL CODE, Art. 1039);
2. Intrinsic validity of testamentary provisions);
3. Amount of succession rights; and .
4. Order of succession (CIVIL CODE, Art. 16). •
Q: What is the rule of Lex Loci Celebrationis?

ANS: The forms and solemnities of contracts, wills and other public instruments are
governed by the laws of the country in which they are executed (CIVIL CODE, Art. 17,
par. 1).
385
• •C-...,A; ' Li
?
Q: What is the difference between Lex Nationalii, Lex Rei Sitae, and Lex Loci
Celebrationis?
A: The differences are the following:
Lex Loci
Lex Nationalii Lex Rei Sitae
Celebrationis
As to governing law
Article 15 of the Civil Code. Article 16 of the Civil Article 17 of the Civil
Code. Code.
As to basis for jurisdiction
Citizenship is the basis for The law of the place The law of the place
determining the personal law where the property is where the contract
applicable. situated is the basis was executed is the
,—ror
detering4e
itl law basis for determining
tyG apiplidab e/ the law applicable.
.4e# ih
As to scope
. . ,.f AV^ 1 ,"". ...—,T---,...— N
Covers family rig an 44:iuges,
? Coyors botrearta
% •44 „covers only the
status, condilio ;pergoneffrope
egal 1(, r . -*e" ,-4forips and
If -4m. Zns.
capacity of pe ons. .: - 4.. c soli-trinities (extrinsic
z V '..
il (ialiclity) of contracts,
mill6,1 and other
ub iq instruments.
a
As to exceptions
The provisiCiqni dk Art fe 26, par. 1 of

Par. 2 of t e Family t9%
i21 7nd the amity Code, i.e.
pertaining to valid Civil 6e, al marriages
obtained abroa ‘41,
,- 1 the 'Caga9fits cceed is olemnized outside
spouse capacitating him o~rfe --gi
oV8rn 4d-0,4816:late; the Philippines, in
to remarry and extbqg -ffifk accordance with the
same capacity to the'Ripinq deNekl1/4 . .k laws in force in the
spouse has been modifieeby,,, country where they
the Republic v. Manalo (G.R. were solemnized,
No. 221029, April 24, 2018) and valid there as
ruling providing that such such, shall also be
foreign divorce proceeding valid in this country,
whether initiated by the Filipino except those
or foreign spouse would prohibited under
produce the same result. Based Articles 35(1), (4), (5)
on a clear and plain reading of and (6), 36; 37 and
•
the provision (Art. 26, Par. 2 of 38, and intrinsic
the Family Code), it only validity of
requires that there be a divorce contracts(C/V/L
validly obtained abroad. The CODE, Arts. 15, 16,
letter of the law does not 17 and 26).
demand that the alien spouse
should be the one who initiated
the proceeding wherein the
divorce decree was granted.
Whether the Filipino spouse
386
4),.v;;T:401.4•1'...t••••.. • „:
initiated the foreign divorce

proceeding or not, a favorable
decree dissolving the marriage
bond and capacitating his or her
alien spouse to remarry will
have the same result: the
Filipino spouse will effectively
be without a husband or wife.
Q: What is the State of the Most Significant Relationship Rule?

ANS: This rule provides that the law of the place with the most connection to the dispute
shall prevail in case of contractual conflicts of law. This is basically a matter of
convenience and practicality as it seeks to apply the law of the place that has the most
connecting factors to the contract (PE BENITO, Conflict of Laws, supra at 102).
Q: What law shall govern (1) One:siOti city to execute the will (2) the formality of
execution, (3) the capacity of ReAsAherit from another; and (4) the intrinsic
validity of the testamentary progjAn? tIt
ANS: The following are the answers.. l'
'I. One's capacity to execute` kie i is-governed •6 his national law (CIVIL
CODE, Art. 15); 1(84.
05o .
2. The,aws of thecsAtntry in w1 idh hey are exec -'&1 all govern the formalities
of the executidnf the will K VIL, CODE, Art. 17, pa
3. The nationaritaw„of the ciece ent shall govern o es capacity to succeed
(CIVIL coogg 03,9); Ad
4. The nalqar lad qtaill'e decedgkt shall govern t o it rinsic validity of the
testartieltary.mo isions (OW OWE, Art. It, p 2; fABUYA, Persons,
supra-904445F*
fP
Q: What law shatgoVrtir adiiiiistr tton of the estatAktdeceased person?
ANS: Administrati,st• ovemed 5 t b t e law on succession (national law of the
deceased) but by thb actual ex fori — u oint of distribution. The forum is the
place where he was aRepi ed, that is =f the domicile in the case of the
domiciliary administrakfrARAS
1 Mk 5
•
% _i t
Q: What law shall gove gAmus of liability and damages for torts in general?
ANS: Lex loci delicti col or the law of the place where the quasi-delict was
committed shall govern (SEMPIO-DIY, Conflict of Laws, supra at 131).
Q: When may liability for foreign torts be enforced in the Philippines?

ANS: Liability for foreign torts may be enforced in the Philippines if:
1. The tort is not penal in character;
2. If the enforcement of the tortious liability will not contravene our public policy;
or
3. If our judicial machinery is adequate for such enforcement (COQUIA, Conflict,
supra at 390).
Q: Explain Qaver's principle of preference.

ANS: A higher standard of conduct and financial protection given to the injured party by
one State is applied by the State where the injury happened, if the latter State adopts a
lower standard of conduct and financial protection to the injured (SEMPIO-DIY, Conflict
of Laws, supra at p.134).
387
C. HUMAN RELATIONS (ART/CLES19-22)
Q: Distinguish Articles 19, 20 and 21.
Article 19 Article 20 I Article 21

As to scope
Describes the degree of care Concerns violations of Concerns injuries that
required, so that the failure to existing law as basis for may be caused by acts
observe the same may justify an injury. which are not
an actionable tort when it is necessarily proscribed
alleged together with Article by law.
20 or Article 21. Contains
what is commonly referred to
as the principle of abuse of
rights, it sets certain
standards which must bets
observed not only kV e
exercise of one's rights, bu
also in the perfoXdfice
one's duties.
"4,
As to remedy
By itself, it is 'ION asis fi —May-be-dped-as-a-basis of l
ay fie sed as a basis
an actionable-tort;, ari,!actiorigor dafripgesi otr"dn action for
J daE0..a.
As to requirerrentfor: recoverability
ffirAltitle requires that
•the edt& willful
As to applicability
Lays down a rule of collet, lipttes.te.bottrrviggi a Applies only to willful
for the government of ha an jp411110- are acts done contra bonus
relations and for the dbr ,..zzatt-or t mores
maintenance of social order
(St. Martin Polyclinic, Inc. v. LMV Construction Corporation, G.R. No. 217426,
December 4, 2017)
Q: What are the requisites for abuse of right?
ANS: The requisites are:
1. Existence of a legal right or duty;
2. Right or duty is exercised in bad faith; and
3. For the sole intent of prejudicing or injuring another (Albenson Enterprises
Corp. v. VA, G.R. No. 88694, January 11, 1993).
Q: What is the doctrine of Volenti Non Fit Injuria?
A: It refers to self-inflicted injuries or to the consent to injury which precludes the
recovery of damages by one who has knowingly and voluntarily exposed himself to
danger, even if he is not negligent in doing so (Nikko Hotel Manila Gallen, et al. v.
Reyes, G.R. No. 154259, February 28, 2005).
388
Q: What are acts contra bonus mores and what are its elements?
ANS: Acts contra bonus mores are acts contrary to morals.
The elements are:
1. There isa legal act
2. But which is contrary to morals, good customs, public order, or public policy;
and
3. It is done with intent to injure (Albenson Enterprises Corp. v. CA, supra);
4. It presupposes loss or injury, material or otherwise, which one may suffer as a ,
result of such violation (Cogeo-Cubao Operators and Drivers Association v.
Court of Appeals, G.R. No. 100727, March 18, 1992).
Q: What is Accion In Rem Verso? •

ANS: Accion in Rem Verso is an action for recovery of what has been paid or delivered
without just cause or legal ground. Under Article 22 of the Civil Code, if a person
acquires or comes into possession of something at the expense of another without just
or legal ground through an act or of performance by another or any other means, he has
the obligation to return the same (RABUYA` Persons, supra at 80).
Q: What are the requisites of AcblopirifFIn Verso?

ANS: The following are the requisitesWpkton In Rem Verso: (NEWS)
1. The plaintiff has No other 4..400tasethipn contracts quasi-contract, crime or
quasi-delict; • .14a
2. The defendant,hasen Enriched; 11r
445VfC q
3. - The enrichmepletif the defendant
--Asq is Without just or le i ground; and
4. The plaintiff lip,SOffered a loss1HABUYA, Person's, stIqra at 80)
Q: What is the differencetbetweerfAcciori

difference In Rem Versb arid Solutio Indebiti?
ANS: Mistakeerg. an essential element olution ind biti. But i the accion in rem
1
verso, it is tit t that4,11,ere should hay\ *sta Ain the payment
rso scipra,,,480)._,
(RABUYA, Pens,
LI:43.:'"" •
1 4s ait eg.ila, 6..t.
A. PERSONS
Q: Distinguish juridicalcaRacity from bapacitifto act.
ANS: The distinctions are the following:
Juridical Capacity Capacity to Act

Definition
Fitness to be the subject of legal Power to do acts with legal effect

relations
CquiSitiOn?
Inherent Acquired through the fulfillment of

specific legal activities
ass
Only through death Through death and other causes
389
In relation to the other
Can exist without capacity to act Exists always with juridical capacity
Limitation
None Articles 38 and 39 of the Civil Code
(1 PARAS, Persons, supra at 222)
Q: What are the restrictions on the capacity to act?

ANS: The restrictions on the capacity to act are the following: (MI2D-PC)
1. Minority;
2. Insanity or Imbecility;
3. State of being Deaf-mute;
4. Prodigality; and ,,tx,,„,,,getc,
-Vro
.14
5. Civil interdiction (CIVItfCODE,WArtt 35).

1
!•••• 4'
Q: What are the circtrrsti-nabdiltà
st. rt modifpoOntit capacity to act?
ANS: The circumstances thatincith
: fy or limit capaCitShtdàct afq The following:OF-I-PAID-
TAPA)
1. Insanity',
2. Family
3. Imbe
4. Penalty'
5. Age;
6. InsolvejAyi
7. Statelorl3ei
8. Trust es tp; Fr?,
9. Alien
10. Prodig '‘`.•
11. Absenc /
Q: When does civil grsortal ,co n
ANS: The civil personalibt-6fAhe-chirshall-commeAffo" e time of his conception
for all purposes favorable'to hitn(hubjedt, tki&itlirgrrtents of Article 41 of the Civil
Code (P.D. No. 603, Art. 5). lylt.
Q: What is the rule for a fetus to be considered as born?
ANS: For civil purposes, the fetus is considered born if it is alive at the time it is
completely delivered from the mother's womb. However, if the fetus had an intra-uterine
life of less than seven months, it is not deemed born if it dies within twenty-four hours
after its complete delivery from the maternal womb (CIVIL CODE, Art. 41).
Q: How is civil personality extinguished?

ANS: The civil personality is extinguished as follows:
• 1. Natural persons — by death (CIVIL CODE, Art. 42);
2. Juridical persons — in accordance with law (CIVIL CODE, Art. 45).
Q: What are the conditions for the application of the survivorship rule under
Article 43 of the Civil Code?
ANS: The conditions for the application of survivorship rule are as follows:
1. There is a doubt, as between two or more persons, as to which of them died
first; and
2. They are called to succeed each other.
390
Note: Whoever alleges the death of one prior to the other, shall prove the same; in the
absence of proof, it is presumed that they died at the same time and there shall be no
transmission of rights from one to the other (CIVIL CODE, Art. 43).
Q: Who are juridical persons?

ANS: The following are juridical persons:
1. The State and its political subdivisions;
2. • Other corporations, institutions and entities for public interest or purpose,
created by law; their personality begins as soon as they have been constituted
according to law; and
3. Corporations, partnerships and associations for private interest or purpose to
which the law grants a juridical personality, separate and distinct from that of
each shareholder, partner or member (CIVIL CODE, Art. 44).
Q: What are the rights of juridical persons?

ANS: Juridical persons may acquire and..lpssess property of all kinds, as well as incur
obligations and bring civil or criminal,qq(kSp, in conformity with the laws and regulations
of their organization (CIVIL CODEr Ait .
46
Q: What are the rules in the use''.of Ortianle by the child?
ANS: The rules are as follows: ap ggtAit•
1. Legitimate child shall* thOldtirtigre'OftiretheiG/V/L CODE, Art 364);
2. Legitimated chiL d0I1 use thqsfname of the fattiopla CODE, Art. 364);
3. Child conceirefore the4i,crie annulling avoid, I marriage shall use the
surname of t egatfier (CIVIpeo-D,E, Art. 369);
4. Illegitimate cad i allarge the sultme of the mother (C rt.
CODE, Art. 368);
Note: Illegitti:natd•schilcIren may the sumarn0 of heir ather if their filiation
hasibeen e9vra. sly recognized y the fathir through the record of birth
appatitigjn3thibiyil register, o hen anoATisaloA 'n. public doCument or
private handwcitt?OinstriAgnt is ade by tliktber ided, the father has
it
the righLto insr' an actipn 7_13re the regulate o prove non-filiation
during hiqtrair tire < AMILCODIV, Art. 176 as amended by RA 9255).
5. Adopted CA .shall se the sum e-oft e adopter (CIVIL CODE, Art. 365).
Q: What are the ruleslin' he usee6frgbitameJa'a ame • woman?

kt. .4*-
ANS: A married woman use
1. Her maiden fi'r'S'42Eiffand surname and add her husband's surname, or
e.g. Maria TorregGid2
• 2. Her maiden firstname and her husband's surname or
e.g. Maria Cruz
3. Her husband's full name, but prefixing a word indicating that she is his wife,
such as "Mrs."
e.g. Mrs. Jose Cruz (CIVIL CODE, Art. 370).
Q: What is the rule in the use of surname of ihe.Wife 'in case of annulment of
marriage?
ANS: It depends:
1. If the wife is the guilty party, she shall resume her maiden name and surname;
or
2. If she is the innocent spouse, she may resume her maiden name and
surname. However, she may choose to continue employing her former
husband's surname, unless:
a. The court decrees otherwise, or
b. She or the former husband is married again to another person (CIVIL
CODE, Art. 371).
391
Q: What is the rule in the use of surname of the wife in case of legal separation?
How about in case of death?
ANS: When legal separation has been granted, the wife shall continue using her name
and surname employed before the legal separation (CIVIL CODE, Art. 372). On the
other hand, in case of death of the husband, a widow may use the deceased husband's
surname as though he were still living, in accordance with Article 370 (CIVIL CODE, Art.
373).
Q: What are the rules in case of identity of names and surnames?

ANS: The rules are as follows:
1. The younger person shall be obliged to use such additional name or surname
as will avoid confusion (CIVIL CODE, Art. 374).
2. Between ascendants and descendants, the word "Junior" can be used only by
a son. Grandsons and other direct male descendants shall either:
a. Add a middle name or the mother's surname, or
b. Add the Roman NurwalsEjt and so on (CIVIL CODE, Art. 375).
Note: Article 375 restricts off. "Jynicr(ST,4. MARIA, Persons and Family
Relations (2015), p. 976) greteinOfter S14. MARIA; 'Deans].
Q: Can a person useitlifiere 4arfi TS and siiiiiariies7-'
ANS: No, as a ge eraf461,9.,No peon:shall-use_c1
p ,1fferentiamelend surnames (CIVIL
CODE, Art. 380).
Exception: The se p:len n es orsta9e:names, pr4videu it is donein good faith and
there is no injur to thirdfpers ns (CIVIL pppE, Art. 379,). r )1
Note: Usurpatiori-ofaLname nd-surnarliqtnay-be-thelubjec of-an action for damages
and other relic VIE COD Art:477), ijhe u.hautho "zed orOnle I use of another
person's sum e giv s a righ of acliArf tolthelager (C IL CODE,tt. 378).
Q: Can an ent' in a iv' km ter-be-ch nged-or-cd

ANS: No entry regiger shall Te lOged ,put a judicial order,
except for.
1. Clerica r typo raphej.ror_ s; a, d
2. Change f first n an:61r1 whi 5an be correq d or changed by the
concerne city or lirar-or n2y1 general in accordance with
the provision of thrr ag--4Z11219en.clg rifles efid regulations (R.A. No.
9048, Sec. 1, gsgmatied).
Q: What is a clerical or typogra'p • al
ANS: It refers to a mistake committed in he performance of clerical work in writing,
copying, transcribing or typing an entry in the civil register that is harmless and
innocuous, such as misspelled name or misspelled place of birth or the like, which is
visible to the eyes or obvious to the understanding, and can be corrected or changed
only by reference to other existing record or records (R.A. No. 9048, Sec. 2(3), as
amended).
Note: No correction must involve the change of nationality, age, status or sex of the
petitioner (R.A. No. 9048, Sec. 2(3), as amended).
Q: Who may file a petition for the correction of a clerical or typographical error in
an entry and/or change of first name or nickname?
ANS: Any person having direct and personal interest in the correction of a clerical or
typographical error in an entry and/or change of first name or nickname in the civil
register may file, in person, a verified petition with the local civil registry office of the city
or municipality where the record being sought to be corrected or changed is kept (R.A.
No. 9048, Sec. 3, par. 1, as amended). •
Note: All petitions for the clerical or typographical errors and/or change of first names or
nicknames may be availed of only once (R.A. No. 9048, Sec. 3, par. 5, as amended).
392
Q: Where shall the petition be filed if the petitioner (1) has already migrated to
another place in the Philippines; or (2) is a citizen of the Philippines presently
residing in a foreign country?
ANS: The petition shall be filed as follows:
1. In case the petitioner has already migrated to another place in the country and
it would not be practical for such party, in terms of transportation expenses,
time and effort to appear in person before the local civil registrar keeping the
documents to be corrected or changed, the petition may be filed, in person,
with the local civil registrar of the place where the interested party is presently
residing or domiciled. The two (2) local civil registrars concerned will then
communicate to facilitate the processing of the petition.
2. Citizens of the Philippines who are presently residing or domiciled in foreign
countries may file their petition, in person, with the nearest Philippine
Consulates (R.A. No. 9048, Sec. 3, pars. 2 and 3, as amended).
Q: What are the grounds for a change of first name or nickname?
ANS: The petition for change of first name or nickname may be allowed in any of the
following grounds:
1. The petitioner finds the :fieSt harrieor nickname to be ridiculous, tainted with
dishonor or extremely diffiduit 41.4te or pronounce;
2. The new first name or nicknO:lOas.:be911, habitually,,,and continuously used by
the petitioner and hp has liati!,prilifaMirAthat by that first name or
nickname in the `7
3c
3. The change wiMoid confupiOR.A. No. 9048, Seg4, as amended).
"*.
Q: When does proviskqn444ence takglace?
ANS: Provisional abStiCelgites place when:(DAW)
1. A perscr8isappei.iTtaim his.D cite;
.str.
Z A pe_Lsgp disappv,prs without Wilb an Agenttg adrpinister his property; and
3. His INfie rea158 ut,5Vre unknown ( IL COM 'ft8
"1041?
Q: What are theNpro,y4stiipal
.1 • measures provided by law in case of provisional
absence?
ANS: The judge may a;poi ) person to V him in all that may be necessary, at
the instance of: w
1. An interestediparty;
2. Relative; or F
3. A friend.
Note: The same rule shall be observed when under similar circumstances the power
conferred by the absentee has expired (CIVIL CODE, Art. 381). The appointment
referred to having been made, the judge shall take the necessary measures to
safeguard the rights and interests of the absentee and shall specify the powers,
obligations and remuneration of his representative, regulating them, according' to the
circumstances, by the rules governing guardians (CIVIL CODE, Art. 382).
Q: Is there a preference as to the appointment of a representative?

ANS: In the appointment of a representative, the spouse present shall be preferred
when there is no legal separation. If the absentee left no spouse, any competent person
may be appointed (CIVIL CODE, Art; 383).
Q: When can the court issue a declaration of absence of a person?

ANS: The absence may be declared under the following:
1. Two (2) years having elapsed without any news about the absentee or since
the receipt of the last news; and
2. Five (5) years in case the absentee has left a person in charge of the
administration of his property (CIVIL CODE, Art. 384).
393
Note: The judicial declaration of absence shall not take effect until six (6) months after
its publication in a newspaper of general circulation (CIVIL CODE, Art. 386).
Q: Who may ask for the declaration of absence?
ANS: The following may ask for the declaration of absence:
1. The spouse present;
2. The heirs instituted in a will, who may present an authentic copy of the same;
3. The relatives who may succeed by the law of intestacy; and
4. Those who may have over the property of the absentee some right
subordinate to the condition of his death (CIVIL CODE, Art. 385).
Q: May the wife alienate the husband's property, or that of the conjugal
partnership?
ANS: No, the wife cannot alienate or encumber the husband's property, or the conjugal
partnership, without judicial authority (CIVIL CODE, Art. 388).
Q: When does the administratioporterrererty,,o4the absentee cease?
ANS: The administration shallceas!e in nyclpf elolIQWirteases:
1. When the abs fg7leajs !A rs na I ,pry Oans r of an agent;
2. When the cie tOof t s„,abs-eligrinrov,ed 91 ,5dilittestate or intestate heirs
appear, ar
3. When Vpears„ bowing-10 ekopegocument that he has
acquire/1th e's pr lc y Mchas or o le\
Note: In these
trses, inistrat srta cese in t e pekora9 of his office, and
the property s all t the disposal_drfase_wh ay ha ri ht thereto (CIVIL
CODE, Art. 384 ‘tT\--;s [' P'''''''4
Q: What are tkyfoeil as to resu ion-II ...T:1

Bath u der theilkinj
ANS: In case fan • in IX \I3 fie prgs,
1. After bser late (7 6 is, 0-74:uped dead for all
purpo ~oit (CIVIL/ CODE, Art. 390,
par.1);
2. After ab e o-g\s pre,. med d ad for purposes of
opening OfikeN11:64 ehr &0 tjage of 75, in which
case, a pen Ny,grs-ts-suhc E, Ad. 390, par.2); and
3. After absence try icarh ,,§ med dead for purposes of
remarriage of the cds'elpreseliVykri six DE, Art. 41).
In case of extraordinary or q, the following
ualifia sence are the rules for all
purposes including those of opening succession:
1. After a period of four (4) years, the person shall
. be presumed dead; and
2. For purposes of remarriage of the spouse present, a period of two (2) years
shall be sufficient (FAMILY CODE, Art. 41).
The following shall be presumed dead under extraordinary or qualified absence after a
period of four (4) years: (VAD)
1. A person on board a Vessel lost during a sea voyage or an airplane which is
missing; period is counted from the loss of the vessel or airplane;
2. A person in the armed forces who had taken part in war;
3. A person in Danger of death under other circumstances and his existence has
not been known (CIVIL CODE, Art. 391).
Q: What is the effect if the absentee appears?
ANS: If the absentee appears, or without appearing his existence is proved, he shall
recover his property in the condition in which it may be found, and the price of any
property that may have been alienated or the property acquired therewith; but he cannot
claim either fruits or rents (CIVIL CODE, Art. 392).
394
Q: What are the rules under the Family Code as to the presumption of death of an
absent spouse in relation to a marriage contracted during the subsistence of a
previous marriage?
ANS: As a general rule, any marriage contracted by a person during the subsistence of
a previous marriage shall be null and void (FAMILY CODE, Arts. 41 and 35 (4)).
The following are the exceptions:
1. Before the celebration of the subsequent marriage, the prior spouse had been
absent for four consecutive years and the spouse present has a well-founded
belief that the absent spouse was already dead; or
2. In case of disappearance where there is danger of death under the
circumstances set forth -in the provisions of.Article 391 of the Civil Code, an
absence of only two years shall be sufficient (FAMILY CODE, Art. 41).
Note: Before contracting a subsequent marriage pursuant to Article 41 of the Family
Code, the spouse present MUST institute a summary proceeding for the declaration of
presumptive death of the absentee, without prejudice to the effect of reappearance of
the absent spouse (FAMILY CODElk-if 4/).The .Family Code prescribes as well-
founded belief that the absentee fOlreAd y dead before a petition for declaration of
presumptive death can be .grante.thtkOhibic v. Nolasco, G.R. No. 94053, March 17,
1993).
B. MARRIAGE
Q: What is marriage? ,actife;
ANS: Marriage is a stellocontractsiflpaminent union between a man and a woman
entered into in accordaite tith law.fabdiestablishment olconjtgal and family life. It is
the foundation of, ftrglyo'arid an inviolable social institution whose nature,
consequences, ZdincidejritsiFaregoverne
governe'
d iby law and n it subjecNto stipulation, except
that marriagePtilemepU s may fix thepro erty relationeduritig theinarriage within the
limits providetinAi#PV.(FAM/LY CODC Art. 1).
Q: Is there a presump~ioa f martjageliftiyhen two pers s sport themselves as
husband and wifeTolthe community fo 'several years despite having no record of
marriage?
ANS: Yes. A man andAa•woman who dp emselves as husband and wife and
known to the communityias-suchaVig edfffMtiWire mere fact that no record of
the marriage exists Wes no ' validate it, provided all requirements are present
(Mariategui v. COurt ofageals G.R. No. L-57062, January 24, 1992).
Q: What are the requisites of a valid marriage?

ANS: The requisites of a valid•marriage are the following:
Essential Requisites Formal Requisites n
•(FAMILY CODE, Art. 2) (FAMILY CODE, Art. 3)
1. Legal capacity of the contracting 1. Authority of the solemnizing officer,

parties 2. Valid marriage license;
a.Must be a male and a female; 3. Marriage ceremony where the
b.Must be eighteen (18) years .old contracting parties appear before
or above the solemnizing officer, with their
c. Not under any impediment personal declaration that they take
mentioned in Arts. 37 (incestuous each other as husband and wife in
marriages) & 38 (marriages void the presence of not less than two
for public policy); (2) witnesses of legal age.
2. Consent freely given in the presence
of a solemnizing officer. .
395
;.•-•••• ifr",”•::7:•.1.•:•;••••• 21.,:et:k•.,.•:r,....h.V.P;t5s.:vtgl
irl.'5:::'.c..j..•*g:Y. —,1;•••::: •
..7••••••
••• •
Q: What is the effect when there is absence, defect, or irregularity of any of the
formal or essential requisites?
ANS: The effects are:
Absence of any of the

Defect in any of the Irregularity in the formal
formal or essential
essential requisites requisites
requisites
GR: Marriage is void ab Marriage is voidable It does not affect the
initio (e.g. expired (e.g. consent obtained validity of the marriage but
marriage license, through force and the party responsible for
marriage by way of jest, intimidation). such irregularity may be
marriage of persons held civilly, criminally and
who are of the same administratively liable (e.g.
sex). absence of two witnesses
of legal age), except that
ExCeption: Where the marriage is voidable
.,, th 1Th ,----
either or both parties ,' ,. ky. . 1., ......„, ..f 0
.„„ .. 1 ., : where contracting party is
believed in good fat 'i, - ,,-.02.,=•-•.,..,-,, 4• ' 18 years old or over but
that the solen)nizina\ -'ear'''''' beiOw 21 without the
officer has le3 .; 4on'skt of the parents
authority to perform( am 4, (FAMILY CODE, Art. 4).
marriages (P),(1)?Lifi' /41.
CODE, Art. 35, par. 4.
1 I cif 'CJ
1
Q: Who are aithorized to solemmLe,cfn
-c-z.T
.. lb . ./.•-•
, waft? ,i g N.51.4
ANS: The perA'on authorize o solemnizearnagesprjejlie f9llowingi

1. Pries ra 'niste -D
irchur5fAll eligiaps sect, who must be:
a. b utho high refilrreli iOu sec 'sy
b. Registered it6's i) °fifth . *NW/ sce genera •
C. cting hin 611• -.of utho granted; and
d. Attest o of tlYe,p9r1L elp s o the jolemnizifig officers church or
religious sec AMk.-yesaa re7 ar4).
2. Municipal Ad o rs.,(W41:00GAVER ' NT CODE, Secs. 444
(b)(1)(xviii) and 17( )rxviii) •
Note: The term " ayor'llinclud qtkpice- aydr who is the "Acting Mayor" or
one who is merely actin •-as.a.,Mayo People v. Bustamante, G.R. No. L-
11598, January 27, 1959).
3. Incumbent members of the judiciary within their jurisdiction; _
4. Ship captains or airplane chiefs:
Only in cases of marriages in articulo mortis between passengers or
crew members; and
b. During the voyage, while the plane is in flight or the ship is at sea and.
during stopovers at ports of call (FAMILY CODE, Art. 31).
Note: Assistant pilot has no authority to solemnize a marriage even if the
airplane chief dies during the trip. (STA. MARIA, Persons, supra at 142).
5. Commander of a military unit, in the absence of chaplain provided:
a. He is a commissioned officer — rank should start from second
lieutenant, ensign and above (Webster Dictionary, 1991 Edition); and
b. Only in cases of marriage in articulo mortis between members of the
armed forces or civilians within the zone of military operation (FAMILY
CODE, Art. 32).
396
, ..„:„,„..„,„...,.,,,.....:.
(--
• ,,,.
,
ri
,.....4,3,,,-,2.:::,, ....,,,-.. ,s....4.;• - • -....':.,,,i.szi.;.;,:,--T4,,,*,,,,,h,i4.33'-'4,-;.oficrip.;14
6. Consul generals, consuls or vice-consuls of the Republic of the Philippines

abroad, provided:
a. Only in cases of marriage between Filipino citizens abroad;
b. The marriage ceremony is in accordance with Philippine laws (CIVIL
CODE, Art. 17);
c. He also performs the duties of the local civil registrar; and
d. Consuls on home assignment in the Philippines cannot solemnize
marriage (FAMILY CODE, Art. 10).
Q: What is the effect if a marriage is solemnized by a member of the judiciary

outside his jurisdiction?
ANS: If a marriage is solemnized by a judge of the Regional Trial Court, Metropolitan
Trial Court, or Municipal Court beyond his jurisdiction, there is absence of a formal
requisite in such a marriage, namely, the authority of the solemnizing officer. Hence, the
marriage is void unless either of the parties believed in good faith that such solemnizing
officer has authority to conduct such marrAge (STA. MARIA, Persons, supra at 141).
11
Q: What is the difference in tkeleff94 of marriages solemnized outside the
territorial jurisdiction of mayors:.'gstn:Wetid to members of the judiciary?
ANS: If the judge is not clothed**iltrijty to solemnize a marriage outside of his
territorial jurisdiction, there is a fotOtpalaS‘ce4.0.a formal ni requisite and not a mere
irregularity, which will render thp'tnefliagrithg.tirfifirp4.:.91 he
\1 fact that a mayor had
solemnized a marriage oyt0 of his !trial juriactio vq, not affect the validity of
the marriage. This is tplifere irregulft n the exercise offh;is authority to solemnize
marriage. While the agtbrij of the t-ridirkers of the judiciape to olemnize marriages is
confined by law to their to,urtft jUrisdidgbn, the authority of Vayors to solemnize
marriages is not. 4rofi finedt69461r to his erritorial jurisdictio . ThR Local Government
Code simply states that mayors are tutho ed to solen)nize marriages without limiting
the exercise 6frgubh am, 't to their terri al jurisctictip, BUY1„gersons, supra at
I* .3%
163). i
.1
, 1),
Q: What are the atithorize Ivenuef of ma
ANS: The fpllowingV4re the atiihorized ve
1. Chambers of the jud e or in ope
2. Church, chapOor empletoR
3. Office of consciffrgengraponsul or vice-consul (FAMILY CODE, Art. 8).
1,..,-
..,q
Q: What are the exceptiow to the authorized venues of marriages?
ANS: The following are the exceptions:
1. Marriage in articulo mortis; •
2. Marriage in remote places; and
3. Marriage at a house or place designated by the parties in a sworn statement to
that effect, with the written request of both parties to the solemnizing officer
(FAMILY CODE, Art. 8).
. . . . .
Q: Who is authorized to issue ivalid marriage license?
ANS: The local Civil Registrar of the city or municipality where either of the contracting
parties habitually resides, except in marriages where no license is required by law, is
the person authorized to issue a valid marriage license (FAMILY CODE, Art. 9).
Q: What is the period for the validity of a marriage license?
ANS: The license shall be valid in any part of the Philippines for a period of one hundred
twenty (120) days from the date of issue, and shall be deemed automatically cancelled
at the expiration of the said period if the contracting parties have not made use of it. The
expiry date shall be stamped in bold characters on the face of every license issued
397
•••
AN R .13
Q: What is the rule when either or both of the contracting parties applying for the
issuance of a marriage license are citizens of a foreign country?
ANS: When either or both of the contracting parties are citizens of a foreign country, it
shall be necessary for them to submit a certificate of legal capacity to contract marriage,
issued by their respective diplomatic or consular officials, before a marriage license can
be obtained. Stateless persons or refugees from other countries shall, in lieu of the
certificate of legal capacity herein required, submit an affidavit stating the circumstances
showing such capacity to contract marriage (FAMILY CODE, Art. 21).
Q: What are the exceptions to the requirements of a marriage license?
ANS: The exceptions are: (O-CRAMZ-5)
1. Marriages solemnized Outside the Philippines where no marriage license is
required by the country where they were solemnized (FAMILY CODE, Art. 26,
par.1);
2 Marriage in articulo mortis between passengers or Crew members may be
solemnized by a ship captain an airplane pilot not only while the ship is
at sea or the plans n flig t, u als'ott unng stopovers at ports of call
(FAMILY CODE, fr 30.,;
3. In Remote pl esidetcelOfeittaer party is so located that
there is no eans9fAr portation to enabkt 7nally appear before
the local Iver IL-Y1,530Eria 28).
4. Marriag cut mo is, hic rem Ins even if ailing party
subsereigyra wives (FA )LYB“D Ad. 2r);
5. Amon Musli s or membersAfAthnic cultt)ral rrAi 'es solemnized in
acco term 'th their uustunt • practlt g, ovided they are
sole nlied n acc rdalice —Nit ' ttipiaiCtistors, rites or " ctices (FAMILY
COD ,A 3);
6. Marra e i artic0r0 mortis 15 n pers s ithI n they one of military
ope ion het embCCO1—J ar orc sipt.4fivilians may be
solem ized by a a Lei itr ho s a 'do missioned officer
(FAMI Y COO , A
7. Marriages betwe lived together as husband
and wife r at le gal imp ainvent to marry each
other (FAATI Y
Q: What are the requi te90 exempti a living together as
husband and wife from proburin a mqffa ibe ae
ANS: The requisites for such exeMptionara owing:(5-No-PAS)
1. The man and woman must have been living together as husband and wife for
at least five f_5_1 years before the marriage;
2. The parties must have No legal impediment to marry each other,
3. The fact of absence of legal impediment between the parties must be Present
at the time of marriage;
4. The parties must execute an Affidavit stating that they have lived together for
at least five (5) years (and are without legal impediment to marry each other);
and
5. The solemnizing officer must execute a Sworn statement that he had
ascertained the qualifications of the parties and that he had found no legal
impediment to their marriage (Manzano v. Sanchez, A.M. No. MTJ-00-1329,
March 8, 2001).
Q: Should the absence of a legal impediment as provided in the preceding

question be for the entire five-year period of cohabitation?
ANS: Yes, this five-year period should be the years immediately before the day of the
marriage and it should be a period of cohabitation characterized by exclusivity —
meaning no third party was involved at any time within the five years and continuity —
398
ker,f;• ,•43.
meaning that the five-year period is unbroken (Nifial v. Bayadog, G.R. No. 133778,
March 14, 2000).
Q: Is there a necessity for a prescribed form or religious ceremony in order for a
marriage to become valid?
ANS: No prescribed form or religious ceremony for the solemnization of the marriage is
required. It shall be necessary, however, for the contracting parties to appear personally
before the solemnizing officer and declare in the presence of not less than two
witnesses of legal age that they take each other as husband and wife (FAMILY CODE,
Art. 6).
Note: The mere private act of signing a marriage contract, without a duly authorized
solemnizing officer, bears no semblance to a valid marriage and thus, needs no judicial
declaration of nullity. Such act alone cannot be deemed to constitute an ostensibly valid
marriage (Morigo v. People, G.R. No. 145226, February 6, 2004).
Q: Is marriage by proxy valid?
ANS: No, marriage by proxy Polemniz,Otere in the Philippines is void because of the
absence of the essentialrequitite•rtatl consent freely given• must be made in the
presence of the solemnizing office e absence of the formal requisite.thof the
contracting parties must personally a're efcire
q•
the solemnizing officer that they take
each other as husband and wife (BTA.. A ,g (sons, supp pt 136).
torV
.00 ). • OW
, Q; What is the effect when; e marriage rs solemnizidroutside the Philippines?
ANS: Generally,. Mena . e marriage Is solemnized oufkle the Philippines, in
accordance with the lamp in,force inSeAr untry where it is Slamnized, it is valid there
as such, and shall alsoIre'v lid in, this cou
_$0
The exception_plre:
1. In Cafe a Filipino contractN feign marriage which is ull and void in the
plat eresit,s solbonized e same— _ft' II siblti end void in the
Philippines even,auchAvali „ celebrate `.4 pine laws;
2. Foreign'twriraifthall noftbe ragnized in the Philippines if:
a. Cier8 ed.* a 'nation • lid is below eighteen (18) years of age
(FAMV CQDE, Art. 35,
b. Bigatri p61,gaato p vided in Art 41, (FAMILY
CODE,j rt. 35,A,. 14),
c: Contra ed th4,oV§h mistake of one party as to the identity of the other
(FAMIL ODE Art. 35, par.5);
d. Contracte o owing the annulment or declafation of nullity of a
previous marriage but before partition (FAMILY CODE, Art. 35, par. 6);
e. Void due to psychological incapabity (FAMILY CODE, Art. 36);
f. Incestuous (FAMILY CODE, Art. 37); and
g. Void for reasons of public policy (FAMILY CODE, Art. 38).
Q: What is the effect of divorce procured abroad to the subsistence of the

marriage?
ANS: Generally, divorce procured abroad is not recognized in the Philippines...
The exceptions are: •

1. Beiween two aliens — if valid in their national laws even if marriage was
celebrated in the Philippines; and
2. Between parties who were Filipino citizens at the time of celebration of
the marriage, but later on, one of them becomes naturalized as a foreign
citizen and obtains a divorce decree —The reckoning point is not the
citizenship of the parties at the time of the celebration of the marriage, but their
citizenship at the time a valid divorce is obtained abroad by the alien spouse
399
•
capacitating the latter to remarry (Rep. v. Orbecido III, G.R. No. 154380,
October 5, 2005).
3. Between a Filipino and an Alien - If there is a:
a. Valid marriage celebrated between a Filipino citizen and a foreigner;
and
b. Valid divorce obtained abroad by the alien spouse capacitating him or
her to remarry, the Filipino spouse shall likewise have capacity to
remarry under Philippine law (FAMILY CODE, Art. 26, Par. 2). Such
foreign divorce proceeding was whether initiated by the Filipino or
foreign spouse (Republic v. Manalo, G.R. No. 221029, April 24, 2018).
Note: Based on a clear and plain reading of the provision (Art. 26, Par. 2 of
the Family Code), it only requires that there be a divorce validly obtained
abroad. The letter of the law does not demand that the alien spouse should be
the one who initiated the proceeding wherein the divorce decree was granted.
It does not distinguish whether the Filipino spouse is the petitioner or the
respondent in the foreign,divorce ,proceding. The purpose of Paragraph 2 of
Article 26 is to avoyirthe absiisrd fitu9ti8,1-Pwbffe the Filipino spouse remains
married to the ajjell,spciAe who, aftel a for:elgri'divorce decree that is effective
in the country where it vOs.srendereq", is no longer married to the Filipino
spouse. Tile:pr,pvt§icipira corrective ml'ate s -toArp s s an anomaly where
the Filipip6 gpopSvIS tjed46‘ttreTfrTaniage44iilehe fpftign spouse is free to
marry tAripte:p-the4avrs.of is cfri(her,countey',. Whetho the Filipino spouse
initiatetl th'e' oreipn di orcemrciteedin or riot, a favorable 1, decree
dissol4ing th mamage bond 'grid, capacitating hi Q5,iiii r alien spouse to
x
rema illfr have , he same rpstilt:, the Itmo sT19.g, i II effectively be
withq, t a-hupand o witb:WEillfino-Iktiolinitilted a fofeignf!ivorce proceeding
is in ithe ..dame pla, andifin,,li ,e,pirdOmstapce as a Wilipillo who is at the
receiviiibleptl oran Wen initig,tatOceedind. .h:erefcre, the subject provision
1 ...,%•
shout \ nog \' istknction— n pt instpn j/it ilexten'ded as a means to
•-4 # ...
recog ize thtsidkil:pkecM t q.lolfej99/1 prce ecree on Filipinos whose
marita ties to heirVen‘ ,4fou es-pe/kOypred b't operation of the latter's
n(R law ep blidstuilik&el eR.016v2210251: April 4, 2018).
( • 1—/4S'. ,,d )
Q: What are the reguiremyn to-Dez.uhrtutt _.,,,b .., h.' petitioner before the local
court recognizes thelovig tiudgmerfrilec ei g he divorce?
. II,
ANS: Presentation soleFo orce decreMI4ot v ce. The fact of divorce must
. . i‘ /
still first be proven. Before a forelg divorce decree carfbe recognized by our courts, the
party pleading it must prove the divorceVga1M-and demonstrate its conformity to the
foreign law allowing it. In this case, petitioner was able to submit before the court the
1) Decision of the foreign court allowing the divorce; 2) the Authentication/
Certificate issued by the Philippines Consulate General in the place where the Decree of
Divorce was issued; and 3) Acceptance of Certificate of Divorce by the Petitioner and
the foreign spouse national. Under Rule 132, Sections 24 and 25, in relation to Rule 39,
Section 48 (b) of the Rules of Court, these documents sufficiently prove the subject
Divorce Decree as a fact (Republic v. Manalo, G.R. No. 221029, April 24, 2018).
Q: What are considered void marriages?

ANS: The following marriages shall be void from the beginning: (18-ALBI-53)
1. Those contracted by any party below eighteen (18) years of age even with the
consent of parents or guardians;
2. Those solemnized by any person not legally Authorized to perform marriages
unless such marriages were contracted with either or both parties believing in
good faith that the solemnizing officer had the legal authority to do so;
3. Those solemnized without License, except those covered the preceding
Chapter; •
400
',1,4T::;i•PFtia4A;Ixtkl
ri
g ff;-
c
4. those Bigamous•or polygamous marriages not failing under Article 41;

5. Those contracted through mistake of one contracting party as to the Identity of
the other; and
6. Those subsequent marriages that are void under Article 53 (FAMILY CODE,
Art. 35).
The following marriages shall be void from the beginning for reasons of public policy:
(CSI-APSLAK)
1. Between Collateral blood relatives whether legitimate or illegitimate, up to the
fourth civil degree;
2. Between Step-parents and step-children;
3. Between parents-In-law and children-in-law;
4. Between the Adopting parent and the adopted child;
5. Between the surviving spouse of the adopting Parent and the adopted child;
6. Between the Surviving spouse of the adopted child and the adopter;
7. Between an adopted child and oUgitimate child of the adopter;
8. Between Adopted children of thqame adopter; and
9. Between parties where one/withithe intention to marry the other, Killed that
othei person's spouse, or i-4*ink6pwn spouse, (FAMILY CODE, Art 38).
4.6
Void marriages also include: (PIW,Brii!.:
1.• Marriage contracted..* affsijja y fiti ,4,-ajitite,ritimet of the celebration, was
Psychologicallyppabacitated loicomply withelOential marital obligations
of marriage ;(Void even if .4chOincapacity becorikmanifest only after its
solemnizationT(FAM/LY CODg: irt. 36). 1`
2. Marriages pfkkeeghe'folfowingvre Incestuousianq voicl from the beginning,
whethactralationspip*tween thdlparties be legttimata clegitimate: ate:
a..:ebetween ascendantgandfascendants andegree; and
Ii4IBetsien'fikipthera and sisters wheffte O. ha blood .(FAMILY
ittcoDE, ArtA7). 3,4
3. Marriage,subteritehtly cbritactef-4 ithout a~ju ration of nullity of the
• previous Ornage*AM/LYCODS, Art. 40);
4. Subsequeilt rparria0 under Article,*, ere both spouses acted in Bad faith
(FAMILY CODE,Afej44).
4,tr dfroar
Q: What are the requigifes fodigYchological incapacity?
ANS: The requisites areIhAplIpwing: (GAO
1. Gravity— must b'egrralle or serious such that the'party would be incapable of
carrying out the ordinary duties required in a marriage;
2. JuridiCal Antecedence — Must be rooted in the history of the party antedating
the marriage, although the .overt manifestations may emerge only after the
marriage; and
3. Incurability — Must be incurable or, even if it were otherwise, the cure would be
beyond the means of the party involved (Santos v. Court of Appeals, G.R. No,
112019, January 4, 1995). '
Q: What are the things to be considered in invoking and proving psychological

incapacity?
ANS: The jurisprudential guidelines are:
1. Plaintiff has burden of proof;
2. Root cause of the psychological incapacity must be:
a. Medically or clinically identified;
b. Alleged in the complaint;
c. Sufficiently proven by experts; and
d. Clearly explained in the decision.
401
3 Incapacity must be proven to be existing at the time of the celebration of
marriage;
4. Incapacity must be permanent or incurable;
5. Illness is grave enough to bring about disability to assume essential marital
obligations;
6. Marital obligations refer to Articles 68-71, 220,221 and 225 of the Family
Code;
7. Interpretations of the National Appellate Matrimonial Tribunal of the Catholic
Church of the Philippines while not controlling should be given great respect;
and
8. Trial court must order the prosecuting attorney or fiscal and the Solicitor
General to appear for the state (Republic v. Molina, G.R. No. 108763,
February 13, 1997).
Note: The Court ruled in Marcos v. Marcos (G.R. No. 136940, October 19, 2000) that
there is no requirement that the person to be declared psychologically incapacitated be
personally examined by a physician,,Xthe.totalky of evidence presented is enough to
• sustain a finding of psychologicalincapacity-
1-
Q: Does the action ordeteriqelforStmilecidra top of absolute nullity of a marriage
prescribe?
44"
ANS: No, the action ortdgepse fo the-deplaratiorwf abso dte nullity of a marriage does
not prescribe (FAMj .C9DE,1 rt. 3 es.4nerVied IST.AN9. 853 ).
ir1R,
Q: Is there a n cessi to obtain a judidial declaration of 805 a previous void
marriage to contract ubse 'uent-rnariir
ANS: Yes. It ssary to obtfte-fn declaring: cre previous marriage
void because subs4quent arriags • lliOutsiLch de laration5o of the previous
marriage is in vd ab-init o in acco fl,;c 'with A p1.9,40, 52, an 53 of the Family
Code (STA. M RI rseSedA ra-at-292
Note: For other see?:9 asp h'CO. o geterm) tion of heirship,
• .•
legitimacy or illeemamof a \serge ettoi diseolution f property regime,
or a criminal cas for thdtimatte , j okuri 5ay" ponifie vali5i of marriage even
in a suit not dire institbV to e0i*M.. 1 _th Rrge spiong aVit is essential to the
determination of the -se (Nip dega. eiVO/3 78, arch 14, 2000).
Cin
Q: What is the status o arrtagdcon ac e ikti04 9\ttie ubsistence of a previous
marriage?
ANS: The general rule is that a ..marciage.. ntracted by any person during the
subsistence of a previous marriage shall be null and void (FAMILY CODE, Arts. 41 and
35, Par. 4).
The following are the excepiiOns:
1. Before the celebration of the subsequent marriage, the prior spouse had been
absent for four consecutive years and the spouse present has a well-founded
belief that the absent spouse was already dead; or
2. In case of disappearance where there is danger of death under the
circumstances set forth in the provisions of Article 391 of the Civil Code, an
absence of only two years shall be sufficient (FAMILY CODE, Art. 41).
Note: For the purpose of contracting the subsequent marriage under the preceding
paragraph, the spouse present MUST institute a summary proceeding as provided in
this Code for the declaration of presumptive death of the absentee, without prejudice to
the effect of reappearance of the absent spouse (FAMILY CODE, Art. 4/).The Family
Code prescribes a well-founded belief that the absentee is already dead before a
petition for declaration of presumptive death can be granted (Republic v. Nolasco, G.R.
No. 94053, March 17, 1993).
402
Q: What is the effect of reappearance of a spouse who was declared
presumptively dead? 003
ANS: Generally, a subsequent marriage shall be automatically terminated by the
recording of the Affidavit of Reappearance of the absent spouse, unless there is a
judgment annulling the previous marriage or declaring it void ab initio (FAMILY CODE,
Art. 42).
Such termination shall produce the following effects:

1. The children of the subsequent marriage conceived prior to its termination
shall be considered legitimate;
2. The absolute community of property or the conjugal partnership, as the case
may be, shall be dissolved and liquidated, but if either spouse contracted said
marriage in bad faith, his or her share of the net profits of the community
property or conjugal partnership property shall be forfeited in favor of the
common children or, if there are none, the children of the guilty spouse by a
previous marriage or in default,opshildren, the innocent spouse;
3. Donations by reason of rplagdK shall remain valid, except that if the donee
contracted the marriagejitgadifaith, such donations made to said donee are
revoked by operation oft A j., ...
4. The innocent spouse mwicce, he designation of the other spouse who
acted in bad faith as,I,be insurahce policy, even if such
w.amo-A-ltan
designation be stipulated asse oca le;. 13tf, , l, '
disqualified 7
5. The spouse !par ntracted1 subsequent marriage in bad faith shall be
inherit from. e innocent spouse/ i.
succession (F MICY COD5, ri•d3). •
l testate and intestate
A
Note: If b_folp,,spgreof the stifosequent marrii ge acted in bad faith, said
marria_ phall bT pidpab initio'- Id all donaticips b reton of marriage and
testa entarygs ositions made 19 one in fa or of he d, er are revoked by
ope• on of i4
F MILZ COD ,h . 44).
Q: What are th rptariCe of annu abl - Ix arriage?

ANS: The followi Bare t e roundp of a r' Jlable marriage: (No-IF-VC)
Z?••
Party to File the Prescription

' Grounds Ratification
Suit . Period
No parental Parer ardian Any time before no-
consent havinga charge consent party
of no-consent party reaches age of 21 Free cohabitation
after attaining age
No-consent party Within 5 years after of 21'
attaining 21
Insanity Sane spouse At any time, before

without knowledge death of either
of insanity party
Relative, guardian, At any time before Free cohabitation

or person having death of either of insane party
legal charge of party after insane party
insane comes to reason
Insane spouse During lucid interval

or after regaining
sanity
403
_Fraud Injured party Within 5 years after Free cohabitation
the discovery of after having full
fraud knowledge of
fraud
Vitiated Injured party Within 5 years from Free cohabitation

consent time force, after the force or
intimidation, or intimidation or
undue influence undue influence
disappeared or has ceased or
ceased disappeared
Incapability to Injured party Within 5 years after Cannot be ratified

Consummate/ the marriage (but action
sexually ..• •ceremony prescribes) (CIVIL
transmissible
. r • -4 , CODE, Arts. 45
, , • t, i•
disease and 47).
• -- .,,,...e
d
.
" •
Q: What constityfes `katicigs,a-gailifettir-anktil orva rriage under the
Family Code? / I
ANS: The, follow) g cirifmsta ces shall constitute frau :
1. Non-disclosute of a previous conviction by fin I judgatekot the other party of
a crirve involOing mqra turpu 1
2. Conceemea I by thelwifeloif tfie per or6t tr time qrthe.nlarriage, she was
pregqa9,t0 man )her bekhygband; ,
3. Con alma o ually tra"fiSmiisible disease, rtardleis of its nature,
existi Tarth,e ti ,.o,f4fe marria0i J. •
4. Con flmerht of dtuV\a.,cidiplloree.,14101t4,:alcoholism or/homosexuality or
lesbianism existing aktfie\ti e-of the' ifdrta,ge".
5. No other misreesent trOk9 k.eitis'to/chariter, health, rank, fortune or
.
chastity stiall cons 'tut 4kch ill [fie grou for action for the
1arrippreIF Ml
annulmentb,ttrr,ii‘, 0.) , Art: 46)
Note: The enumeratio .'n•Ast, 641smEXOLLISI E,41(Qr v. Palaroan, •GR. No. L-
27930, November 26, 1970)
I\ -S-
Q: What are the requisites for annulitid marriage due to impotence?
ANS: The requisites for annulment due to Impotence are: (Not-U-PIE)
1. It Exists at the time of the celebration of the marriage;
2. It is Permanent;
3. It is Incurable;
4. It is Unknown to the other spouse; and
5. The other spouse must Not also be impotent (STA. MARIA, Persons, supra at
322-323).
Q: What is the Doctrine of Triennial Cohabitation?

ANS: The doctrine-deelares the presumption that the husband is impotent should the
wife still remain a virgin after living together with the husband for three (3) years. In such
event, the husband will have to overcome this presumption (STA. MARIA, Persons,
supra at 324 citing Tompkins v. Tompkins, 92 N.J. Eq. 113; 111 AU. 599).
404
Q: Is one estopped from annulling a marriage on the ground of impotency due to
ratification via cohabitation?
ANS: No. Unlike the other grounds for annulment of voidable marriages which are
subject to ratification by continued cohabitation, the law does not allow ratification under
Article 45 (5). This is so because these grounds are not based on defective consent like
the others but based on the fact that the impotency or disease is incurable. Moreover,
they negate the other important purpose of marriage which is to procreate normal,
healthy and upright children. In fact, in the case of incurable sexually-transmissible
disease, the continuance of the marriage may even pose a danger to the life of the other
contracting party. However, if the aggrieved parties in these cases do not bring the suit
within five years after the marriage ceremony, they are barred forever from annulling the
marriage (STA. MARIA, Persons, supra at 326).
Q: What are the steps taken by the court to prevent collusion between the parties
in an action for annulment or declaration of absolute nullity of marriage?
ANS: In all cases of annulment or declarpkion of absolute nullity of marriage, the Court
shall order the prosecuting attorney or,,fiOal assigned to it to appear on behalf of the
State to take steps to prevent colfttSior4between the parties and to take care that
evidence is not fabricated or supPrestedfn the cases referred to in the preceding
paragraph, no judgment shall be:,basedigon a stipulation of facts or confession of
judgment (FAMILY CODE, Art. 48).
—
Q: What are the' steps takep'by the court pending'theaction for the annulment or
declaration of absoluteiltility of mairri?e?
gay r
ANS: During the penaerIcy:of the act On d in the absenciorklequate provisions in a
written agreement beq.geril .spouses, e Court shall Flroyld for the support of the
spouses and the py,StOdy.:40:0,upport oft eir common ghildren.'he Court shall give
paramount copSideration to the moral, and material welfare said children and their
choice of the4arpnt wi;(14liom they viiisOto remain g,",pgvided to. Title IX. It shall
also provide fqr;:appitiOriate.iyisitatiorkrightef the otireVre .1734WCODE, Art. 49).
9.k1 -
.0446 ,g;i>,
Q: What are theeffecte4.'of
.447it*" gg, the declaration of absolute nullity or judgment of
annulment of a marriage?
ANS: The effects arett folio ing:
1. Either of thvIcirriier eppu.sa% .64Lau gajg after complying with the
requirementskArticle,52YFAM COlUk, Art. 53).
2. As to the stattik of thPfiildren the general rule is that children conceived and
born outside of at'ajtmarriage are illegitimate. The exceptions are:
a. Those conceived or born before the judgment of annulment or absolute
nullity of the marriage under Article 36 (psychological incapacity) has
become final and executory, shall be considered legitimate; and
b. Those conceived or born of the subsequent marriage under Article 53
(Failure to partition and distribute properties and deliver the children's
presumptive legitime) shall likewise be legitimate (FAMILY CODE, Art.
54).
The effects provided for by pars. (2), (3), (4) and (5) of Article 43 and by Article 44 shall
also apply in the proper cases to marriages which are declared void ab initio or annulled
by final judgment under Articles 40 and 45.
C LEGAL SEPARATION
Q: What are the grounds for legal separation?
ANS: The grounds are:(RPC-6-SAD-BALL)
1. Repeated physical violence or grossly abusive conduct directed against the
petitioner, a common,child, or a child of the petitioner;
405
AN RED Br
2. Physical violence or moral Pressure to compel petitioner to change religious or
political affiliation;
3. Attempt of the respondent to Corrupt or induce the petitioner, a common child,
or a child of the petitioner, to engage in prostitution, or connivance in such
corruption or inducement;
4. Final judgment sentencing the respondent to imprisonment of more than six
(6) years even if pardoned;
5. Sexual infidelity or perversion;
Note: Sexual perversion includes engaging in such behavior not only with third
persons but also with the spouse. Mere preponderance of evidence will suffice
to prove the existence of these grounds except the fourth ground.
6. Habitual Alcoholism or Drug addiction of the respondent.
7. Contracting by respondent of a subsequent Bigamous marriage;
8. Abandonment of the petitioner by the respondent without justifiable cause for
more than one year;
Note: There must be absolutexessatiai of marital relations, duties, and rights,
with the intention of perpetual se , paratipnrartosa-Jo v. Court of Appeals, G.R.
No. 82606, Decoraer 1 1982).1A6VioatnTht‘Lmplies total renunciation of
duties.
9. Attempt by, eles o deir;;ains7;114,
r ! e'epi
paibner, and
10. Lesbianyfi orOcise ualitroTgrespo deri (F.6:A4/ 1 1CODE, Art. 55).
\\,7
Q: What cons dute its oT violence,4defift.A. o. 9 2 (Antr-Violence Against
Women and eir C ddre (Act of 20 r VK
ANS: Acts of i e inclu e e o owlq:
1. Cau rifihypical ha tq; an0E4r c ild;
2. Thre te cause-Ithe W fr-11 T2child 'hysical
3. Atte p ca s4the women, er child a Wal
4. Piaci ftti orA er chit'• in po *he t p rm;
5. Attemritinb co 1 co. h o an o1her ild to engage in
conduct whichthle ,g1 :441 r Chi a?, e right to cysist from or desist
from conduct Ich the m r" chi d hoe the ri t to engage in, or
attempting to redtV r1/4it!" .i
. riffirfh
. -b„1/1,oTan's or 4.45- child's freedom of
movementi comp hr'eg ortorekpOsical or other harm or
threat of phy ic_al,641he lI nprofrinti daVvi5lirVied against the woman or
child. This sharing -2166f ut nq[ kip 4 -'5,461lowing acts committed with
the purpose or effe contrdllihb e tricting the woman's or her child's
movement or conduct:
a. Threatening to deprive or actually depriving the woman or her child of
custody to her/his family;
b. Depriving or threatening to deprive the woman or her children of
financial support legally due her or her family, or deliberately providing
the woman's children insufficient financial support;
c. Depriving or threatening to deprive the woman or her child of a legal
right; and
d. Preventing the woman in engaging in any legitimate profession,
occupation, business or activity or controlling the victim's own money or
properties, or solely controlling the conjugal or common money, or
properties;
6. Inflicting or threatening to inflict physical harm on oneself for the purpose of
controlling her actions or decisions;
7. Causing or attempting to cause the woman or her child to• engage in any
sexual activity which does not constitute rape, by force or threat of force,
physical harm, or through intimidation directed against the woman or her child
or her/his immediate family;
406
B
8. Engaging in purposeful, knowing, or reckless conduct, personally or through
another that alarms or causes substantial emotional or psychological distress
to the woman or her child. This shall include, but not be limited to, the following
acts:
a. Stalking or following the woman or her child in public or private places;
b. Peering in the window or lingering outside the residence of the woman
or her child;
c. Entering or remaining in the dwelling or on the property of the woman
or her child against her/his will;
d. Destroying the property and personal belongings or inflicting harm to
animals or pets of the woman or her child;
e. Engaging in any form of harassment or violence; and
f. Causing mental or emotional anguish, public ridicule. or humiliation to
the woman or her child, including, but not limited to, repeated verbal
and emotional abuse, and denial of financial support or custody of
minor children of accespV the woman's child/children
9. Causing mental or emottotil nguish, public ridicule or humiliation to the
woman or her child, tniciAdjp but not limited to, repeated verbal and
emotional abuse, and de00',ina cial support or custody of minor children of
access to the woman's child /WO (R.A. No. 9262, Sec. 5).
agig...10,.•
Q: When should an action foopdgal,VOirabonte sled?
ANS: An action for legal sgparation shal e filed wit &NW 5 years from the time of
the occurrenceòf the a* (FAMILY g , Art. 57).
A,
Q: What are the gro idsift rOniarof p tions for legalse tion?
ANS: The groun5oit "eying: (MC'A RD)
1. gonpnalion of the offense1pr a mplained of
2. cons944to cdarifssionipf offdns 44 r act com ainedpf;
NoWtonseliLis dor fOhe ac - condona "o ear rroyo v. Court of
Appeakt G.I : t a 6602;19ve er 19, 199
3. gonnivai-0 410ee partieso commission of offense or act constituting
ground;
4. Collusion betkeen rties; "0,
11W4.
4- ,
5. Mutual guilt ost'" here both pa v_erkpromd for legal separation;
6. L'rescription;
Note: An actionor ,Vg I separation shall be filed within five (5). years from
time of Occurreak„ ahe cause (FAMILY CODE, Art. 57).
7. Death of either party during the pendency of the case (Lapuz Sy v. Eufemfo,
G.R. No. L-30977, January 31, 1972); and
8. Reconciliation of the spouses during the pendency of the case by filing in the
same proceeding a joint manifestation under oath, duly signed by the spouses
Q: If a man commits several acts of sexual infidelity particularly in 2002, 2003,
2004, 2005, does the prescriptive period to file for legal separation run from 2002?
ANS: No. Every act of sexual infidelity committed by the man is a ground for legal
separation under Article 55(8) of the Family Code. Hence, the prescriptive period begins
to run upon the commission of each act of infidelity. An action for legal separation must
be filed within five years from the occurrence of the cause. After the lapse of the five-
year period, the legal separation case cannot be filed (STA. MARIA, Persons, supra at
382).
Q: When shall the action for legal separation be tried?
ANS: An action for legal separation shall in no case be tried before six (6) months shall
have elapsed since the filing of the petition (FAMILY CODE, Art. 58).
407
( ,r,•F5i.• ",-"al-:,.T.KAktz.Nts.,_ tty,1e451.1w``tnt.4.:'..!1?;:':'iRt' :;! •'-i,;':'4--:-.$-.,
:-,
.....-; ,,r.
.....,.'
1.1MO: .j.....'..e::."-t--.,-",?,e,:,th4.1.1'W.7::443..,.,...::),':::.,A,V-.....F.Y....01,7,.A:
Q: Is the cooling-off period applicable where violence as specified under R.A. No.
9262 is alleged?
ANS: No. In cases of legal separation, where violence as specified in R.A. No. 9262 is
alleged, Article 58 of the Family Code shall NOT apply. The court shall proceed on the
main case and other incidents of the case as soon as possible. The hearing on any
application for a protection order filed by the petitioner must be conducted within the
mandatory period specified in this Act (R.A. No. 9262, Sec.19).
Q: Can the parties enter upon stipulation of facts or a confession of judgment?

ANS: No. No decree of legal separation shall be based upon a stipulation of facts or a
confession of judgment. In any case, the Court shall order the prosecuting attorney or
fiscal assigned to it to take steps to prevent collusion between the parties and to take
care that the evidence is not fabricated or suppressed (FAMILY CODE, Art. 60).
Q: What are the effects of filing a petition for legal separation?

ANS: The effects are the following:
1. The spouses shall beterifiiled to livle sepaTately,from each other; or
2. In the absence.qffei aaeement betOeji the parties, the court shall designate
the husband,theee,br 0*.,,third=persontqcifmaliagelne absolute community or
conjugal parrephipprdrerty (FAMILY D,,EtAttx60k,
dO
I Vet,
Q: What are theiffects o a endingi a,On•cor [edit atichil
separ
ANS: During thipendeyty of the action 0:1inethe absfnce Vadetillate provisions in a
written agreem t be een the spousestt apourt shall; )
1. Provi he support of thrpouses a d the tistqc1 and support of
comrp trail ren; I p!i e.-. 1'
2. Givelp, .. 1
aratn unt co sideratie.lartolln4n\- e moral nd malnal-vvelfare of the said
. t,cs.of tti6$6;r4 with
theirErb rrbthe wishid remain; and
3. Prolforia prd0: e vIsitattbn fight FA E.-Art 49)
ekt.e.07
Q: What are theefect eyre,Nof: e
ANS: The effects'are the ollowi 119ADS
1. The abs8lute can; unifyefthg.TisrINga.1, ership gnall be Dissolved and
liquidated tut the o ncit... picEtase-h111,1 rk94,Ig do any share of the net
profits earned 3y he,a olbte.commeffily,1 tl njugal partnership, which
shall be forfeiteal ccoir ancelvini roLviS1011 of Article 43(2);
2. The custody of the childrehighdll elgarded to the innocent spouse,
subject to the provisions o ft o the Family Code;
3. The offending spouse shall be Disqualified from inheriting from the innocent
spouse by intestate succession. Moreover, provisions in favor of the offending
spouse made in the will of the innocent spouse shall be revoked by operation
of law;
4. The spouses shall be entitled to live Separately from each other, but the
marriage bonds shall not be severed (FAMILY CODE, Art. 63); and
5. After the finality of the decree of legal separation, the innocent spouse may
Revoke:
a. The designation of the latter as beneficiary in any Insurance policy,
even if such designation be stipulated as irrevocable; as well as
b. The Donations made by him or by her in favor of the offending spouse.
Note: The revocation of the donations shall be recorded in the registries of property in
the places where the properties are located:' Alienations, liens and encumbrances
registered in good faith. before the recording of the complaint for revocation in the
registries of property shall be respected. The revocation of or change in the designation
of the insurance beneficiary shall take effect upon written notification thereof to the
insured. The action to revoke the donation under this Article must be brought within five
408
-.eq.': A',
, 4- kr, •:.41,
(5) years from the time the decree of legal separation becomes final (FAMILY CODE,
Art. 64).
Q: What is the requirement if the spouses reconcile after the legal separation
decree has been issued?
ANS: If the spouses should reconcile, a corresponding joint manifestation under oath
duly signed by them shall be filed with the court in the same proceeding for legal
separation (FAMILY CODE, Art. 65).
Q: What are the consequences of reconciliation between spouses?

ANS: The consequences are the following:
1. The legal separation proceedings, if still pending, shall thereby be terminated
at whatever stage; and '
2 Tffefinal de.cree of legal separation shall be set aside, but the separation of
property and any forfeiture of the share of the guilty spouse already effected
shall subsist, unless the spousmagree to revive their former property regime.
The court's order containing lie shall be recorded in the proper civil
registries (FAMILY CODE, 411:1 6.0).
Q: Should the spouses agree ti:i,reydytbeir former property regime, what are the
requirements that must be corn,Oli0 105
ANS: The agreement to revive fegzealito0ertyare,11; erred to in the preceding
Article shall be executed u0Sigt oath and dal! specify:
1. The propertieelne contributed new to the restory rRgime;
2. . Those to be rWairAd as seigfaferctl properties of eac spouse;
3. The names 'oftalb` :eV known Reditors, their esges, and the amounts
owing,tgeach; • • ,.,:- I
4. Thei agreemeplgt revival afidith0- otion for its. appral span be filed with the
courtc Itip;gapiz pr9s_pedinP .or lega IparatiRl eVocopies of both
fumighed to theac editorg.,' ' ame 4therein. After.- pangbAbe court shall, in
its orderjaket. e Sure fo '''Eotefille interest of %*". -decks' and such order shall
be recordain-the roper r,gistr
e of properties; and
-4.
5. The recording of the ordering irialkagi. tries of property shall not prejudice
any creditor 1) listed or not no ' n es the debtor-spouse has sufficient
separate proles to sa 'sf9IfFiereclito airqFAMILY CODE, Art. 67).
Q: What is the statui0 Idren conceived or born before the judgment of

annulment or absolute nVili of the marriage under Article 36 has become final
and executory?
ANS: Children conceived or born before the judgment of annulment or absolute nullity of
the marriage under Article 36 has become final and executory shall be considered
legitimate. Children conceived or born of the subsequent marriage under Article 53 shall
likewise be legitimate (FAMILY CODE, Art. 54).
D. RIGHTS AND OBLIGATIONS BETWEEN HUSBAND AND WIFE

Q: What are the essential obligations of the husband and wife?
ANS: The husband and wife are obliged to.liVe together, observe mutual love, respect
and fidelity, and render mutual help.arid support (FAMILY CODE, Art. 68).
Q: Is procreation an obligation of the husband and wife?

ANS: Yes. Procreation is also an essential marital obligation considering that such
obligation springs from the universal principle that procreation of children through sexual
Cooperation is the basic end of marriage. Thus, the senseless and protracted refusal of
one of the parties to fulfill this marital obligation is equivalent to psychological incapacity
409
• 't
(Chi Ming Tsoi v. Court of Appeals, G.R. No. 119190, January 16, 1997). However, if
the husband is immoderate or barbaric in his sexual demands for sexual intercourse, the
wife may establish a separate residence or domicile (Goitia v. Campos Rueda, G.R. No.
11263, November 2, 1916).
Q: What is a domicile?
ANS: For the exercise of civil rights and the fulfillment of civil obligations, the domicile of
natural persons is the place of their habitual residence (CIVIL CODE, Art. 50). The
domicile is the place where the parties intend to have their permanent residence with
the intention of always returning even if they have left it for some time (STA. MARIA,
Persons, supra at 425).
Q: Who fixes the family domicile?

ANS: The husband and wife shall fix the family domicile. In case of disagreement, the
court shall decide.
Note: The court may exempt one wousearamjiying with the other if the latter should
live abroad or there are otheualitrandlgornpelling,reasons for the exemption. However,
such exemption shall nol,a&ly Ifst he s-r
kr_0
1- ii149i epraPatilzle with the solidarity of the
family (FAMILY CODE ArK 69). r. ,;;,„„.......-,-. ... i
1: ,N
11"
Q: Who shall be re%po.A.
-C4 Ar, ie\b
for.theVrapfrof.tbe fat pi ?'
ANS: The spouses
A I'
.. Arfii9 ly respontspled
7 thei supp rt oft The expenses for
such support and oTherÀonju t al obleatio4stiall be p id fail I
Immunity property
and, in the ab nce Treof, from the ingdNe or fruit of their/A arate properties. In
case of insuffi • it_g-y r abs nce o sal oncome or 'ts, gua,obligations shall be
satisfied from d"-separate pr peitiegrAkbr_CJOE, rt. 70). r.
4,4 i
Q: Who has t 4tan uty inlaktnage 1‘,,t,sfth hors hold?
ANS: The ma gesne t gli /and thezdn of both spouses
(FAMILY COD Ft.'7/.
Q: What is the 1 ect in neglects hisfor her duty to the

conjugal union? n
ANS: When one o e sp agAN /I 'es the conjugal union or
commits acts which tern errdish 'u the other or to the family,
the aggrieved party may app cou% f9J- CODE, Art. 72).
Note: The relief may take on s rn_ any fori Mi I case for legal separation if there
are grounds for the same, nullifyinOWftrafFibge based on Article 36 if the neglect is
such that it does not create a functional marital life, petitioning the court for receivership,
for judicial separation of property, or for authority to be the sole administrator of•the
community property or the conjugal partnership subject to such precautionary conditions
as the court may impose (STA. MARIA, Persons, supra at 427).
Q: Can a spouse ask a competent court to order the spouse who abandoned the
conjugal home without any justifiable cause to return to the conjugal home under
pain of contempt?
ANS: No, the court cannot order a spouse to return to the conjugal home under pain of
contempt. The doctrine in this jurisdiction, which is now well-settled, is that the obligation
'of cohabitation of husband and wife is not enforceable by contempt proceedings. The
reason for this is that cohabitation is a purely personal obligation — an obligation to do.
To compel him to comply with such obligation would be an infringement of her personal
liberty (JURADO, Civil Law Reviewer (2009), p. 136) (hereinafter JURADO, Civil Law
Reviewer].
410
Q: Is there a need for consent in case either spouse desires to exercise any
legitimate profession, occupation, business, or activity?
ANS: No. Either spouse may exercise any legitimate profession, occupation, business
or activity without the consent of the other. The latter may.object only on valid, serious,
and moral grounds. In case of disagreement, the court shall decide whether or not:
1. The objection is proper; and
2. Benefit has accrued to the family prior to the objection or thereafter.
Note: If the benefit accrued prior to the objection, the resulting .obligation shall be
enforced against the community property. If the benefit accrued thereafter, such
obligation shall be enforced against the separate property of the spouse who has not'
obtained consent. The foregoing provisions shall not prejudice the rights of creditors'
who acted in good faith (FAMILY CODE, Art: 73 as amended by R.A. No. 10572).•
E. PROPERTY kELATIONS BETWEENPUSBAND AND WIFE

Q: What goyerns the property relations between husband and wife?
ANS: The property relations between.;;4itsband and wife shall be governed in the
following order:
1. Marriage settlements eqatite6 before the marriage or ante nuptial
agreements;
"ATt"
2. Provisions of the FantApk; Absolute Com Unity of Property [ACP]
(FAMILY CODE, Art. ,88).:ar,01 2ty Gains [CPG] (FAMILY
CODE, Art. 107); eV," /47
3. Local customs= • 'gen spouses re udiate absolute c munity (FAMILY CODE,
Art. 74); 410 •
Note: It commences a recise moment of the celebratio ortthe marriage (FAMILY
CODE, Art. 88).
Q: What.is a, arriageTettlement?
.
ANS: It us a contra ctre n tered, e re spouse' gjfirmonial property
regime that should gwere uring t e ex ence of the relrPARAS, Persons,
supra at 533). NLI
Note: In the absence, o mara§ge settlem t or when regime agreed upon is void, ACP
shall govern (FAMILY CODE Art 75). ,4*- •
Q: What are the requts1 es of eizip marr age se emen ?

ANS: The requisites arkte fo (B-Not2-FAWS)
1. Made Before ce erà`{ion of marriage;
2. In Writing (even modifications);
3. Signed by the parties;
4.. Will Not prejudice third persons unless registered in the civil registry and
proper registries of property;
5. Shall Fix terms and conditions of their property relations;
6. Must Not contain provisions contrary to law, good morals, good customs,
public order, and public policy, or against the dignity of either spouse; and
7. Additional signatories/parties, that is, if made by civil interdictees and disabled,
it is indispensable for the guardian appointed by court to be made a party to
the marriage settlement (1 PARAS, Persons, supra at 535).
Q: Can the marriage settlement be modified?

ANS: The general rule is that marriage settlement can be modified provided it
1. Must be made in writing;
2. Signed by the parties; and
3. Executed before the celebration of the marriage (FAMILY CODE, Art. 77).
411
• • -.r..;• .
It can, however, be made after the ceremony in case .of judicial separation of property
during the marriage:
1. In case of revival of former property regime between reconciling spouses after
a decree of legal separation has been issued (FAMILY CODE, Arts. 66-67);
2. In case of abandonment or failure to comply with marital obligations (FAMILY
CODE, Art. 128);
3. If it falls under any of the following sufficient causes for judicial separation of
property:
a. That the spouse of the petitioner has been sentenced to a penalty
which carries with it civil interdiction;
b. That the spouse of the petitioner has been judicially declared an
absentee;
c. That loss of parental authority of the spouse of the petitioner has been
decreed by the court;
d. That the spouse of the petitioner has abandoned the latter or failed to
comply with his or herAbligatio_np, to the family as provided for in Article
101;
e. That the,spoous 3granteed tnelperetoradministration in the marriage
settlement had ibitged=that‘power;,andi
f. Thatrat th4tme" o the petition:Iffe4bus,dsZhave been separated in
factrfq19ast one,(1)7675-nd-reconciliatLan isitlighly improbable.
Note: In the cas4449%.1 focin (a).(b)Ànd the)relezttatlan'of the final judgment
against the guilty or absednt souse hall .enliugh basis fo grInt of the decree of
judicial separatk,f property (FAMILY CODE, Art. 135). J)
Itic
41%
Q: What law *ferns the propertimetat s, beiweer) the sp9uses?
ANS: In the a sendl of a contranjitstkiatioffzin a marriage Is'ettle ent, the property
t
relations of theAgrikses srf goverrteell E;VPhilippi s, fegard ss of the place of
the celebrationlot,tVeparr theiri re qiice. pply:
1. Wher both sloous \t
2. With respect to,the s aUecting ploperty not situated
in the kilippin& and\e uteri it the' property is located
(CIVIL CODE, Art. 6); .. ejffeir0_, ..)
3. With respect.? the;le slc-GatiditSt-o,r gtracts'Ogtessed into in the Philippines
but affecting prep6rty
r acHwatorel9nAct2ltgyvhose laws require different
formalities for its rns (Ft A-Art. 80).
Note: Everything stipulated in th settlen-idrits •__.. 1tonfActs in consideration of a future
marriage, including donations between ffeff6Wective spouses made therein, shall be
rendered void if the marriage does not take place. However, stipulations that do not
depend upon the celebration of the marriages shall. be valid (e.g. admission of paternity
of an illegitimate child) (FAMILY CODE, Art. 81).
Q: What are the requisites for a valid donation by reason of marriage?

ANS: The requisites are the following:(BCF)
1. Made Before the celebration of marriage;
2. In Consideration of marriage; and
3. In Favor of one or both of the future spouses (FAMILY CODE, Art. 82).
Q: What are the rules in case of donation by future spouses to each other?
ANS: The limitations are the following:
1. There must be a valid marriage settlement;
2. The marriage settlement must stipulate a property regime other than the ACP;
and
3. Donation in the marriage settlement must not be more than one-fifth (1/5) of
his or her present property (FAMILY CODE, Art. 84).
412
ja-.,...='• ‘
', ...,,z4.• -4:41 ,0, ;., 4,,*-1511'4gt.,,
....-.;:.:
A, ...t , .., .,
iiiP,Mnite,W,p"",.. it, â1114,- a-Vtiv,,,-w,t"
Note: If such donation exceeds this limitation, only the excess is considered
void but the remainder remains to be valid (RABUYA, Persons, supra at 411).
4. The donation must be accepted by the would-be spouse; and
5. It must comply with the requisites in Title II of Book II on Donations (STA.
MARIA, Persons, supra at 445).
Note: If there is a marriage settlement providing for a particular property regime other
than the absolute community of property, such as the conjugal partnership of gains or
the separation of property, and there is also a donation propter nuptias not included in a
marriage settlement but contained in a separate deed, the "not more than one-fifth"
limitation will not apply. Instead, the general rules on donation shall govern (STA.
MARIA, Persons, supra at 430).
Q: What are the grounds for revocation of a donation propter nuptias?

ANS: The grounds are the following: (Not-VP-ARAL)
1. Marriage is Not celebrated or judicially declared Void ab initio except those
made in marriage settlement that slo not depend on celebration of marriage;
2. Marriage takes place withoutPkental consent, as required by law;
3. Marriage is Annulled and dOneejsiin bad faith;
4. Upon Legal separation, the,dblebeing the guilty spouse;
5. Donation is with a ResokitarY.00rKiition and the condition is complied with; and
6. Donee commits Acts of jngrOtk1Cialas,..sRecified by,cArAicle 765 of the Civil Code
(FAMILY CODE Art 86). gekre.444-76,141, r
,
J3
• W,1
Q: After the finality offjtidicial de,4aNtion of nullity of viirliage on the ground of
a bigamous inarriaglcotacted by a-Tor-spouse, cagt eflonor-spouse revoke
a donation proptertaylitiegpede to donp-spouse? t'a
ANS: No. The suiyfor revoOttop for the dpi nation propterup ias VI
not prosper. True,
the marriage .Was annulled at the iraanc%rof the done, but lit must be noted that the
donee, did nolifpf If anybody acted in bad,faitivitavas.kth%donor. Under No.
3 of Article 86rqf the 0arrirlilbodejt clert „that the `826TAWITelnitent case can be
t4„
revoked if the mardager,ermulled.,and the donee acted'Inibadlaith (JURADO, Civil
• •r
Law, supra at 1484-40-
A
4 -
Q: Can one of the spoetses.lionate to theAbispom their marriage?
ANS: No, the spousefacnot 024erdirAire%ffitheWATe every donation or grant of
gratuitous advantage, direct orondirect, between the spouses during the marriage shall
be void. However, modefat,efgifts which the spouses may give -each other on the
occasion of any family relorrei are valid. The prohibition shall also apply to persons
living together as husband and wife without a valid marriage (FAMILY CODE, Art. 87).
Q: When does the absolute community property regime between the spouses
commence?
ANS: The absolute community of property between spouses shall commence at the
precise moment that the marriage is celebrated. Any stipulation, express or implied, for
the commencement of the community regime at any other time shall be void (FAMILY
CODE, Art 88).
Note: The same rule applies to conjugal partnership of gains (FAMILY CODE, Art. 107).
Q: In the absence of specific provisions in the Family Code regarding the property
regime of the spouses, what law shall be applied?
ANS: The provisions on co-ownership shall apply to the absolute community of property
between the spouses in all matters not especially provided for by the Family Code
413
:DAN
Q: What constitutes community property?
ANS: Unless otherwise provided by the law or in the marriage settlements, the
community property shall consist of a// the property owned by the spouses at the time of
the.celebration of the marriage or acquired thereafter (FAMILY CODE, Art. 91).
Note: Property acquired during the marriage is presumed to belong to the community,
unless it is proved that it is one of those excluded therefrom (FAMILY CODE, Art. 93).
Q: What are excluded from the community property?
ANS: The following are excluded:
1. Property acquired during the marriage by gratuitous title by either spouse, and
the fruits as well as the income thereof, if any, unless it is expressly provided
by the donor, testator or grantor that they shall form part of the community
property;
2. Property for personal and exclusive use of either spouse. However, jewelry
shall form part of the community property; and
3. Property acquired before the,„smarriage by either spouse who has legitimate
descendants by a formermarripgq; aid* fte,fruits as well as the income, if any,
of such propertypATA/N COREitt y .
.)N
Q: Can a spouse e rigligrrnter'gts shares and effects during the
marriage?
ANS: No waiver 5 jig,b1 jrite agr;r
upon judicial separatibp) f pro ierty (PM*
ia7e7sFan-detre-dts of LNan be made except
. ),
c)gpE, A.. 8
Note: In order d: protest third personsgh`7Code
7ode-requi of the interest
1
or share in the 13g6r6 e comuni Otect p disspJytion arriabb or its annulment
or in case of 1
udicial separa 'ono - rcii) 1 e\pli
ft ap ,..FLEit instrument and
recorded in th I ivil ‘regIstry w er*In*jarriage sp i ed as well as in
the proper regittries prar -AMILL ba-A
( y" , A 'Pt,.
RT I
Q: What are th argqs up \,, ti oliggiir sod, -0, 02munityfroperty?
ANS: The chargk uponland d ligaA‘a ella .
Charges and Obligations
ACP (Art. 94) CPG (Art. 121)
Support of the spa tireldtir comnp .,,5gn(legitimate children
1
For illegitimate children, support from For illegitimate children, support from
separate property of person obliged to separate property of person obliged to
give support. In case of insufficiency give support. In case of insufficiency or
or absence of separate property, ACP absence of separate property, CP shall
shall advance support, chargeable to advance support, chargeable to share of
share of parent upon liquidation. parent upon liquidation, but only after
obligations in Art. 121 have been covered.
Debts and Obligations Contracted During Marriage:
1. By the administrator spouse designated in the marriage settlement/appointed by
court/one assuming sole administration;
2. By one without the consent of the other;
3. By one with the consent of other; or
4. By both spouses
5. For 1 and 2, creditor has the burden of proving benefit to the family and
ACP/CPG chargeable to the extent of benefit proven, otherwise, chargeable to
the separate property of the obligor spouse.
6. For 3 and 4, benefit to family is presumed.
414
All taxes, liens, charges and expenses including minor repairs upon ACP or CP
Taxes and expenses for mere Taxes and expenses for mere
preservation during marriage upon preservation during marriage upon
separate property of either spouse separate property of either spouse,
used by family. regardless of whether used by the family
because the use and enjoyment of
separate property of the spouses belong
to the partnership.
Expenses to enable either spouse to commence/complete a professional, vocational

or other activity for self-improvement.
Value donated/promise by both spouses in favor of common legitimate children for

exclusive-purpose of commencing or completing professional or vocational course or
other activity foself-improvement.
,k
Expenses of litigation between:epOsssunless
, ,..:,t t-a. the suit is found to be groundless
1 C:. st
1. Ante-nuptial debts are chardea0s0 416or Ante-nuptial debts, same as ACP but
to ACP if they redounded to 411i hr( of insufficiency of separate
benefit of family. ''. 11W:.1-'. ITili5WerdriPpbtigatrihs enumerated in Art.
2. Personal debts notojAnding o 121 must tifItti satisfied before such
benefit of the 44'friily such ,44; debts may be cha sable to the CP.
liabilities incurreCliaiyl` reasonfik•.'
crime or iii.141.0ict,' . are
chargeable 064'.• theitoparate •
property,epthe deltolspouse. 'r?i'k
3. In case byjpgin90, of ssearate . '• ZIP. ,,
property;; to ACtIbut -tc.er
considered ,4,advelir**deductitle .. .,
from the shlika z e deptor-
spouse upon laidation
t Ai
Note: The separate propprties """ e VettEWIt7
- 1 1-Y A 13eUBSIDIARILY liable for the
obligations if the commttyritkijugal properties are insufficient (FAMILY CODE, Art.
94).
Note: Whatever may be lost"iring the marriage, in any game of chance, or in betting,
sweepstakes, or any other kind of gambling whether permitted or prohibited by law shall
be borne by the loser and shall not be charged to the community but any winnings
therefrom shall form part of the community property (FAMILY CODE, Art. 95). The same
rules apply to CPG (FAMILY CODE, Art. 123).
Q: What is the effect of debts incurred by either spouse before their marriage on
the absolute community of property?
ANS: Ante-nuptial debts of either spouse shall be considered as the liability of the
absolute community of property insofar as they have redounded to the benefit of the
family (FAMILY CODE, Art. 94, Par. 7).
Q: To whom shall the administration and enjoyment of the community property

belong?
ANS: The administration and enjoyment of the community property shall belong to both
spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to
recourse to the court by the wife for proper remedy, which must be availed of within five
years from the date of the contract implementing such decision (FAMILY CODE, Art.
96). The same rules apply to conjugal partnership property (FAMILY CODE, Art. 124).
415
( . . •y-:F:::fs=.::
.f,e4:7,.p,.O'ir.'r?r'F.R.j-.i.jfq'';tV,'IE.- VikiVr;..y:'f4t',',:V'i:F:f:*Iir;vfiF2P,-
4 t4-
04 -,1,.?1:1
Q: What are the instances when one of the spouses may assume sole powers of
administration? What are those powers that are deemed excluded?
ANS: One of the spouses may assume sole powers of administration in the event:
1. One spouse is incapacitated; or
2. Otherwise unable to participate in the administration of the common properties
Note: These powers do NOT include disposition or encumbrance which must have the
authority of the court or the written consent of the other spouse. In the absence of such
authority or consent, the disposition or encumbrance shall be void. However, the
transaction shall be construed as a continuing offer on the part of the consenting spouse
and the third person, and may be perfected as a binding contract upon the acceptance
by the other spouse or authorization by the court before the offer is withdrawn by either
or both offerors (FAMILY CODE, Art. 96). The same rules apply to conjugal partnership
property (FAMILY CODE, Art. 124).
Q: Can one of the spouses donal9,any•conmunity property without the consent

of the other? ., ,,,-'''''' I h. '7''-4--,.
ANS: Generally, neither,spl?,ut,,,,may,!,d9halelet,OnylcOibrqunity property without the
consent of the other. H6uve.Crer,Leb,er=sliOuse.„way.; w)thoutle consent of the other,
make moderate donations ?r9n9he' community prOriertyf'." N
ny. .1
1. For char N4/1„...,..-------.-- -;‘, ------,..„ -,
2. On occagjOlsxf familyrejolicirig:Vr ..v.,-
y:
o ..< 1 '4,•.b.-V-04,
3. On occasion^ Amity ' distress (FAMILY . CODE,, Art 9,$). I
Note: The same fioply to conjugal prorrty VILIPIYCODE, Art. 125).
I, I i I iI ,. ,mot x
Q: In the evelttiatIne spouselgilfcaOcitat§ifor otherwise unable to participate
in the administraticiq of the komMUijitl*ciiyaity orAonjugii)pari 'ership property,
may the other spAup'e a su e sole tiji.ikers:of admipyptio'n?
ANS: Yes. Howevertsel3 ,hrs 4414 ingude dvcirtiotNenblimbrance without
authority of thelc6tirrokt.1/4e14the ri wori:ntAggepflk_rAou e. In the absence of such
authority or co sent, t e clispgsit'Ortor Ieticil -131en,c6 shill be rid. However, the
transaction shall 13g const ed a,a'cb ..,ptirktng't. el#ri the, of the consenting spouse
and the third person, and lik be pfefie-prd- steAndinecontractfupon the acceptance
KI - A.
by the other spouse auth9nr a '''''r-th-ylt e_c urtbefdre e off, r is withdrawn by either
or both offerors (FAMILYCOD2' . &and-1247A.
Q: When does the absolutecorn4nzr2ity_....in te2
m NCrIA-
ANS: The absolute community terminater(SAD-JR)
1. When there is a decree of legal Separation;
2. When the marriage is Annulled or declared void;
3. Upon the Death of either spouse;
4. In case of Judicial separation of property during the marriage under Articles
134 to 138 (FAMILY CODE, Art. 99); or
5. Upon the filing of an affidavit of Reappearance of the absent spouse (FAMILY
CODE, Art. 42, par. 2).
Note: The same rules apply to Conjugal Partnership of Gains (FAMILY CODE, Art.
126).
Q: Does the separation in fact between the spouses affect the regime of absolute
community?
ANS: Generally, the separation in fact between husband and wife shall not affect the
regime of absolute community except:
1. The spouse who leaves the conjugal home or refuses to live therein, without
just cause, shall not have the right to be supported;
416
;•.-f-VA*::§g3:ifi::g0PgkIrlif.V:;!•tiP.LT:fr..,4:7•".•:1
2. When the consent of one spouse to any transaction of the other is required by
law, judicial authorization shall be obtained in a summary proceeding; and
3. In the absence of sufficient community property, the separate property of both
spouses shall be solidarity liable for the support of the family. The spouse
present shall, upon proper petition in a summary proceeding, be given judicial
authority to administer or encumber any specific separate property of the other
spouse and use the fruits or proceeds thereof to satisfy the latter's share
Note: The same rule applies to Conjugal Partnership of Gains (FAMILY CODE, Art.
127).
Q: What is the remedy of the present spouse in case of abandonment by the other
spouse or failure to comply by the latter with his or her obligation to the family?
ANS: The aggrieved spouse may petition the court for:
1. Receivership;
2. Judicial separation of property; ok,
3. Authority to be the sole adrniniSttor of the absolute community (STA. MARIA,
Persons, supra at 501-502k:
Note: The obligations to the faitit ri4tjp n ed in the preceding paragraph refer to
marital, parental or property relatidfis41
44 spouse is deemed to have abandoned the
other when she has left the conjugalgOaggaytfttaut any intention of returning. Three
(3) months disappearance or faitUre toOlvpVitliinit;iftRfcgagiod any information as to
a spouse's whereabouts s.hpli'te prinidl `Cie presumption"' of the other
spouse (FAMILY CODE" 101). A
: NN.
Q: What are the stepsettr liquidation of the ACP and,ClliG?
ANS: The steps in tyeliquitiqpn are the aowing:
1. Inventd of ACPIr CPG properRs and exclusive prope of each spouse;
Nott. ";Separgalisting
tagy,:o shall be made of the abtolut omainity and exclusive
properties' spoiltez..(1 PAPAS, Penal :at-1557). ACP or CPG
shoUld,also isidlUdkreceig6,jes tpitim each spouse 01.4u.
a. lounterdtncedlor parnal debts of each spouse;
b. S pport ente life of enach souse; and
c. For CLGidclude valueAf.' rgp ents constructed on separate
prope07.1°-
2. Payment of absolute cdemu 'nity debts and obligations. In case of insufficiency
of said assets the shall be solidarily liable for the unpaid balance with
their separate proaltes;
Note: For CPG, reimburse first the spouse for separate property acquired by
CP due to increased value thereof as a result of improvements thereon.
3. Delivery to each spouse of his/her separate property if any;
4. For CPG, unless the owner is indemnified from whatever source, payment of
loss or deterioration of movables belonging to either spouse that was used for
the benefit of the family must be made;
5. Division of net assets (for ACP) or net profits (for CPG), which are not subject
to forfeiture;
6. Delivery of presumptive legitime, if any, to the children; and
7. Adjudication of conjugal dwelling and lot (FAMILY CODE, Arts. 102 and 129).
Note: Whenever the liquidation of the community properties of two or more marriages
contracted by the same person before the effectivity of the Family Code is carried out
simultaneously, the respective capital, fruits and income of each community shall be
determined upon such proof as may be considered according to the rules of evidence.
In case of doubt as to which community the existing properties belong, the same shall
be divided between the different communities in proportion to the capital and duration of
each (FAMILY CODE, Art. 104).
Note: The same rules apply for CPG (FAMILY CODE, Art. 130).
417
Q: In case of death of one of the spouses, what is the action that the surviving
spouse should undertake to liquidate the property?
ANS: The community property shall be liquidated in the same proceeding for the
settlement of the estate of the deceased. If no judicial settlement proceeding is
instituted, the surviving spouse shall liquidate the community property either judicially or
extra-judicially within one year from the death of the deceased spouse. If upon the lapse
of the six-month period, no liquidation is made, any disposition or encumbrance
involving the community property of the terminated marriage shall be void. Should the
surviving spouse contract a subsequent marriage without compliance with the foregoing
requirements, a mandatory regime of complete separation of property shall govern the
property relations of the subsequent marriage (FAMILY CODE, Art. 103).
Note: The same rules apply to CPG (FAMILY CODE, Art. 128).
Q: What is the concept of conjugal partnership of gains?

ANS: It is that formed by a husband and wife whereby they place in a common fund the
proceeds, products, fruits and income of their properties, and those acquired
by either or both spouses throughlheir4 effort brs by,,,9hance, the same to be divided
between them equally (as„a-ger,iasal rule) WO, the,xliggcliption of the marriage or the
partnership (FAMILY CODE,-Artr am
i 7
1:/. 11
‘ . •
Q: In what instances thjprovis_tons-9p.CEG apply?i", •
ANS: In case theleuresimuKsigreethq,marnage‘ttlemyits that the regime of
conjugal partneIiipqAi s sall gofgrnitheirziroperey rela 19 s during marriage, the
provisions in Chapter 4, Title IV of th*, Family C 'de s gs.91pr supplementary
application. The provisions o-this-GhaPt4hall-also- pply t lbonjugal partnerships of
gains already .46st,45.1,islied be;eei,m pouspsrbettr„e theeffectityitylif the Family Code,
without prejudice to gated rights alOadAbquIrAd in cordanp9„wittt he Civil Code or
other laws, as in(Artle 256 (FAMIWCODE, tio5)
Note: The co ju9aljaarthera ip-shalF6Vt-ovemel the fAs,„.cp the contract of
partnership in all t k noi\t6artflict gth e etemirfed in this Chapter
or by the spouses in thdir mar a e, etiginifitev CODE, Art. 08).
Q: What is the p sumption mi a _to uring the marriage
in the name of onevr both'Ipotia0/ENT1
ANS: All property acq"VdiEtri:t 41.1 r ge, he/ .gr t>acquisition appears to have
been made, contracted or,„49ii e, 9d in e asne,A rip/Ob'oth spouses, is presumed
. 4)VIC)ODE, Art. 116).
to be conjugal unless the contral•is prov! F1
Q: What are considered as exclusive properties of each spouse and properties

conjugally owned?
ANS: The following are the conjugal and exclusive properties under the CPG:
Property included in CPG Exclusive Property in CPG
All property acquired during the marriage

presumed conjugal, unless the contrary
is proved (FAMILY CODE, Art. 116)
1. Those acquired by onerous title 1. That which is brought to the

during the marriage at the expense of marriage as his or her own
the common fund 2. That which each acquires during the
2. Obtained from the labor, industry, marriage by gratuitous title
work, or profession of either or both 3. That which is acquired by right of
spouses redemption, by barter or by
exchange with property belonging to
only one of the spouses
418
3. Fruits from common property and net 4. That which is purchased with
fruits of the exclusive property of each exclusive money of the wife or of the
spouse husband (FAMILY CODE, Art. 109).
4. Share of either spouse in hidden
treasure, whether as finder or owner
of property where treasure was found
5. Acquired through occupation such as
fishing or hunting
6. Livestock existing upon the
dissolution of the partnership in
excess of what is brought by either
spouse to the marriage acquired by
chance (FAMILY CODE, Art. 117).
Property donated or left by will to the

spouses, jointly and with designation of
determinate shares (FAMILY CODE,
. .4:4,4f Art 113).
,... ic-ni: k t
ill ifr
Property bought on installments u a ligA'llierty bop t on installments partly
from exclusive funds andopaltlgritritAftbftE,_ exclys funds and partly from
conjugal funds, if full,ggymership waN conjugV4tindl if full ownership was
vested during the Atigrriage (FAMIL, vested befor ,.,e marriage (FAMILY
.•
CODE, Art 118). , ' .4. • CODE, Art li ).1
ir vs i
Ale itftv.10 • #
As to credit be ongin No one of the As to crept belotg to one of the
spouses, inio i fallin . dUe during, th spouses, pums1whic may be collected
marriage ionwthe frn cipal (FAOIL s during thg mar age! partial payments
CODE, Art.419)."*-- -.0.0. ;1, or brItikalla, o the principal
' '-''' .,s-•
.. ,_ A' s..., i' ' d (FAMILM - ,A0 '19).
Q: What are the rues n prpperties ac gratuitous title by each during the
marriage?
ANS: They are subject to e folio" o_ les.
1. Property don fed or ft by will to spouses, jointly and with designation of
determinate shares, fail pertain to the donee-spouse as his or her exclusive
property; in the' 'c
''itisInce of designation, share and share alike, without
prejudice to the right of accretion when proper (FAMILY CODE, Art. 113);
2. If the donations are onerous, the amount of the charges shall be borne by the
exclusive property of the donee-spouse, whenever they have been advanced
by the conjugal partnership of gains (FAMILY CODE, Art. 114);
3. Retirement benefits, pensions, annuities, gratuities, usufructs and similar
benefits shall be governed by the rules on gratuitous or onerous acquisitions
as may be proper in each case (FAMILY CODE, Art. 115).
Q: What are the rights that may be exercised by each spouse in their exclusive
property?
ANS: Each spouse may:
1. Retain the ownership, possession, administration and enjoyment of their
exclusive property (FAMILY CODE, Art. 110, par.1);
2. During the marriage, transfer the administration of his or her exclusive property
to the other by means of a public instrument, which shall be recorded in the
registry of property of the place where the property is located (FAMILY CODE,
Art. 110, par.2); and
419
AA;41, g'tto
',',&*•1;.1:v:fs; •
Note: The alienation of any exclusive property of a spouse administered by

the other automatically terminates the administration over such property and
the proceeds of the alienation shall be turned over to the owner-spouse
3. Mortgage, encumber, alienate, or otherwise dispose of his or her exclusive
property, without the consent of the other spouse, and appear alone in court to
litigate with regard to the same (FAMILY CODE, Art. 111).
Q: If property bought on installments is paid partly from exclusive funds and

partly from conjugal funds, to whom shall the ownership pertain?
ANS: It depends. Property bought on installments paid partly from exclusive funds of
either or both spouses and partly from conjugal funds belongs to:
1. The buyer or buyers if full ownership was vested before the marriage; or
2. To the conjugal partnership if such ownership was vested during the marriage.
Note: In either case, any amount advanced by the partnership or by either or both
spouses shall be reimbursed by the,9wner DI:owners upon liquidation of the partnership
(FAMILY CODE, Art. 118). 4,--,-' , 7 t
L.A.,. \ 6.1 .e:.Aj. . ;( . ',,, .

Q: Whenever an amount.eibreditpaya lemftnto ppriod-of time belonging to one
of the spouses is ,collected ,ddring the marrageQ6- lop, shall the ownership
pertain? ef As‹),,, ...----m''7,'''--,,, .4.„.`<.: A
ANS: It shall be ;111:0exclthive.Oropecty rke,;s thpoui.e. flowe'—e)-,Vnterests falling due
during the marriage -of principal shall .101on6,to thi coriju alrtnership (FAMILY
CODE, Art. 119I...., % ,,,
it.;,._
' ' 1
..,.,.," 1
Q: Whenever impro,vemen , ililigter foriistility or ado nme9t . is made on a
separate propertyJoY the sliouse;lati, ,ei.-.0X0ensqf of (1) Ihevalitnership; or (2)
ti ,-.4- t 4 te La
through the acts-octefforislf either oebtitik spouse/At? whg m shall the ownership
pertain? 1 r 1 ,..,
r t shall pdith , te "; ; I wel
ANS: It depencst, , livto qe,p flj.1.001. pa hi, ship or torte original owner-
spouse, subject 19, the fiiiIpwiri6;:yet,1/4=- ''''''i,,t.,l
1. When tfie cost Otthe 1 firoveme t. g'de\bi thVonjugal partnership and any
a,
resulting Trease'ln,ya 49.?rer ore
NI
:f ho value of t e property at the time
of the improxemegkiheenlife-prop pp:Me bAtieaspouses shall belong to
the conjugal Peer6Aiplibbject.toxreirribuKet-nptfithe value of the property
of the owner-spouse at/the tinfe 91 1... Improement (Munoz, Jr. v. Ramirez,
G.R. No. 156125, Atgui_
r25, 200,1.1 ,-,s ,,p,
2. If the cost of the improvarede by the conjugal partnership and any
resulting increase in value is equal to or less than the value of the principal
property at the time of the improvement, said property shall be retained in
ownership by the owner-spouse, likewise subject to reimbursement of the cost
of the improvement (Accession).
Note: In either case, the ownership of the entire property shall be vested upon the
reimbursement, which shall be made at the time of the liquidation of the conjugal
partnership (FAMILY CODE, Art. 120).
Q: Is the conjugal partnership liable to pay the personal debts contracted before
or during the marriage, fines, indemnities and support of illegitimate children of
either spouse?
ANS: No as a general rule. The payment of personal debts contracted by the husband
or the wife before or during the marriage shall not be charged to the conjugal
partnership. Neither shall the fines and indemnities imposed upon them be charged to
the partnership.
420
• -i
, e-• ,,..if, , si *v?4,..,,N, 4 :11.,1,.rq. v..,...psf
( 077-
71. .si •
,S.
,,lii
j i ,:f,,,
;.
1 'Ll-,' l• ?. • ... ..t r;;,.%la•Qfnt,ylig-tiTi;:ikr,:tFAzs•;;;A;4,:w.fritit:;.1•Ft •i:tvn:1:110
The exceptions are:

1. If they redound to the benefit of the family; or
2. If the spouse who is bound should have no exclusive property or if it should be
insufficient, provided that the charges and obligations of the conjugal
partnership have been covered.
Note: But at the time of the liquidation of the partnership, such spouse shall be charged
for what has been paid for the purposes above-mentioned (FAMILY CODE, Art. 122).
Q: What rule shall be observed in the appraisal and sale of property of the
conjugal partnership and other matters which are not expressly determined in the
chapter on CPG?
ANS: The Rules of Court on the administration of estates of deceased persons shall be
observed (FAMILY CODE, Art. 132).
Q: During the liquidation of the property, where shall the support of the surviving
spouse and the children come from?
ANS: From the common mass of propestitpupport shall be given to the surviving spouse
and to the children during the licAlattiigy of the inventoried property and until what
belongs to them is delivered; butt5Altlysikhall be deducted that amount received for
support which exceeds the fruits oittriy,t,
...,, 154
'ettaining to them (FAMILY CODE, Art 133).
Q: When will the separation of p*
ErfArt, aPir.
spoups during the marriage
to
•z•••
take place?
ANS: In the absence4Pen express.) $claration in the trihrriage settlements, the
separation of propertyVetween spouseiaring the marriage'soiell not take place except
by judicial order. Sucilltjtiarpial .epajfatio 'of property m4 either be voluntary or for
sufficient cause (FAM&Y ltYE: Art. 134)
.003i rtr
,
Q: What are Itagufficir causes fo judipial separation of prop rty?
ANS: The sufficient,causetpre:(SCALOP) 1,!.•
1. That at the tirripAoilne pp .11r" Le spouses na eparated in fact for at
rIcA4.
least ofiediaekra rpd recoptiliati5 is highly improsa e;
2. That the itprdtlee lthe AN° er has been sentenced to a penalty which
carries with'itgivil interdiction; r
3. That the spouftofte pe itiomr.fia&A ;judicially declared an Absentee;
4. That Loss oflperentaL,eObrity flfre'rp CisPafiietitioner has been decreed
by the court; I AM
5. That the spouse.4tge petitioner has abandoned the latter or failed to comply
with his or her Obligtrfins to the family as provided for in Article 101; and
6. That the spouse granted the Power of administration in the marriage
settlements has abused that power.
Note: In the cases provided for in numbers (1), (2) and (3), the presentation of the final
judgment against the guilty or absent spouse shall be enough basis for the grant of the
decree of judicial separation of property (FAMILY CODE, Art 135).
Q: How may the voluntary separation of property be effected?
ANS: The spouses may jointly file a verified petition with the court for the voluntary
dissolution of the absolute community or the conjugal partnership of gains, and for the
separation of their common properties. All creditors of the absolute community or of the
conjugal partnership of gains, as well as the personal creditors of the spouse, shall be
listed in the petition and notified of the filing thereof. The court shall take measures to
protect the creditors and other persons with pecuniary interest (FAMILY CODE, Art.
136).
Note: In both cases (voluntary separation or for sufficient cause), the petition for
separation of property and the final judgment granting the same shall be recorded in the
proper local civil registries and registries of property (FAMILY CODE, Art. 139).
421
Q: What are the effects of the filing and the subsequent issuance of a decree of
separation of property?
1. The absolute community or the conjugal partnership of gains shall be
liquidated in conformity with this Code (FAMILY CODE, Art. 137, par.1);
2. During the pendency of the proceedings for separation of property, the
absolute community or the conjugal partnership shall pay for the support of the
spouses and their children (FAMILY CODE, Art. 137, par.2);
After dissolution of the absolute community or of the conjugal partnership, the
provisions on complete separation of property shall apply (FAMILY CODE, Art.
138);
The petition for separation of property and the final judgment granting the
same shall be recorded in the proper civil registries and the registries of
property (FAMILY CODE, Art. 139);
Note: The separation of property shall NOT prejudice the rights previously
acquired by creditors (FAMJI,X.CODE„4rt. 140).
5. *Each spouse maylbece .'elter excluPely,all his or her earnings and the
fruits of his or h9risepaKe prollsly qop,E, Art. 145);
• 6. The obligationiSfespoies.to-suppoq
h their ;OWldr n continues, each spouse
contributingliereto4FARLY CODE, Art,148 Var.
7. Liability of ' dRciuse.s4o—dre"illitats--shall Begs lida with their separate
propertied, JEY OZDE,Art.14 ,6,Rpr.2))nd
8. Mutuat.robligai rn to suppolf eaCji• other alsoacont ex ept when there is
legal ceparati n.
..... 1111: ,
Q: After a decremt sepaatiorcof-prth, opertyltila een issue ran the spouse
revive the foiler riperty rigime2 ..;:s>rsA
ANS: The spous e same7'jiit ""ddings separation of property was
decreed, file dirpopck in 3irt Ora—da-c-r iee7eNfifth {fropiedyorepime that existed
between them Aforeft ar on okrop.6ityin the °How instances: (CAT-
PALS)
1. When he Court, ei ,, ti f d 1'e sp9 se gra, ted the power of
adminis action in e ap3a e-seftl en w olftrnot again abuse that power,
authorizes e resu ptio -Ek-i:ajt__D iPdcrunisfr, flow
2. When the Ab ent gpio eAreapp_earsr
3. When the civil he tticko TlIermili,
4. When Parental a h is allele y- estded to the spouse previously
deprived thereof;
5. When after voluntary dissolution of the absolute community of property or
conjugal partnership has been judicially decreed upon the joint petition of the
spouses, they Agree to the revival of the former property regime. No voluntary
separation of property may thereafter be granted;
6. When the spouse who has heft the conjugal home without a decree of legal
separation resumes common life with the other; or
7. When the spouses who have Separated in fact for at least one year, reconcile
and resume common life.
Note: The revival of the former property regime shall be governed by Article 67 of the
Family Code (FAMILY CODE, Art. 141).
Q: What are the grounds by which the administration of all classes of exclusive
property of either spouse may be transferred by the court to the other spouse?
ANS: The instances are the following: (GACI-I)
1. When one spouse becomes the Guardian of the other;
2. When one spouse is judicially declared an Absentee;
3. When one spouse is sentenced to a penalty which carries with it Civil
interdiction; or
422
4. When one spouse becomes a fugitive from justice or is in Hiding as an
accused in a criminal case.
Note: If the other spouse is not qualified by reason of incompetence, conflict of interest,
or any other just cause, the court shall appoint a suitable person to be the administrator
Note: If the cause for the transfer of administration of the exclusive properties of a
spouse ceases to exist, the reason for the administration by another disappears. The
owner-spouse may petition the court to declare the administration terminated and
recover her full rights over the properties under administration (RABUYA, Persons,
supra at 502-503).
Q: Can spouses validly execute a public document evidencing their agreement to

voluntarily dissolve their conjugal partnership?
ANS: No. This agreement is void because it was never approved by a competent court
IFAMILY CODE, Art. 134). Consequently, it cannot produce any legal effect (JURADO,
Civil Law, supra at 203-204). J.;
Q: Are properties subsequently: 000'40y spouses after their separation-in-fact

liable for obligations incurred 4100iligind to the benefit of the family?
ANS: Yes. Generally, the absolute Vrtgaity of property will not be affected by the
separation in fact between the spoliAstliteLce-L _,.
the absolp$community of property for
instance will still be liable for all4fie 81511§48fiVirlairOtrgith'er
-...., ,,,, 11 of the spouses for the
benefit of the family. It .0e4.9tilikewise be rfeld.liable for art) cistcharges provided under
Article 94. The separeltfrOperty of Ittleze arated spouses lq still be solidarily liable
for the obligations inculeclftor the bgrte of the family in he event that the absolute
community of propertOisksvfficient to ay off the otgigatior The exceptions are
provided in Article,00 of tlfetarnily Code STA. MARIA, Persons,Tsupra at 498).
e'" 4.` Jk,Its
Q: Define theegime,IgNparation of P erty.
ANS: It is thgt4n
. " atr'imOnigfitiroperPiregirrie greed u Oa age settlement by
..m- r.;44 ‘,..:1
the future spouses wneteeteacn . pouse• hall own, dispes, possess, administer
and enjoy his or herlectiti separate estate la d earnings without the consent of the other
(FAMILY CODE, Ar6, 1145), with each spotilkOmAng the family expenses in proportion
to their earnings and prcifaxifItheir respeciftiVe FAMILY CODE, Art. 146).
OW .
..k..,
Q: What are the consequence yef a regime of separation of property?
ANS: The consequenceraldr,
e tAe following:
1. To each spouseiranelong all earnings from his or her profession, business
or industry and all fruits, natural, industrial or civil, due or received during the
marriage from his or her separate property (FAMILY CODE, Art. 145); and
2. Both,spouses shall bear the family expenses in proportion to their income, or
in case of insufficiency or default thereof, to the current market value of their
separate properties. The liabilities of the spouses to creditors for family
expenses shall, however, be solidary (FAMILY CODE, Art. 146).
Q: What does separation of property refer to?

ANS: The separation of property may refer to:
1. Present property;
2. Future property; or
3. Both.
It may also be:
1. Total; or
2. Partial.
Note: In the latter case, the property not agreed upon as separate shall pertain to the
absolute community (FAMILY CODE, Art. 144).
423
Q: How shall the wages and salaries of persons who are capacitated to marry
each other, living exclusively as husband and wife without the benefit of marriage
or under a void marriage, be distributed?
ANS: Their wages and salaries shall be owned by them in equal shares and the
property acquired by both of them through their work or industry shall be governed by
the rules on co-ownership (FAMILY CODE, Art. 147, par. 1).
Q: What are the requisites for the applicability of Article 147?

ANS: The requisites are:(MEW-V)
1. Both man and woman are capacitated to Marry each other;
2. They live Exclusively with each other as husband and wife; and
3. Their union is Without the benefit of marriage or their marriage is Void
(Mercado-Fehr v. Fehr, G.R. No. 152716, October 23, 2003).
Note: Void marriages under this provision do not contemplate a void marriage that may
occur due to non-observance of Article 40 of the Family Code. (FAMILY CODE, Art. 50).
Q: What is the presumptionAdh regard toxoiv :Wer0ip of properties obtained by

the parties during cohatitglorpA .!1.11
ANS: In the absence,of•rtOliT,,pqiortig. acquired wIfil9,sthex lived -together shall be
presumed to have btn,obtalped%y their joint efforts;-"work Or„industry, and shall be
owned by them inoqual(stiaresA.partyliro—did-no,tpartIOV4he acquisition by the
other party of any: orcipqriK hdll be deemed to,. have cAntrilopte oihtly in the acquisition
thereof if the fogile?g‘e
gOrts donsist4d ineffie care and InairitenancAf the family and of
the household (F Mlle; CODE, Art. 147
(.17)
Q: Can the partyncumbeiior Ilf4,0s11::.bylts'finfr vivo trills or her share in
the prOperty durin cohalit1RVigiph• • owned in cofrim9
ANS: General nibit er purl an enciftbbetOr dispol,144)acti
si inter vivos of his or her
share in the prope cqui cqh bitptkon d •o ned rbconi . on, except when
made: (s'
1. With the cons t of (qb eVat
2. Until aft r the to inatfolifthqr„,cdri Llita1ion (FAMILY CODE, Art. 147, par.
e .
3).
Sb Ely
"
Q: What is the effect'f pne" h~ parties.tb-a oid arri5 e is in bad faith?
ANS: When only one of tI epa la to alold rhaitjagbq in good faith, the share of the
party in bad faith in the co-owiersdip
,..!ilazticNtedg favor of:
1. Their common children;
2. In case of default of or waiver by any or all of the common children or their
descendants, each vacant share shall belong to the respective surviving
descendants; or
3. In the absence of descendants, such share shall belong to the innocent party.
Note: In all cases, the forfeiture shall take place upon termination of the cohabitation
(FAMILY CODE, Art. 147, par. 4).
Q: What are the cases of cohabitation contemplated in Article 148?

ANS: The relationships contemplated under Article 148 are those whereby a man and a
woman live together as husband and wife without the benefit of marriage, but are not
capacitated to marry. These include: (PIBA)
1. An Adulterous relationship
2. A Bigamous or polygamous marriage
3. Incestuous void marriages under Article 37; and
4. Void marriages by reason of Public policy under Art. 38 (STA. MARIA,
Persons, supra at 609).
424
Q: What are the distinctions between Articles 147 and 148 (parties not capacitated
to marry each other)?
Art. 147 Art. 148'

As to Applicability
The provision applies to parties who are The provision applies to parties who are
capacitated to marry each other, but live incapacitated to marry due to some
exclusively with each other as husband legal impediments (i.e. adulterous
and wife without benefit of marriage or relationships and marriages which are
under void marriage. bigamous, incestuous, or void by
reason of public policy under Art. 38).
As to Salaries and Wages
Owned in equal shares. Separately owned by the parties. If any
of them is married, his/her salary is the
property of the CPG of the legitimate
marriage.
. As to Proparty•Acquired by Either Spouses Exclusively through their Own
Funds
:I. Li
Belongs to such pawl subject to,prooy Belongs to sudi tarty.
of acquisition by extsjvl funds. r- -e
As to Property Acquired by Both SpOuSes through their Work/IncluStry'.
AT.Z.
.‘rAr
Governed brAes orkdo:
ownership.-i Owned y teem in • • common in
#:444' t propoqio tostgeentributions.
As to Propeity Acquired While Living Together' •
ow:
Presumed to beVotainedr blew join No,.presumption of joint acquisition.
efforts, work, or intstryond shall ber lerg,„there is evidence of joint
owned by .them in eggr share,.sAg,ffo Apsgtglikalgt none as to the extent of
in care and mainterignce of,rairriilY and actual contribution, there is a
household'are consiak&strIbutions. presumption of equal sharing.
As to Forfeitare
When only one of parties to a void 1. If one of parties is validly married to
marriage is in good faith, the share of another, his or her share in the co-
the party in bad faith in the co- ownership shall accrue to the CP or
ownership shall be forfeited: CPG existing in such valid marriage;
1. In favor of their common children; 2. If the party who acted in bad faith is
2. In case of default or waiver by any or not validly married to another,
all common children or their his/her share shall be forfeited in the
descendants each vacant share shall same manner provided for in Article
belong to respective surviving 147; or
descendants; or 3. The above rules apply even if both
3. In their absence, to the innocent parties are in bad faith.
party.
In all cases, forfeiture takes place upon
termination of cohabitation.
425
Q: What property regime governs a man and a woman who live together without a
benefit of a marriage and thereafter acquired from their combined earnings a
parcel of land?
ANS: The regime is that of co-ownership (FAMILY CODE, Art. 147, par. 1). The half
interest in the parcel of land will then become absolute community property of the
person who subsequently married and his/her spouse (JURADO, Civil Law, supra at
211 — 212.).
Q: What property regime governs a man of age who cohabited with a minor
woman and who thereafter acquired from his savings a parcel of land?
ANS: The man is the exclusive owner of the coconut land. The applicable law is Article
148 and not 147 since the woman being a minor has no legal capacity to marry. The
parcel of land will then become absolute community property of the man and his wife
(a).
F. FAMILY HOME
Q: What is. a Family Horn
i
ANS: Family home is stitUtej_ 0 nal" y thee hquagu sand wife or by an unmarried
head of a family, th orr is the dwerliirgutptise Ire they and their family
reside, and the land 0 ft'is tuated4rAM/ CODE A 2).
Q: When is the ~ammry ome onstate4%,

ANS: The farn' hom is d erred conpfi.ptved on a h use rk(LI lb) rom the time it is
occupied as a iden
Note: From ' its 0 nstltuttin4 solog a any o)i(rblneficiaries actually
reside therein the ily ho e ce-atirfuedLtCNt suc and is exeuip from execution,
forced; sale or a en •t as gral aragr provi • ' d theie ent of the value
allowed by law FA
1 )Thcf
Q: What are th requis es sit tar ami home
ANS: The family ome: ( ,OP I
i
1. Must be nstituta on ous of t ri,nd the land on which
family
house is si ated;
2. Must be dee e I C - beats qtf a Occupation as a 'family
residence (FA ArtV5,3);
3. Must be part of the _ erties Aft s of absolute community or the
conjugal partnership, or•o e.excl ' properties of either spouse with the
latter's consent (FAMILY CODE, Art. 156); and
4. Must be Permanent. •
Note: The rule applies to valid and voidable and even to common—law spouses under
Articles 147 and 148 of the Family Code.
Note: The family home continues despite the death of one or both spouses or
unmarried head of the family for ten (10) years, or as long as a minor beneficiary lives
therein (FAMILY CODE, Art. 159). After ten (10) years and a minor beneficiary still lives
therein, the family home shall be preserved only until that minor beneficiary reaches the
age of majority. The intention of the law is to safeguard and protect the interests of the
minor beneficiary until he reaches the age of majority (Patricib v. Dario III, G.R. No.
170829, November 20, 2006). A person can constitute one (1) family home only
Q: Who are the beneficiaries of a family home?

ANS: The beneficiaries are the following:
1. The husband and wife, or an unmarried person who is the head of a family;
2. Their parents, ascendants, descendants, brothers and sisters, whether the
relationship be legitimate or illegitimate, who are living in the family home and
426
-" •
who depend upon the head of the family for legal support (FAMILY CODE, Art.
154); and
3. In-laws provided the home is jointly constituted by husband and wife (Patricio
v. Dario III, G.R. No. 170829, November 20, 2006).
Q: What are the exceptions to the rule that the family home shall be exempt from
execution, forced sale or attachment?
ANS: The exceptions are the following: (P-LMT)
1. For non-payment of Taxes;
2. For debts incurred Prior to the constitution of the family home;
3. For debts secured by Mortgages on the premises before or after such
constitution; and
4. For debts due to Laborers, mechanics, architects, builders, material men and
others who have rendered service or furnished material for the construction of
the building (FAMILY CODE, Art. 155).
Q: What is the limitation on the right Of disposition of the owners of a property

where a family home is situated/
ANS: The family home may be sold;, .alienated, donated, assigned or encumbered by
the owner or owners thereof with tile :IA/Oen consent of the person constituting the
same, the latter s spouse; and a, ,rtijOfftifojthz:jpepeficia ig of legal age. In case of
conflict, the courts shall decide,(FAARLY,b1:R5e
Q: What are the requi'gites that will a creditor td 'apply for the execution
sale of a family home? i At.‘
ANS: The following arithelquiltes: (C% ore) 1
1. The ClainfVthe'4.'efttor is not al those me tiorted irtArticle 155;
2. He obtains a judgment in hidTav:tri
: and %
,.,
3. Helli_asYreppbri24 grounds to tleileve thaktheja hamis actually worth
- More ;than ihp.M4kimuri-,arnoe fixed in'AMTe 457.eroxy CODE, Art.
160). +, ' ..r .dgfrts"
•
G. PATERNITY ANDPILIATIO ,NT;$
Q: Who are deemed legitimate Mildreil ....Sla-
k Z;
ANS: The legitimate chliren arAre following:
1. Children conddlykscl ogiadrn during the marriage of the parents.
Note: This is tfuelftardless of the existence of extramarital relationships.
(Liyao v. Liyao, G.R. No. 138961, March 7, 2002).
2. Children conceived as a result of artificial insemination of the wife with the:
a. Sperm of the husband;.
b: That of a donor; or
c. Both, provided that:
• 1. Both of•thern authbrized or ratified such insemination;
ii. Ina written instrument executed and signed 'by them before the
birth of the child. Also,
iii. The instrument shall be recorded in the civil registry together
with the birth certificate of the child (FAMILY CODE, Art. 164).
427
Q: What are the distinctions between legitimate and illegitimate children?
ANS: The following are the distinctions:
Legitimate Child I Illegitimate Child
a
As to who are deemed included
1. Conceived or born during a valid 1.Conceived and born outside a valid

marriage (FAMILY CODE, Art. 164); marriage or inside a void ab initio
2. Conceived or born before the marriage such as bigamous and
judgment of annulment or absolute incestuous marriages and marriage
nullity of marriage if ground is declared void for being contrary to
psychological incapacity (FAMILY law and public policy (FAMILY CODE,
CODE, Art. 54); Art. 165);
3. Born in a subsequent void marriage 2.Conceived and born after the decree
due to failure to comply with Arts. 52 of annulment of a voidable marriage
and 53 (FAMILY CODE, Attj"); ,,--- Santos v. Angeles, G.R. No.
4. Product of artificial insemination 1 ).10819,„December 12, 1995); and
provided both spousA4uttribrized 'or," 3.Conceived=. and born before the
ratified such proc/ddre ini-a Nrritten— ---de.cree ..Of.ariny.lment if the ground is
instrument, e)selidted 17 and signed. oti4r,tifah psychological incapacity.
before birth jiff ciiiltfialipfetrardge.
(FAMILY COP );431.0164 ; , j ti t
5. ConceivedAir bo others"- who'wh
might hale declared against V r
t•
legitimacy or ,Wap sent nced ,ps an:,
adulteres MILY CO4E, Xr1067)k,
6. Legally a opted FAMI CODEW-17
189); and ''"14
Legitimate .t. ncei 6
1
outside of liyedloc ,,,)f fi.a• n wit4
impediment at the time o ..,,cidn iton
and had 'pubseqlytlys\-C ........._
rried„, 7' 4'
(FAMILY CODE, Art. 1 k. S(.."rt-
'.• '"- ,...--
- • As to Use of Surname
Has the right to bear tlie'"'seulame att i_ae;.1ofidie: the child shall bear the
father (CIVIL CODE, Art. 364). -mtitRr's surname (CIVIL CODE, Art:
368).
Note: Illegitimate. children may use the
surname of their father if their filiation
has been expressly recognized by the
father through the record of birth
appearing in the civil register, or when
an admission in a public document or
private handwritten instrument is made
by the father. Provided, the father has
the right to institute an action before the
regular courts to prove non-filiation
during his lifetime (FAMILY CODE, Art.
176 as amended by RA 9255).
*As
. , to Parental Authority
Under joint authority of parents. Under the sole parental authority of
mother (FAMILY CODE, Art. 176).
428
4A '6'..P
"''.4..7-tliS111.:.17Z.;';'.1,3q.;
As to Support
Has preferential right to support over No such preference.

mother if father has no sufficient means
to meet both claims.
As to Successional Rights
Entitled to inheritance (FAMILY CODE, Entitled to % of legitimate child's

Art. 174). inheritance (FAMILY CODE, Art. 176).
As to Beneficiary Right under the SSS and GSIS
Primary beneficiaries. Not primary beneficiaries.
As to Paternity Leave •
Father is entitled to paternity leave of 7 No such benefit (1 PARAS, Persons,

days with full pay. supra at 669-670).
•
Q:. What is the presumption on the legitinigtipf a • child born after the mother
contracted a subsequent ntt.artiage? -•:.•: ./41411f,ON
ANS: It depends. Thg,t0g. is that if ttie marriage is terminated and the mother
contracted another mIpag9 within tlOp.p00) hundred day4a.tter such termination of
the former marriage, thOelples shall goyim in the absence oflpr?of to the contrary:
1. A child bqsonftieftehe hundredeighty (180) days ftecIthe solemnization of
the 13/equent marriage is coi?t, dered to haye been conceived .during the
formetmarriage„Provided itbe bbrn within three hundredV00) days after the
.kfMti' .
ternmation,OPuw.icymerrparriagr
`tt;• • IPAV
2. A child born *gone hpfted Ohty (180) • 4, c2lo jgg Ihe celebration of
the SuBseptvOrriage considered to have Wei 'Conceived during such
marriageWerfthatibh it be bo Within the three hundred (300) days after the
terMinationibfAhe former marria fAKI:Y CODE, Art. 168).
Note: The legitimacy :qillgitimapy.,p,fl a bi e three hundred (300) days
following the• termination of the,fricarriggeSlia 6e'prb ad by whoever alleges such
legitimacy or illegitimae'.94(FA/01 CODE, Art. 169). In case of.annulment, the actual
separation of the spouses inc(Inot the final judgment, should be the starting point for
counting the 300 days beciaie the litigation for annulment may last long after the
spouses shall have actually separated (1 TOLENTINO, Civil Code, supra at 532).
Q: What are the grounds in impugning the legitimacy of the child?

ANS: The grounds are:
1. Physical impossibility of the husband to have sexual intercourse with his wife hits.
within the first 120 days of the 300 days immediately preceding the child's
birth, due to:
a. Physical incapacity of the husband;
,b. ,Husband and the wife living separately; or
c. Serious illness of the husband which absolutely prevented sexual
intercourse.
2. Biological or scientific proof that the child could not have been that of the
husband; and
3. Written authorization or ratification of either parent for artificial insemination
obtained through mistake, fraud, violence, intimidation or undue influence
429
Note: Rules on impugning legitimacy govern situations where a husband (or his heirs)
denies as his own the child of his wife (Benitez-Badua v. Court of Appeals, G.R. No.
105625, January 24, 1994). An assertion by the mother against the legitimacy of her
child cannot affect the legitimacy of the child born or conceived within a valid marriage.
A mother has no right to disavow a child because maternity is never uncertain
(Concepcion v. CA, G.R. No. 123450, August 31, 2005).
Q: What are the requirements, if any, in order to establish paternity over a child
conceived as a result of artificial insemination?
ANS: The following are the requirements to establish his paternity over a child
conceived as a result of artificial insemination:
1. The artificial insemination has been authorized or ratified by the spouses in a
written instrument executed and signed by them before the birth of the child;
and
2. The written instrument is recorded in the civil registry together with the birth
certificate of the child (FAM/LY,,CODE_,.4tt. 164, par. 2).
•--u.:
. • t,..
Q: When should the action to impugn:tie lo itmlqty of the child be brought?
ANS: It shall be brougte ) r--- ...,...,.., ..„: : .. ,-,
1. Within one (1)%ye r-ifs,om the knowledge 6f,the birtt-Oqi-its recording in the civil
/0
register, if- the iit,ban,sLorfirt'difdp-ar.case., any hie,Ifirs, should reside in
the city Jr uqi *pality wherie,the#rthxtook prreop.vts),recorded;
2. Within o 2-)1 .earsif the hUsb4,0 of} his default, 011 hikieirs do not reside
at the piece f birt or whereas recorded, if 3thefihould reside in the
Phili ilis-, nd 1 7". .
n iilkg
3. Withi 4firee (3) yea if ifigitho ' fadabri oad. gg
Note: If the bi h al child as beieftpoOceared fro or was nkn9 to the husband
401
or his heirs, th peri9 sht e countetatKihe discfLe ,• or inowle ge of the birth of
la
the child or of e faq of r \Ois ,,. tion ofcAsa'd birth, whidhd
w / er is earlieiRFAM/LY CODE,
kJ I 1.., , /...•? 4
Art. 170). V e.,N al e:-.(t • -1.... \V
Note: The ques On of egitime'gy aziot est,911ate* ly attacked. I . can be impugned

only in a direct action (LA -Jr2‘tr ► adAge:V..4-3 961, ,March 7 2002).
Q: When may the hetr. s img

Sripyrki)
egitimac -of-
ANS: Generally, only thectids pq Tay-impugn:1ra r‘t eteirs of the husband may
impugn the filiation of the eh'r 'hem of the ifplE)An
1. If the husband show dIda42±tejpir,ation of the period fixed for bringing
his action;
2. If he should die after the filing of the complaint without having desisted
therefrom; or
3. If the child was born after the husband's death (FAMILY CODE, Art. 171).
Note: Legitimacy can only be attacked directly (Sayson v. Court of Appeals, G.R. Nos.
88924-25, January 23, 1992).
Q: How is the filiation of legitimate children established?

ANS: The filiation of legitimate children is established by any of the following:
1. The record of birth appearing in the civil register or a final judgment;
2. An admission of legitimate (or illegitimate) filiation in a public document or a
private handwritten instrument and signed by the parent concerned (STA.
MARIA, Persons, supra at 671-673).
Note: In the absence of any of the foregoing evidence, such legitimate or illegitimate
filiation shall be proved by:
1. Open and continuous possession of the status of a legitimate or illegitimate
child;
430
2. Any other means allowed by the Rules of Court and special laws (FAMILY
CODE, Art. 172);
a.: An act or declaration concerning pedigree (RULES OF COURT, RULE
130, Sec. 39);
b. Family reputation or tradition concerning pedigree (RULES OF
COURT, RULE 130, Sec. 40);
c. 'Common reputation respecting pedigree (RULES OF COURT, RULE
' 130, Sec. 41);
d. ! Judicial admission (RULES OF COURT, RULE 129, Sec. 4);
e. Admission of a party (RULES OF COURT, RULE 130, Sec. 26);
f., Admission by silence (RULES OF COURT, RULE 130, Sec. 32).
Q: Who may bring an action to claim legitimacy?

ANS: An action to claim legitimacy may be brought by:
1. Child t- exclusive and personal right of child which may be brought anytime
during his lifetime; -IX.,
2. The .heirs of the child withinOeppd of five (5) years in case:
a. Child dies during rilirOri*.
b. Child dies in a stAlotitiOttty; or
4
Child dies after 4i66:j-idea ready been instituted (FAMILY CODE, Art
173). .:+ .,:,,,41t 44.1;;,.„. •
r-F- -2.kir „....,*
41 h.
• F. i
!1,,,
Q: What are the rights pfJegitimate ihdlillegitimate children?
ANS.: Legitimate and illOgitimate children hall have the folloyft rights:
'kr i -.0-.M • -i.
.1 Legitimate Children (S4A) I Illegitimate children (S3-1/2)
,0:V" "rifittr, . • , If 1 12,
.1. To bear t '!'Surngp-ies of the fattier eV' 1. Use fthe Surname and shall --6e
the moteily In ioVormity with t ' ug4546. e a gp., tl,.
authority of their
provisionM of "fhel:4 '..bivil 11'We motik9' v ."-Titr
Surnames. -,- 0,04
" 065 -''''11 ' 2. Be entitfa • axSeipport in conformity
2.To receive ' Sl ''''
olorYfrortw2 their/
• epares , with the Family Code;
their ascendants, and iii3 proper cases,,343e entitled to the legitime which
their brothers andhistea , in confornIP ,, liairconsist of 1/2 of the legitime of
Support; of .t
with the provision's, of thi .00-de. afe§ifiiiihte child (FAMILY CODE,
Art. 176, as amended by R.A. No.
3.To be entitled to thellegiti ate and other 9255); and
• Successional rightSVali ed to them by . 4. Receive Support from only up to
the Civil Code(FAM1LY CODE, Art. 174); grandparent and grandchildren
4. Receive support from ascendants or (FAMILY -CODE, Art. 195, par. 3
descendant's of the Same line (FAMILY and 4).
CODE, Art. 195, par. 2); and
5. Right to : inherit ,Ab intestato from
legitimate parents and ascendants (CIVIL
CODE, Art '887," par- 1)..
Q: Who are deemed illegitimate children? .

ANS: Children conceived and born outside a valid marriage are illegitimate, unless
otherwise provided in the Family Code (FAMILY CODE, Art. 165).
Q: When can an illegitimate child use the surname of the father?

ANS: Illegitimate children may use the surname of their father if:
1. Their filiation has been expressly recognized by their father through the record
of birth appearing in the civil register; or
431
2i7.4 ,-;-.,4t1•
When an admission in a public document or private handwritten instrument is

made by the father, provided that the father has the right to institute an action
before the regular courts to prove non-filiation during his lifetime (FAMILY
CODE, Art. 176, as amended by R.A. No. 9255).
Q: How is illegitimate filiation established?
ANS: Illegitimate filiation may be established in the same way and on the same
evidence as legitimate children. The action must be brought within the same period
specified in Article 173, except when the action is based on the second paragraph of
Article 172, in which case the action may be brought during the lifetime of the alleged
parent (FAMILY CODE, Art. 175).
Q: Car! a father compel his illegitimate children to use his surname upon his
recognition of their filiation?
ANS: No. Article 176 of the Family Code gives illegitimate children the right to decide if
they want to use the surname of theirjather,:or qqt. It is not the father or the mother who
is granted by law the right toodjetate the'purciarrle Oh* illegitimate children (Grande v.
AntonlO, G.R. No. 206248,ebnialy 18,;2014),1 ‘i t N,,,
,4
/14-)
r.,,,,, :-...,, . / i
-,—,,,,,.. -,..
Q: Who may be legilnatecR" . '%,,,, 1.- - ."0.
, -. %,
ANS:: Only childrycon‘liktpd asid,borriZiltglde-of4x9dIcIpis Or pavnts who, at the time
of the conceptiortollha former;weimpof'ditqualified by dily,imgediment to marry each
other may be legitimatea (FAMILY CODOrt..17.7). %I ,
Note:,The disq80ficatiOn refkred to doWnot include the cap - belt either or both of
them were bel eigh een (18) - years
, of age. Cou ples ho had. ildrep when they were
,,,,,,.._ oi ...,;,,.....,
beloW the ma e wou ranee-d to .go tbrougti the prqcess of having to adopt
1t
their own offsp so thei kids toUlatajo9.-the rights of legitimate hildren (FAMILY
CODE, Art 1 .-- ,
,.
,.....,
,•-‹ 111:63)
./ _...e i
rj-.)
Q: When shall e itimlion'd f'p1ace..cw
;9
;:-.
/
ANS: Legitimation shat take .lgtet.bk-sa sub!" tittgvalidramage between parents.
The annulment of a voidable rn\arfrage till.no,.-aff.0 theAegitima rim (FAMILY CODE,
Ilk
Art. 178). 1\ §16kL-.,_
-SYigaff\ _-°---)
Note: The effects ollegitimati • snall"-re • t-to th a4f e .child's birth (FAMILY
CODE, Art. 180).N ‘4‘,
.
$47
Q: What are the rights of legitimated chil.n?
ANS: Legitimated children shall ei-ijeqtre-g me rights as legitimate children (FAMILY
CODE, Att. 179).
Note: The legitimation of children who died before the celebration of the marriage shall
benefit their descendants (FAMILY CODE, Art. 181).
Q: How may legitimation be impugned?

ANS: Legitimation may be impugned only by those who are prejudiced in their rights
within five (5) years from the time their cause of action accrues (FAMILY CODE, Art.
182).
432
(- 4..,„?:
,
,75:s•!,.st,:i*••••dir.v,f4.1-kz;:z.f.''Pgi,&4
H. ADOPTION
Q: Distinguish between R.A. No. 8552 (Domestic Adoption Act) and R.A. No. 8043
(Inter-Country Adoption Act of 1995.
ANS: The distinctions are:
R.A.No. 8552 R.A. No. 8043

(Domestic Adoption Act) (Inter-Country Adoption Act)
As to What Type of Proceeding
Judicial Proceeding (DSWD Extra-Judicial Proceeding; the Inter-
Implementing Rules and Regulations Country Adoption Board acts as the
on R.A. No. 8552, Sec. 27). central authority in matters relating to
inter-country adoption (R.A. No. 8043,
Sec. 4).
As to Where Will the Petition be Filed
File a petition in the Family CAtfctilpii File either with the Philippine RTC
adopt not later than thirty (30) i4,4y.:11,9,rsi, paving jurisdiction over the child, or
date of receipt of the DSWD'41,WAte, ., Inter-Country Adoption Board, through
consent to adoption 4:(D'$1i1/pA mintermedicteogency (R.A. No. 8043,
Implementing Rules and Reguldil4kA 114 1:vs ' 4g11
on R.A. No. 8552, Sec.270(
Aga°
As to Where and Flow long the Supervised Trial Custody Occurs
or
In the PhilippineapOr At east six (6) In the country 8f tir adoptive parents
months BUT, court RiaPrdduce4 the, which filed the: application for inter-
period of custersjx for non-aliery country a ptio? foraiperiod of six (6)
adopters (Pko'Nop85wsec.'42.), month earrctplacement (R.A.
No. 804J,1/4,5t9
As to Who Can Adopt
1. Filipino Citizen: 1 )*
a. Of legal age; `2lipmdcitizen, both permanently
b. In a position to' uppo and care residing abroad.
for his/her childreeping with
the means of the family; •• Conditions:
c. Good moral character; 1.At least twenty-seven (27) years of
d. In possession of full civil capacity age and at least sixteen (16) years
or legal rights; older than the child to be adopted, at
e. At least sixteen (16) years older the time of the application unless the
than the adoptee, except when: adopter is:
i. Adopter is the biological a.parent by nature of the child to be
parent of the adoptee adopted; or
ii. Adopter is the spouse of the b.spouse of such parent.
adoptee's parent 2.If married, his/her spouse must jointly
f. Has not been convicted of any file for the adoption;
crime involving moral turpitude; 3.Capacity to act and assume all rights
and and responsibilities of parental
g. Emotionally and psychologically authority under his/her national laws,
capable of caring for children and has undergone the appropriate
(Sec. 7(a)). counseling from an accredited
counselor in his/her country;
433
'•e
2. Alien - Same qualifications as a 4. Has not been convicted of a crime

Filipino, provided: involving moral turpitude;
a. Country has diplomatic relations 5. Eligible to adopt under his/her national
with the Philippines; law;
b. Has been living in the Philippines 6.1n a position to provide the proper care
for at least three (3) continuous and support and to give the necessary
years prior to the application for moral values and examples to all his
adoption and maintains such children, including the child to be
residence until the adoption adopted;
decree is entered, except when: 7.Agrees to uphold the basic rights of
i. A former Filipino citizen seeks the child as embodied under
to adopt a relative within the Philippine laws, the U.N. Convention
fourth degree of consanguinity on the Rights of a Child, and to abide
or affinity; by the rules and regulations issued to
ii. One who seeks to adopt the implement the Inter-Country. Adoption
legitimate son/daugter...,of=....-Agti •
his/her Filipino spousor —: Eli C ffibsrom a country with whom the
..- .
iii. One who is.p* arriem to 'aj j Rpilipines;,. has diplomatic relations
i o %,..
Filipino citizen anol seeJ(s,-tc- '..,'...a.041x whose government maintains a
adopt jokl ithePlis/her similarrapffistrized and accredited
spousela r afiAxvithiffireT--agenc, s'aff'd that `'adoption is allowed
fourth/(1e ,o, c nsangrpitylc Awnder isitierinSiibnil laws; and
or dffini -if e Filipino'
e • gPosses. es 4(th9qivalifications and
spo e s,,;',.1, none o the diskOlifications under the
c. Certifie to ve lege caugy to' I Inter--Cluntry 111.optioli Act and other
adopt Ebt`hi her di loniat)c,.or ' e:: *4371icable Philirine-laws (Sec. •9). •
consul irAffi e bu ertifi&ath" is - -1,ii .,.,,,,,-_.t1
may e.vai ed „IR., the sarife- .-L,
J
instancii,ffDtive N.
require\ ent in b); and
Certified by sae'. off
govemme t alloA-• e
enter his country a
child (Sec. irb
3. Guardian
a.After terminational
guardianship, with reslibeLlo theyv.{i
ward; and
b.Clearance of his/her financial
accountabilities (Sec. 7(c)).
As to Who Can Be Adopted
1. Any person below 18 years of age Only a "legally-free child" may be the
who has been voluntarily committed subject of inter-country adoption (Sec.
to the DSWD under P.D. 603 or 8).
judicially declared available for Note: Legally-free Child - a child who
adoption; has been voluntarily or involuntarily
2. Legitimate child of the other spouse; committed to the DSWD of the
3. Illegitimate child of a qualified Philippines, in accordance with the Child
adopter to improve the child's status; Youth and Welfare Code (Sec. 3(e)
4. A person of legal age, who, prior to No child shall be matched to a foreign
the adoption, has been consistently adoptive family unless it is satisfactorily
considered by the adopter as his/her shown that the child cannot be adopted
own child since minority; locally (Sec. 11).
434
5. Child whose adoption has been There shall be no physical transfer of a
previously rescinded; and voluntarily committed child earlier than
6. Child whose biological or adoptive six (6) months from the date of execution
parents haye died provided that no of Deed of Voluntary Commitment
proceedings shall be initiated within except:
6 months from the time of death of 1.Adoption by a relative; or
said parents (Sec. 8). 2.Children with special medical
Note: Child — is a person below conditions (Implementing Rules and
eighteen (18) years of age.(R.A. No. Regulations on R.A. No. 8043, Sec.
8552, (Sec. 3(a)). 25).
Note: The provisions on adoption contained from Articles 183 to 193 of the Family Code
have been repealed by RA 8552 (STA. MARIA, Persons, supra at 701).
Q: When is inter-country adoption allowed?
ANS: Inter-country adoption allows alierMot presently allowed by law to adopt Filipino
children if such children cannot be,,adOPt4d by qualified Filipino citizens or aliens (R.A.
No. 8043, Sec 3). The Board shell IS :s(cl'i hat all possibilities for adoption of the child
under the Family Code have been ed and that inter-country adoption is in the
best interest of the child (R.A. No.k643Sec 7).
Q: Whose consent is necesse„ry to sia op ion. 4xklav
ANS: After being properlyAgthseled of informed of het right
. to give or withhold
his/her approval of theMoption, the4vlitten consent of the ,(d Owing to the adoption is
hereby required: L i: 4
1. The adoptemiffeN1,0 years of e or over;
2. The blopal peeriip) of the Id, if known e legal guardian, or the
prorthOverwent instrumerlali. which has lekl ctistod of the child;
3. Thei gitimatka d adopted son ,.aughter,. te as of age or over, of
the 'aggpters,:adoptee: if an
4. The illegitimaferto sided ers, e (10) years of ggb -over, of the adopter if
Am -v
living wi taidigao er an& he I er's spouse, if any; and
5. The spouse, any,-p,f the perso o ting or to be adopted (R.A. No. 8552,
Sec. 9).
1;1l
.a
4Pe .04,4 ,3z-vo
Q: What is the rule e adoritbh • y a hus • and and wife?
ANS: Husband and wifeTsIvIl jan y adopt, except in the following cases:
1. If one spouse sers tAadopt the legitimate son/daughter of the other;
2. If one spouse seeks to adopt his/her own illegitimate son/daughter: Provided,
However, that the other spouse has signified his/her consent thereto; or
3. If the spouses are legally separated from each other.
Note: In case husband and wife jointly adopt, or one spouse adopts the illegitimate
son/daughter of the other, joint parental authority shall be exercised by the spouses
(R.A. No. 8552, Sec. 7).
Q: What are the effects of adoption?
ANS: The effects of adoption under R.A. No. 8552 are the following:
1. Severance of legal ties between the biological parents and the adoptee, which
shall be vested in the adopters, except if the biological parent is the spouse of
the adopter; •
2. Adoptee shall be considered as a legitimate child of the adopter(s) for all
intents and purposes; and
3. In legal or intestate succession, the adoptee and the adopter(s) shall have
reciprocal rights of succession without distinction from legitimate filiation.
However, if there is a will, the rules on testamentary succession shall be
followed (R.A. No. 8552 Secs. 16-18).
435
-
Q: What are the rules in legal or intestate succession to the estate of the
adopted?
ANS: In legal and intestate succession, the adopter(s) and the adoptee shall have
reciprocal rights of succession without distinction from legitimate filiation. However, if the
adoptee and his/her biological parent(s) had left a will, the law on testamentary
succession shall govern (R.A. No. 8552, Sec 18).
In intestate succession, the adopter and the adoptee are mutually legal or intestate of
each other. The biological parents will not get anything because all legal ties are
severed as between them. In testate succession, if the adoptee and his/her biological
parents had left a will, the law on testamentary succession shall govern. Considering
that all legal ties are severed between the adoptee and his or her biological parents, the
latter shall not inherit anything by way of legitime. However, if there is still a free portion
left on the estate of the decedent-adoptee, he or she can give the same to his or her
biological parents via a stipulation n, a‘,"Latwill ,testament (STA. MARIA, Persons,
supra at 737-740).
..'' y
Note - Alternate Answerylt is rf0t., clealls!0ettio Se ,8vof, .R.A. No. . 8552 repeals Art.
190 of the Family CodeprAl tqlingig,the-spe ' .9pplic,able in legal or intestate
succession to the estate of tK,adopted child since b 13rovKoRs of R.A. No. 8552 are
deemed repealed,modiftru•mencie-cry . y th-e-latter EOPI0,-DJY, Handbook on the
Family Code of tIle4hilip nes1(2013)pp. 3)14ereafte - glOWIY, Family Code].
Legal or intestatSsuctession fo the dstatq4f th?a‘adopted sh ll;6e o erned by the
following rules:f ..t,),
I. ,,.
7m,c,--1
1. Legiti are7apd illegiLateciii • li
•r-f
,, esce dants surviving spouse
of th grloptbd shalkinh4ii5ffpm:IlthOikitiied in accd~dance with the ordinary
rules of ledal or intestate sUc'40nri lz;Ni
2. Whe the.p plumate oc4i16"dtimate, • e legitimate scendants of the
adoptpci 9oq • hI q„ a • opter, t ex,s d the/entire state, one-half to
ff.
be inhellteof b the c\nto, p s0.13-0,hy e o her hkf by the adopters;
3. When \ie su wingj3bseiiiAtlie IfIr(91 i chit ren of the adopted concur
with thevdopters, the tiardiv,id nth ---' to in ec(tial shares, one-half
to be inh8rited by1 e s oOtt el ?Oiti hildrenpal the adopted and the
other half, Nthe ado
/1''''4,-
4. When the aclopt€,9! rwith-thei ecitl arephildren and the surviving
spouse of the adb*d,.,t 'by sh4[10.ivikelhq'b e-estate in equal shares, one-
third to be inherits by the illFdifilt2„pchi ren, one-third by the surviving
spouse, and one third by the adOpte ;
5. When only the adopters survive, they shall inherit the entire estate; and
6. When only collateral blood relatives of the adopted survive, then the ordinary
rules of legal or intestate succession shall apply (FAMILY CODE, Art. 190).
Q: Who may file an action for rescission of adoption?

ANS: The adoptee, with the assistance of the Department of Social Welfare and
Development if a minor or if over eighteen '(18) years of age but is incapacitated, as
guardian/counsel, may file a petition for rescission of adoption (R.A. No. 8552, Sec. 19).
Q: What are the grounds for rescission of adoption?

ANS: The grounds are (PASA):
1. Repeated Physical or verbal maltreatment by the adopter despite having
undergone counseling;
2. Attempt on the life of the adoptee;
3. Sexual assault or violence; and
4. Abandonment and failure to comply with parental obligations (R.A. No. 8552,
Sec. 19).
436
Note: Adoption shall not be subject to rescission by the adopters. However, the
adopters may disinherit the adoptee for causes provided under Article 919 of the Civil
Code (R.A. No. 8552, Sec. 19).
Q: What are the effects of rescission of adoption?
1. Parental authority of adoptee's biological parents or legal custody of DSWD
shall be restored if adoptee is still a minor or incapacitated;
2. Reciprocal rights and obligations of the adopter(s) and the adoptee to each
other shall be extinguished;
3. Amended certificate of birth of the adoptee shall be cancelled and its original
shall be restored; and
4. Succession rights shall revert to their status prior-to the adoption, but vested
rights shall be respected (R.A. No. 8552, Sec. 20).
SUPPORT
Q: What constitutes support?
ANS: Support comprises everythIngl• Apensable for sustenance, dwelling, clothing,
medical attendance, education Ortp "'Option in keeping with the financial capacity
of the family. The education of tffeig ',entitled to be 'supported shall include his
•schooling or training fOr some pV5flpf a9,7404, vocatio; r. even beyond the age of
majority: Transportationsshall4OudeepAns d from school, or to and
from place of work (FAIVILOCODE, Ad. 196).
Q: Who are obliged triyAsuppo3t?
ANS: The following 0,o
rbfigedgtd support ach other: [S-LAD-Pl2C-PIC-(BS)2]
1.- The Spouses; arsv,
2. Legiliibte Ascendants and'Deswpdants;
3. Pare-01@a " Legitimate Btildren nd illegitimate
childrenof the IAA .y.ktem74.er
'PrAfo '
4. Parentst,p.ndTelllegiti ildren and e.dilegi mate and illegitimate
children 81-1,ffiellitte
5. LegitimatA3r9thers; and Sisters, hether of full or half-blood (FAMILY CODE,
Art. 195); andbk40
6. Brothers andiSisters NO4-16'd'i mate in:father of the full or half-blood,
are likewise Paund leppport each other, except only when the need for
siiptiort of the%,rbilleAor sister, being of age, is due to a cause imputable to
the claimant's failanegligence (FAMILY CODE, Art.'196).
Q: Which properties are answerablejor support?

ANS: The properties answerable for support are:
1. The spouses - prOperty of the absolute community or the conjugal partnership
(FAMILY CODE, Arts. 94 and 121). In case of absence of common property,
the property of each.spouse. is answerable for the support of each other;
2.. Legitimate• children. from legitimate-parents Property of the absolute
community or the conjugal partnership (FAMILY CODE, Arts. 94 and 121). In
case of absence of common property, the properties of the parents are
solidarily liable; •
3. Legitimate parents from legitimate children - Property of the children (FAMILY
CODE, Art. 197). The parents are included in the term "ascendants";
4. Descendants, whether legitimate or illegitimate, from the legitimate parents of
their parents - (grandparents) Separate property of the grandparents (FAMILY
CODE, Art. 197);
5. Illegitimate children from parent - Separate property of the parent (FAMILY
CODE, Arts. 94 and 121); and
6. Brothers and sisters - Property of the obligor,
437
Note: In case the absolute community or the conjugal partnership advances the support
due from the separate property of a spouse the amount advanced shall be deducted
from the share of the spouse obliged upon the liquidation of the absolute community or
of the conjugal partnership (FAMILY CODE, Art. 197).
Q: Whenever two or more persons are obliged to give support, to whom shall the
liability devolve?
ANS: The liability shall devolve upon the following persons in the order herein provided:
1. The spouse;
2. The descendants in the nearest degree;
3. The ascendants in the nearest degree; and
4. The brothers and sisters (FAMILY CODE, Art. 199).
Q: How should payment be made in case the obligation to give support falls upon
two or more persons?
ANS: The same shall be divided between them in proportion to the resources of each.
However, in case of urgent rsad-alidly ipepi-cirgumstances, the judge may order
only one of them to furnip-theisuppoit prpviisiorlallyNithout prejudice to his right to
-hare dbe-SomAfiern GAMILY CODE, Art. 200, pars. 1
claim from the other obfgbrsLtheig
-N. i #
/ )
Q: How shouldpay,mdm e Made in :d se. two-oc more recipients, at the same
time, claim sumo° 'Poo, one ancirtim meliersol, Adlitie -k-4la ter does not have
sufficient mead's to s tisfy dll claims? 1\14.
ANS: General.p-thg ,6rder stablisbegeArticle 1c1 shali‘ tie TO owed unless the
concurrent oblig„es'Vpuld thwousOndia„child subjec toTarental authority, in
which case thl c15shall be leferld/F404)Ee5DE Art. 20
:1 .
Q: Are the Holmes stt resLto2,9b1.6...._m.utup14ppori,
i aftF final jtid§ment
granting the p'FAtt6ti
. or IY gel eparVio dailruilmefitcif marnaVior declaration of
nullity of marriage? ' /
ANS: Generall\ after inal "qtRI rge-rit ra e petition fo legal separation,
annulment of marriage, or4eci lj maafge, the obligation of mutual
support between the spouses,,,, as ..11-imeyein' e of leg,' separation, the court
may order that the gthkty spAirs i gi.-give-stirgrt' thinno9cen one, specifying the
terms of such order (FAIT • \v-
Q: What should be the basiefor e atkua' eid ven as support?
ANS: It shall be in proportion to t e sources or means of the giver and to the
necessities of the recipient (FAMILY CODE, Art. 201). Support in the cases referred to
in Art. 201 shall be reduced or increased proportionately, according to the reduction or
increase of the necessities of the recipient and the resources or means of the person
obliged to furnish the same (FAMILY CODE, Art. 202). The amount of support granted
in a judgment may be changed from time to time. Similarly, contractual support shall be
subject to adjustment whenever modification is necessary due to changes. of
circumstances manifestly beyond the contemplation of the parties (FAMILY CODE, Art.
208, par. 2).
Q: When is the obligation to give support demandable?
ANS: It shall be demandable from the time the person who has 'a right to receive the
same needs it for maintenance, but it shall not be paid except from the date of judicial or
extra judicial demand (FAMILY CODE, Art. 203).
Note: Support pendente lite may be claimed in accordance with the Rules of Court.
Payment shall be made within the first five days of each corresponding month. When
the recipient dies, his heirs shall NOT be obliged to return what he has received in
advance (FAMILY CODE, Art. 203).
438
( ,--"-?c ztilgin*.;;:ti,41:4,,,,,; .,50.0f0W7
.4,
-e-4.?-,0,r-f
.......
e.-ip-).°,-;,,,tt.P.),t;:ki';',!,-*/ .:".,',M1Vt',.it:t-,,-.k,,,e,'qqq, tt iVY it. • -;',F1- 4 •-.•:' - :7,1, 1..i% ..
Q: What is the option given to the person obliged to give support in order to fulfill
his obligation?
ANS: The person obliged to give support shall have the option to fulfill the obligation
either by:
1. Paying the allowance fixed; or
2. Receiving and maintaining in the family dwelling the person who has a right to
receive support.
Note: The latter alternative cannot be availed of in case there is a moral or legal
obstacle thereto (FAMILY CODE, Art. 204).
Q: Can the right to receive support be subject to attachment?

ANS: It depends.
1. The right to receive support under Title VIII as well as any money or property
obtained as such support shall not be levied upon on attachment or execution
(FAMILY CODE, Art. 205); or
2. In case of contractual supporlq that given by will, the excess in amount
beyond that required for Igg*.:*Stipport shall be subject to levy on attachment or
execution (FAMILY CODT!1.,4 11gipar 1).
Q: May the right to receive supp-krt412:::ftved?

ANS: No. Support is a mandatoryl:q0katiolk„Ktw,Hitt,istandi What the Family Code did
not incorporate or adopt Artiglea-301:41PW11,-V4 10 that the right to receive
support cannot be renouwed nor cari-tie transmitted• hird person and neither
could it be compensa,4'with whatItlaAcipient owes the 9 Igor, the very nature of
support as a mandat400 essential` tiliigation nevertheles9 mands that the same
cannot be waived,1-9ficnlpp.d transmi gcl or compensate! as such obligation is
necessary for tbelk isten"survival an well-being 1th individual ought to be
supported (STA4fARI6,,,ersons, sdPra a.16792).
J. PARENTALAVTHOWW
Q: What is the scokeldf parental autho
ANS: Pursuant to tffe nafuralligh't and d f pi
a.ents over the person and property of
their unemancipated chllsicedparental -responsibility shall include:
1. The caring fodalid—rearinailtiefiltoildiVibleonscio s ess and efficiency; and
2. The developrAht of tOimoral, mental and physical character and well-being
(FAMILY CODE; 9).
<-41k4
Q: Who exercises parental authority?
ANS: The father and mother diall jointly exercise parental authority over the persons of
their common children. In case of disagreement, the father's decision shall prevail
unless there is a judicial order to the contrary (FAMILY CODE, Art. 211, par.1).
For Article 211 to apply to illegitimate children, two requisites must concur, namely:
1. The father is ceitain; and'
2. The illegitimate children are living with the said father and mother who are
cohabiting without the benefit of marriage or under a void marriage not falling
under Articles 36 and 53 (STA. MARIA, Persons, supra at 830-831).
Q: Can parental authority be renounced?

ANS: Parental authority may not be renounced or transferred except in the cases
authorized by law (FAMILY CODE, Art. 210).
439
•
Q: When a child's custody is entrusted by his parents-to a relative, is there

abandonment?
ANS: No. The law allows a waiver of parental authority only in cases of adoption,
guardianship, and surrender to a children's home or an orphan institution. When a
parent entrusts the custody of a minor to another, such as a relative, as in this case, or
to a friend or a godfather, even in a document, what is given is merely temporary
custody and it does not constitute abandonment or renunciation of parental authority
(Eslao v. Court of Appeals and Cordero, G.R. No. 116773, January 16, 1997).
Q: What is the effect of absence, death, unsuitability, remarriage of the surviving

parent or separation of the parents to the parental authority exercised over the
children?
1. In case of absence of either parent, the parent present shall continue
exercising parental authority;
2. In case of death of either paEentir..the,p4ent present shall continue exercising
parental authority; ,,'''
I I 6 -I.
3. In case of remarriage b,fthe ,,igivi0
i kpari-ntl it,,pall not affect the parental
authority ovepgcch .Hictrerrunless.the4Rurtf 49ints another person to be the
guardian o,KeloeTscin,olproperty of thethiWen (bY CODE, Art. 212);
4. In case 9ffrsepldrilpf-the-p—al-VITM-pareAtfiltkaqoritikshall be exercised by
the parerRgleisi at& by ;We 'di:iurt.,7The Court 4h91,0ke into account all
releva I cortsiderati1ntsd, esPecialtY-thechoicelof th *qhild OVer seven (7) years
of ag , unlesl the ar'ent chopatilis unfit. N child ...d,el seven (7) years of
age q ,013 sepa e from "ta mother unless the, coulfinds
i compelling
reasdns-tolo der othkrwrTer(P.41EYE, 4t. 2/3))a—nd-n
5. In c...eRftath, a senceitykkingitability of the pa ,ehtsi . bstitute parental
authdri54sti II \e krciseebrilfe?survivitiN4andParen )1n case several
survite eon one 4ignateoL,f14 i tlje cop/ 41cing ihtoodaccount the same •
consi eratidn meritt CI in th: kagding •,:s • fti le, span aercise the authority
(FAMI\ Y CODE4 A
Q: What is the co cept offikal e

ANS: It is the privile e stati9 'ttlakTi d afillos all b pelted to testify against
his parents and grand erit twhen.suc esti o indispensable in a crime,
against the descendant or by o parent'againg(teZpihe AMILY CODE, Art. 215).
Afir
Q: In default of parents or a judicua ppointed guardian, who has the right to
exercise parental authority?
ANS: The following persons shall exercise substitute parental authority over the child in
the order indicated:
1: Surviving grandparent, as provided in Article 214;
2. Oldest brother or sister over 21 years of age unless unfit or disqualified; and
3. Actual custodian over 21.years of age unless unfitor disqualified: .•
Note: Whenever the appointment of a judicial guardian over the property of the child
becomes necessary, the same order of preference shall be observed (FAMILY CODE,
Art. 216).
Q: When shall special parental authority be exercised?

ANS: Special parental authority shall be exercised as follows:
1. In case of foundlings, abandoned, neglected or abused children and other
children similarly situated, parental authority shall be entrusted in summary
judicial proceedings to heads of children's homes, orphanages and similar
institutions duly accredited by the proper government agency (FAMILY CODE,
Art. 217); or
440
2. The school, its administrators and teachers, or the individual, entity or
institution engaged in child care shall have special parental authority and
responsibility over the minor child while under their supervision, instruction or
custody. Authority and responsibility shall apply to all authorized activities
whether inside or outside the premises of the school, entity, or institution
Q: In case where the acts or emissions of minors under special parehtal authority
cause damage to another, who shall be principally and solidarily liable for
damages? What are the defenses available to them?
ANS: Those given the authority and responsibility under Article 218 shall' be principally
and solidarily liable for damages caused by the acts or omissions of the minor. The
parents, judicial guardians or persons exercising substitute parental authority shall be
subsidiarily liable.
Note: The respective liabilities of those referred to in the preceding paragraph shall not
apply if it is proved that they exercised theRroper diligence required under the particular
circumstances (STA. MARIA, Persgaqi0kra at 857). ,
Note: All other cases not covered.W-14pr the preceding articles shall be governed
by the provisions of the Civil Code:b-Wwiestiidelidts (FAMILY CODE, Art 219).
Q: What are the rights and riiitik1.44LarArits and those exercising parental
authority over the children px.‘Aard* IhT"vortgeat
ANS: They shall have the Loll&ing rigOs,And duties:
1. To keep thetertheir comp,mao support, educe ' agd instruct them by right
precept and t7ip,c0xampleera-d 'to provide for their pbringing in keeping with
their means*: pr-01'
2. To girothem themlo;efand
to affectid advice and counsel, companionship and
undeptanding., t,„N
3. To peraegerlh moral and iritual gtida ce,,niqculca ei .j,n them honesty,
integrity, self-disci ine, , industrkad4 date their interest
, ritinspigOthetcompliance WitWige11
in civiclaffaireS .6 ies of citizenship;
4. To enhanc0 rotetpreserve a • • maintain their physical and mental health at
all times; 11
5. To furnish tham wit good and e educational materials, supervise
their activitie ecreatior d ssociation4 if ,0t ers, protect them from bad
,
company, an 4reve rt,,-em from acquiring habits detrimental to their health,
studies and mats.
6. To represent theerrin II matters affecting their interests;
7. To demand from them respect and obedience;
8. To impose discipline on them as may be required under the circumstances;
and
9. To perform such other duties as are imposed by law upon parents and
guardians (FAMILY CODE, Art. 220).
What'ate the condition's 'in order for the civil liability of parents and other
persons exercising parental authority over the children to arise?
ANS: Parent and other persons exercising parental authority shall be civilly liable for the
injuries and damages caused by the acts or omissions of their children:
1. While living in their company; and
2. Under their parental authority, subject to appropriate defenses provided by law
(FAMILY CODE, Art: 221).
441
..„
- rile:::
-01
,Z
Q: What are the rules in the exercise of legal guardianship over the property of
the child?
1. The father and the mother shall jointly exercise legal guardianship over the
property of the unemancipated common child without the necessity of a court
appointment. In case of disagreement, the father's decision shall prevail,
unless there is a judicial order to the contrary (FAMILY CODE, Art. 225, par.1);
2. Where the market value of the property or the annual income of the child
exceeds P50,000 the parent concerned shall be required to furnish a bond in
such amount as the court may determine, but not less than ten per centum
(10%) of the value of the property or annual income, to guarantee the
performance of the obligations prescribed for general guardians; and
Note: A verified petition for approval of the bond shall be filed in the proper
court of the place where the child resides, or, if the child resides in a foreign
country, in the proper court of the place where the property or any part thereof
is situated (FAMILY CODEjrt,,,225,..par43).
3. The property of thvhilr earged-pr vsapired,,yvith his work or industry or by
onerous or grawiteus tilk shalLbelos.ikto the Chid in ownership and shall be
devoted excludivrof.titjatteit.,suppod and_edUqation, unless the title or
, ma p ,41' \
transfer prcles the Ise.
Note: The right of the pd?tt Pthelfaffrandincofile
„, °title Child's property shall be
..., \ ..4,
limited primarily Oh— rd's s ppo And spcokidarily to the colle9bvp daily needs of the
family (FAMILY COD rt. 226). r *A 7--
itth. 1 i ,,;„,„,,
04r )
Q: State the,appi,aliffity.of the ordin"a4 reef on gTardiansrup„p the exercise of
legal guardia sfiippirer the roli`dk4ertitild: Ir''
ANS: The ordi atyr4s on ardiarigkkipck4tialfibeimere4 supplJtbry=4 cept:(SSR)
1. Wheri the.cliild if erLaubititatearental af j.417:p ; 1
2. The gt.rjiqiis ac,SjAnFr; op j , ,„-1 / ,-,...) 1.., -
3. A parqnthKRenv 9,d, irthp off;pAsy pt, rdingry rut et on guardianship
shall a ly (FA' ILY 9d -4471. 5,•1-'fi Or
'''`....
Q: What is the rut'e y the ‘en skaWff :pA , er9pag ment or administration of any
of their properties fka n u n rite ciii-afe%child/
ANS: The rules are the oll slb.
1. The net proceelh: elst.te prop 111
'all
'al ) 4., p he owner;
2. The child shall be gRe a reasoliabl otithly _, allowance in an amount not less
than that which the owne CiltIve paid if the administrator were a
stranger, unless the owner, grants the entire proceeds to the child; and
3. The proceeds given in whole or in part shall not be charged to the child's
legitime (FAMILY CODE, Art. 227).
Q: What are the grounds for suspension of parental authority?

ANS: The grounds are the following:(CEO-BAN)
1. Conviction of a crime with the penalty of civil interdiction (FAMILY CODE, Art.
230);
Note: The authority is automatically reinstated upon service of the penalty or
upon pardon or amnesty of the offender (STA. MARIA, Persons, supra at 899).
2. Excessively harsh or cruel treatment against the child;
3. Giving the child corrupting'Orders, counselor example;
4. Child is compelled to Beg;
5. Subjecting the child or allowing him to be subjected to Acts of lasciviousness;
and
6. Culpable Negligence, committed by the parent or person exercising authority
442
44,:i•Vrctiirr14k,'INZZ
Q: What are the grounds for termination of parental authority?

ANS: The termination of parental authority may be permanent or temporary. Parental
authority'terminates permanently: (PEC)
1. Upon the death of the Parents;
2. Upon the death of the Child; or
3. Upon Emancipation of the child (FAMILY CODE, Art. 228).
Note: A child is emancipated upon reaching the age of majority which is 18 years
(FAMILY CODE, Art. 234, as amended by R.A. No. 6809).
Unless subsequently revived by a final judgment, parental authority also terminates: (I-
DAGA)
1. Upon Adoption of the child;
2. Upon appointment of a General guardian;
3. Upon judicial declaration of Abandonment of the child in a case filed for the
purpose;
4. Upon final judgment of a competent court Divesting the party concerned of
parental authority; or . • $i
5. Upon judicial declaration, of a(4e9Ce. or. Incapacity of the perscin exercising
parental authority (FAMILY C.O4fert. 229).
Note: Under the Child Abuse Law. (4ANVo. 7610), the ascendant, stepparent or
guardian who shall induce, deliver.or:cfferpkiRo* any onqiprohilptted by, the said law
to-keep or have in his company..a minoi-1411F•publiftgOte place, hotel, motel, beer
joint, discotheque, cabaret; :pension hOuge, sauna or massb.,ge parlor, beach and/or
other tourist resort ,ormirillAr places shall parental auteity over the minor (R.A.
No. 7610, Sec. 10). 1:! :.
K EMANCIPAripp, I '1
0,-- • •
Q: When dofternancirAtIon take place? f
ANS: EmanelpaiiorvigkeijalaCe.:y .the attainmeWMpli Y [Mess otherwise
r
provided, majority commences at the; age Ufpighteen yda'sztd CODE, Art 234 as
amended by R.AT'No...68090
Q: What are the effect of emancipatiotiL

ANS: The following ar$3f *gi ecqUroge.ipa
1. Emancipationbr anyoceOse shall terminate parental authority over the person
and property'df the child who shall then be qualified and responsible for all
acts of civil life kveJithe exceptions established by existing laws in special
cases;
2. Contracting marriage shall require parental consent until the age of twenty-
.one; •
3. Nothing in the Family Code shall be construed to derogate from the duty or
responsibility of parents and guardians for children and wards below twenty-
one years of age mentioned in the second and third paragraphs of Article 2180
. of the Civil Code.(FAMILY CODE, Art. 236. as amended by R.A. No. 6809).
•
L. RETROACTIVITY OF THE FAMILY CODE

Q:. Does the Family Code have retroactive effect?
ANS: The Code shall have retroactive effect insofar as it does not prejudice or impair
vested or acquired rights (FAMILY CODE, Art. 256).
Note: The phrase "vested or acquired rights" under.Art. 256 of the Family Code is not
defined, thus leaving it to the courts to determine what it means as each particular issue
is submitted to them. It is difficult to provide the answer for each and every question that
may arise in the future (1 PARAS, Persons, supra at 835).
443
Q: When did the Family Code take effect?
ANS: August 3, 1988 (Memo. Circ. No. 85)
HI. PROPERTY
A. CL4SS/F/C4T/ON OF PROPERTY
Q: What is property?
ANS: Property is a mass of things or objects useful to human activity and which are
necessary to life, for which reason they may in one way or another be organized and
distributed, but always for the use of man (2 TOLENTINO, Commentaries and
Jurisprudence on the Civil Code of the Philippines (1992), p.1) (hereinafter 2
TOLENTINO, Civil Code].
Q: What are the characteristics of pro.P.PEtY2 „

ANS: The characteristics ofi:pg pe -are:. (USA. .., 7-'.-..,
1. Utility for the satisfattiob. of moat or 600rtlieWants:
•i, .1._ . ...., . 4 't.. 4. -1.
Indi
2. SubstantivelyArtndnIually,(Le,Ccan ixistf by..its,alf, and mot merely as a
part of a wtitile) (IRMA'S, Civil Code orrtkelPhilipp(hqs Annotated (2016), p.
4) (hereinafter S, Propenylir-----..„, -<:),-
3. Susceptibility to A prppriatiop; À.• .,,,,
‘e6
These characterigte*i4G-• b.ject . to theollgiidnules:
- y .‘
1. Res pommtpes (elcnging ,:gi;iveryone) are -Rost) Vhich cannot be
approiopedpn theicantiretraltbppth-ther y be pOtL opriited under certain
condtnsla limited WayAre:g,.fpctriqtyroxygen, disttllial.pater); and
2. Res ulli s (belonging tcfsg104*-ate thidse whist mayhave .no.-owner
bec4 • e.. as Rale{ been appropriated (e •)d a , imald,, idden treasure),
or beivel hasleret or,.ab 60:me y/ dow t,, nstitutes property
as long s i i sus\cgkb e of thasei or 7 use an; and
. ..iil,
c..51
Q: When can alking no ;be cons ad use yt le of appropri tion?
ANS: Things cant be;;4,c sid ty they ale not susceptible of
appropriation by reason of: y
1. Physical impo sibjfi
or
2. Legal impossibility uctis I Vnd other heavenly bodies;
atilknan +My while . the person is alive.

However, under certain conditionsrth'body of a person or parts thereof may
be the subject matter of a contract (e.g. posing as a model, donation of blood
or a corpse) (DE LEON, Comments and Cases on Property (2015), p.2)
(hereinafter DE LEON, Property].
Q: How is property classified? .

ANS: Property may be classified as follows: (M0A-MEDiCs-NCC)
1. As to Mobility:
a. Movable or personal property; or
b. Immovable or real property
2. As to Ownership
a. Public dominion or ownership; or
b. Private dominion or ownership
3. As to Alienability
a. Within the commerce of man (or which may be the objects of contracts
or judicial transactions); or
b. Outside the commerce of man (like prohibited drugs, the sun, or the
moon)
444
4. As to Materiality
a. Tangible or corporeal; or
b. Intangible or incorporeal
5. As to Existence
a. Present property (res existentes); or
b. Future property (res futurae)
6. As to Dependence or Importance
a. Principal; or
b. Accessory
7. As to Capability of Substitution
a. Fungible (capable of substitution by other things of the same quantity
and quality); or
b. Non-fungible (incapable of such substitution, hence, the identical thing
must be given or returned)
8. As to Nature or definiteness
a. Generic (on referring to pAgroup or class); or
b. Specific (on referringfa'aingle, unique object)
9. As to whether subject to tilOP,igitIdy of the court or free
a. In custodia /egis;(0144gdy of the court) — when it has been seized
by an officer undgt a ,W.Iiirottachment or under a writ of execution; or
b. "Free" property (nOtIiiiiAlaciWiegis, S, Property, supra at 3-
4..-143t,,504Arg,„
^
10. As to Consumapilfir
a. Consuffigle — canncitzbe; used according a is nature without being
consumeVor
VS,63,
g
b. Non-eWst.6016 any °flier kind of mo ab operty (CIVIL CODE,
;04"'is)9"„.
(MI
Q: What is fife impohanceof classifying p romovables and
movables`? ,41
ANS: The classifjpatioir.80opertylito truovables or mov g does not assume its
importance from (itfati aiknobilfij,or Con-mobility, but from the fact that different
provisions of the avy,. govern the acq yalarlpossession, disposition, loss, and
registration of immovaRes and movables flirMS,pg6! supra at 5).
,ciffe
Q: What are deemed diimm?Able property?
ANS: The immovable propActie# are the following:(LaTAS-FAMine-MacDoCo)
1. Land, buildings, roahnd constructions of all kinds adhered to the soil;
Note: Where a building is sold to be demolished immediately, it is to be
regarded as movable because the subject matter of the contract is really the
materials thereof (Bicerra v. Teneza, G.R. No. L-16218, November 29, 1962).
2. Trees, plants and growing fruits, while they are attached to the land or form an
integral part of an immovable;
Note: The moment they are detached or upiooted from the land, they become
personal property except in the case of uprooted timber, if the land is timber
land. Although no longer attached, the timber still forms an "integral part" of the
timber land (PARAS, Property, supra at 18).
Note: Growing crops of fruits or ungathered products or fruits may be treated
as personal property. For the purpose of attachment, execution, and the
chattel mortgage law, they have the nature of personal property (Sibal v.
Valdez, G.R. No, 26278, August 4, 1927).
3. Everything Attached to an immovable in a fixed manner, in such a way that it
cannot be separated therefrom without breaking•the material or deterioration of
the object (e.g. walls, canals, aqueducts);
445
ZV:%.:kI;MP;;P•vkirz:V:lr!.•
N".?0,
-44e; ariamvA,s,:r xvg:gq,,,, 14). .A32F-14.itte".AliAziViATO:;.,:'*;;;5e,

. .
4. Statues, reliefs, paintings or other objects for use or ornamentation, placed in
buildings or on lands by the owner of the immovable in such a manner that it
reveals the intention to attach them permanently to the tenements;
Note: The requisites in order that statues, reliefs, paintings or other objects
may be considered immovable property are: (0P01)
a. It is an object of Ornamentation or object of use;
b. The property is Placed in the building or on land;
c. The property in a building or on land must be placed by the Owner of
the immovable (buildings or lands) and not necessarily by the owner of
the object; and
d. There is an Intention of permanent annexation or attachment, even if
adherence will not involve breakage or injury - this is the main
consideration (DE LEON, Property, supra at 21).
5. Machinery, receptacles, instruments or implements intended by the owner of
the tenement for an industry or works:
a. Which may be carrie,ci.on,in,a.tp„ijding or on a piece of land; and
b. Which tend djrebtlY to nrieetthe.ne:eds,of the said industry or works.
Note: The requisit6s in,kqer t*tria4tilriery-mke considered as immovable
property are:AdCAN e
a. It must-be pja9pd`tly r the Owner dtthe,tenerpecitlor his agent;
b. The intlfistrv'or)vorksibISTWCarrjed"o (i1J'a bbilding or on a piece of
1,00d:I^N
c. 4,ThelnAchinefy, etcAn4tend directl to ' p'et th4 needs of the said
Indust. or Arks; and
d. Th-e'rnachine,ry must 5-e"Orert oal and Princip 191meants of an industry
rfrdr-wirks, witthork41*hMuch ;laths* or w wpvld be unable to
function or cagy onfthp,inFiusgiallpurp se for vihichi tas established.
6. Animerhours, pi eon-hous..-Isehives, isE, poncts or reeding place8 of
similar pqufe,j, in 4 their °I/toe acecetiiein of pre relies them with the
intention-,to tave 1°,7a Antlyv- attdehpd the land, and forming
permanpnt pakof it; tiO,b1)1 'als in ttliacspyare.inSludedi
Note: 'The et.thW-gn imal ouses may be considered
immoval3kprope •
a. Placedby t1)6151.64eror.:13... . tenant, s agent o e Owner;
b. With trie,,,t orleperrnanenrgratifm4t. d
c. Forms a Pe,,,,, FmAnerit par RfAhelivnpvayie (CIVIL CODE, Art. 415).
Note: Since animagtab th it a u e b. Moved from place to place without '
injury, they are to be regal e ' e onal property in case of alienation and
for purpose of the criminal law. They may be properly be the object of theft or
robbery.
7. Fertilizer actually used-on a piece of land;
Note: "Actually used" means that it has been spread over the land (PARAS,
Property, supra at 28).
8. Mines, quarries, and slag dumps while the matter thereof forms part of the
bed, and waters, either running or stagnant;
Note: Once severed, they become movable, for then they are no longer
mines, etc. but minerals (DE LEON, Property, supra at 30).
9. Docks and structures which, though floating, are intended by their nature and
object to remain at a fixed place on a river, lake, or coast; and
Note: Vessels are personal property, although they partake the nature of real
property in view of its importance in the world of commerce (Rubiso v. Rivera,
G.R. No. L-11407, October 30, 1917).
10. Contracts for public works, and servitudes and other real rights over
immovable property (CIVIL CODE, Art. 415).
446
•
i6.
...f.
A,-.,...k;
ttl'.1_I- ..., • • :- . ,:.. g-kt.;5V.:
i.s,.1i4115,AiiN4,V44.4N,k`4:4,,•"4tU•;4:,:>=14.+'
Q. What are the different classifications of real property?

ANS: The classifications of real properties are as follows (NIDA):
1. Real Property by Nature (like trees and plants) (CIVIL CODE, Art. 415, pars. 1,
2 and 8).
2. Real Property by Incorporation (buildings) (CIVIL CODE, Art. 415, pars. 1 -4
and 6).
3. Real Property by Destination or purpose (like machinery) (CIVIL CODE, Art.
415, pars. 4-7 and 9).
4. Real Property by Analogy (like right of usufruct, or easement and servitudes,
or a contract for public works) (CIVIL CODE, Art. 415, par. 10).
Q: What are deemed as movable properties?

ANS: The following are deemed movable properties:
1. Those movables susceptible of appropriation which are not included in Article
415 (enumeration of immovable property);
2. Real property which by any special provision of law is considered as personal
property;
3. Forces of nature which are bro ght under control by science (CIVIL CODE,
Art. 416); • • •
4. In general, all things:
a. Which can be traKISO:dttep. coxpj ci to plaA and
b. Without impajffnentljyth ",rteaPp OpgItyji ich they are fixed (CIVIL
CODE, COW/6).
5. Obligations agd'actions bjeItovables or demandable
ve for theiTtoil
•• sums (C/VILI.tg,ODE, Art. 41,7,)f a. 1'1
6. Shares of st.cicii9Y;agriaiitural, Ommercial, an irrustrial entities, although
they mayiae rell agate (C/VII?:C.ODE, Art. 41. ).
PO4;
- fr". IN,
Q: What a‘tests4which rust be applied in ordps to,,determine whether an
kg --wr-=
object is mov4e'de-n_.,,,diFf •• '
ANS: The tests wtilphlm -SCesu • seively are:
1. Whether tiZeàjedrea , n beitTansp9rted from place to place;
2. Whether tire change location 8%,,,ta -tak e lace without injury to the immovable
to which it malLbe4t6ched; and ,
3. Whether it is no include-8 IfFtWenurfferationibund in Article 415 of the Civil
Code
4. If the answer jo a1l,ttte above question is in the affirmative, then the object is
' movable (JURADO?"611/il Law Reviewer,•supra at 321).
Q: What is the distinction between consumable and non-consumable properties?

ANS: Consumable properties are those that cannot be used according to their nature
without them being consumed. Non-consumable properties refer to any other kind of
movable property (CIVIL CODE, Art. 418).
Q: What is the distinction between fungible and non-fungible properties?

ANS: Fungible properties are those replaceable by an equal quality and quantity, either
by nature of things or agreement. Non-fungible properties are those that are
irreplaceable because identical objects must be returned (PARAS, Property, supra at
39).
Q: What are the classifications of properties in relation to the person to whom

they belong?
ANS: Property is either of public dominion or of private ownership (CIVIL CODE,
Art.419).
447
'
Q: What are properties of public dominion?

ANS: Properties of public dominion are those intended for public use, such as roads,
canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, road
steads, and others of similar character; and those which belong to the State, without
being for public use, and are intended for some public service or for the development of
the national wealth (CIVIL CODE, Art. 420).
Q: How are lands of the public domain classified?

ANS: Lands of the public domain are classified into: (1) agricultural; (2) forest or timber;
(3) mineral lands; and (4) national parks (CONST., Art. XIV, Sec. 10).
Q. What are the characteristics of a public property? (0I-PEAR)

ANS: The following are the characteristics of a public property:
1. Outside the commerce of man except insofar as they may be the object of
repair or improvement or other similar things;
2. Inalienable, however, whenAlsno:lomer needed for public use or service, it
may be declared asyatilmoniN property; '•••-,
3. It cannot be accipirgd 0:Prescitigoq V /
4. It cannot bel-OrdirretliikEasemen ?• ..4:
5. It is not subject to'Attefaent or executiorgtaiski ./•;\
6. It cannot Se'lle:egiiigreslAndellrPropetly_ R‘9istrationi pecree or PD 1529
and the gpject of% TOrrensiritlePAqielS, Propertyi4b at 48-49).
ir ' ''',•-// V
Q: What are thkindir.of public propere . y.-
,?-, i, (I I
ANS: There are tripqinds op-Toperty Otpip5liacTifinion: (USD) „,i 1
1. For piliblio•Use- like koa06-0ifelsVtnaylkised by ;lo andyy
2. For pucaervice
lf L
likeW0,i, 661:Tb-0N:fern &it buiI4ihg , rmy rifles, army
vessel mq bed in only bi.sa‘ isitaithorize, .*ni); an
i
3. For tke„Dev op ,A nitioppRvailth — net ' fresources' PARAS,Property, •
supra R21 • ..•:, ..- • 2,, / it,,,, \i
N '' ' ' -7 er
\::{3 }
.kk‘ :4 - .t,
Q: What are propprties cOri,larp„.11 hip •
ANS: Properties ofprivate 64:15r4tIkar h,p-sp• ?,..
1. Owned byl, e State and its-po iticlIsud'visio their private capacity and
are known asatrirrAiallropert espa
2. Belonging to priliat‘pergeins whischre ststq of all roperty belonging to private
persons, either indivklualyz doll& iv besides the patrimonial property of
the State, provinces, cities, arttrilTaill6palities (CIVIL CODE, Arts. 421-424).
B. OWNERSHIP
Q: What is ownership?
ANS: Ownership is the independent and general right of a person to control a thing
particularly in his possession, enjoyment, disposition and recovery, subject to _no
restrictions except those imposed by the state or private persons, without prejudice to
the provisions of the law (PARRS, Property, supra at 84).
Q: What are the rights of an owner?

ANS: The rights of the owner are: (PUF-DAA-Vi)
1. Jus Possidendi — the right to possess.
2. Jus Utendi — the right to use and enjoy; it may also include the right to exclude
any person from enjoyment and disposal of the thing.
3. Jus Fruendi — the right to enjoy the fruits — natural, industrial, and civil.
4. Jus Accessiones — the right to accessories.
5. Jus Abutendi— the right to abuse or to consume.
6. Jus Disponendi — the right to dispose.
448
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...,,-.,:..,
itt-4
r,
n,.:4i,Ape,.,(1-;;vc0tek:4cg,,"ft:,;;.3'.itiiiA:111.21114';:-•-•:.' -.,... ,....f.....;,:):::r'A;,
7. Jus Vindicandi — right of action against the holder and possessor of the thing
or right in order to recover it (PARAS, Property, supra at 89).
Q: What are the actions to recover possession or ownership of real property?

ANS: The actions to recover possession or ownership of real property are accion
interdictal, accion publiciana and accion reinvindicatoria (DE LEON, Property, supra at
93).
Q: What are the distinctions among accion interdictal, accion publiciana and
accion reinvindicatoria?
Accion interdictal Accion Publiciana I Accion Reinvindicatoria
As to nature
A summary action to An ordinary cAil proceeding An action to recover real

recover physical or to recoveKith4e Vetter right of property based on
..4
material possession of possesSion ddf: property and ownership. The object is the
property. is reVritISIA1 when the recovery of dominion over
disposgesX9p as lasted the property as owner.
for mote Vlbal ort 41ye,,ar.
TO.e.OrsaiRifiti ed n.
.4Efssessiona„ e facto but
Fssessio*A. ure of realty
dpdepensidrit o he title.
As to which court has jurisdiction

<dr
It must be apfbaght Lari sDepends on assessed, „Dep,prips the assessed
it; •
the proper4PTO ord plue.
MeTC. Im=
Y
RTC: ,, RTC:
1Air the prope As.,,sitAated 1. If the property is situated
11, .,,Autside d outside Metro Manila
its4aggSWEISA al e Ea and its assessed value
qxce ds P20,000; exceeds P20,000;
12.1fittie property is situated 2. If the property is situated
3444thin Metro Manila and within Metro Manila and
its assessed value its assessed value
exceeds P50,000 (B.P. exceeds P50,000 (B.P.
Big. 129, Sec. 19). Blg. 129, Sec. 19).
Otherwise, MTC. Otherwise, MTC.
Asto the time when the action must be brought to court
Within one (1) year Within a period of ten (10) Prescriptive periods:
from the time the years from the time the 1. Four (4) years — if based
cause of action arises. cause of action arises. on fraud from the
issuance of certificate of
In forcible entry, the title over property.
cause of action arises •
from the date of actual 2. Ten (10) years — if based
entry on the land. on implied or
constructive trust.
449
In case of strategy or 3. Imprescriptible - when
stealth, the cause of plaintiff is in possession
action arises from the of the property.
date of discovery of
such strategy or stealth
(PARAS, Property,
supra at 96).
In unlawful detainer,
the same arises from
the date of last
demand to vacate.
Q: What are the distinctions between forcible entry and unlawful detainer?
ANS: The distinctions are the following:_
Forcible Entry I Unlawful Detainer
As to proving prior physical possession
• f-C)- . .
The plaintiff rn..t.1d proey,adtfilpe-Wdger plaTittf_f•i- need not have been in
prior physical po,sSessi,ofi or the mmiq.eS • vpriorPhygicapesgbssion (Id.).
until he was: clegAeri tgereof iby
defendant (Dela C •z v. kermano, t p
No. 160914„ tialph 5, 2045)
As to wheri the possession becomes unlawful
1 7--1..4 II .. i. k t ...,,,,..,.....:
The possession qt. t .q.% iand—by2tr-L e-- .• The .4gassifin of.ttle defendant
. is
‘
•defendant istitt6Tietil fr r he begliinipg.5 inc lawfuN ut it becomes
as he acquires poves ibi ll,>:-theralij lici:-:.: ',1194.(10, reason of e termination of
Force, Intimidktion, StratedY? AteRt,i - ,I))1s\--lyyight td the possession of the
Stealth (FISTS)"Y/d.). sY ,,,-> ... •'krotoefrtOnderyfs contract with the
75/. 11 Vstal:1 i
4‘.
As to requisite of previous demand
/ A A -44 16-
The law does not requitarevioiK../ raintiff must first make such
demand for the defendant to vad'ate-=th demand, which is jurisdictional in
premises (Id.). nature (Id.).
As to counting of one-year prescriptive period
The one-year period is generally counted The one-year period is counted from
from the date of actual entry on the land. the date of last demand or last letter
of demand (DE LEON, Property,
supra at 84-98).
Q: What is the remedy for the recovery of possession of movable property?

ANS: Replevin is a remedy for the recovery of possession of personal property which is
governed by Rule 60 of the Rules of Court (DE LEON, Property, supra at 83).
Q: What are the requisites for recovery of property?
ANS: The requisites for recovery of property are:
1. The identity of the property (CIVIL CODE, Art. 434); and
2. The strength of the plaintiff's title (CIVIL CODE, Art. 434).
450
""""'• . , • ••
Note: If claims of both the plaintiff and defendant are weak, judgment must be for the
defendant, who, being in possession, is presumed to be the owner, and cannot be
obliged to show or prove a better title (Santos v. Estedaja, G.R. L-8574; December 27,
1913).
Q: What are the distinctions between real and personal rights?

Real Rights I • • Personal Rights

As to the parties who take part in the legal relation . •
There is a definite active subject who There is a definite active subject

has a right against all persons generally (creditor) and a definite passive subject
as an indefinite passive subject. (debtor).
As to the subject matter
The object is generally a corporeal It is always an incorporeal thing.

thing.
As to the causes of their creation
Ti
Created by "mode" and Createciiinerely* y "title".
a.
As to the modes of their extinction
''.;'3;;;N.,..1,:ir '-
Generally, it is e.fpngUip49.4- by the los
or destructiq0 the thiiViffer which i
is exerciseit,...„.: — .
ear
As to the nature of the actions arising from the juridical relation.
It is directed against, theAhole It is binding or enforceable only against

giving rise to real actipns(action in rem) gpfrarticular person (the debtor), giving
against third personsV, ' sa4, to eksonal
" actions (action in
personam) against such debtor (DE
LEON, Property, supra at 5-6).
411
• ‘•tittqa•I
Q: What are the limitations on ownership?
ANS: The limitations on ownership are:
1. Those given by the state;
2. Those given by the owner himself; or
3. Those given by the person who gave the thing to its present owner (PARAS,
Q: What are the limitations imposed by the State on ownership?

ANS: The limitations imposed by the State are the police power, power of taxation and
•power of eminent domain (PARAS, Property, supra at 142-149).
Q: How does the power of eminent domain pose a limit to ownership?

ANS: The State has the right to acquire private property for public use upon payment of
just compensation. Eminent domain or expropriation is based on the need for human
progress and community welfare or development (Republic v. Court of Appeals, G.R.
No. 100709, November 14, 1997).
451
i A.7,50.,,:k1, 41-a.:.*:-.1„;.ewifiiir.:,:p4,,..0,.,44:-.,.,:.,,-.,..
•• ,..... ii7...z,,,..S:.
,,,,
„ -..:,....,
..4,
fill LA: ......„,.g..i...,,..,.... ,,
, ,•if.I.,:f.::,..;..,,...,.:•. •
BOO Ka;
Q: How does the power of taxation pose a limit to ownership?
ANS: Real as well as personal property may be taxed and unless the taxes are paid
there is danger that the property may be seized and confiscated by the government. The
sale and forfeiture of the property to the government in the absence of bidders operate
to discharge tax claims up to the value of the property forfeited (Castro v. Collector of
Internal Revenue, G.R. No. L-12174, April 26, 1962).
Q: How does police power pose a limit to ownership?

ANS: Ownership of private property is impaired or destroyed in the interest of the public
welfare (Director of Lands v. Abanzado, G.R. No. L-21814, July 15, 1975). As such,
financial compensation is not given to the owner (U.S. v. Toribio, G.R. No. L-5060,
January 26, 1910).
Q: What are the specific limitations on ownership?

ANS: The specific limitations on ownership are as follows:
1. Imposed by law .r00,u,
2. Nuisance, q;
3. State of necessity ''' IS., T '.T„.
.,, ... „ T1/4....—„„ 4 4 f j '',•
4. Easements vpItintarily imvsed,by,ownqr ,;, .1 f,
..,‘-.,„,,,,,,.! , d, ,„.
5. Servitudes,- \, 4,''''
."-
6. Mortgage,stimhosedfv,contratr(117RADO,„9pitkAv 'ReVewer, supra at 328).
,-- _.,,r.
.1- ,f-
i iii:.) A ''?'' . 1 \;:1--)
Q: To what ext t mayAn owner make,14,e of:a thing? 1,
ANS: The own of ailing dannot make{ thereof such foidner as to injure the
rights of a third ear rl(CIVILtCOD 1 Yr —
.
Q: What is thq extent of ther ight of ciyme,rAl)iii: of the owne/Of-sla rcel of land?
ANS: The own palriiflprisl is thV.CiAtiVer of itss a , e qnd orgerything under it,
and he can co iructItkereiOnx works:;o0 mike arVp allatiotithaT:fxcavations which
he may deem itro6eit, VithooViiRkm4,t4,04itud;e0nd stliojectIci special laws and
ordinances. He VannotIcomPlirciRrieq ded' 104quirefrients of aerial navigation
(CIVIL CODE, Arl 473). /
Q: What is the doctite of se f--1100:-

›".-
ANS: The doctrine of kittleiSs . I possessor of a thing has
' taiplhat.then:S nerkoc.lywip
the right to exclude any persgritfrkm the1206elitand.,disposal of the property by the
use of such force as may be ne sary toYel3elbip -Areent actual or threatened unlawful
physical invasion or usurpation of his pro urty(eita CODE, Art. 429).
Q: What are the requisites of the Principles of Self-Help?

ANS: The requisites are: (ROAD)
1. The use of force as may be Reasonably necessary;
2. It is the Owner or lawful possessor who will exercise the power;
3. That there is Actual or threatened physical invasion or usurpation; and
4. That there is no Delay in one's exercise (CIVIL CODE, Art. 429).
Q: What is the doctrine of incomplete privilege or state of necessity?

ANS: Under this doctrine, the owner of a thing has no right to prohibit the interference of
another with the same, if the interference is necessary to avert an imminent danger and
the threatened damage, compared to the damage arising to the owner from the
interference, is much greater (CIVIL CODE, Art. 432). It is the exception to the general
rule that a person cannot interfere with the right of ownership of another (DE LEON,
452
;;
1,WACe
Q: What are the requisites for the state of necessity to apply?

1. Interference necessary to avert an imminent and threatened danger; and
2. The damage to another is much greater than the damage to property.
Note: The right to act in a state of necessity depends upon the objective existence of
the danger with the requisites provided by law. If through error, one believed himself to
be in a state of necessity, or used means in excess of the requirements of the situation,
his act would be illicit, and the owner of the property can properly use against him the
defensive force authorized in Aiticle 429 (2 TOLENTINO, Civil Code, supra at 69).
Q: What is hidden treasure?

ANS: It is any hidden and unknown deposit of money, jewelry, or other precious objects,
the lawful ownership of which does not appear (CIVIL CODE, Art. 439).
Q: To whom does a hidden treasure belong?

ANS: Hidden treasure belongs to the owner of the land, building, or other property on
which it is found (CIVIL CODE, Art. 43.8,-2pfr. 1).
Q: What if the discovery is made.on the ppperty of another by chance?

ANS: When the discovery is made on the*operty of another, or of the State or any of
its subdivisions, and by chance, otie-halftWeofitag be allQWed to the finder. However,
if the finder is a trespasser, heshall riot beRtilleclataLatiere of the treasure (CIVIL
CODE, Ad. 438, par.2).
Q: Who is consideredikespasseri
ANS: A trespasser 1::.,tin::j4Qhibited to tter, or not giv n authority to enter. If a
trespasser disboyefd'a hidi_lkItreasure, lie%is not entitle. to ny%hare of the treasure
(PARAS, ProRady
'' , supra at 205). cp;
Q:Whatis meant by the'Plfrasel!,by,chglite"?

chances medal* goalikk" Ci-lether there jas
ANS: "By chance liberate search for the
144
treasure or not but tnerevasTo prior agre'binent on how the treasure, if found, would be
divided. The reasoriiis becaiTie it is extreine,l,y Difficult to find hidden treasure without
looking for it deliberatelkIPAAS, Prope
-47". wag •?c,
Q: May the State acqtikb theApen treasure?
ANS: Yes. If the things fogmlbt of interest to science of the arts, the State may acquire
them at their just price, . be
shall
divided in conformity with the rule stated (CIVIL
Q: If hidden treasure is found by chance under a municipal plaza, who owns the
treasure? •
ANS: Half of the treasure goes to the finder and the other half goes to the municipality.
However, if the hidden treasure is scientifically or artistically valuable, the finder's half
has to be given to the municipality or state, who in turn will give him a just price therefor.
The acquisition here by the municipality or by the state is a particular form of eminent
domain or expropriation, hence, the procedure thereon should be substantially followed
(PARAS, Property, supra at 205).
Q: What is the effect of concealment by the finder?

ANS: If the finder of the treasure conceals it from the owner of the land on which it is
found, he does not thereby lose his share, but he becomes liable civilly and criminally
for taking something not belonging to him (2 TOLENTINO, Civil Code, supra at 96).
453
ef. eg e%bget, e -ia;V;.*:
Q. What is accession?
ANS: Accession is the right of a property owner to everything which is
1. Produced thereby (Accession directa)
a. Natural Fruits - Spontaneous product of the soil and the young and
other products of animals (Civil Code, Art. 442, par. 1).
b. Industrial Fruits - those produced by lands of any kind through
cultivation or labor (CIVIL CODE, Art. 442, par. 2).
c. Civil fruits - rents of buildings, price of lease of lands, and the amount
of perpetual or life annuities or other similar income (CIVIL CODE, Art
442, par. 3).
2. Which is incorporated or attached thereto, either naturally or artificially
(Accession continua)
a. with respect to real property
i. Accession Industrial - Building, planting, sowing
ii. Accession natural - Alluvium, avulsion, change of course of
rivers, formation otislank
b. with respect to,p'efsonal property
i. Appictigh., '
ii. ,Coehixtion'qr.confusliqn
iii.s' -Specifiq,atii5n (DE LEON, Ptopoiti,, supra,at 135).
Q: What is accessiiinlis6rete?
A
ANS: Accessiorldislretimegns to the owner belongs pe ownership of fruits produced
by the OropertypARAS, Property, supra at 211). f.
,
7,7.7 -
Q: Who ownsiltbfr fruits?
1 et
ANS: As a gerplArUte, the owner of the ffiing-owns its..natural, industrl, and civil fruits
(CIVIL CODE,t4rt.44.41) th,e-fallowing are trig CXception'OPptRA) . .
1. Posses? irroodeCiA. oftffe:IT'a (he ow dpefruits'alrea'd received) (CIVIL
CODE, A /5'44, p\af::: / • Y • • •-• •
2. In usu uct, the.Xsufkiq'tu'ar.x.,,Chql
- be;e6q
t felyto aynatura , industrial and civil
fruits-of e property insitsliftuct, ciioopE,
ta A "566);
3. Lessee gets the of,tbe-119_ Tbtitsthe,Owse gets the civil fruits in the form
Of rentals (CIVIL if •
.4. In the contract0,61QgcpePledgeeig entitled-to/receive the fruits, income,
dividends, or inter,,,skhich ttieit pfecrge earpeor produces but with the
obligation to compefisate or sktdff:744re" receives with those which are
owing him (CIVIL CODE, An.. '2102rfirr: 7; DE LEON, Property, supra at 136);
and
5. In the contract of antichresis, the Antichretic creditor acquires the fruits of an
immovable which should be applied first, to the payment of interest, if owing,
and then to the principal amount of the loan (CIVIL CODE, Art 2132, PARAS,
• . .
Q: What are the basic principles of accession continua (accession industrial)?

ANS: The basic principles are the following:
1. To the owner of the principal (the land for example) must belong also the
accessions, in accordance with the principle that "the accessory follows the
principal" (Accesio cedit principali);
2. The union or incorporation must, with certain exceptions, be effected in such a
manner that to separate the principal from the accessory would result in
substantial injury to either;
3. He who is in good faith may be held responsible but not penalized;
4. He who is in bad faith may be penalized;
5. No one should enrich himself unjustly at the expense of another; and
454
‘77-7f
i~ BED •
6. Bad faith of one party neutralizes the bad faith of the other so both should be
considered in good faith (PARAS, Property, supra at 221).
Q: What are the rights and obligations of the landowner, builder, planter and
sower, and the owner of the materials in case of accession with respect to
immovable property?
ANS: The rights and obligations are:
Builder, Planter, Sower Owner of the Materials

Landowner (LO) •
(B,P,S) (OM)
Good Faith Good Faith Good Faith
1.Acquire improvements 1.Right of retention for 1.Collect value of

and pay to B, P, S necessary and useful materials primarily
indemnity; OR expens%, from B, P, S;
2.Sell land to B or P 2. Pay vallo of materials subsidiarily from land
except if the value of to owner bf materials. owner if B, P, or S is
the land is insolvent.
considerably more. 2.Remove only if without
3.Rent to' S (CIVIL injury (CIVIL CODE,
CODE, Arts. 448, 546, Arts 455, 447).
455)
4. Subsidiarily liable. to
owner of materialS7. to
•
Good Faith Good Faith Bad Faith
1.Acquire iirflp.coverrtrkts 1.
iq
l
orfzetention for
,r 14 Loseò. them without
and pagyrdemnitli.A% rnecessaffl and LISVIuj ifilRegfo indemnity
B, P, S; OR exPgnses4 .-,.(4 Ort.. CODE, Art.
2.Sell to B, 03Tcc9Fif. 2.Keep Ilding, planting 449).
the value of Oild is Or sòwing w/o
considerably more, indemnirtMAer of
forced lease. natqqalsp4116ctai
3.Without subsidiary
•
, 'cliiiig es (oltit
liability for cost of 27tODE, Arts. 546, 449).
material. Al f
'Good Faith Bad Faith Bad Faith
1.Acquire improvement 1.Recover necessary 1. Recover value from

w/o paying indemnity expenses for B, P, S (as if both
and collect damages; preservation. (CIVIL acted in good faith).
2.Demolition or CODE, Arts. 452 and 2. If B, P, S acquires
restoration, and collect 453) improvements,
damages; or 2.Lose improvements remove materials if
3.Sell to B, P or rent to . w/o right .to indemnity w/o injury (CIVIL
S, and collect from LO (CIVIL CODE, CODE, Art. 447).
damages. Art. 449) unless the LO 3. No action against LO.
4.Pay necessary sells the land.
expenses to B, P, S
(CIVIL CODE, Arts.
449, 450, 451).
455
Bad Faith
Same as though all acted in good faith (CIVIL CODE, Art. 453).
Bad Faith Good Faith Good Faith

1.Acquire improvements 1. Remove 1. Remove materials if
after paying indemnity improvements in any w/o injury;
and damages to B, P, event; 2. Collect value of
S; 2. Be indemnified for materials, primarily
2. Subsidiarily liable to damages. from B, P, S;
owner of materials 3. Subsidiarily from LO
(CIVIL CODE, Arts. (CIVIL CODE, Arts.
454, 447, 455). 447, 455).
Bad Faith Bad Faith Good Faith
1.Acquire improvements,0 RightiofT reRniph:41K, 1. Collect value of
after indemnity to B, 159.acessarY .expenies; ' materials primarily
S; OR t • -,., from B, P, S;
2. Sell to B, P e4akt: if Pay value of materials ./s.'subsidiarily from L;
the valuefirst''` ,,-to'Olkilar-Orfriaterjalt,,: ,.,'.2. dolject damages;
-
considerablyirn, re;) and) paAhim damagps alii) B., P, S acquires
3. Rent to S VIL (d/V/LOCO&E, Arts. f inements remove
CODE, A st.,453 448, I 546, 44,44., firLate als in any event
546, 548, 45 (P11/11.5 CODE, Arts.
4. Subsidiari id le to 44_
7,455).
1
owner of a erih s.
ff?..,
Good Faith Bad Faith Good Faith
B "y
,
4),t .. c4ce(wly
1. Acquire /o p ing\ 4 . Coll$ct value of
1. .1 make als
indemnity apd co lect iifib
ec;4;js and
damages; Ork ks, 452 ngt" damages from B, P, S
2. Sell to B, P an I, to 60DEe \11 " and subsidiarily from
S and collect damage( -tose,b ploy meats LO;
OR y2
/o rigptokrgiritLan, . Remove materials in
3. Demolish or restore gain4VIL.9)..)-&1//L' any event if B, P, S
and collect damages. (;ODEF...=Arte*- 449) acquires
4. Pay necessary unless LO sells the improvements.
expenses to B, P, S; land.
5. Subsidiarily liable to
owner of materials
(CIVIL CODE, Arts.
449, 450, 451).
Bad Faith Good Faith Bad Faith
1. Acquire improvements 1. Indemnity for 1. No indemnity;

&pay indemnity & damages; 2. Lose materials without
damages to B, P, S 2. Remove right to indemnity
(CIVIL CODE, Arts. improvements in any (CIVIL CODE, Art.
454, 447). event (CIVIL CODE, 449).
Arts. 454, 447).
456
Q: What are the different forms of accession natural?
ANS: The different forms of accession natural are:
1. Alluvion (CIVIL CODE, Art. 457);
2. Avulsion (CIVIL CODE, Art. 459);
Change of course of rivers (CIVIL CODE, 461- 462, 464 — 465; PARAS,
Q: What is accretion?
•
ANS: Accretion refers to the process whereby the soil is deposited along banks of rivers
(Heirs of Navarro v. IAC, G.R. No. 68166, February 12, 1997).
Q: What are the requisites of accretion as a mode of acquiring property?

ANS: The requisites of accretion are: (GI-C-A)
1. The deposit or accumulation of soil or sediment must be Gradual and
Imperceptible;
2. The accretion results from the effects or action of the Current of the waters of
the river; and
3. The land where accretion takes.place must be Adjacent to the bank of a river
(DE LEON, Property, supra:at178))1,,,t.
Q: What is alluvion?
ANS: Alluvion is the soil dep!pited otie o.thdia. dsradjoining the banks of rivers,
and gradually received asider effect of t e current of the w trs (Republic v. Santos,
G.R. No. 160453, N9verec12, 201461.
Q: What is the rule with regard to alluvio ?

ANS: To the ow.rjell
P• ,...,,. , PC. I ‘a
s of lancnegjoining the;.banks of rivets Vona. the accretion which
they gradualleceiveAon1 the effeots otTlfie current othe water (CIVIL CODE, Art.
457). The owag,rs4oLtere,tates adjoining,. " nds or lag onsrgio•41
,, acquire the land left
dry by• the M ural `decease orthp 1.?rs, or 1016/ cl Iti Red by them in
extraordinary floo,c(s_ GiVflabODE; Aft. 458
4101
P It
Q: What are the req IresA alluvion?
:I
ANS: The requisites ofiejlvOn are: (GI-Wu , 1.,
1. The deposit A& be G4io61.,and4r-riperee'p ible-(as a process);
2. The cause is b Curr8firof the river and not due to works expressly designed
for the- purpose-414
Note: If a lake, he • panish Law of Waters must apply; if a sea, the deposit
belongs to the state (Gov't of the Philippines v. Cabangis, G.R. No. L-28379,
March 27, 1929);
3. The river must continue to Exist; and
Note: If the river disappears, Art. 461 and not Art. 457 should apply (Ronquillo
v. Court of Appeals, G.R. No. L-43346, March 20, 1991).
4. The increase must be comparatively Little, and not, for example, such as
would increase the area of the riparian land by over one hundred fifty percent
(De Lasa v. Juan, CA L-3076, May 25, 1950) (PARAS, Property, supra at 266-
267).
Q: What is avulsion? •
ANS: Avulsion is accretion which takes place whenever the current of a river, creek,
torrent or lake segregates from an estate on 'its bank a known portion of land and
transfers it to another estate (CIVIL CODE, Art.459).
457
tf.1....Na•
Q: What are the requisites of avulsion?

ANS: The requisites are: (CSI)
1. The segregation or transfer must be caused by the Current of a river, creek, or
torrent;
2. The segregation and transfer must be Sudden or abrupt; and
3. The portion of land transported must be known or Identifiable (DE LEON,
Property, supra at 182-184).
Q: What is the rule with regard to avulsion?

ANS: Whenever the current of a river, creek or torrent segregates from an estate on its
bank a known portion of the land and transfers it to another estate, the owner of the land
to which the segregated portion belonged retains ownership of it, provide that he
removes the same within two years (CIVIL CODE, Art 459). Trees uprooted and carried
away by the current of the waters belong to the owner of the land upon which they may
be cast, if the owners do not claim them within six months. If such owners claim them,
they'shall pay the expenses incurreclim.gatheriri9 them or putting them in a safe place
(CIVIL CODE, Art. 460). • t•
g
Q: What are the distindidni
4r
betvib,en,ailuviiin,:ana avulsion?
ANS: The following are•tellis nctions:
..0"
Alluvion • Avulsion
.•.
As to the manner created
s.
The deposi rofite 'soil fin alluvion ;I§ ,• The deposit of0he.'Soil in avulsion is
gradual. Si.idderlor abrupt.
itf< 131
As to capability of identification
The soil cannzille4lentifiWalluvidit ddCigable ir7Lu sion
JJ •&/
As to ownership
The soil belong to the oznetfi) -
•C'._:_fraqi T e soirl ,irlongsfto the owner from
property to which it ikattacked'intiorr.--- tboser, pre6ps,rtVe it was detached in
avulgio'n (P44 RAS, Property, supra at
} M ts&\;"
Q: What are the requisites for change of river bed to apply?

ANS: The requisites are: (SPANE)
1. The change must be Sudden;
2. The changing of the course must be more or less Permanent;
3. There must be a definite Abandonment by the government (Panlilio v.
Mercado, G.R. No. L-18771, March 26, 1923);
4. The change of the riverbed must be a Natural one; and
5. The river must continue to Exist (Ronquillo v. Court of Appeals, G.R. No. L-
43346, March 20, 1991).
Q: What is the rule on the change of course of rivers?
ANS: As a general rule, riverbeds which are abandoned through the natural change in
the course of the waters ipso facto belong to the owners whose lands are occupied by
the new course in proportion to the area lost. In proportion to the area lost" implies that
there are two or more owners whose lands are occupied by the new bed. Therefore, if
only one owner lost a portion of his land, the entire old bed should belong to him (DE
LEON, Property, supra at 194).
458
Exception: However, the owners of the lands adjoining the old bed shall have the right
to acquire the same by paying the value thereof, which value shall not exceed the value
of the area occupied by the new bed. Whenever a river, changing its course by natural
causes, opens a new bed through a private estate, this bed shall become of public
dominion (CIVIL CODE, Arts. 461-462).
Note: The "right of owners of land adjoining the old bed" is a PREFERENTIAL RIGHT to
acquire the same by paying the value thereof to promote the interest of agriculture
because the riparian owners of the old course can better cultivate the same.
Q: What are the three (3) types of accession with respect to movable property?
ANS: There are usually three types of accession with respect to movable property:
1. Adjunction;
2. Mixture (commixtion or confusion); and
3. Specification (CIVIL CODE, Arts. 466-475).
Q: What is adjunction? •
ANS: Adjunction is the process by yittup, of which two movable things belonging to
different owners are united in such' irgy that they form a single object (PARAS,
Property, supra at 287). 4-?'
;cow
Q: What are the requisites of adjurttp_p
ANS: The requisites are the following:.,'.::1
1. The two (2) thiqggAust below kildifferent owners
2. That they are united in suct),*,y4 that they form a !Ale object and
3. That they are,* ifiseparabtetlikitheir separatiorditvOu10 impair their nature or
result to subeentibtfinjCiry to eithdr component (DE LEON, Property, supra at
201).
. .4. i
Q: What are asiruns„„ovntItlement to ..opertiesAntiedVAdjgpcgion?
ANS: The ruldsron entitlemit to 01.70ertiedlOined by&fitibte
1. Adjuncti% inS1311 aith by eithe ner.
Note: AcOSt`trgollows the pri c pal, unless the accessory is more precious
than the pRncjpal, it which case he,.owner of the accessory may demand the
separation evd ,it,the principal'`4,0194; or whenever the things can
be separated: hout e-thelMspective owner may demand
their separatiCig(DE liEQN, Property, supra at 195).
2. Adjunction in battgtrtby the owner of the principal;
Options availableSic e owner of the accessory:
a. To require the owner of the principal thing to pay the value of the
accessory thing; OR
b. To have the accessory thing separated even if for the purpose it be
necessary to destroy the principal thing; AND •
c. To indemnified for damages, in either case (DE LEON, Property, supra
at 205).
3. Adjunction in bad faith by the owner of the accessory:
a. He loses the thing incorporated; and
b. He is liable for damages to the owner of the thing (CIVIL CODE, Arts.
466-471).
4. Adjunction in bad faith by both
a. They shall be considered as though both had acted in good faith;
Article 453 shall apply (DE LEON, Property, supra at 205).
459
Q: When is separation of the thing, when it comes to adjunction, allowed?
ANS: Separation is allowed:
1. When it can be separated without injury;
2. When the accessory is more precious than the principal; or
3. The owner of the principal acted in bad faith (DE LEON, Property, supra at
196).
Q: What is mixture?
ANS: Mixture is the union of materials where the respective identities of the component
elements are lost. There is a greater inter-penetration or decomposition of the objects
that have been mixed (PARAS, Property, supra at 296).
Q: What are the kinds of mixture?
ANS: The two kinds of mixture are:
1. Commixtion - mixture of solids; and
2. Confusion - mixture of liquids Id.).
o..60* .
Q: What are the rules that n n mixTurb
ANS: The rules are: L) _,f. 4 ir 7; N
1. Mixture by vvi1,of ers``.'" 1,.../. ...:‘
a. Pricnaliy,jh60) fights should.te,Roverned ftheir stipulations; or
b. I Oak" n f sany 4tipulatal ;-,. e a 0 0 owArvcquires a right or
inter, in th mixtufin giepailon to he )igjuTrof his material mixed or
confu ed as n co-owneriiip.`"
2. Mixtu e,)•causid by arLowner,intgOdiaith.or-by chaL. it
a. SI rule in (1) - ..,-.„ ,,„.,:-4
vz--.4,1, iiII ‘,---,
-,,,7 I
3. By o e ow r in ba falth:'7,24. j_. _ -'!-'
a. ..Q osesiallt s rigtirtiViiv maters It:a9d
b. Helsi iabl,erfo amageplifIL-GOD A( s. 4- 7p).
Note: If the mixt0 dey faitef?yl tlorme, and w tVe knowledge and
without the obja ton o he wn0 tlig-t oyi Op 6f A 1 cle 470 par. 3 shall apply
by analogy; their respe 14...,tie2 g .tOni ' d hough Moth acted in good
faith (DE LEON, P.Kperty, yer: 2 r*•4•''.
Q: What is specificIti,pn? 7-'', 5 '
ANS: Specification is ttiN,[16 rerpatio
c no er'00e 4914 the application of labor.
The material becomes a thin Itif..4 diffeleip yiy.Na or-l's the principal (CIVIL CODE,
Art. 474).
Q: What are the rules that govern specification?
ANS: The rules are:
1. Owner of the principal (worker) in good faith:
a. Maker acquires the new thing:
b. He must indemnify the owner of the material (CIVIL CODE, Art. 479,
par. 1).
2. Owner of the principal (worker) in bad faith, the owner of the material has the
option:
a. To acquire the result without indemnity; and
b. To demand indemnity for the material plus damages (CIVIL CODE, Art.
479, par. 3).
3. Owner of the material in bad faith:
a. He loses the material; and
b. He is liable for damages (CIVIL CODE, Art. 473, par. 2).
Note: If the owner of the principal made use of material of another with the consent and
without objection of the latter, Article 470 shall apply by analogy; as if both persons were
in good faith (DE LEON, Property, supra at 207-208).
460
Q: What are the options of the owner of the material if the material itself is more
valuable than the resulting thing?
ANS: If the material is more valuable than the resulting thing, the owner of the material
has the options to:
1. Appropriate the new thing to himself, after indemnifying for the labor; or
2. Demand indemnity for the material (CIVIL CODE, Art. 479, par. 2).
Q: What are the distinctions among adjunction, mixture and specification?

ANS: The distinctions among adjunction, mixture and specification are as follows:
Adjunction Mixture I' SPecification

, As to the number of things involved
Involves at least 2 Involves at least 2 May involve one thing (or
things. things. more) but form is changed.
As to the ownership of the outputlthmiproduced
Accessory follows the Co-c4rAirip. results. Accessory follows the
principal. principal.
As to the nature of the thing produced

wif
Things joined retain..,, fixed or '` 'Thqi new object retains or
idra
their nature. confused:, ay either pmeives
iai ' retain Ide lose their Tfie nature of the original
:::0speolive tures. .61:Oct KpE LEON, Property,
supra at212-213).
.0.011
,., „- „--er illi;A-..,- I,... VI
Q. What' is the...test to oetapplied'folthq:16terminatiOntel, nsVal?
ANS: The principal is (irlith'619,rder,154prefeiir : ' ....-if' v
1. That tolifitilely$049ther has b united as an ornament or for its use or
perfectionW/V/L C DE, Art 46?
2. That of great4val (CIVIL COO. .., 1.%
3. That of greatePrumepyl k e-C4EpArageMad
4. That of greatergmerits rrn the combined utility and volume (3 MANRESA, p.
285-286; PAIUSP erty, supra at 289).
Q: What is a cloud on title?

ANS: It is a semblance of title, either legal or equitable, or a claim or a right in real
property, appearing in some legal form but which is, in fact, invalid or which could be
inequitable to enforce (Iglesia ni Cristo v. Ponferrada, G.R. No. 168943, October 27,
2006).
Q: What are the classes of action in quieting of title?

ANS: The classes of action are:
1. Remedial — the action may be brought to remove a cloud or quiet title to real
property or an interest therein (CIVIL CODE, Art 467, par. 1); or
2. Preventive — the action may be brought to prevent a future cloud from being
cast upon the title to real property or an interest therein (CIVIL CODE, Art.
467, par. 2); or
3. Extinctive — an action to quiet title or remove cloud therefrom when the
contract, instrument, other obligation has been extinguished or has been
terminated or has been barred by extinctive prescription (CIVIL CODE, Art.
478).
461
••••
41. yt.
4
-?
Q: What are the requisites for the existence of a cloud?

1. There is an Instrument or Record or Claim or Encumbrance or Proceeding
(IRCEP);
2. The instrument is apparently valid or effective;
Note: "apparently" herein is meant to be what is on the face of the instrument.
3. The instrument is in truth and in fact, invalid, ineffective, voidable, or
unenforceable, or extinguished or barred by extinctive prescription (CIVIL
CODE, Arts. 476-478); and
4. The instrument may be prejudicial to the title (CIVIL CODE, Art. 476; Robles v.
Court of Appeals, G.R. No. 123509, March 14, 2000).
Q: What are the requisites for an action to quiet title to prosper?
ANS: The requisites are: (TACR)
1. Plaintiff must have a legal or equitable Title to, or interest in the real property
which is the subject matter of th,p,apIon;
2. Such cloud must be,due`td scime7ins1411ent, record, claim, encumbrance or
proceeding whiclyig- ApParentlyvatlid,Nt'issin truth invalid, ineffective, voidable
or unenforceabfk6114
3. There must 4.a ClptidArrsach title; and'",--,
4. Plaintiff VisttRbituiret9, ' tbe-deferldantall„j2ehelitsThe'rriay have received from
the latte,r,..•of.,rdinturse him fodiexp.ppses`lfiat•kNyelpice redounded to his
p Arts.476479),Z.1..
benefit2tC/V/00bDd
I
I. .
Q: To what prpery. e acton-to-quietlitle-applicable? —
ANS: The actpnap, title applies:40,Iy•-to•;:r,pal p -opertytexttpt' certain types of
personal propgrty 19,.g. vessels, motor vehiclep,.certifi6ate of tpc.0).Nhich partake of
the nature of reakriOrierty(ortiv treateaViaitie exte0p ,s:cealey beca "se of registration
requirements t5or owoership, :b •
nsagtions-affectingithryt. (e.g4cpq pt mortgage) (DE
LEON, Prope4 rsopi4tat 22t F 6,./
it ,
Q: What is the rigture okthe btick. .
NJ ,„, fc". i
, ,yoaresy(i k. 9ainsya particu ar person in respect
ANS: They are stilts quadh • resW.g141
to the res and the judgment 4) _42tigh6 pitlefty in dis 'ate (Spouses Portic v.
Cristobal, G.R. No. 1561714A 2,,g.„.j.):—.„,„,„..--
7. x c\-i,,,,,
Q: Are tax declarations cone! sive &dente ofi wriership of properties stated
therein? %,...,,,„,,, 1 N- ..,;„00"'
ANS: No. Tax declarations are not conclusive evidence of ownership of properties
stated therein. At best, tax declarations are indicia of possession in the concept of an
owner. However, non-declaration of a property for tax purposes does not necessarily
negate ownership (Sps. Azana v. Lumbo, G.R. No. 157593, March 22, 2007).
Q: What are the distinctions between quieting of title, removing of cloud, and
preventing a cloud?
•
• Quieting of Title Ilernovkig of Cloud Preventing. a Cloud •
To put an end to To procure the cancellation, To remove possible

vexatious litigation in delivery, release of an foundation for a future
respect to the property instrument, or encumbrance hostile claim.
involved. which constitutes a claim in
plaintiff's title, and which may
be used to injure him in the
enjoyment of his title.
462
•:',1: -?..,::••:.,....:11-4?-i*',.!rc'1.7.1, P14'4 'N
As to Nature of Action
Remedial in nature, involving Preventive in nature, to Preventive in nature,
a present adverse claim. remove cloud which may to prevent a future
be used for future actions. cloud.
'As to NatUre of Claims
Plaintiff asserts own claim, Plaintiff declares his. own
declares that the claim of the claim and title, and at the
defendant is unfounded and same time indicates the
calls on the defendant to source and nature of
justify his claim on the defendant's claim, pointing
property. its defect and prays fot the
declaration of its invalidity.
Filed Against Whom
11F
Filed against people who Fildd fegainst defendant
have claims; claims are more wbb aelparts claims based
general in nature. erfOriliTiyaljd' instrument
noh apparent) , (DE
LEb.N1PrOlie 4, .• supra .4
,1‘
2214229).
•
14.9r •
Q: Does an action to ilideptitle prescribe? 0r
ANS: It depends. If the. plaintiffis in postassion, the action Ss imprescriptible because
the owner is giveptttreyconflhift aid by tide to asceflainianckletermine the nature
of such claimAtidrits effectvon his title.,..fieon wait until/is pdeses$ion is disturbed and
attached beforethking Jtaps to yindicateAs
<"; • 1; +$i •
right ,(SypiesiBeqlett Saquitan-Ruiz,
RN_W
?lo
G.R. No. 1499,06, DecerhOr 26':2902),Len the °diet At,plaintiff is not in
possession, the Vion'tiragtibes in'ten 'years for ordiap?etcription or thirty (30)
years extraordinartregaptlan. .
Note: If the plaintifris irt in Ogssession, q ougt he action is brought within the period
of limitations, it'may bel:etrOby.laches, Trtjessence is the doctrine of estoppel (DE
LEON, Property, supraitr226).
RIT
C CO-OWNERSHIP
Q: What is co-ownership? , •
ANS: Co-ownership is that state where an undivided thing or right belongs to two or
more persons (CIVIL CODE, Art. 484). It has the following requisites: (PUR)
1. . Plurality of subjects; •
2. Unity of object (material indivision);
3. Recognition of the ideal or intellectual shares of the co-owners which
determine their rights and obligations (2 TOLENTINO, Civil Code, supra at
140).
Q: What are the characteristics of co-ownership? •
ANS: The characteristics are:
1. There must be more than one owner (CIVIL CODE, Art. 484);
2. There is one physical whole divided into IDEAL shares;
3. Each Ideal share is definite in amount, but is not physically segregated from
the rest (Lopez v. !lustre, G.R. No. 2426, January 24, 1906);
4. There is no mutual representation by the co-owners;
5. Regarding the ideal share, each co-owner holds almost absolute control over
the same (CIVIL CODE, Art. 492);
463
6. It is not a juridical person (Smith v. Lopez, G.R. No. 1472, September 30,
1905); and
7. A Co-owner is in a sense, a trustee for the other co-owner (CastriIto v. Court of
Appeals, G.R. No. L-18046, March 31, 1964; PARAS, Property, supra at 320 -
321).
Q. What are the sources of co-ownership?

ANS: The sources of co-ownership are: (C -LOST)
1. Contract - by stipulation
2. Chance - Commixtion, confusion, finding a hidden treasure
3. Law- party walls, party ditches, absolute community of property between
spouses
4. Occupation - catching animals, fish, etc.
5. Succession - heirs of undivided property before the partition
6. Testamentary disposition or donation inter vivos - when the testator or donor
prohibits partition (PARAS,,gropertyr,swpra at 321-322).
Note: Any stipulation in a CONTRACT making the-share in the benefits or charges
disproportional to the reWe-Ctivknterepy is,` Cleblated;NOID; if the co-ownership is
created other than a cgifraa,'-litchApIcy--will:14it cihndti9n,Ifie share of the co-owners
need not be proportio'n4el
se N. t io,their respective inteitst".(DtppN, Property, supra at
.„,.,...„.......„- . ,
2,41).
I/ ".-". ..1;•-- .. ' lt " .2-.-e-':
h 0 ,,\ .:!' . . 1...,, ..
Q. What are theirig 'te*of each co-owneGias to.the thing owped id common?
ANS: The rightsof eac co-okler as topvtkiing owned in corgi:1 .9W ‘e:
1. To U4eth-et ing owned in comnigp Wiyx-corE, Al f52,i
= felmi tions: '',̀4.... .;-t 10 (.,
ypd ccordin to th'eliqtyosq;foti which it was Vended;
-1-nterAst oft co-own9rkitiarnust no/117.41rejudiced;I and and
* liners must no be:TpreventAcC fom ti§ing3it according to their
5
5 niights <:),
, • ,e, .,_,_] ';'-.• ,'•-
." \:" <lc-
s-t
2. To share in Me be • Ci ..\ s d-c ai'kqs irrZproportion to interest of each
(CIVIL MODE, A . 41k -"‘
3. Benefitstprescn ton Pft pt(prf e c9,--Owner b6nefits all;
4. Repairs anNaxes:foicompe .atm ate 40 expenses of preservation
even if incurrakwifhelt-pcornotice.(B1 /L4 . pfit ,6rtir 486);
5. Alterations: To àpp.9 dalteratiopsr ae4vithout" the consent of all, even if
beneficial (CIVIL COD rt. 490(1
6. To protest against serious y p gram decisions of the majority (CIVIL CODE,
Art. 490);
7. Legal redemption: to be exercised within 30 days from written notice of sale of
an undivided share of another co-owner to a stranger;
8. To defend the co-ownership's interest in court; and
9. To demand partition at any time (CIVIL CODE, Art. 494).
Q: What are the rights of each co-owner as to his ideal share?

ANS: The following are the rights of a co-owner as to his ideal share:
1. Right to full ownership of his part and of his share of the fruits and benefits;
2. Right to substitute another person in its enjoyment, except when personal
rights are involved;
3. Right to alienate, dispose or encumber; and
4. Right to renounce part of his interest to reimburse necessary expenses
incurred by another co-owner (PARAS, Property, supra at 356).
464
( "''
ol";:•-r. '
•,- ; I t...!
"!:; '-', BEDANrRE
C. Ve.:-.:•t ,t; t'vi.V7,'.`; ,,,'1.',' :',.; 1: ,:t.,i'. A':::..:::::,.:Aa.P.S.'i.,:.'? .. ;,.....
Q: Is a co-owner obliged to remain in the co-ownership?

ANS: No co-owner shall be obliged to remain in the co-ownership. Each co-owner may
demand at any time the partition of the thing owned in common, in so far as his share is
concerned (CIVIL CODE, Art. 494).
Q: What are the instances when a co-owner cannot demand for partition?
ANS: The following are the instance when a co-owner cannot successfully demand
partition: (DACUL)
1. Partition is prohibited by a Donor or testator (for a period not exceeding 20
years) — from whom the property came (CIVIL CODE, Art. 494);
2. Partition is prohibited by Agreement (for a period not exceeding .10 years)
(CIVIL CODE, Art. 494);
3. The law prohibits partition in case of Conjugal partnership property, except in
certain instances;
4. Physical partition would render the property Unserviceable for the use for
which it is intended (CIVIL COD, Art. 495) BUT the co-ownership may be
terminated under Art 498; an'
5. The Legal nature of comdbr.13)cy erty does not allow partition as in the case of
,Q.
party walls (PARAS, PrOrt at 361).
Le4*+-
Q: Does a co-owner have a right td-compel;-lhe„other co owners to contribute to
the expenses and taxes? 4, -;
ANS: Yes. Each co-ownekgs a right mpel the other colwners to contribute to the
expenses for the preseigtation of the r right owned in cehion
ji and to the payment
taxes. If by reason of fie..TrijustifiesVop sition of the otheri.cqowners the necessary
repairs were not undeaka nd"d'imageeor losses resulted thkse who opposed such
repairs shall be Uable forl _idC/V/L CO E, Art. 488; E EON, Property, supra at
248). (4-4.
i ner exedip.lhimikfro the paymen,kotexpens s for preservation

Q: May a co-oj
and taxes? a We74150'
4
ANS: Yes. Any °OM the o-owpers nay exempt himself from this obligation by
renouncing so muclikof,his u;g:divided inteMtah ay be equivalent to his share of the
expenses and taxes. 1 o •sV6h waivers aAe. e if it is prejudicial to the co-
ownership (CIVIL COD , Arta 4ff8)T-ThelreTtilliciatarabst be expressly made (2
TOLENTINO, Civil Coda suprafatY173).
Q: When may a renuncia ion-be disallowed?

ANS: A renunciation may be disallowed if the co-ownership will be prejudiced (PARAS,
Q: May co-owners exercise the right to redeem a co-owner's share?

ANS: Yes. A co-owner of a thing may exercise the right of redemption in case the
shares of all the other co-owners or of any of them are sold to a third person. If the price
of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one.
Should two or more co-owners desire to exercise the right of redemption, they may only
do so in proportion to the share they may respectively have in the thing owned in
common (CIVIL CODE, Art. 1620).
Q: What is the effect of redemption?

ANS: Redemption of the whole property by the co-owner does not vest in him sole
ownership over the said property. Redemption duly made within the period prescribed
by law inures to the benefit of the co-ownership and does not put an 'end to its existence
(Mariano v. Court of Appeals, G.R. No. 101522, May 28, 1993).
465
• .•
Q: What is an alteration?
ANS: An alteration is a change:
1. Which is more or less permanent;
2. Which changes the use of the thing; and
3. Which prejudices the condition of the thing or its enjoyment by others (PARAS,
Note: Alteration is not limited to material or physical changes; It includes any
act of strict dominion or ownership by which a real right or encumbrance is
imposed on the common property (e.g. servitude, registered lease, lease of
real property for more than one year, mortgage, or pledge) (Id. at 349).
Q: What is the effect if a co-owner makes an alteration without the express or
implied consent of the other co-owners?
ANS: The co-owner who makes an alteration without the express or implied consent of
the other co-owners acts in bad faith because he does so as if he were the sole owner.
As just punishment for his conductja,shouldj9se what he has spent; be obliged to
demolish the improvements.sioneandbeTliakle;rdsm for losses and damages the
community property or ttyptiffierNc-owitersirrl.
aVayse suffered. BUT whatever benefits
the co-ownership deriypsvi:11plonp..it.(ichaL349)
...,„4c y/ ,.” N.,
if..e
Q: What are the grountfor,Atingurg 17 fiTeht'of.co-ow,cidibhip3,
ANS: The ground4. 6)., AU guishrpenrcf cw2wne-rlhiW'pre41E I/ 1'-CoS-M-LEx-T2)
1. ludicia partitt; IL * s.:\
,.
2. Extrai icial artitio ;
(.
NotelT ssesspn o a co,44.cier
.'- canno r pen in 1̀9 ()Jae ship because the
pbsses on' s merely kt,x
i,tceltit:375f1a trustee lar th1 other co-owners
(Sall/0,90. CA, G.R. No.&55,69A,(140;21, 192). Thdreis- iidical dissolution
of coloWhe‘r hiprr4:11, the ttite-W—old, eit R.) billy or vately, to a third
perso fRep blicyI361azar-ka c.,:.G? 04481 3;-‘1(.11S, 7, 2006).
3. When b? rfi. ,scri -:`R, ne/bo- .t/J1d.til (42quir tl the+, hole property by
advers-q possksioriV,ag !hit 111:641 tiari, an repudiating unequivocally
the ownkrship oche otkert.....
i
4. When a gjengerle,clui( sftvirf7190 ng owner in common;
5. Merger in on2 co-cyner4„.. 4'20
.6. toss or desOction;s9/1 ''""''''-,--'"' :, A8sYs*
7. Expropriation (librk tbqinderipity 11'4bp distri uted accordingly (PARAS,
Property, supra at 348)k ,,,,, I.Vi
8. By the Termination of the pefiC-d reed upon or imposed by the donor or
testator, or of the period allowed by law (CIVIL CODE, Art. 494, pars. 2 and
3); and
9. By the sale by the co-owners of the thing to a Third person and the distribution
of its proceeds among them (CIVIL CODE, Art. 498).
Q: What is partition?
ANS: Partition is the division between two or more persons of real or personal property
which they own in common so that each may enjoy and possess his sole estate to the
exclusion of and without interference from others (DE LEON, Property, supra at 264).
Q: What is the purpose and effect of partition?

ANS: Partition has for its purpose to put an end to co-ownership. Every act intended to
put an end to indivision among co-heirs is deemed to be a partition (CIVIL CODE, Art.
1082). Its effect is to vest in each a sole estate in specific property, giving each one a
right to enjoy his estate without supervision or interference from the others (Noceda v.
Court of Appeals, G.R. No. 119730, September 2, 1999).
466
Q: How is partition effected?
ANS: Partition, when proper (i.e., a co-ownership in fact exists and partition not
otherwise legally proscribed), may be effected extra judicially pursuant to an agreement
or judicially by judicial proceedings under Rule. 69 of the Rules of Court. It may be
effected in consequence of a suit through a settlement between the parties with the
approval of a competent court. An agreement for partition may be made orally or in
writing (DE LEON, Property, supra at 273-274).
Q: When is the partition of the community property at the instance of a co-owner

not allowed?
ANS: The partition of the community property is not allowed in the following cases:
(ADLU) • . .
1. When the co-owners have Agreed to keep the thing undivided for a certain
period of time, not exceeding ten years (CIVIL CODE, Art. 494, par. 2).
2. When it is prohibited by the Donor of testator for a period which shall not
exceed 20 years, if the thing.. was acquired either by donation or succession
(CIVIL CODE, Art. 494, par, 3)r,, . .
3. When it is prohibited by 11,0K§qc as in the case of party walls and the family
home (CIVIL CODE, Arti40:),,fior v. ,
4. When to do so would renAri 'etmg Unserviceable for the use for which it is
intended, although the,Ooi:rigr,A* :my still beltrminated in accordance
with Article 489 (CIVILiCODEA ' 495)..-
.,..•
D. POSSESSION 0P;ii. '1 vo q,
,...
Q: What is possession?' ,.t.„ 0. -r
InTof a thing or the enjoym7t ofright (CIVIL CODE, Art
*ANS: Possession isja'hodIa,,,,,,
523). ,4;f
91,4 Tii-mykex,
*.
vg:
Q: Is OwnerOlpdiffdfe.,Arpmb.gssessio ?
L
ANS: Yes. .A):ersonoornObe cIel:Ored the owner, b Itheray 'not be entitled to
possession. me.purptimay la.p in V hands of another, such as a lessee or a
tenant. A person may tiave „troduced improvements thereon of which he may not be
deprived without due tkarin '-He may h alid-defenses to resist surrender of
possession. Hence, a Iggment fo ,.9 am, niatagessarily include possession
as a necessary incider#PARA Voperty, supra at 58).
l'h,. IL
.Q: Is possession a FactTorla,Right?
ANS: Possession is a fact, but from the moment it exists, certain consequences follow,
thus making it a right (PARAS, Property, supra at 450).
Q: What is the difference between the right TO possession and the right OF
possession?
ANS: The right to possession Gus possidendi) is a right or incident of ownership (e.g. I
own a house therefore I am entitled to possess it) while the right of possession is a right
independent of ownership (e.g. I am renting a house from C. Although I am not the
owner, still by virtue of the lease contract, I am entitled to possess the same) (PAPAS,
Q: Is possession' definite proof of ownership?

ANS: No. Possession is not a definitive proof of ownership nor is non-possession
inconsistent therewith (Heirs of Botill v. Court of Appeals, G.R. No. 107930, October 7,
1994).
467
.7.,.:*.v: -..., ;77;f•V;t 1.: • •.';
Q: What are the requisites of possession?

ANS: The requisites of possession are: (H10)
1. The Holding or control of a thing or a right;
2. There must be a deliberate Intention to possess; and
3. The possession must be by virtue of one's Own right (PARAS, Property, supra
at 451).
Q: What are the different kinds of possession?

ANS: The different kinds of possession are:
1. In one's own name — where possessor claims the thing for himself;
2. In the name of another — for whom the thing is held by the possessor:
a. Voluntary — as when an agent possesses for the principal (by virtue of
an agreement);
b. Necessary or Legal — when exercised by virtue of law, such as
possession in behalf of incapacitated persons, and juridical entities;
and ,I.........,,,,,,,,
c. Unauthorized,-' will trecorpephe.principars possession only after

there hastieen h'; tificati93 of tile sa'MOvithout prejudice to the effects
of negptGc..)i4g st 4,,(PARASAergpp ,; su-kat 455).
3. In the cony tof yvii,erfenconcepto ca'eluericif 7469sessor of thing or right,
by his actions,
4e
considerecrollFetted.b.
,r vo'
ahersst, as
•,.. t e owner, regardless of
good orba 49it rof tpe possdolt. ,7 k,,,,
a. Only thdpossessio&acqkedebnd enjqyecN I e cogcept of owner can
it_91.6ve s a title for acqulrki0Vominion (pivec9p,Art 540); and
b. posse sor is presii ed to possess just 110 eGIVIL CODE, Art.
s.,.. ., 1 tr " r..,1.
..
4. In th cope pt of h Icier -44.9,,,,Kiith. SQ holds merel/ to4et or enjoy it, the
ownergip,p,,rtatiiin o another erlon; pos 610br a*nowleflges in another a
supene light4 whic shici calif-663d Lire ownership by
presc tion7PARA "\f
Q: What are the egrees f p'oss'e

ANS: The degrees f posse qcn'ss* N.
1. Possession without n.r, fill h e er 'n- vicIlation of the right of the true
owner (e.g. t f ofOra # ,
2. Possession with EV16 title, blitgoktii 7h, 1\6;
apt of an owner (e.g. lessee,
pledgee, agent, trust'de, eposita*;
3. Possession with just title, or a 'UM c is sufficient to transfer ownership, but
not from the true owner (e.g. when the seller is not the true owner);
4. Possession with just title from the true owner (ALBANO, Civil Law Reviewer
(2018), p. 287- 288) [hereinafter ALBANO, Civil Law].
Q: What are the classes of possession?

ANS: The classes of possession are:
1. Possession in one's name or possession in the name of another;
2. Possession in the concept of an owner or possession in the concept of a
holder; and
3. Possession in good faith or in bad faith (ALBANO, Civil Law, supra at 288).
Q: What are the presumptions regarding possession?

ANS: The following are presumptions regarding possession:
1. Good faith is always presumed (CIVIL CODE, Art. 527);
2. Possession continues to be enjoyed in the same character in which it was
acquired, until the contrary is proved (CIVIL CODE, Art. 529);
468
3. The possession of hereditary property is deemed transmitted to the heir
without interruption, and from the moment of the death of the decedent, in
case the inheritance is accepted. One who validly renounces an inheritance is
deemed never to have possessed the same (CIVIL CODE, Art. 541);
4. A possessor in the concept of owner has in his favor the legal presumption
that he possesses with just title, and he cannot be obliged to show or prove it
5. One who recovers, according to law, possession unjustly lost, shall be deemed
for all purposes which may redound to his benefit, to have enjoyed it without
interruption (CIVIL CODE, Art. 561);
6. The present possessor who was also the possessor at previous time, has
continued to be in possession during the intervening time, unless there is proof
to the contrary (CIVIL CODE, Art. 1138, par. 2);
7. The possession of real property presumes that of the movables therein, "eo
long as it is not shown or proved that they should be excluded (CIVIL CODE,
Art. 542); and
8. Each one of the participants.Of'althing possessed in common shall be deemed
to have exclusively posse#e'cljapart which may be allotted to him upon the
division thereof, for the er#0.:o,egod during which the co-possession lasted
(CIVIL CODE, Art. 543; PAIftfe; perty, supra at 474-475).
is
41
1,
Q: What is the nature of _the possession atm teller over the money
depositedlremitted?
ANS: The possession 'a, bank 41,0fAis only physical op sriftterial possession. The
money was in the pothsstn of the,,Fe'cetng teller of thepakilaand the possession of
the defendant was th4o4epsicin of the batik. Payment 13-5, ttepersons to the teller is
payment to the liapkiitseltlfrepteller is a mar, custodian clke0pertif the funds received,
and has no ir0pendenttridht or title ro.:retp or possestthe qamel es against the bank.
When the bargdeller„thrhOed the, money hd approprated 41n,use without the
consent of te. bank, .114 wal,:,Vle tar g or apTOI4 t "lilemplated in the
definition of the crirriek'itiileft (Cfisfe,ia C a-Burce v. o. -109595, April 27,
2000 citing Peoplelites`dhl
8
Q: What the naturp,ofg' - e possespionifqf sales agent over the process of
things he was authorized sellraartit=azz
ANS: The possessioribf a KalOs agent is a juridical possession which gives the
possessor a right over thug; which the transferee may set up against the owner. An
agent can even assert, as againsthis own principal, an Independent, autonomous, right
to retain money or goods received in consequence of the agency; as when the principal
fails to reimburse him for advances he has made, and indemnify him for damages
suffered without his fault. A sales agent who misappropriates or fails to return to his
principal the process of things he was commissioned or authorized to sell is liable for
estafa (Cristeta Chua-Burce v. CA, G.R. No. 109595, April 27, 2000 citing Guzman v.
CA).
Q: How is possession acquired?

ANS: Possession is acquired:
1. By the material occupation of a thing or the exercise of a right (tradicion brevi
manu (CIVIL CODE, Art. 499) and tradicion constitutum possessorium (Civil
Code, Art. 1500);
2. By the fact that it is subject to the, action of our will (tradicion longa manu)
(CIVIL CODE, Art. 499) and tradicion simbolica (CIVIL CODE, Art. 1498);
3. By the proper acts and legal formalities established for acquiring such right
(CIVIL CODE, Art. 531).
469
:7? t:1'4.1.L .
1.0.::.riVg1T,W!
Q: By whom is possession acquired?

ANS: Possession may be acquired:
1. Personally or by the same person who is to enjoy it;
2. Through an authorized person or by his legal representative or agent; and
3. Through an unauthorized person or by any persons without any power of
authority whatsoever (CIVIL CODE, Art. 532).
Q: What are the modes by which possession cannot be acquired?

ANS: Possession cannot be acquired:
1. Through force or intimidation as long as there is a possessor who objects
thereto (CIVIL CODE, Art. 536);
2. Through mere tolerance (CIVIL CODE, Art. 537); and
3. Through clandestine, secret possession (CIVIL CODE, Art. 537).
Q: What may be possessed?

ANS: Only those things and rights whjch_are .s.caceptible of being appropriated may be
possessed (hence, only prqpeqr iiiay be the object of . possession). However, the
following cannot be approprigted0.0d•heqcejcAdt be pOssessed:
1. Property of public`ctOMihidti;,----.,„,„„ 'e _( ? 27 \
,9- ..,,..
2. Res commurrs; ../,,i.01 •..,\
3. Easeme9A(iPtisbpappoustYlib7riza'pparent);Vit ' , \
4. Things spptific1119 priihibitegi,bylaw (134RAt PropeirCsilpra at 476).
I NV/ Jr" .''t. .•:•;•,. .i1
Q: Can properpe.clairsifle as res nullIciS..be acquirhed bykp 'e criptio.n?
e ,‘
ANS: No. Res 'n .11iu (aban,doried-or OlieTfess-ToTgperty) „p& possessed, but
cannot be accgdtwed 1 by prdscrii3tik1:..POscriPtibil presuppo„ses prior ownership. in-
another. Howeyer sad "res may
Alliusle.a0qUired
......... • .,,,•., by occudation1PARAS,
.. Property,
supra at 476). • ,e'."•,-..1 ...'.7.-Z2-7::'" 1
Cg b
'I''''
\,..--'..'''N. . e :tr, e..._) A.K0
Q: May posse mon- erec opi, sfil irrtw :difror55 Arson, ities?
ANS: As a.gen4alrule,posses.jort'.-Wd4f cfdyphpePO'recognized 4 the same time in
two different pers - .nalitieNxcept irea .... f,co-pdtsessioor(C/V/L , ODE, Art. 538).
,_:„g"es
tSC, 1-..r.:„. ?),)
Q: What are the rules u e tigtrz±t.:1:30 .0 the fact of possession?
ANS: The rules are thhto ihrl
1. Present/actual pm,iesaithall kegreffAect,
2. If there are two (2) p-o"sssors,lhOone'-1 g in possession;
3. lithe dates of possession diet e, the one with a title; or
4. If all the above conditions are equal, the fact of possession shall be judicially
determined and in the meantime, the thing shall be placed in judicial deposit
Q: Who is a possessor in good faith?

ANS: A possessor in good faith is one who is not aware that there exists in his title or
mode of acquisition any flaw which invalidates it (CIVIL CODE, Art. 526).
Q: What are the requisites to be a possessor in good faith?

ANS: The requisites to be a possessor in good faith are: (OVI)
1. Ostensible title or mode of acquisition;
2. Vice or defect in the title; and
3. The possessor is Ignorant of the vice or defect and must have an honest belief
that the thing belongs to him (DE LEON, Property, supra at 335).
470
.......'
672.4.
r,.
2,,...,
ri
e \ti24, ‘,.`60,v;,4g...giti:;t:.:,km,:j;;:;::i.;1141:;•:Z.:,:ii.•::.z.;44,,-,:,:.-:-.1AP.SIff;:v.,:iw:
Q: May ignorance entitle a person to be a possessor in good faith?

ANS: No. Gross and inexcusable ignorance of the law may not be the basis of good
faith, but possible excusable ignorance may be such basis (Kasilag v. Rodriguez, G.R.
No. 46623, December 7, 1939).
Q: Who is a possessor in bad faith?

ANS: He is a person who is aware of the invalidating defect in his own title. Only
personal knowledge of the flaw in one's title or mode of acquisition can make him a
possessor in bad faith. It is not transmissible even to an heir. Possession in good faith
ceases from the moment a defect in his title is made known to the possessor (DE
LEON, Property, supra at 334).
Q: What are the distinctions between a possessor in good faith and a possessor
in bad faith?
Possessor in Good Faith I Possessor in Bad Faith

. As to rights to the Fruits. Received
, -:it-M
Entitled until good-faith ceases. and•badv., Not entitled. Has a duty to reimburse
faith begins ' •'.-6;4'4'
•2 ,1P' Alm a 1',- pceivedlihcluding that which the
• 'regitinia „, ailsessor could have
1 y.
4,-. received
.a.h.., 1
As to rights as regards the Necessary Expenses
• I Q 1
Reimbursement Inn rete:fitiqtvtrt Reimbursernentiwithout retention
e" 5 •5:N. ig, PI %
. :As to rights as regards the Useful Expenses
.-' 0 :Pil le i ' • ' .-At."`', 1i, ' t'':V
Reimbursemet with%ertion • oj he N, No rein'', emen or retention or
may remove theitipsciVideAthe re nova .e . 'i removal
can be done without datages to the
principal thing
A I) tvwx,1
4 '
'1 ... .....,...eltd&-kWA--
: . As to rights as regards the Ornamental Exper!ses -
Right of removal % , rght
wivit, i of
AN, AI Right of removal without right of
reimbursement reimbursement, but the owner •or lawful
possessor is liable only for the value of
Note: Reimbursement may be had only the ornaments, in case he prefers to
when the prevailing party decides to retain them, at the time he enters•
keep the improvements possession
Note: Reimbursement may be had only

when the prevailing party decides to
keep the improvements
. . .. . .
. As to Taxes 'and Charges 1. on C?pital, 2. on Fruits and 3. CfaiVes)
Taxes and charges ' Taxes and charges

1.Charged to owner 1.Charged to owner •
2.Charged to possessor 2.Charged to owner
3.Pro-rated 3.Charged to owner
471
As to reimbursement of Improvements no longer existing
No reimbursement No reimbursement
As to Liability for accidental loss or deterioration

0
Only if acting with fraudulent intent or Liable in every case
negligence after summons
As to who will be entitled to the Improvements due to nature or time

Not entitled. Not entitled.
Improvements caused by nature or time Improvements caused by nature or time
shall always inure to the benefit of the shall always inure to the benefit of the
person who has succeeded in-.,1 _person who has succeeded in
-,00.wa...•
recovering possession. -rkecoveitng possession (CIVIL CODE,
Are 5g9L'5610)
of' • "
(DE LEON, Property,isupra tt,40,64108)
4.
e X,
Q: What are the srigh,s,o osseoisoq
ANS: The rights ord'paS. ess r are: fr- 1:;_
1. To bei tespected in is possessiorn:.,
2. To b&V
# rtec ed in drrestoted 14aid-possess on b‘ lleg,.,!r)
T\ans should he be
disturb .therein; and \z1 .1.:', II:i ‘:.-""Z:V
3. To secum,frbm
3 .4 a competefit01. rt in:arIactio for forail?le.efixy the proper writ
to rerrel in (h ssesstaitzWEON, supra t 359).
\
r n . "
Q: Is the po sessotkin
,- I
iiik to Ihe frujts r ceived before the
possession is legally inlerr '-'.:(>. .,..\./
./
ANS: Yes. A poeessokin g ad erf to the fruits leceived before the
possession is legally inteARtedkAl ara -aud.rctustria ruits allconsidered received
from the time they are gathead<sevekNaivil-frOts ar‘ deemed to accrue daily and
1t (0 IL CODE, Art. 544).
belong to the possessbrkiz.gbneyth,oa.tbat,,propti
1
Q: Is a possessor in gool?raitatitlecMpth ingk its?

ANS: If at the time good faith ceastheresh-otireie any natural or industrial fruits, the
possessor shall have the right to a part of the- expenses of cultivation, and to a part of
the net harvest, both in proportion to the time of possession (CIVIL CODE, Art. 545).
Q: To what reimbursement is a possessor in good faith entitled?

ANS: A possessor in good faith is entitled to reimbursement of the necessary and useful
expenses (CIVIL CODE, Arts. 546-547).
Note: A possessor in good faith is not entitled to reimbursement for expenses of pure
luxury, but he may remove the ornaments if the principal thing will suffer no injury
thereby and if his successor in the possession does not prefer to refund the amount
expended (CIVIL CODE, Art. 548).
Q: What is the doctrine of irrevindicability?

ANS: Possession in good faith of a movable is presumed ownership. It is equivalent to
title. No further proof is necessary (Aznar v. Yapdiangco, G.R. No. L-18536, March 31,
1965).
472
, • -
Q: What are the requisites for the applicability of the doctrine of irrevindicability?
1. Possession is in good faith; and
2. Possessor is in the concept of an owner (CIVIL CODE, Art. 559).
Q: What are the exceptions to the doctrine of irrevindicability?

ANS: The exceptions are:
1. Where the owner or possessor lost a movable; and
2. Where the owner or possessor has been unlawfully deprived of a movable
Q: When does the period to recover prescribe?

ANS: The period to recover prescribes:
1. The ownership of movables prescribes through uninterrupted possession for
four (4) years in good faith; or
2. The ownership of personal property also prescribes through uninterrupted
possession for eight (8) yearS, without need of any other condition.
Note: Movables possessed through ..4crirtat_can never be acquired through prescription
by the offender (CIVIL CODE, Art 1132) * 0
•'...41' 44
,
Q: What are the effects if a lost riidAtitejsilogrld?
ANS: The effects are: -,- •!'''L-'-. g, azgill'iliovig?
„, ...
1. Whoever finds aogliable, wljtcliis not treasured, rnfist return it to its previous
eiDw• A. ,EM
possessor. Ifixne latter is unknown the finder shalltmediately deposit it with
the mayor of t0e,city or municiali_ty where he found I; ii'k,
2. The findingAIReAptiblicly alounced by ther maya for two consecutive
weeks)49:06waypAeems best 1 1 1
3. If thAtnovab4-cannot be kettikwiltirt deterioration, qr without expenses which
corigiii,Wapiydiminish its laphall be spILV,a4:04 l'clgi,iction eight days
afteljzffie publicara AlA gs,
4. Six moop itrciatie Obligati° aving elapseEPAthout the owner having
appeared, p-elhiiglfouneor i `value, shall be awarded to the finder. The
finder and owned shall be o . ,ig,45.a, the case may be, to reimburse the
expenses (CI VODE, Art. 711artig, ..,
5. If the owners : ould apoltlirptimeehertffabretobliged to pay as a reward to
the finder, oneztenth*yMO) of the sum or the price of the thing found. (CIVIL
CODE, Art. 7 0),
Q: What is the effect of a voidable title?

ANS: The owner cannot recover when the seller has a voidable title which has not been
avoided at the time of the sale to the buyer in good faith for value and without notice of
the seller's defect of title (CIVIL CODE, Art. 1506).
Q: What are the causes for loss of possession?

ANS: The general causes for loss of possession are:
1. Thru the possessor's voluntary will and intent:
a. Abandonment; and
b. Transfer or conveyance (CIVIL CODE, Art. 555).
2. Against the possessor's will:
a. Eminent domain;
b. Acquisitive prescription;
c. Recovery or vindication by the legitimate owner or possessor;.
d. Judicial decree in favor of one who has a better right; and
e. Possession of another for more than one year (CIVIL CODE, Art. 555).
473
•
Note: This refers to possession de facto where the possessor loses the
right to a summary action; but he may still bring an accion publiciana or
reinvindicatoria.
i. By reason of the object:
• ii. Destruction or total loss of the things;
iii. Withdrawal from commerce; and
iv. Escaping from possessor's control of wild animals (CIVIL
CODE, Art. 555) (PARAS, Property, supra at 458).
Q: What are the acts that do NOT constitute loss of possession?

ANS: The acts that do not constitute loss of possession are:
1. Acts executed by stealth and without knowledge of the possessor;
2. Acts merely tolerated either by the possessor or by his representative or
holder in his name unless authorized or ratified;
3. Violence; and
4. Temporary ignorance of th,9„whereatalts of movable property (CIVIL CODE,
Arts. 537-538)• t•00'''' TT '4'
.1- i .1 .4• tIN
Q: Summarize the Rec vtiii'?)..NItirRecovery,,,cmciple:-
ANS: The followingj,e sufnpatIr of recovery or rion4e-6ovdryftrinciple:
1. Owner may re4py,et w* houtrelfribltrse ent.
a. Fro os(es or in bad faith; op-7
b. Fro gssesfsor in Vooditfa ith;Clif ow er hRpflost the property or has
been rile Ily depriv ' Atf it (the cquisiticNISIg from a private
—to ) (C/ COD , A--
2. Ownetiiiay ecove btitVieful fretutise:
a. i If poi sensor cquirecif,kal c:ii1A.eptin go ,d
• faith 7 Isvpiiblic sale or auction
'becp set; ublicity`:6tthriciant to,tapjplic sale ''sAould have been
sulfictgnt a in,g for the ciwop[ to carp
07 orward.and laim the property
irGIL4L‘CO E•1 . 50)1 kk;03. .
3. Owne canncitireca efi v4iilif eVer,
s1— reimburse irhether or not the
owner ad lost has bri-t4wfitir -E.Privetf):
a. If ossesibc h (1*El trpdriNn gs06 faifh dby purchase from a
rne hant's stdre,z. adsN.-aP:i narkels 1 ccordance with the Code of
Comaecce(gb-reig.law 6Tv E:,' Art. 1505; CODE OF
COMMERG,g MA . 85 altclif6
b. If owner is brhis49nduotip' ecl rom denying the seller's authority
to sell (CIVIL CODE:4711r1`50 , and
c. If possessor had obtained the goods because he was an innocent
purchaser for value and holder of a negotiable document of title to the
goods (CIVIL CODE, Art. 1518; PARAS, Property, supra at 560).
E USUFRUCT
Q: What is usufruct?
ANS:' Usufruct is that which gives the right to enjoy the property of another with the
obligation of preserving its form and substance, unless the title constituting it or the law
otherwise provides (CIVIL CODE, Art. 562).
Q: How may usufruct be constituted?

ANS: A usufruct may be constituted by:
1. Prescription;
2. The will of private persons expressed in acts inter vivos;
3. Law; and
4. The will of private persons expressed in a last will and testament (CIVIL
CODE, Art. 563).
474
•
Q: What are the characteristics of usufruct?

ANS: The characteristics are: (RTAPT)
1. Real right;
2. Temporary in duration;
3. To derive all Advantages from the thing due to normal exploitation;
4. May be constituted on real or personal Property, consumable or non—
consumable, tangible or intangible, the ownership of which is vested in
another; and
5. Transmissible (PARAS, Property, supra at 572-573).
Q: What are the classifications of usufruct?

ANS: Usufruct may be classified:
1. As to Origin:
a. Legal — created by law, such as usufruct of the parents over the
property of their unemancipated children;
b. Voluntary — created by will of the parties either by an act inter vivos
such as donation, n act mortis causa such as in a last will and
testament; or ,ts
L
c. Mixed — acquiretRyippsqvption such as when believing himself to be
the owner of the titd e y1oe4en absentee, gave in his will the usufruct of
the property for,OhRiikadatopms, cripti %period to his wife, who
possessed it vgbotPlattrs-tdafeittilsnd
4,4 naked ownership to his
brother34Le3P-
2. As to quantiplbr kind of object:
a. Total; ,
b. PartiA,wileperiall the fr js are given or
3. As to thslatenttdegyner's patrimony:
a4Iii•bniverp4 1if over ttresen patrimony:,
0,0irlgiePAparticular — if Ay indivioar4qg. tided.
4. As iolthe numb-60f per,sois e ploymg
a. ,§irnylaSig'aiy calbsuf c uary enjoys.;13°
b. 116Itirile- aeveral,,tisufr tuary enjoy:
nit vtr4— at the sa
c. Simultaneousj or
d. Succetly;e0one after tb,
5. As to the qultity or kindidfrabteCts ' ji M
a. over nkts; or
b. over thik 's
6. As to whether o ndilmpairment of object is allowed:
a. Normal — perfect or regular; or
b. Abnormal — imperfect or irregular.
7. As to term or conditions:
a. Pure; or
b. With a term or period (a termino):
i. Ex die — from a certain day;
ii. In diem — up to a certain day; or
iii. Ex die in diem — from a certain day up to a certain day.
c. Conditional (PARAS, Property, supra at 575 — 576).
Q: What are the rights of the usufructuary?

ANS: The usufructuary shall be entitled to all the natural, industrial and civil fruits of the
property in usufruct. With respect to hidden treasure which may be found on the land or
tenement, he shall be considered a stranger (CIVIL CODE, Art. 566).
475
Q: Are products (e.g. minerals extracted from mines) which diminish capital
treated as fruits?
ANS: No. Products (e.g. minerals extracted from mines) which diminish capital are not
to be treated as fruits since it is the obligation of the usufructuary to preserve the form
and substance of the property unless the contrary is provided (PARAS, Property, supra
at 582).
Q: What are the rules on pending natural or industrial fruits?

1. Fruits pending at the beginning of usufruct:
a. Belong to the usufructuary;
b. No necessity of refunding owner for expenses incurred; and
c. But without prejudice to the right of third persons
2. Fruits pending at the termination of usufruct:
a. Belong to the owner;
b. But the owner musIzeimburse,lhe usufructuary for ordinary cultivation
expenses andofciflhe seeds Ki similar expenses, from the proceeds
of the fruitslInd, 1.
.....) 1 '",
i, ..,
c. Right%Acilitiperic,Aird-pa . ear should :nbt, be prejudiced (PARAS,
. \
Prol*ty &repel 583 - 584). , v
Note: Civil fruits &e e fined„to.,.attUd7dallyNazd ke152 g oithe usufructuary in
proportion to theMb-th sufruct ay l8t ' (q.Avic COD A 69). The exception is
whenever a usttruct'is/ onstituted oil thegfigheto receive alint oiVriodical pension,
or in ruits, for in the interest on bona or seee4s, ayable to bearer.
whether in money...._
In this case, each pa ment ue s ar e iconsiderecr.'s the proceeds of fruits of such
right (CIVIL ClgE;A il . 570).,
1 774 Ille-lOr 1,6*”'
Q: What is the elrelli of the sufrulalAhare i s lden reasuce?

ANS: The usurru, Ftvaork no , e W IN , rier, is ds,ovIrter, but is entitled
as finder to ondishaff flhe tree If glj-nkbOdlosl der, bid usufructuary gets
nothing (4 MANRESA, 13438A91)x.. ' ' \'/".•.,
k,.
Q: What rights des the usSu'ctgov 1.2
-.-... k.. it 1\
ANS: The usufruct covers te ntelOairei ht o trijp,y4t e fruits) and the entire
jus utendi (right to the e)-(pf'Propert p 4498).,,,
Mt PI,
Q: Is the consent of the ownermededlf tie- suf uctuary to lease the thing?
ANS: No. He may lease the thing rearrOthvrgen without the consent of the owner
Note: The lease must not extend to a period longer than that of the usufruct, unless the
owner consents. Thus, the lease ends at the time the usufruct ends, saving leases for
rural lands, which shall be considered as subsisting during the agricultural year
Q: What is an abnormal usufruct?

ANS: Abnormal usufruct is composed of the following:
1. Abnormal usufruct on things that deteriorate - whenever the usufruct includes
things which, without being consumed, gradually deteriorate through wear and
tear, the usufruct shall have the right to make use thereof in accordance to the
purpose; and
Note: Not obliged to return them at the termination of the usufruct except in
their condition at that time, but shall be obliged to indemnify the owner for any
deterioration they may have suffered by reason of his fraud or negligence
476
‘..,.,--;-• .' -
-,-xL-0.'1.c.'A'rate4,̀,::c'.}:'1, -fli-c4,.•=7.33",,..?;:i.•:s.4*,flo.l.,4N1,25.',74...117-:?..-gi:0;•':-5.-1
-' ' 1-A-
( ..e...:' ,..,°
2. Abnormal usufruct on consumable things (quasi-usufruct) — whenever the

usufruct includes things which cannot be used without being consumed, the
usufructuary shall have the right to make use of them (CIVIL CODE, Art. 574).
Q: What are the rules on quasi-usufruct?

ANS: The following are the rules for 'Quasi-Usufruct':
1. The usufructuary can use them (as if he is the owner, with complete right of
pledge or alienation);
2. But at the end of the usufruct, he must:
a. Pay the appraised value (if appraised when first delivered); or
b. If there was no appraisal, return same kind, quality, and quantity or pay
the price current at the termination of the usufruct (therefore not at the
original price or value) (PARAS, Property, supra at 593).
Q: What are the two kinds of improvements?
ANS: Improvements include both useful and luxurious improvements (PARAS, Property,
supra at 599). Useful improvements are fiXose which increase the value or augment the
income of the property (CIVIL CODE, Art6I48-489). Luxurious improvements are those
made for pleasure (CIVIL CODE, AO.' 54.8)
Q: May the usufructuary alter.:tb0! or substance, of the property held in
usufruct?
ANS: No. He must not altpdt-ie form or su property (CIVIL CODE, Art.
,..t,..%,
581).
&0
Q: Is the usufructuaryitentitled to airefuOg? 4'
ANS: No, he is NOIleifitletp refund. But, he may eithe r1
r: :\ 1
1. Remgyfilthe ima:ovanentsif no 'substantial da agel to the property is caused --14444
(C/V/L.CODE7•104d. 579); or ', V 1
A1-0 . otig, , aTbe liable (CIVIL
2. SetitlheAmprslytiment4gains tiamagesterm
CODE, Art. 5B0),,v -I,
Q: What are the rqfitli§ite Alrfore4 se =off can be made on the improvements for
any damage to the'brgperty1/4
ANS: The requisites arN ,,
tiNo ,,e,40 t , mm
e. ,-
..-,-44.
1. Damage muSitt, ave beerlyadseci- lethe'ril ctUary; and
2. ImprovementsAmust 4,04e augmented the value of the property (PARAS,
Property, sup-44160j.
Q: What are the rules in the setting-off of improvements?
ANS: The rules in setting-off of improvements are as follows:
1. If damages exceed the value of the improvements, usufructuary is still liable
for the difference; or
2. If the value of the improvements exceeds damage, the difference does not go
to the usufructuary, but accrues in favor of the naked owner, in the absence of
stipulation to the contrary (PARAS, Property, supra at 607-608).
Q: What are the rights of the usufructuary as to the usufruct itself?
ANS: As-to the usufruct itself, the rights of the usufructuary are:
1. To mortgage the right of usufruct except parental usufruct;
Note: That is, in the case of parents who are usufructuaries of their children's
property, except when the parents contract a second or subsequent marriage,
provided that each child's property does not exceed P50,000 in which case,
the parents have to file a bond not as usufructuary, but as guardian or
administrator. (PARAS, Property, supra at 606). But he cannot pledge or
mortgage the thing itself because he does not own the thing (CIVIL CODE, Art.
2085, par. 2);
477
2. To alienate the usufructuary right (PARAS, Property, supra at 589 - 590); and
3. To bring action and oblige owner thereof to give him proper authority and
necessary proof in a usufruct to recover property or a real right (CIVIL CODE,
Art. 578).
Q: Whk are the rights of the usufructuary upon the expiration of the usufruct?
ANS: The rights of the usufructuary upon expiration of the usufruct are:
1. To collect reimbursement from the owner:
a. For indispensable extraordinary repairs made by the usufructuary
b. For taxes on the capital advanced by the usufructuary (CIVIL CODE,
Art. 612); and
c. For damages caused by the usufructuary.
2. To retain the thing until reimbursement is made (CIVIL CODE, Art. 612); and
3. To remove improvements made by him, but without injuring the property
(CIVIL CODE, Art. 579)
Q: What are the other righfi of the ushicArht

ANS: The other rights yrthf ti)urruOjapparess„Z,-g. N,
1. Right to mplke'useVheland and mateei6ls,„whegethp\building forming part of
the usufruct 'brf'i movable'tiVreVir destkoyecl1WanY% anner (same rule if
usufruc pistons itutecron buildiriatonly),(C/V/L CO E, 607); and
ge.) "a%
2. If usuf ctuaryishares in insurance atenement in sufruct, and it was lost, he
shail ntinuein enjoyment of the new one (if one b%e o'Rtructed) OR receive
intere e insur C/17ICCO E, Ark
1
Q: What are tie opligations of the:l'uvAlVgdy before exercising the usufruct?
ANS: The oblig:aionr,i are:c,,,,
1. To may anolive*w\e the pr,p
Note:',(NrikAretitorYsfs2,9Veq4irp , ,f
a. tio k9.5 injtkert ergY,A7cylded ,the naked owner consents
(CIVIL co,p . E,Ao.vmk cfr" _if' 1
b. In\ca ... se of aiVer6b5n dd. wnee'or the aw or when there is
stipbVion irna I or:„...1 . .Ptol?, , supra at 612).
2. To give a borik .419
Note: The givinNf 6uritylog e effect. After the security has
been given by the usuftwparyVh'e-61ial " ave a right to all the proceeds and
benefits from the day oniVnit , ccordance with the title constituting the
usufruct, he should have commenced to receive them (CIVIL CODE, Art. 588).
Q: When is a bond not required?

ANS: A bond is not required:
1. When no prejudice would result (CIVIL CODE, Art. 585);
2. When there is a waiver by the naked owner (PAPAS, Property, supra at 612);
3. When the usufructuary is the DONOR of the property who has reserved the
usufruct (CIVIL CODE, Art. 584); and
4. When there is a parental usufruct, i.e., in the case of parents who are
usufructuaries of their children's property (FAMILY CODE, Art. 225).
Q: When is a bond required in a parental usufruct?

ANS: A bond is required when the market value of the property or the annual income of
the child exceeds P50,000, in which case the parents shall be required to furnish a bond
in such amount as the court may determine, but not less than 10% of the value of the
property or annual income to guarantee the performance of the obligations prescribed
for general guardians (FAMILY CODE, Art. 225).
478
•4: %14,:.;`.:1
;•A•:-.;;'C'i.41:4•j"*!".ti4;?"":I!Ei:
BEDAN RED
Q: What is caucion juratoria?
ANS: Caucion juratoria is a sworn duty to take good care of the property and return the
same at the end of the usufruct. It takes the place of the bond or security and is based
on necessity and humanity (PARAS, Property, supra at 617).
Q: What are the requisites for caucion juratoria to apply?

1. Proper court petition;
2. Necessity for delivery of furniture, implements, or house included in the
usufruct;
3. Approval of the court; and
4. Sworn promise (PARAS, Property, supra at 611).
Q: May the usufructuary alienate or lease the property?

ANS: No. The property cannot be alienated nor leased because this would mean that
the usufructuary does not need it (PARASeroperty, supra at 617).
4
Q: What are the obligations of tbp,,k(qkuetuary during the usufruct?
ANS: The obligations are: (TAR*?
1. To Take care of the prolie ie:15' good father of a family (C/V/L CODE Art
4 -4-g-,0
589); OTA:bti
2. To Answer for the acts'.15f th'es:ab,Stitute(C/AVILE), Art 590);
3. To Replace witVhWyoung thereof animals that die are lost in certain cases
when the usulktbi is constituted n flock or herd ofli e tock .(CIVIL CODE Art.
591); . rf
4. To make grariargirairs (C/VIa0DE, Art. 592Ipari. 1 k
5. To NotifyitRe owrterlaurgent ex{ -ordinary repa'irs (91/)1: CODE Art 594);
6. To Poait worl$s and imprdie.m by the naj owner of prejudicial to the
usupW(CDCAPDE, 6rt. 595),
7. To [36V Annual die& andl8harges n the frui si Art. 596);
8. To papkteregi.,rgbxesibrOapi ?paid by the naked,o er (CIVIL CODE Art
597); ltpe
9. To pay Delits,whethe usufruc ,is nSiluted on the whole patrimony (CIVIL
CODE Art 5t1,i,iikz „,1M
10. To Secure tharnaked ovinefig-t6PCOUri-saapproVa to collect credits in certain
cases (CIVIL laOD E , elf899);
11. To notify the R§,e/At any prejudicial Act committed by third persons. (CIVIL
CODE, Art. 601);46frtr
12. To pay for Court expenses and costs regarding usufruct (CIVIL CODE, Art.
602).
Q: What are the obligations of the usufructuary upon the termination of the
usufruct?
ANS: The obligations are: (RIP)
1. To Return the thing in usufruct to the owner unless there is a right of retention
2. To Indemnify the owner for any losses due to his negligence or of his
transferees (CIVIL CODE, Art. 573); and
3. To Pay legal interest on the amount spent by the owner for extraordinary
repairs or taxes on the capital (CIVIL CODE, Art. 594).
Q: What are the rights of the owner during the usufruct?

ANS: The rights are:
1. He retains title;
2. He may alienate the property, but he may not:
479
•".; • ..•!•,
a. Alter the form or substance of the thing (CIVIL CODE, Art. 581); and
b. Do anything prejudicial to the usufructuary (CIVIL CODE, Art. 581).
3. He may construct buildings, make improvements and plantings, provided:
a. The value of the usufruct is not impaired (CIVIL CODE, Art. 595); and
b. The rights of the usufructuary are not prejudiced (CIVIL CODE, Art.
595).
Q: What are the obligations of the owner at the expiration of the usufruct?
ANS: The obligations are:
1. To make reimbursement for advances of the usufructuary (CIVIL CODE, Art.
567);
2. To cancel the bond, upon discharge of the usufructuary's obligations (CIVIL
CODE, Art. 583); and
3. To respect leases of rural lands by the usufructuary for the balance of the
agricultural year (CIVIL CODE, Art. 572).
Q: How is a usufruct extinguished? I ) x ,

ANS: It may be extinguistiailthr 'Ugh: (P.13,LIDFIli) i -,,,,...
1. Prescription;, b 'ci ,, _,,,,,, ...-----.4,,_ 4 , ---
2. Terminatioyi2fRigfit- fitriperson constittitinfftfie uSuf t;
3. Total Los/Oft 'elpi g• ..------7-------,,, Nk.
4. Death sr114tis
- uc ary, Liplestb contrary rotten 'ova ears;
5. Expiration ofl,t pe od or fulfillment of the resoluto r fonditr;
6. Renuotiationif the sufructuarNir, U.)
7. MergeZthe usufr ct and ownership in the pcmi(C/V/L CODE, Art.
6031 it 5,. — 2.. 1 .6 -...?:‘,`'
' " li
.7y
Q: What are t atker ctis-Ps,for the4itiituishme hif.usufruct
I . ‘ / ' -/
ANS: The followmfan th*e\causp forpe, exti gOisbrne Ofth4 sufruct: (MARL)
1. Muturlvivithdrawal\-;)>>\ *I. et•?..̀.V..i.
2. Annulment; \ \',.),\\S-L-1 ••=-:',.
3. Ilescissn; andka„ \y‘ %...„,,,
,p
4. Legal cases ending legAis IR rtvv4 n a ainmenyof the age of majority
extinguisha' areniatts,_uittiakPIA'RAS;1„ ProperffrosupcSat 632).
Note: Abuse or misus fith suffOct.does.rtorextci r'buish 'eunless by virtue of such
abuse or misuse, the thing] wah totaNtspfatVfl. , Art. 610).
Q: What are the rules on usufruct ofiVbVil ing and/or the land concerned in case
of loss?
ANS: The rules on usufruct on a building and/or the land in case of loss are the
following:
1. Usufruct on both building and land (but building is destroyed before the
expiration):
a. Usufruct on building ends, but the usufruct on land continues;
b. Usufructuary still entitled to the use of the land and the use of whatever
materials of the house remain; and
c. If the naked owner wants to rebuild and the usufructuary refuses, the
usufructuary prevails (PARAS, Property, supra at 634 - 635).
2. Usufruct on building alone (but building is destroyed before expiration):
a. Usufruct on building ends, but the usufructuary can still make use of
whatever materials of the house remain;
b. The usufructuary is entitled to use the land; and
c. Because there was no usufruct on the land, the naked owner has
preferential right to the use.
480
•
Note: He shall be obliged to pay to the usufructuary, during the continuance of the
usufruct the interest upon the sum equivalent to the value of the land and of the
materials (PARAS, Property, supra at 635).
Q: What are the rules on payment of insurance on the tenement held in usufruct?
ANS: The following are the rules on payment of insurance on the tenement held in
usufruct:
1. If the naked owner and the usufructuary share in the premiums:
a. If the owner constructs a new building, the usufruct continues on the
enjoyment of the new building; and
b. If the owner does not construct a new building or rebuild, the naked
owner gets the insurance indemnity but should pay the interest thereon
to the usufructuary.
2. If the naked owner alone pays for the insurance and the usufructuary has
refused to share:
a. The naked owner gets the whole indemnity;
b. If the usufruct was 09 Afftbuilding and the land, the usufruct continues
on the land and thq:Plettuals; and
c. If the usufruct wad,;en,fiffililding alone, the naked owner may rebuild,
with or without the ap.prznal of the usufructuary, but he must pay
interest on the valugaP end the aid materials that may have
been used.., ,' •l''' .
.,:10 • i
3. If the naked oNsneralone paig for the ins 'Tar but there is failure or
omission otitrtifructuaryi0A,are, the effect isItterame as if there was a
sharing, buttrat„.usli.fructuayl-rigt reimburse the Taked owner his share of the
insurance pwiut4,i ,' -- /
4. If the upsfrtictui., 4,alone pays e insurancepremiurni
a The insuAnce inderqpi oes to the' us cblary alone, with no
*.i'' . AriN,,,.
ii." ' obligalioT n hig part to, are th • hem- * nor to give legal
, intgi-tittlfe eon to1/4 a na.ed owner;
b. Osufectp2 tinues a th nd for the rerhainingveriod of the usufruct;
alid • e*,'
c. UsUfructuaittas no obli p instruct a new building or to rebuild
(PARS P •petty, supra 316a
F. EASEMENTS
Q: What is an easemegtA
ANS: An easement or serMid is an encumbrance imposed upon an immovable for the
benefit of another immovable belonging to a different owner. The immovable in favor of
which the easement is established is called the dominant estate; that which is subject
thereto, •the servient estate (CIVIL CODE, Art. 613).Servitudes may also be established
for the benefit of a community or of one or more persons to whom the encumbered
estate does not belong (CIVIL CODE, Art. 614).
Q: What is the difference between easement and servitude?
ANS: The differences
•
are:
Easement • Servitude •
Refers to the right enjoyed by one Refers to the burden imposed upon
another
Active aspect of being a right Passive aspect of being an

encumbrance
-(RABUYA, Property (2017), p.502) [hereinafter RABOYA, Property].
481
Q: What are the characteristics of an easement?
ANS: The characteristics are: (RITI-ILAS)
1. It is a Real right but will affect third persons only when duly registered;
2. It is enjoyed over another Immovable, never on one's own property;
3. It involves Two neighboring estates (in case of real easements);
4. It is Inseparable from the estate to which it is attached, and, therefore, cannot
be alienated independently of the estate;
5. It is Indivisible; the division of the estate between two or more persons does
not modify the easement. The mere fact that the property was subdivided does
not extinguish the easement as per Article 618;
6. It is a right Limited by the needs of the dominant owner or estate, without
possession;
7. It cannot consist in the doing of an act unless the act is Accessory in relation
to a real easement; and
8. It is a limitation on the servient owner's rights of ownership for the benefit of
the dominant owner; and, therefore,Ats not presumed (DE LEON, Property,
supra at 465). 00"."'Pt" -.
U I V et
Q: How are easementsvolasstft g
ANS: Easements r"Sfbe
e. „
1. As to resiptentjf
a. ;R,W--1F r e ben ,fit or another immo4jef6hriging to- a different
A‘p war( v
b. Personal - F r the ben9fic5f,one or more perstildf a community.
2. As t tirce:
• --- 0 ,,... .
a. oVolu tary - onttit}ite-d irwitlaif agreeme t
1 1 . 1 parties or by a
or; or X •,,.. "L' --->..-
on ti uted bylawlio 'public • 44. Pri ate interest;
o ts‘Sit.o: 'e eo l easerip / are,
I ' Ovate er-SP 46 i.
. 48);
\ii. • ht o cod It§?649657);
0' pa _DE -(649- 57);
iv. ligh tnd Arts 667-673
v. dra4a eou rtsr674-676);
vi. .iiSefj iqte istaneesir 4. . E.,Ats. 677-681);
vii. agni stkidilance- ROL D ..„telfts. 682-683), and
viii. latera a. -bubja nfisupp:O(C-1VIL CODE, Arts. 684-687);
c. Mixed - Created pa -ragrEFinent and partly by law.
3. As to its exercise:
a. Continuous easements - Their use is incessant, or may be incessant,
without the intervention of any act of man; and
b. Discontinuous easements - They are used at intervals and depend
upon the acts of man (CIVIL CODE, Art. 615).
4. As to the indication of their existence:
a. Apparent easements - Those made known and continually kept in view
by external signs that reveal the use and enjoyment of the same; or
b. Non-apparent easements - They- show no external indication of their
existence (CIVIL CODE, Art. 615).
5. As to duty of the servient owner:
a. Positive - The owner of the servient estate is obliged to (a) allow
something to be done on his property or (b) to do it himself; or
b. Negative - The owner of the servient estate is prohibited to do
something which he could lawfully do were it not for the existence of
the easement (CIVIL CODE, Art 616).
482
•-•
6. According to the right given:

a. Right to partially use the servient estate;
b. Right to get specific materials or objects from the servient estate;
c. Right to participate in ownership; or
d. Right to impede or prevent the neighboring estate from performing a
specific act of ownership.
Q: What are the modes of acquiring easements?

ANS: Easements may be acquired:
1. If continuous and apparent - by title or by prescription;
2. If discontinuous and apparent - by title;
3. If continuous and non-apparent — by title; or
4. If discontinuous and non-apparent — by title (DE LEON, Property, supra at
476).
Note: The presumption is always against the existence of an easement for "property is
always presumed free from any and altAncumbrances" (RABUYA, Property, supra at
523).
'''•
Q: How does compulsory easertietftgakgalace?
ANS: Compulsory easement takatlifa94. V? FAT)
1. By Prescription of ten (10' eatgmr, 'ous and al erent easements):
a. Positive servitude - a zer xercise commences; or
b. NegativpOiltude - toured , _ from the ormaiVohibition to the servient
owneddrd9 any actoMbed to the servituipC/V/L CODE, Art. 621).
Therein:mot:be a notati2eadocument evident ng,the prohibition.
2. By Deed olOgni,tiontYCIV/L CrE, Art. 623);
3. By Eiri0judgmegklaL CODEA,rt. 623); {.
4. By 13parent pjgri4establishedipyre owner of estates, unless:
aprhae,AtcontraFy stipulag s; or
b. The sigq-is,teffacel .9IVI ODE,
5. By Titlek(Q/1//e00E, Attt. t20).
faizoiN
Q: Who is a dominantlpwneri'
r
ANS: He is the owner Of4thefiimovable in .V1-4) hich the easement is established.
Q: What are the rights:of the .,mtriinant owner?

1. To exercise all the- ghts necessary for the use of the easement (CIVIL CODE,
Art. 625);
2. To make on the servient estate all the works necessary for the use and
preservation of the servitude, provided that:
a. It must be at his own expense;
b. He must notify the servient owner,
c. At a convenient time and manner; and
d. He must not alter the easement nor render it more burdensome (CIVIL
3. To renounce the easement if he desires to exempt himself from contribution to
necessary expenses (CIVIL CODE, Art. 628, par. 1); and
4. To ask for mandatory injunction to' prevent impairment of his use of the
easement (Resolme v. Lazo, G.R. No. L-8654, March 30, 1914).
Q: What are the obligations of a dominant owner?

ANS: The obligations of a dominant owner are as follows:
1. Cannot alter the easement or render it more burdensome (CIVIL CODE, Art.
627, par. 1);
483
2. Notify the servient owner of works necessary for the use and preservation of
the servitude (CIVIL CODE, Art. 627, par. 2);
3. Choose the most convenient time and manner in making the necessary works
so as to cause the least convenience to the servient owner (CIVIL CODE, Art
627, par. 2); and
4. Contribute to the necessary expenses if there are several dominant estates
(CIVIL CODE, Art. 628, par.1).
Q: Who is a servient owner?

ANS: He is the owner of the immovable whose property is subject to easement for the
benefit of the dominant owner.
Q: What are the rights of a servient owner?

1. To retain ownership and possession of the servient estate;
2. To make use of the ease ent,-unless there is an agreement to the contrary;
and
.40 4 7
3. To change at hix era krmar heof
se, theltqce4_mariher (the
- easement provided it be
equally conveyire t (I ODE: Art, 291part, 21:
Q: What are the obi Aif ervidiiroWner2 NI

di-. "-,
ANS: The obligatels ; d ifo over le: TT )
1. Cannotrimp ie e of the easi gInent(C/VACODgyArt. 9, par. 1); and
2. Contribute to necessary emkilses in case he a easement, unless
1 Pa reeme o e con' ary C7VICCIODE, . 628, par. 2).
theresh-
T- ; 47W
,./-• i •
Q: How are e4seKid is extinguishe rdi
ANS: Easemegrsi.re xtingu ed by tifeleill•Wing:
1. Mergirto rtk-and s es
Z Non-us o t (1 .-4,rr
Note: Itspresu eose eril't sedbut
butlat
er later bandoned.
Either o both o e es ale,..._a oJi ondition that ttl e easement cannot
be used;
0`
Note: if th lica]Sirch,...gendergdyinpossible the use of the
easement, th ly-suspelia04p6sequent conditions shall
again permit the • st e eases} n. 14,6f owing situations, however, the
easement is not mealy uspendlebibut 'n 'shed:
a. If the circumstances i finalise the impossibility of use shall be
irreparable, in which case, the easement is absolutely extinguished.
b. If the circumstances which cause the impossibility of use are reparable,
the easement is likewise extinguished if the period of extinctive
prescription by non-user has already lapsed (RABUYA, Property, supra
at 534).
4. Expiration of the term or fulfillment of the resolutory condition;
5. Waiver by the dominant owner;
Note: the renunciation of the owner of the dominant estate must be specific,
clear and express. Hence, a tacit renunciation will not be sufficient (RABUYA,
Property, supra at 535);
6. Redemption agreed upon (CIVIL CODE, Art. 631).
Q: What are the other causes for extinguishment of easements?

ANS: Easements are also extinguished by the following:
1. Expropriation of the servient estate;
2. Permanent impossibility to make use of the easement;
484
3. Annulment, rescission, or cancellation of the title that constituted the
easement;
4. Abandonment of the servient estate;
5. Resolution of the right of the grantor to create the easement;
6. Registration of the servient estate as free; or
7. In the case of the legal easement of right of way, the opening of an adequate
outlet to the highway extinguishes the easement, if the servient owner makes
a demand for such extinguishment (PARAS, Property, supra at 681-682).
Q: What is a legal easement?

ANS: Legal easements are easements imposed or mandated by law and which have for
their object either public use or the interest of private persons, and thereby become a
continuing property right (Villanueva v. Velasco, G.R. No. 130845, November 27, 2000).
Q: What are the rules governing legal easements?

ANS: The governing rules for voluntary elements are as follows:
1. Public legal easements :.,tE4
a. Primarily, by the i.i.:0,00.1).ars and regulations relating thereto;
b. Civil Code appljW_ - ,:4tiVretorily, specifically Articles 634 to 687,
i„.
inclusive.
2. Private legal easements, ? ' .'' • : Val=1' ` . gi
a. Primarily, by agreerifefirofffi&interes "elt parti s;
b. Provisio:40 a
sqlgeneral local laws andain ces;
z
c. Civil %I:de, specificalitA. cles 634 to 687, i 4sive.
Note: The provisions' o he parti9016r w itself imposigg I hgg easement determine
whether the legal eseer cipublia or prate (DE LEON,PrrooeI y, supra at 500-501).
Q: What is a vguntary,,,ea'sement? ',

ANS: A volurtre,,9seriret,is orig ettabli0 ed by t(ipmt,vsier.4 la.45,ment or piece of
land. It must be, deemedlAble '5the dier, arid it %„ss.tpisfied in the manner
and form which' e rniy —,.
atm best., provrdi dd he does riotT6Tifeavene the laws, public
policy or public or ek CE •ODE, rt. 60.
Q: What are the rules ,:_)Aeraging the vo % sements?

ANS: The governing RP for vop: easerrienttrollows:
1. If created byIre,
tkv. the ti governs. The Civil Code applies suppletorily;
2. If created by pr Scrip on, the form and manner in which it had been acquired
(CIVIL CODE, A 62 . The Civil Code applies suppletorily; and
3. If created by prescription in a proper case, the way easement has been
possessed, that is, the manner and form of possession. The Civil Code applies
suppletorily (PARAS, Property, supra at 738).
Q: What are the different kinds of legal easements?

ANS: The law classifies legal easements according to their use or object into
1. Public legal easements or those for public or communal use;
2. Private legal easements or those for the interest of private persons or for
private use, which include those relating to:
a. Waters (CIVIL CODE, Arts. 637-648);
b. Right of way (CIVIL CODE, Arts. 649-657);
c. Party wall (CIVIL CODE, Arts. 658-666);
d. Light and view (CIVIL CODE, Arts. 667-673);
e. Drainage (CIVIL CODE, Arts. 674-676);
f. Intermediate distances (CIVIL CODE, Arts. 677-681);
g. Against nuisance (CIVIL CODE, Arts. 682-68); and
h. Lateral and subjacent support (CIVIL CODE, Arts. 684-687).
485
Q: What are the legal easements relating to waters?
ANS: The legal easements relating to waters are the following:
1. Natural drainage (CIVIL CODE, Art. 637);
Note: Art 637 has already been superseded by the following provision found in
P.D. No. 1067: "Article 50. Lower estates are obliged to receive the waters
which naturally and without the intervention of man flow from the higher
estates, as well as the stones or earth which they carry with them. The owner
of the lower estate cannot construct works which will impede this natural flow,
unless he provides an alternative method of drainage; neither can the owner of
the higher estate make works which will increase this natural flow."
2. Drainage of building (CIVIL CODE, Art. 674);
3. Easement of a dam (CIVIL CODE, Art. 639 and 647);
4. Easement on riparian banks for navigation, floatage, fishing, salvage, and
towpath (CIVIL CODE, Art. 638);
5. Easement of aqueduct (CIVIL CODE, Arts. 642-646);
6. Easement for drawing water,or.for.watering animals (CIVIL CODE, Arts. 640-
641); and 0. "` ri
_ t A
Note: In additioOkttw;,'Nquisitsprovicledi forander Art. 643, the Water Code
of the Philip0fe(m)ntlatelsthe-acqUipftion o nitater right from the National
Water Reso6rce ,-
.t 4;1/4
• 4 '
7. EasemenefolktO cons ructionfrttop4ock Or. qice gate (CIVIL CODE, Art.
647). ,k
Q: Who has o ove rain waterg.? ( P
ANS: Pursuan provis pins orPailihp-6(, rap wateis allinu on private lands
shall belong to the-St e. HoW,evehrflypeAorria&captures acollec& water by means
of cisterns, to sjoiolD ols shad havei4pIhivie.'41:introl fiver suc )wat4rind he shall also
have the right cfiisn se same. 'Biefo—ner of APtid here tie rain waters fall
may use the spoeie n i. securing a permiti .4he Nationdlaohater Resources
Council but onl fof o qhsegin aner Of, building does not
intend to collect rain ate 4611ing t eleof,on*Geri of his building, he has the
obligation to conitruct rhrstlijding n suchilanner that the rain
waters shall fall on s own'1%.id r„*., r—
p Oublic pl ce, andot on the land of his
neighbor, even thoug the acrbeentla a}r-, 6nTtd o dmore persons, one of
whom is the owner o ,1/44''even.if.its"gifoul
/-7 6 i fa is own land, he is also
obligated to collect the wateuntsdch a wW,kh 'AiW1 use damage to the adjacent
land or tenement (RABUYA, Propks .210,1
t#
Q: What is the easement of right of way?

ANS: This is the easement or privilege by which one person or a particular class of
persons is allowed to pass over another's land, usually through a particular path or line
(Ballard v. Titus, 157 Cal. 673 [Cal. 1910]).
Q: What does the term "right of way" refer to?

ANS: It refers to the easement itself, or simply, to the strip of land, over which passage
can be done (Anderson.v. Wilson (1920), 48 Cal. App. 289, 293 [191.P 1016]).
Q: What are the requisites for the easement of right of way?

ANS: The requisites are: (SOILAO)
1. The property is Surrounded by the estates of others (Vda. De Baltazar v. Court
of Appeals, G.R. No. 106082, June 27, 1995);
2. There is no adequate Outlet to a public highway (CIVIL CODE, Art. 649);
3. There must be payment of proper indemnity (CIVIL CODE, Art. 655);
4. It must be established at the point Least prejudicial to the servient estate
486
•,`•.*:,
Note: Where there are several tenements surrounding the dominant estate,
and the easement may be established on any of them, the one where the way
is shortest and will cause the least damage should be chosen (Spouses Sta.
Maria v. Court of Appeals, G.R. No. 127549, January 28, 1998).
5. The isolation must not be due to the proprietor's own Acts (CIVIL CODE, Art.
650); and
6. Demandable only by the Owner or one with a real right like a usufructuary (4
MANRESA, p. 739).
Q: Who may demand for the compulsory right of way?
ANS: Under Article 649 of the Civil Code, it is the owner, or any person who by virtue of
a real right may cultivate or use any immovable surrounded by other immovable
pertaining to other persons, who is entitled to demand a right of way through the
neighboring estates.
Note: The burden of proving the requisites lies on the owner of the dominant estate. If
an outlet already exists, which is a path alk located at the left side of the property of
the dominant estate and which is conned( to a private road, the dominant estate is not
entitled to an easement of right 4A:0 ecially if it is sufficient for the needs of the
dominant (Cristobal v. Court of ApPOIAT No. 125339, June 2Z 1998).
AmIr
Q: How is right of way extinguispel er
ANS: If the right of way is noddnApecesganAlacota owner of the dominant
estate has joined it to another abuttirg/otra public highwayend such public highway
substantially meets theaileeds of the do ant estate, the mitt er of the servient estate
may demand for the rgivsg of his eirdre.Arom the servituqe returning what he may
have received by wayJ. .IfinClernr4ty Wirhou terest (CIVIL. CODE, rt. 655).
Note: However, thafilie 4e 41 ,guishment f the right ofipaylin e foregoing manner
does not take491dce ip_soitjure7Thewpwra. of the servient estatemust ask for the
release of hikgate filk.the servitu8e n the return of tile indemnity he received
VA! t
(RABUYA, PNerttsupra acr550h4.
44-
Q: What is easafig% o t?
ANS: It refers to rig4t: o light from t e neighboring estate by virtue of the opening
of a window or the ma certain ope t.g —n eur.ose is to admit light and little air,
but no view (PARAS, Pto su •ra,ptgf̀' 5 ,44
Q: What is easement o
ANS: It refers to the rig ke openings or windows, to enjoy the view through the
estate of another and the 'power to prevent all constructions or work which would
obstruct such view or make the same difficult. It necessarily includes easement of light
Q: Suppose that an easement of light and view has been acquired, what is the
distance which must be observed by the owner of the servient estate if he desires
to construct a house on his own property?
ANS: The construction must be at least 3 meters away from the boundary line between
the two estates (CIVIL CODE, Art. 673).
Q: How shall the period of prescription for the acquisition of an easement of light
and view be counted?
ANS: The period of prescription for the acquisition of an easement of light and view
shall .be counted:
1. From the time of the opening of the window, if it is through a party wall; or
2. From the time of the formal prohibition upon the proprietor of the adjoining land
or tenement, if the window is through a wall on the dominant estate (CIVIL
CODE M. 668).
487
•
Q: What are the rules for regular windows?

ANS: The following are the rules for regular windows:
1. For windows having direct views (face to face), at least 2 meters distance must
be observed between the wall having the windows and the boundary line;
2. For windows having side or oblique views, at least 60 cm between the
boundary line and the nearest edge of the window must be observed.
Note: Non-observance of these distances does not give rise to prescription.
G. NUISANCE
Q: What is a nuisance?
ANS: It is an act, omission, establishment, business, condition of property, or anything
else which: (HOSIA)
1. Hinders or impairs the use of property;
2. Obstructs or interferes with the free passage of any public highway or street,
or any body of water;
3. Shocks, defies or disre ards'tlfe -63-Jr- orality;
4. Injures or endangers p healthor afe.440f her,s• or
5. Annoys or offends-the fksesir/ CODS,
;
t 4\ .
Q: What are the cla iisUc9tio s o_utsance
m foN).
ANS: Nuisance magy,„be ciVgified'Fs folio • \s• .0', 4/,
-
1. Old elai ifatjon:
.4, x
a. uisa a per' se — always- nuisance; and
b. Nulsp ce pe?.accklens4:a -ituisance-ohly
.
n\
be ause- 1 the location and
rothlircumstanc„91.-- -
4 e- •
2. New lassi cationk
a. co din orrelief:
H
A ea eit-o
ii~ No 81 a able•
b. ccor tag t er e
pose as Irby cr' ctions;
Thb e tOpi .o y- ctions;
Thos bf-t ate40101
c. iv. Thisirpatalt FExtraiudici
According oA jvil CNC
i. PLO orfimon) ff .bt ,a q unity or neighborhood or any
considera le,nuagrAtpettons; or
ii. Private — that which is not public (CIVIL CODE, Art. 695).
Q: What is the difference between a nuisance and negligence?

ANS: A person who creates or maintains a nuisance is liable for the resulting injury to
others regardless of the degree of care or skill exercised to avoid such injury while the
liability for negligence is based on want of a proper care (DE LEON, Property, supra at
562).
Q: What is the doctrine of Attractive Nuisance?

ANS: An attractive nuisance is a dangerous instrumentality or appliance which is likely
to attract children at play.
Note: One who maintains on his estate or premises an attractive nuisance without
exercising due care to prevent children from playing therewith or resorting tMreto, is
liable to a child of tender years who is technically a trespasser in the premises (Jarco
Marketing Corp. v. Court of Appeals, G.R. No. 129792, December 21, 1999; Hidalgo
Enterprises Inc., v. Balandan, G.R. No. L-3422, June 13, 1952).
488
• Q: What are the remedies against public nuisance?
ANS: The remedies are:
1. Prosecution under the RPC or local ordinance;
2. Civil Action; and
3. Extrajudicial abatement (CIVIL CODE, Art. 699).
Q: What are the remedies against private nuisance?

ANS: The remedies are:
1. Civil Action; and
2. Extrajudicial Abatement (CIVIL CODE, Art. 705).
Q: Does the action to abate a public or private nuisance prescribe?

ANS: No. The action to abate a public/private nuisance is NOT extinguished by
prescription (CIVIL CODE, Art.1143, par. 2).
Q: Who may abate a nuisance? ,,,,

411,
ANS: Under Article 700 of the New. CNII,•Qode, it is the City and/or the Municipal Health
Officer, or in cases of illegal conSt*tidjuthe City and/or Municipal Engineer, who is
charged with the responsibility of §bitirial:Sic nuisances (RABUYA, Property, supra at
,,.A..L1
590). WO§
Note:- A private person may 1115ewlelegasegmblic nuisance which is especially
injurious to him by removing,.opif necWspiciht bPelebtVylnk:e thing which constitutes
the same, without committied
„......m,, breacNithe peace, or crOing.unnecessary injury. This
rule, however, applies&ily:to nuisanpAr se. i.
'F*,,4
VI 1
Q: To abate a pul*c,ncaw'oe,wha'must a pale erson do prior to the
ga,,,,
abatement? Aigr.,..
‘
ANS: Prior tell abate ent of a ptiblIc rt`"sauce by a rive e person, it is necessary:
(DRAV) r407 , i
1. That Demand be rst rri e updn he own htir d5essbf;of the property to
abate ttl eoutql - '00-
2. That suc c orridn& :% as bedn Rej
3. That the abatements e Approv district health officer and executed
r .,
with the assistance: of the local po,,cej-:an ._/,,
mt
'4. That the Valgrof thVg§frrectilai85MtMaeed three thousand pesos
(P3,000).
Note: The same procee u't, eall be applied in case of extrajudicial abatement of a
private nuisance by any peTraffinjured by the same (RABUYA, Property, supra at 590-
591).
H. MODES OF ACQUIRING OWNERSHIP

Q: What is a mode?
ANS: A mode is the actual process of acquisition or transfer of ownership over a thing in
question. This is the proximate cause of the acquisition (Acap v. Court of Appeals, G.R.
No. 118114, December 7, 1995).
Q: What is a title?
ANS: A title is the juridical justification for the acquisition or a transfer of ownership or
other real right. This is the remote cause of the acquisition (Acap v. Court of Appeals,
G.R. No. 118114, December 7, 1995.).
Q: What are the modes of acquiring ownership and other real rights?
ANS: The following are the modes of acquiring ownership and other real rights:
1. Original (01P)
a. Occupation;
489
b. Intellectual creation;
c. Prescription.
2. Derivative (LIDS)
a. Law;
b. In consequence of certain contracts, tradition (CIVIL CODE, Art. 712;
PARAS, Property, supra at 774).
c. Donation;
d. Testate and intestate Succession.
Q: What is the difference of an original mode from a derivative mode of acquiring

ownership and other real rights?
ANS: Original Modes pertain to those independent of any pre-existing right of another
person, while Derivative Modes are those based on a pre-existing right held by another
person (DE LEON, Property, supra at 596).
Q: What are the requisites of occupationas,a mode of acquiring ownership?

ANS: The requisites are:(SC3NIL:r
1. There must be Seizure a thing 7
2. The thing seiz6rd us .e.,,torporea464?;.al property;
3. The thing mtit be pub Ptible of Appropriationty jtiatpr,p;
4. The thing thus 6 . itiputsn'tTrrer,'-'--.-,„...„ 2, '
S. There _aP iopqate; an•
InpntionN 1
6. Requi by Law rffist•zlie corn lied with (DE LEON, Property,
supra A. ,s
\CII ‘
Q: What propg res ay be icq6iF,cip. I cc-A:I:aeon
II
ANS: The folld'win kinds of prop6f.tyi.fi Fjpitable by ccupattob.
1. Thositho like -41g/that arp bj t of h ting and fishing;
Notell;r9vi y eitid: uringf ebpe nokol sed seasons, the
catchiWs pe ar7ntlu s lik expldstves, and that they
have not been ug rieWat eb o dy else (PARAS, Property,
supra aX84-78S).
2. Hidden tr psure (bIAL COD
3. Abandoned ovablers
Note: A thing corns ep -abandon w.116A.",
a. Spes rec pera expetkaKoka'r , ei
,c,ovp is gone; and
b. Animo never èn intenbeiWilyinfor have it returned) has been
given up by the owner PA'Rroperty, supra at 789).
Q: What is a donation?
ANS: An act of liberality whereby a person disposes gratuitously of a thing or right in
favor of another who accepts it (CIVIL CODE, Art. 725). When a person gives to another
a thing or right on account of the latter's merits or of services rendered by him to the
donor, provided they do not constitute a demandable debt, or when the gift imposes
upon the donee a burden which is less than the value of the thing given, there is also a
donation (CIVIL CODE, Art. 726).
Q: What are the essential elements of a donation?

ANS: The essential elements of donation are as follows:
1. The essential reduction of the patrimony of the donor;
2. The increase in the patrimony of the donee; and
3. The intent to do an act of liberality or animus donandi (RABUYA, Property,
supra at 625).
490
Q: What are the classifications of donations?
ANS: Donations may be classified as follows:
1. From the viewpoint of motive, purpose, or cause:
a. Simple — the cause is pure liberality;
b. Remuneratory for past services;
c. Remuneratory for future services; and
d. Onerous.
2. From the viewpoint of taking effect:
a. Inter vivos;
b. In praesentito be delivered in future; and
c. Mortis causa.
3. From the viewpoint of occasion:
sa. Ordinary donation; and
' b. Donation propter nuptias.
4. From the viewpoint of object donated:
a. Corporeal property:
i. Donations of real property; and
ii. Donations of 0001 property.. .
b. Incorporeal propertY . -'don9tions of alienable rights (PARAS, Property,
supra at 877 - 879). 4tief
Q: What are the distinctions between MOndtralfrinteroiiiiY..as and donation mortis

causa? 41-
ANS: The following arg;tfi6 distinctions:
ar • raffia
Inter Vivos I Mortis Cause
• As to effect
Takes effikuringth Afetime of ihe
donor Vitr Y„igz,„
,a044,
As to formalities
.
Must follow the formalibes,of donations.2ig follow the formalities of wills or
WPM
As to, revocation ••.
Cannot be revoked eaten grounds Can be revoked any time and for any
provided for by law reason while the donor is still alive
As to preference in case of impairment of

Donations inter vivos are preferred to Donations mortis causa are reduced
donations mortis causa ahead of donations inter vivos, the latter
being preferred
As to transfer of ri ght of disposition :
Right of disposition is completely Right of disposition is not transferred to
transferred to the done - the done while the donor is still alive
•• • to-time of acceptance
Acceptance by donee must be during Acceptance by done mortis causa can
lifetime of donor only be done after the donor's death
(PARAS, Property, supra at 882— 883)
491
Q: When must acceptance be made?
ANS: Acceptance must be made during the lifetime of the donor and of the done (CIVIL
CODE, Art. 746).
Q: To what extent may a donor donate property?

ANS: Donation may comprehend all the present property of the donor, provided:
1. If the donor has forced heirs: he cannot give or receive by donation more than
what he can give or receive by will (CIVIL CODE, Art. 752); and
2. If the donor has no forced heirs: donation may include all present property
provided he reserves in full ownership or in usufruct, sufficient means for the
support of himself and all relatives entitled by law to be supported by him
Note: Donations cannot comprehend future property (CIVIL CODE, Art. 751).
Q: When is a donation perfected?

ANS: A donation is perfected fromitie,:moment the donor knows of the acceptance by
the donee. The acceptance ri14'be madg'dykinOlhejifetinne of the donor and of the
done (CIVIL CODE, Art. 746f N /NJ
F4 '
Note: In case of donatiohlptec y/vds,acceptanc&takes "flea during the lifetime of the
donor and the donerin cAelokraation mortis caus,4; acceptance is made only after
the donor's death,be&ti et trey, p a rt a RF re will a t €')'governed by the rules on
succession (CIVIlietiD Art4728). \
--Svi \•
Q: Is acceptans e indiv pens?ble? (.IA
ANS: Yes. Acce61,Wrice is indispensabTe nciboily is obliged receive a benefit
against his ql:T ° I donee. mIlii'rItde. t.::tevelonation pelf-sonar, or through an
authorized perpvIt a special polivdrif9t, Ourpos or with a-gefl ral and sufficient
power; otheniviFilie, one \hall betii'd*V/L C r rt. 145). I .
Note: The rationple-lhhin eVquiremeit o.f.caccep isiffiaknbBody is obliged to
receive a beneet'againsl his it \ F'.1 ,kx 4;3? ' sy
ik -d-, .:_D
i, ._1/ -
Q: What are the formalities b§e ed orfati ns or immo able and movable
properties? \, .,,.1/45Z-1
-------
.E1, (11L,
N, )
ANS: The following ar the fprrna grest`
1. Movables: -t' 0 ,
a. If donate n.< oral, sir illta iiiiis\:4514\ :1ev ry of property donated is
required if the...volt.titflStroleSs. Acceptance may be oral or
written;
b. If donation is in writing, simultaneous delivery of property donated is
NOT required regardless of value. Acceptance may be oral or written;
or
c. If the value exceeds P5,000 the donation and acceptance must be in
writing. Simultaneous delivery of property donated is not required
2. Immovables:
a. Must be in a public instrument specifying the property donated and the
burdens assumed by donee, regardless of value;
b. Acceptance must be either:
i. In the same instrument; or
ii. In another public instrument, notified to the donor in authentic
form, and in both deeds (CIVIL CODE, Art. 749).
Q: What are the qualifications of a donor?

ANS: The donor must have both the capacity to contract and to dispose (CIVIL CODE,
Art. 735).
492
1"tiVg!'NP-1 17-1
:71:-1.3.11
Q: Can donation be made between spouses during the marriage?

ANS: No. Under Article 87 of the Family Code, every donation between spouses during
the marriage shall be void except moderate gifts on the occasion of family rejoicing. The
prohibition applies also to persons living together as husband and wife without a valid
marriage, or in illicit relation. Under the Corporation Code, every corporation has the
power and capacity, inter alia, to make reasonable donations, including those for the
public welfare or for hospital, charitable, cultural, scientific, civic, or similar purposes.
However, it cannot give donations in aid of any political party or candidate or for
purposes of partisan political activity (REVISED CORPORATION CODE, Sec. 35 (0).
Q: May guardians and trustees alienate property entrusted to them?
ANS: No. As a general rule, guardians and trustees cannot alienate property entrusted
to them except in cases of simple donation, but not where the donation is onerous, and
is beneficial to the beneficiary (Araneta v. Perez, G.R No. L-18872, July 15, 1966).
Q: When are trustees permitted to donat,e the properties subject of trust?
ANS: Trustees who have repudiatedAhlytrust and have acquired the properties by
prescription are allowed to donate sid.prdperties (PARAS, Property, supra at 900).
Q: When is the donor's capacityr:•fcilltmafgdetermined?
ANS: Donors capacity shall be deterMtheaids of the time of the making of the donation
tpe,,
(CIVIL CODE, Art. 737). 1:•A 4-F
Q: Does the subsequent incapacity f the donor a dct the validity of the
donation? q'A
ANS: The subsequentJocapacitypf the dqmor does not affect the validity of the donation
(CIVIL CODE, Art. 7.40,fin feratia to Art. gg1).
41g1P rkim
Q: What areftqualiticgons of a "donee?
ANS: All thoseafiho,prektitspecially disqUalified by.tavattkdrefor..ma occept donations
(CIVIL CODE,Irt. 738),'. ..4% *i tP
Q: May donation g
%k
s • ,APW
.,vtriiadeAo inca acitated persons?
ANS: Yes. Donations may belvade to inc/acitated persons such as:
1. Minors, and otliers.who canner n e ,lea-tact, but acceptance shall be
done througtf-reeir parents' rep eseatairas (CIVIL CODE, Art. 741);
and
2. Conceived arialunbo children, acceptance of which may be made by those
persons who wail dgally represent them if they were already born (CIVIL
CODE, Art. 742).
Q: Who are the disqualified donees?
•• ANS: The following are disqualified donees: (ASPU)
1. Those persons who were found guilty of Adultery or concubinage at the time of
the donation, in so far as they donate to each other;
2. Those persons found guilty of the Same criminal offense, in consideration
thereof;
3. A Public officer or his wife, descendant and ascendants, when donation is
made by reason of his office (CIVIL CODE, Art. 739); and
4. Donees who were found Unworthy under Art. 740, in relation to Arts. 1032 and
1027, except par. 4 of Art. 1027.
Q: What are the. effects of a donation?
ANS: The effects of a donation are as follows:
1. When the donation is made to several donees jointly, they are entitled to equal
portions, without accretion, unless the donor has otherwise provided (CIVIL
CODE, Art. 753);
493
2. Donee may demand the delivery of the thing donated; and
3. Donee is subrogated to all the rights and actions which in case of eviction
would pertain to the donor (CIVIL CODE, Art. 754).
Q: When does a donor's warranty exist?

ANS: A donor's warranty exists if: (EPOB)
1. Expressed;
2. Donation is Propter nuptias;
Note: In donations propter nuptias, the donor must release the property from
encumbrances, except servitudes.
3. Donation is Onerous, thus if simple or remunerative, the donor is not liable for
eviction or hidden defects; and
4. Donor is in Bad faith (CIVIL CODE, Art. 754).
Q: What are the rules when a donee is made responsible for the payment of debts
of the donor?
ANS: When the donation imposes-upKihe,dae-e,the obligation to pay the debts of the
donor, the following rules shall apply
i unless is ckiti-aryihteption clearly appears:
. 1. The donee is,m0erstockh.to bklippre to pey bnik.the debts which appear to
have been peevio4V<Ontre'cled; A
2. The liablW ofthe doriee isJimitedq)nlylp, th6Nalt.ido . f the property donated.
may
On the other hanAintie;,&bsdnce orany*irifOlion r egardigd'ine payment of the debts
of the donor, the'donet7f4hall .f)e resptinsOie theitfore only when theldonation has been
made in fraud Ot,creg.it„ rs (R4BUYA,_P.ropiiik,. supra.ab692).
I " I
Q: What is thq ruldbui doublie dOlnitiohol
ANS: The rulbs off boubletles 'gt4i1c;applY."If ther,,same OTT hould have been
donated to ditterent-donees" e_ommeraiip_thalLbe_tlaVi'si?rre ,to the person who may
have first take;pgessiorOhereof good pith ittity'sholilrbi
i ovable property
(PARAS, Propel,supla ae9,03)1\-1 /
4
Q: When is a donee responsible t e, a ;pent f deb of thidonor?
\
ANS: There being\o stipt.ilatiokr&AYA,0411)aYmerif of debts', the donee shall be

responsible therefor only whdnthe-atinatial-hab beer mtle,i raud of creditors (CIVIL
CODE, Art. 759). lc) -a"
S0.1
When is a donation presu td.,.to be in- ra Fcreditors?
ANS: The donation is always prestirnerto e in fraud of creditors, when at the time
thereof the donor did not reserve sufficient property to pay his debts prior to the
donation (CIVIL CODE, Art. 759).
Q: What are the instances of void donations?

ANS: Instances of void donations are: (ACPP-ReWAP-Not-DP)
1. Those made by persons guilty of Adultery or concubinage at the time of
donation;
2. Those made between persons found guilty of the same Criminal offense in
consideration thereof;
3. Those made to a Public officer or his/her spouse, descendants or ascendants
in consideration of his/her office;
4. Those made to the Priest who heard the confession of the donor during the
latter's last illness, or the minister of the gospel who extended spiritual aid to
him during the same period;
5. Those made to the Relatives of such priest, etc. within the 4th degree, or to
the church to which such priest belongs;
6. Those made by a Ward to the guardian before the approval of accounts;
494
•
7. Those made to an Attesting witness to the execution of donation, if there is

any, or to the spouse, parents, or children, or anyone claiming under them;
8. Those made to a Physician, surgeon, nurse, health officer or druggist who took
care of the donor during his/her last illness;
9. Those made by individuals, associations or corporations Not permitted by law
to make donations; and
10. Those made by spouses to each other During the marriage or to persons of
whom the other spouse is a Presumptive heir (CIVIL CODE, Arts. 739-740,
1027).
Q: What are the distinctions between revocation and reduction of donation?
Revocation Reduction
• • As to extent
It is TOTAL as it affects the whoI4, This is only PARTIAL and applies only
property) regardless of whether . th0,', when the legitime has been impaired.
legitime has been impaired or not:' Thus, the legitime must always be
• • le 4
iiAs:,‘ fat
preserved.
As to benefit
t.141%.1EWM4ratt.-....ms:
For the benefit of the donop,and forthe) For thblberiefitkif the heirs of the donor,
benefit of the heirs of;t4118nor. since their legit . es are supposed to be
4. preserved.
1).%. - • • -
(PARAS, Properly, supra ae960, 961)
.
Q: What is theltasonjpereductioti* re ocation?
ANS: The laggesmeitiat had the do or known,4etweg e;9 rwould adopt) a
child or that fitchild he tItokht
-11441,
Alglea as really dity,11 have made the
donation (or at least he wo Id haveirnade, smaller one ,-• eca se then his own child
would have been Melt blect\of his affectict 'and generosity (PARAS, Property, supra at
961).
V-13 4-
Q: What are the grouw.js for rematiofi,ordonatiOnIVIS
ANS: The grounds for cleyocatioMf donation are: (BIN)
1. Birth, appearaV4,4doption of a child (CIVIL CODE, Art. 760);
2. Ingratitude of the4hte (CIVIL CODE, Art. 765); and
3. Non-fulfillment of a resolutory condition (CIVIL CODE, Art. 764).
Q: What are the instances when donations may be revoked or reduced in case of
birth, appearance, or adoption of a child?
ANS: Every donation inter vivos, made by a person having no children or descendants,
legitimate or legitimated by subsequent marriage, or illegitimate, may be revoked or
reduced by happening of any of these events: (LAD)
1. If the donor, after the donation, should have Legitimate or legitimated or
illegitimate children, even though they be posthumous;
2. If the donor should subsequently Adopt a minor; and
3. If the child of the donor, whom the latter believed to be Dead when he made
the donation, should turn out to be living (CIVIL CODE, Art. 760).
Q: Does the revocation of a donation due to birth, appearance or adoption of a

child apply to all donations?
ANS: No. It only applies to all donations inter vivos. It does not apply to donation mortis
causa, onerous donations, and donations propter nuptias (DE LEON, Property, supra at
676).
495
( ,. z. ,r,::;,i:,:::::::::,!::::::;:y.xi,e.ziz*;e qnt;o:-t.-4-gp4.
i,
Q: When
When does the revocation of a donation due to the birth, appearance or
adoption of a child apply?
ANS: When the donor, at the time he made the donation, did not have any child or
descendant or erroneously thought he had none (DE LEON, Property, supra at 676-
677).
Q: What if the donor already had a child at the time he made the donation?
ANS: If the donor had at least one (1) child already at the time he made the donation,
the following rules shall apply:
1. No person may give or receive, by way of donation, more than he may give or
receive by will. The donation shall be inofficious in all that it may exceed this
limitation (CIVIL CODE, Art. 752); and
2. Donations which are inofficious, bearing in mind the estimated net value of the
donor's property at the time of his death, shall be reduced with regard to the
excess; but this reduction shall not prevent the donations from taking effect
during the life of the donos,„norshalt,Abar the donee from appropriating the
fruits (CIVIL CODE, ifire771). "
— )
Q: What are the effects" urion.revation?-.., .•
ANS: The property affect,(PsWallAbe returned or A-V*6 if thkelonee has sold the same
or the donor maylfectegiiieli portgaglarthe->proP'e right to recover the
property (CIVIL CODEpArtr762). -,
y
Q: When is the donee obliged to return the fruits?
ANS: The donee-101d obliggd to reffrittielluils—
i iihen the danation (p revoked for any
of the causes n ArticiF 7601.,..6r4,:reakfiV6f ingratituder8r.plien it is reduced
because it is inofficious except fi:Okke,.,.j(litig of ithe complaint. However, if the
revocation is basdd4 OpoR n, compliapoeleth any ,o 414, conditions imposed in the
donation, the cri?neriA oblige'd returp2nOtionty thelp oqertyPitFalgd the fruits thereof
which he may haVe ive avtit (CIVIL CODE, Art.
768). fir •
Q: When is a donation revoted1/4114easornicff03atitu e?
ANS: The donation may be rplibked'whataeldoneescfmrp th following acts:
1. If the doneeN4otilc9oRrnit-some-ofrens,vg_a 400- .4
nafrrile person, the honor or
property of the dollar,(3/54 his vlitifelOtIcThMen Tinder his parental authority;
2. He imputes to the do offege, or any act involving moral
turpitude, even though he 17691-615r157eit, unless the crime or the act has been
committed against the donee himself, his wife or children under his authority;
and
3. He unduly refuses him support when the donee is legally or morally bound to
give support to the donor (CIVIL CODE, Art. 765).
Q: What happens to the alienations and mortgages when the donation is revoked
by reason of ingratitude?
ANS: Although the donation is revoked on account of ingratitude, nevertheless, the
alienations and mortgages effected before the notation of the complaint for revocation in
the Registry of Property shall subsist. Later ones shall be void (CIVIL CODE, Art. 766).
Q: For alienations and mortgages effected before notation of the complaint, what
may the donor demand from the donee?
ANS: The donor has the right to demand from the donee the value of the property
alienated which.he cannot recover from third persons; or the sum for which the same
has been mortgaged (CIVIL CODE, Art. 767).
496
t
Q: What are the effects of the revocation of a donation?

1. The donee shall not return the fruits except from the filing of the complaint,
when the donation is revoked under the following grounds:
a. For any of the causes stated in Article 760;
b. By reason of ingratitude; and •
c. When it is reduced because it is inofficious.
2. The donee shall return not only the property but also the fruits thereof which
he may have received after having failed to fulfill the conditions imposed in the
donation, if the revocation is based upon noncompliance therewith (CIVIL
CODE, Art. 768).
Q: May the action granted to the donor by reason of ingratitude be renounced in
advance?
ANS: No. The action granted to the donor by reason of ingratitude CANNOT be
renounced in advance (CIVIL CODE, Art.i69).
Note: The right of action by reason .qtfifigYatitude is not transmitted to the heirs of the
donor nor can the action be filed •aigOdtfied,heirs of the donee (CIVIL CODE, Art. 770).
WAle
•OWASr
Q: When does the action for reliOdabf, scribe? •'
ANS: The prescriptive period for the o e. cation is a&follows:
'' Grounds for Prescriptive period and transferability to file an

. revocation action .
IN,
Birth, appearance, otr i3 , The "'act° for revocatio u%
l, . 41., der; this ground shall
adoption of a child f ' Pk.prescribeafter 4 years fro
Pi 44,,,Hr
t? 1. The~.birtl the first ch' d;
'4! 454,
2.,...His legit' ation, recognitionbon;
4,'--- 7
1. 1 d'" declara3.'The judi
1,,, • -' 4. ITO ti g information r.eceived regarding the
.o.'
1 exptence of the child believed dead (CIVIL CODE,
Art. 763j
ik oi LI.Note: The L it-of, ctio is transmitted to children and
?' descend nt:slireagixt_713-on his death (CIVIL CODE,
A,A.----.-
ra
e wo 763).
vi:Naki ,2,4,
Non-fulfillment of 7.%:'17he action for revocation under this ground shall
resolutory condition prescribe after 4 years from the non-compliance with
the condition.
Note: The right of action may be transmitted to the
_ - _ heirs of the donor, and may be exercised against the
donee's heirs.
Ingratitude of the donee This action prescribes within 1 year, to be counted from
the time the donor had knowledge of the fact and it was
possible for him to bring the action (CIVIL CODE, Art.
769).
Note: This action shall not be transmitted to the heirs of
the donor, if the latter did not institute the same,
although he could have done so and even if he should
die before the expiration of one year (CIVIL CODE,
Arts. 763-769).
497
Q: What are the grounds for the reduction of donations?
ANS: The following are the grounds for reduction of donations: (BWSDF)
1. Birth, adoption, reappearance (CIVIL CODE, Art. 760);
2. Inofficiousness for what a donor can give by Will (CIVIL CODE, Art. 771);
3. If insufficient property is left for Support of donor and his relatives (CIVIL
CODE, Art. 750);
4. Inofficiousness when a person gives or receives by way of Donation, more
than he may give or received by will (CIVIL CODE, Art. 752); and
5. If made in Fraud of creditors (CIVIL CODE, Art. 1387; PARAS, Property, supra
at 908).
Q: What are the rules observed in reduction of donations?
ANS: The following are the rules observed in reduction of donation:
Birth,
Insufficient In fraud'of
reappearande, Inofficiousness
property creditors
adoption
As to prescription
The action may ,,t1The.;acticro-must be -The, action rtiay, The action for
be brought at, .elkoug,Ot/ within,..-5 be biougte rescission must
any time by thi..: ,y,edri' afte? The death any' time'by the. be brought within
donor or by t . e4,/, ,,,p he Idonor.:•(C/p, .donor or V years from the
relatives entit, ed 'CODE!' Arts. 771 and r- elative's entitled :.perfection of the
to sup Ort-., 149).1-The• donatiOb to- suppolt.1 "dOnation, or the
during the a takes i effect, during during r the- laiest, from the
lifetime of the A the lifetime of the lifietimel of the Arlie the creditor
donor Ritet( 1 doporif‘ subjecC .:103. donor had knowledge of
CODE, \t,
Art.„,,: %redustOronly- *m i.-, CODA., Art a ,,thp, donation
750). i his ,4.th.:witli re:Oidi, 7 9)'•/: 1 "..(CI VIL CODE,
fot the' :e.X04s.. (OW • • 4, i'lt.•1389).
. k CO DE, Ait..,..,7Z1), i .....,.
As.to transferability of action
•Nt, ,,00"
The action is not The c%action is ,."Fha
-
eactidft''
)). The action is
transmissible as transmitted'to 'the no \
transm
transmitted' transmitted to the
the duty to give donors,eirs. :101
. Air
-.01ssible as creditor's heirs or
support and the duty to give successors - in-
right to receive support and the interest (CIVIL
is personal in right to receive CODE, Art.
nature (FAMILY are personal in 1178).
CODE, Art. nature (FAMILY
195). CODE, Art. 195)
As to effect of reduction •
The donation is The donation shall The donation is Property affected
reduced to the be reduced as reduced to the shall be returned
extent necessary regards the excess extent by the done for
to provide at the time of the necessary to the benefit of the
support (CIVIL donor's death provide support creditor subject to
CODE, Art. 750). (CIVIL CODE, Art. (CIVIL CODE, the rights of
771). Art 750). innocent third
persons (CIVIL
CODE, Art.
1387).
498
As to fruits
The donee, as The donee is The donee is The fruits of the
owner, entitled to the fruits entitled to the property shall
appropriates the as the owner of the fruits as the also be returned
fruits of the property donated owner of the (CIVIL CODE,
property not (CIVIL CODE, Art. property Art. 1387). In
affected by the 441). donated (CIVIL case the donee
reduction (CIVIL CODE, Art. acted in bad faith
CODE, Art. 441) 441). and it should be
but with regard to impossible for him
the excess, he to return the
shall be liable property affected
only for the fruits due to any cause,
accruing from the he shall indemnify
filing of the the donor's
complaint (CIVIL creditor for
CODE, Art. 768, damages suffered
par. 1). by the latter
(CIVIL CODE,
Art. 1388, par. 1).
:af
Q: What is prescriptiopp „..,,, ,14
ANS: It is a means wli0Te one acquireOpvrership and otheffregkrights, and loses rights
and actions, through tli4la6te
_AS14b
of:tim'6 in tffe manner and u 'del the conditions laid down
17ra,,w
by law (CIVIL CODEirArt. ft,..06). ‘,
• '06 ' iy• ,' ow
Q: What are 4.4stics. of acts
h.e.tchara-
: wi we prescription
.ANS: The.cheatientigsfargi 14
• 1. -A derivative lide%,
2. Vests oOri'gr:slyfiblpther tile! rig s in the occupant;
3. Possessior.1,is its fundamental b is which must be:
a. In the•4•onceat of owner;
b. Public
c. Peace j; and
d. Unihte pteda
4. Based on:
a. Economic necessity Otherwise property rights would remain unstable);
b. Presumed abandonment or waiver; and
c. Public policy.
5. Of purely statutory origin;
6. Relationship between the occupant and the land in terms of possession is
capable of producing legal consequences; it is the possessor who is the actor;
7. Applicable to ownership and other real rights;
8. Results in the acquisition of ownership or other real rights in a person as well
as the loss of said ownership or real rights in another; and
9. Can be proven under the general issue without its being affirmatively pleaded.
Q: What is ordinary prescription?

ANS: It is a kind of prescription which requires possession of things in good faith and
with just title for the time fixed by law (CIVIL CODE, Art. 1117).
Note: Ownership and other real rights over immovable property are acquired by
ordinary prescription through possession of ten years (CIVIL CODE, Art. 1134).
499
Q: What consists of good faith in an ordinary prescription?
ANS: The good faith of the possessor consists in the reasonable belief that the person
from whom he received the thing was the owner thereof, and could transmit his
ownership (CIVIL CODE, Art. 1127).
Q: What is just title?
ANS: For the purposes of prescription, there is just title when the adverse claimant
came into possession of the property through one of the modes recognized by law for
the acquisition of ownership or other real rights, but the grantor was not the owner or
could not transmit any right. The title for prescription must be true and valid (CIVIL
CODE, Arts. 1129-1130).
Q: What is extraordinary prescription?

ANS: It refers to the acquisition of ownership and other real rights without need of title or
of good faith or any other condition (CIVIL CODE, Arts. 1132, Par. 2).
Note: Ownership and other real rights over immovables also prescribe through
uninterrupted adverse possessign.thbrarrdriirrty,ye.ers, without need of title or of good
faith (CIVIL CODE, Art. 11371` f i IA
1 , "I
41# Ckic, N,-• ,
Q: What are the requigiteeprresdfilitiorir4.-,,,,; 1.,' ,:\
ANS: The requisites$* j :77 ........r.,—,T--- '' y '.-
1. Capacittqup brplescription; *
2. The thing ustre capable if accNisip by pcescri ton;
3. Possession of/hing finder certajrr,Ccnditions; grid t
of
4. Laps0f-tOefprovi -by.law4ifica-CODE,Arfs. 1 1(811hi).
i ,,e...„ 1 ,,...., ,,,...... lip, ,,...
. _,,, 1.---4
Q: What is th periolfor prescription'o ini ovabfes?
ANS: The ow qp.igit f miles Orei;briks:.thrOugh ,f3i terrupt'e- ssession for four
(4) years in g oa'fai4 . TO,e, AynerslaiiiZofip — ersonal, pircip rtlalso rescribes through
uninterrupted plissp,ski for);;eiglzt (8)VasAjthoyf b,' of n 1r condition. With
regard to the right of e olei.,,to recover0:s'o .c,I.:Zprope lost 9r of which he has
been illegally deprived, es. wekgssii-04peco'quoable ,,,s acquired in a public sale,
fair, or market, or from a merchas
* ore the IS.6ns orArticlesZ59 and 1505 of this
Code shall be observed (C/V/L CODE21. C
N.,,, ., r)_.--..,--,
Q: What is the period foOresplptionaim ovaVI,eVY.'v )
ANS: Ownership and otherreallna6ts ova jrlik ble>operty are acquired by ordinary
prescription through possessiaittkten 10 years Ofninership and other real rights over
immovables also prescribe through unin errupted adverse possession thereof for thirty
years, without need of title or of good faith (CIVIL CODE, Arts.1134 and 1137).
Q: What are the rules on computation of period?

ANS: In the computation of time necessary for prescription the following rules shall be
observed:
1. The present possessor may complete the period necessary for prescription by
tacking his possession to that of his grantor or predecessor in interest;
2. It is presumed that the present possessor who was also the possessor at a
previous time, has continued to be in possession during the intervening time,
unless there is proof to the contrary; and
3. The first day shall be excluded and the last day included (CIVIL CODE, Art.
1138).
Q: How may the period of possession be interrupted?

ANS: Strictly speaking, there are three (3) ways by which the period of possession may
be interrupted. They are the following:
500
..,:„...
„.111.,..„,,
1.4,
'12 VIZ-ow4tvs..,1-.cmy.,s,liibi,:1,,
1. Naturally — when through any cause, the possession shall cease for more
than one (1) year (CIVIL CODE, Arts. 1120 and 1121). If the natural
interruption is for only one year or less, the time elapsed shall be counted in
favor of the prescription (CIVIL CODE, Art. 122).
2. Civilly — When there is a judicial summons to the possessor (CIVIL CODE,
Art. 1123). However, judicial summons shall be deemed not to have been
issued and shall not give rise to interruption:
a. If it should be void for lack of legal solemnities;
b. If the plaintiff should desist from the complaint or should allow the
proceedings to lapse; and
c. If the possessor should be absolved from the complaint.
Note: In all these cases, the period of the interruption shall be counted for the
prescription (CIVIL CODE, Art. 1124).
3. Express or tacit recognition by the possessor of the owner's right (CIVIL
CODE, Art. 1125; JURADO, Civil Law Reviewer, supra at 696-- 697).
Q: What is extinctive prescription? ,

ANS: Extinctive prescription is when rightend actions are lost through the lapse of time
in the manner.and under the conditiOnS. 14iihdown by law (CIVIL CODE, Art 1106, Par
2).
M-zpit.11}1/44;151mi2;
Q: What are the characteristics of ktinctike..prgscriptionat
ANS: The characteristics are:'
1. One does nalp.ok to the act Of.* possessor but to neglect of the owner;
2. Requires inaction of the owner of one wITITAight to bring his action;
3. Applies to apitifdtpffighte; wheffler real or persgnalj
4. Produces the of rights ;,(: bars a right of action;
tt..*
5. Result6iii the logs of a reaLor personal right or bars the cause of action to
enforce..,said right; and
4#t
6. Shad`beiffirratively'pleadedrac d proved& 61-6, oacton or claim of the
,St •
adverse party(J*D0?-iwilLa !Reviewer, — 692).
'h j
Q: What are the distinctions ;between kescription and laches?
• •
.., • I I IC 11101.111,4.1,011. G.
''' ' 11 t _AN/
' -1
1KaiOkr 1
Prescription - Laches
Not applicable Applies even to imprescriptible actions
(e.g. action to annul a void contract may
be barred by laches)
Concerned with the fact of delay Concerned with the effect of delay
A question or matter of time A question of inequity of permitting a
claim to be enforced (this inequity being
founded on some subsequent change in
the condition or relation of the parties)
Statutory Not statutory
Applies at law Applies in equity
Cannot be availed of unless it is Need not be specifically pleaded; court
especially pleaded as an affirmative may consider it in its own initiative to
allegation prevent inequity
Based on a fixed time Not based on a fixed time
(JURADO, Civil Law Reviewer, supra at 915)
501
•
Q: What are the requisites under extinctive prescription?

ANS: The requisites are:(CAPT)
1. Capacity to acquire by prescription;
2. The thing must be capable of Acquisition by prescription;
3. Possession of thing under certain conditions; and
4. Lapse of Time provided by law (Mercado v. Espinocilla, G.R No. 184109,
February 1, 2012).
Q: In what instances is prescription not available?

ANS: Prescription is not available in the following instances:
1. Acquisitive prescription:
a. Movables possessed through a crime can never be acquired through
prescription by the offender;
b. Registered Lands — P.D. No. 1529 (Property Registration Decree); and
c. Property of public dominion.
2. Extinctive prescription:
a. Action to depanAright offway (c/VIL,CODE, Art. 649);
b. To abatefatuisioce; \!
c. ActionAo•i criret
d. Void4ontrhtsLe(CIV/L CODE, A-PN 10); arld;\
e. Aqtro'ri'tci deffend.partitirr-----,,. • NY
Q: What are sorpe

1 o the
9 '1 pres. r
7 riptiveit)) s udder
7.-7 theCivil‘11:"1
ode?
ANS: The perioels are/ I .,t().;\
•1 X "
. Prescription Periods
.
Actions Movable Immovable
' 1 1)1- X ,'igi 11.,..."
Action to recove7)(C/ L-' ODE, iiitt. 1.:,6).ye5rv,tr e 3 years
1140-1141) . ""-4 l'‘vt, \ ,S)
"..:1 -tinjd ot ssio . IS
1
Foreclosure of Mo gage k..-4

.,"&Nl*rq/
Art. 1142)
10/1 "."'... -(\)
'''te,,„. kJ i
1T A.
All other actions whose penadrare now tylitthin c ars from the time the right of
fixed in the Code (CIVIL COICE4rt.-...acti n accrues
1149)
1. Upon a written contract 10 years from the time the right of action
2. Upon an obligation created by law; accrues.
and
3. Upon a judgment (CIVIL CODE, Art.
1144)
1. Upon an oral contract 6 years

2. Upon a quasi-contract (CIVIL
CODE, Art. 1145)
1. Upon an injury to the rights of the 4 years

plaintiff (CIVIL CODE, Art. 1146)
2. Upon a quasi-delict (CIVIL CODE,
Art. 1146)
502
3. Revoke or reduce donation based
on the birth, appearance or adoption
of a child (CIVIL CODE, Art. 763)
4. Revoke donation based on non-
compliance with a condition (CIVIL
CODE, Art. 764)
5. Rescission of contracts (CIVIL
CODE, Art. 1389, Par. 1)
6. Annul a contract (CIVIL CODE, Art.
1391, par. 1)
1. Forcible entry and detainer (CIVIL 1 year

CODE, Art. 1147)
2. Defamation (CIVIL CODE, Art.
1147)
3. Recover possession de facto (CIVIL
CODE, Art. 1147)
4. Revoke a donation on the gr,p4clibf
ingratitude (CIVIL CODE, Art,'769)1:4
5. Rescind or recover darripgMtitchLii
immovable is sold with non-apparent 4gtiv
burden or servituft0V/L CODE,
Art. 1560)
6. Enforce warrantyt,,pfi solven9y, in
assignment of cr,Olitsp/V/L CODE,
Art. 1629) ,„ 444 1 46.,,
Aiteo
.1/4
1144' it
A. GENERAL PROVISIONS Agi
tl delv.
Q: What is successiclan'ir.--
4..0,-
.
ANS: Succession is a ,ode pc quisition by virtue of which the property, rights and
obligations to the exten • o,,! the Value of the inheritance of a person are transmitted
through his death to anot VoDothers, either by his will or by operation of law (CIVIL
CODE, Art. 774).
Q: What are the kinds of succession?

ANS: Succession may be:
1. Testamentary;
2. Legal or intestate; or
3. Mixed (CIVIL CODE, Art.778).
Q: Who is a decedent?
ANS: Decedent is the general term applied to the person whose property is transmitted
through succession, whether or not he left a will. If he left a will, he is also called the
testator (CIVIL CODE, Art. 775).
Q: What does inheritance include?

ANS: Inheritance includes all the property, rights and obligations of a person which are
not extinguished by his death. Thus, those extinguished by his death are not included
503
t .5 1:7,7iit* zEil:gaqi
.:Sr t !'• g : iFirA 4.1iW:4$140. •
Q: What are examples of rights that are not extinguished by death and part of the
estate?
ANS: The following rights are not extinguished by death and part of the estate:
1. Patrimonial (proprietary) rights, unless excluded by law or by will (JURADO,
Succession (2009), p. 18) (hereinafter JURADO, Succession].
2. Contractual rights, with respect to the rights of the creditor and obligations of
the debtor, except in case where the rights and obligations arising from the
contract are not transmissible by their nature, or by stipulation or by provision
of law (CIVIL CODE Art. 1311).
3. Right to compel the execution of a document necessary for convenience in a
valid and enforceable contract (Heirs of Biona v. CA, G.R. no. 105647, 2001).
Q: What are examples of rights that are extinguished by death?

ANS: The following rights and obligations are extinguished by death because they are
purely personal in character or they are made so by operation of law:
1. Rights and obligations between husband and wife;
2. Property relations between husbandg
3. Action for legal seppratj64; \,/
4. Action to corypeltckciOwVgment-of.:a,attiralictiilci;
5. Action to obtiqiu'qicial declaration of illebitiplafe Matron of an illegitimate child
who is norndittpl; <\,••
6. Parent*Qhority or patria poteStat;-,:?-•
7. Rights 6f a griani
8. Right o recei e andithe obligaji6Vto give support; (r) ,
9. Right to "Olds a public office as' ell—a-lffe right to epr,qinse a profession or
voca
10. Righ of usufruct;
11. Righ ofper on re-4 ment; 7`;')
12. Right anflio lig cco.0 nsingl fromg:sontract ot artnetsW r agency; and
13. Crimi dl-fedp ns1611,itOU at 19)f
\P
Q: Distinguish irkheritance fro Accc'es4to
ANS: The followin is the &fere c6lfitterttance...f rnsticcessio
1tIN
Inheritance Succession
or
Refers to all the 'IrfropYrtc, an Narr ode by which property rights
transmissible rights and obligations ""f ,an igations are transmitted
the decedent which are not
extinguished by his death.
Objective element of succession
(JURADO, Civil Law Reviewer, supra at 491).
Q: When are the rights to the succession transmitted?

ANS: The rights to the succession are transmitted from the moment of the death of the
decedent (CIVIL CODE, Art. 777). As such, before the death of the decedent, the
persons entitled to succeed from him, whether by will or intestacy, only have an
inchoate right to the rights of succession (Garcia v. David, G.R. No. L-45454, April 12,
1939).
504
Q: What are the conditions for the transmission of successional rights?
ANS: The following are the conditions:
1. There has been a death (either actual or presumed);
2. That the rights are indeed transmissible;
3. The transferee is still alive (no predecease), willing (no repudiation) and is
capacitated to inherit (PARAS, Wills and Succession (2013), p. 13) (hereinafter
PARAS, Wills and Succession].
Q: What is the rule if there is doubt as to who died first between persons called to
succeed each other?
ANS: If there is a doubt, as between two or more persons who are called to succeed
each other, as to which of them died first, whoever alleges the death of one prior to the
other, shall prove the same; in the absence of proof, it is presumed that they died at the
same time and there shall be no transmission of rights from one to the other (CIVIL
CODE, Art. 43).
Q: Upon the decedent's death, .1s.. ' d efwery necessary for the heirs to acquire
ownership over the estate? .••,:,.. •;: ,
:i,' '. 'At
ANS: No. Tradition or delivery is s !iitne'0.44Try because succession is an independent
mode of acquisition of ownership ci‘ier.i.liteitate; hence, the right to the inheritance is
transmitted from the moment of death opttae .decaent (CIVIL CODE, Art. 777). The
effects of the acceptance by.r.tfid heirk,,b" elic-qrhelitappe_g.fg the estate shall always
retroact- to the moment of.thO'ileath of the ecedent (CML—CODE, Art. 1042).
04,0' .
'4. - ,,,,.„1 ‘
Q: May the heirs con:101111el et adm,iii skalor to deliver to eT the property under
administration? i1-1 f4'...,,.:e' f ' I
ANS: No, the heise'Eannilf ..,...mpel the ministrator tqfdelver‘9 them the property
inherited whilWthe hereditary estate IS,:,u41 administration VOLE TINO, Succession
(2003), p. tR)Vic,0545. TOL,ENTINd SuccesVp j h it is .not entitled to
possession, aspite havi.d ow,rship f the saute whe.. e e is a judicial
administrator. Unipss iri ken by court ,I. er or the admirriStrailo consents to the heirs
continuing in possgegiathertof (Arallata plJoya, G.R. No. L-28067, March 10, 1928).
1,
,
Q: Does "death" inclkpfesumptive cleaf wAm_.
ANS: Yes. SuccessiotloccursArrirtligatMktriPfficedent, whether actual or
presumptive. In presurttive dr* the absentee shall not be presumed dead for the
purpose of opening his scftkon until after an absence of 10 years. If he disappeared
after the age of 75 yearaSit'absence of 5 years shall be sufficient in order that his
succession may be opened (CIVIL CODE, Art. 391).
Q: When can there be a presumptive death?

ANS: The following shall be presumed dead for all purposes, including the division of
the estate among the heirs:
1. A person on board a vessel lost during a sea voyage, or an aeroplane which is
missing, who has not been heard of for 4years since the loss of the vessel or
aeroplane;
2. A person in the armed forces who has taken part in war, and has been missing
for 4years; and
3. A person who has been in danger of death under other circumstances and his
existence has not been known for 4years (CIVIL CODE, Art. 391).
505
Q: Distinguish an heir from a devisee and a legatee.
Heirs I Devisees/Legatees
As to definition
Person called to the succession either Persons to whom gifts of real and
by the provision of a will or by operation personal property are respectively given
of by virtue of a will (CIVIL CODE, Art.
law (CIVIL CODE, Art. 782). 782).
In case of preterition
The effect is to annul entirely the Devises and legacies shall be valid
institution of heirs (CIVIL CODE, Art. insofar as they are not inofficious (CIVIL
854). .CODE, Art. 854).
In case of imperfect disinheritance

i
r f
The effect is to ann,u1 t e)Otitdtion of Legacteand rdevises shall be valid to
h
k,,,,,,,.5 ,6.,t4tpe legItime.ot- —suciLektve.onlyill not impair the
heirs to the extAlb
the disinherited, eij,. s Rrejudfeed (CIVIL legitime? C7 IL CODE Art. 918)
CODE, Art. 94): .
1 ' I'
I ,
ir' L'e2:u f
As to properties acquired by testator after execution of the will
"c• I "<;',:'''' 1 iiri -:7."'•7 )
Voluntary heirs ir4erit eve hinC,t:thel: As, a rule, suditlfr,DAerties are not
7, r--
time of the e Mots deat (JURAPW 2:418luderbr9,ong he properties disposed
Succession, at 36 A ,- ,,,,.. ,ofrunlesfrit'AhoP10)9I essly appear in
1 <,.:,, Abe. wiljitg:qlf that sucl-{, as the testator's
..,\51 /4 ,.::
\ 4 A1/4L iiiie griii1CIVILIC0DE, Atf 793).
1 •
Q: Can an heir selPany particular.kalrblfttpe e

ANS: No. An heir ca seltdhls)Uhayzi:9V;eirsofot etin rite ce, but not a particular
portion of the estate. An eir-a validly convey aplope
s ,,offhe estate only in so far as
his individual share in the do-oVnershippecONc§rWe'a (fIURADO, Civil Law Reviewer,
)*
supra at 493).
B. TESTAMENTARY SUCCESSION
Q: What is testamentary succession?
ANS: Testamentary succession is that which results from the designation of an heir,
made in a will and executed in the form prescribed by law (CIVIL CODE, Art. 779).
Q: What is a will?
ANS: A will is an act whereby a person is permitted, with the formalities prescribed by
law, to control to a certain degree the disposition of his estate, to take effect after his
death (CIVIL CODE, Art 783).
Q: What are the characteristics of a will?

ANS: The characteristics of a will are as follows: (PFV-DRUM)
1. It is a strictly Personal act;
2. It is a Formal and solemn act;
3. It is a free and Voluntary act;
4. It is a Disposition of property.
506
5. It is ambulatory and Revocable;
6. It is an Individual and Unilateral act; and
7. It is an act Mortis causa (JURADO, Succession, supra at 30).
Q: What is meant by a will being a strictly personal act?

ANS: It means that the making of a will cannot be left in whole or in part to the discretion
of a third person, or accomplished through the instrumentality of an agent or attorney
(CIVIL CODE, Art. 784). 003
Q: What are the acts which may NOT be left to the discretion of a third person?
ANS: The following acts cannot be left to the discretion of a third person: (DEPO)
1. Duration of the designation of heirs, devisees or legatees;
2. Efficacy of the designation of heirs, devisees or legatees;
3. Determination of the Portions which they are to take, when referred to by
name (CIVIL CODE, Art. 785); and
4. Determination of whether or not the testamentary disposition is to be Operative
Q: Are there acts which may be pritr*Vtto a third person?

ANS: Yes, the following acts maylj'e•Wicili'd to third persons:
1. Distribution of specific property pg,buzigi9,‘moneyttpal he may leave in general
to specified classes,optauses:?Jae"gdotAIDA
2. Designation °Lae.' persons, institutions or d'sfSb ' ishments to which such
property or NOS' are to be gpentor applied (CIVIL ,O:62E, Art. 786).
Q: How is a will intesigeteil /Y 13 I,

ANS: The chief object andprpose in corsyuing a will o ascertain and give effect to
the intention of- the testator. The Court It place itselfiin th position of the testator,
ascertain histipl'aft froj!":rovisions of t, will, ancWrtforcet, JURADO, Succession,
supra at 34). 4"4
Note: The words of a' ViillTare to 1:16 takl in their or iria and grammatical sense,
(Y. tt,57
unless a clear interttidrilo use then) an4 her sense can be gathered, and that other
can be ascertained:khchnici words in aBIL. 11-to be taken in their technical sense,
unless the context cleVAtindicates a$ 91tfaVarteption, or unless it satisfactorily
appears that the will vas drawrkSOIO1RPhirfettlf6rAird that he was unacquainted
with such technical sertsd(CIVI,OODE, Art. 790).
Q: How is the intention °Rid-testator ascertained?

ANS: Intrinsic or extrinsic evidence may be used to ascertain the intention of the
testator. However, the oral declarations of the testator as to his intentions must be
excluded (JURADO, Succession, supra at 35).
Q: How is a will interpreted in case of doubt?

ANS: That interpretation by which the disposition is to be operative or will sustain and
uphold the will in all its parts shall be adopted, provided that it can be done consistently
with the established rules of law (CIVIL CODE, Art. 788). Further, of two modes of
interpreting a will, that which will prevent intestacy shall be preferred (CIVIL CODE, Art.
791).
Q: What is the effect of some invalid dispositions in the will?

ANS: The invalidity of one of several dispositions contained in a will does not result in
the invalidity of the other dispositions unless it is to be presumed that the testator would
not have made such other dispositions if the first invalid disposition had not been made
507
Q: What must be done when there is an imperfect description or uncertainty upon
the face of the will?
ANS: When there is an imperfect description of an heir, legatee, or devisee, or the gift
being given, or when no person or property exactly answers the description, the remedy
is to ascertain the testator's intention by using intrinsic and/or extrinsic evidence,
excluding the oral declarations of the testator as to his intention; and when an
uncertainty arises upon the face of the will, as to the application of any of its provisions,
the testator's intention is to be ascertained from the words of the will, taking into
consideration the circumstances under which it was made, excluding oral declarations
Q: When shall properties acquired by the testator after the making of the will but
before his death pass to the inheritance?
ANS: Property acquired by the testator after the making of a will shall only pass thereby,
as if the testator had possessed it at the time of making the will, should it expressly
appear by the will that such was his,Intention,(WIL CODE, Art. 793). This rule applies
only to a devise/legacy becaugg" an -hei in eriNq,eyerything upon testator's death
.1.
(JURADO, Succession, sup? at46).
V I"
Q: In case of a devp °or ieg'acsr, what is the exten4sPof intefest disposed of by the
testator?
ANS: Every devir.ctli
41 a"6(1 y tall cpt3yell tile7inter ft iiicxhipttator could device
or bequeath in the property disposed of,i.0plegit cleaily alJ,pears f ,om the will that he
intended to coney a lets interest (C/V14-CODE, Art. 794). Cr)
Q: As to the ti" e;-wl3at law goveithilheiCtpritiqU'elidity of a i

ANS: The law o.,, verh ng the f6rmal i • force a thet the will is made
(CIVIL CODE, 7147.9 . TchiRa will peVettl'Oalid at Prryie 9f its e ,ccution cannot be
invalidated by Imre actepatkr the •,,.eat tqf-ttle te, Sati*Neiliftiekdki a will totally void
at the time of es-Qe ution•Cbt Validated ,,bjf:.;Stic ,q4idlation (JURAIDO, Succession,
supra at 38).
,
Q: As to the placel,,what r le govensi helorchal alb of a Will?
N.
ANS: The forms an&solernilitis..,_
,orwillLshall:* ''gq,vernddby tyre laws of the country in
which they are executadk G(ViDp 108;.Artr4.7)
MA-
Q: What law governs when thelgralbrigVrilipino?
ANS: If he executes his will in the Philippines, the law that governs is Philippine law. If
he executes his will outside of the Philippines, the law applicable is either the law of the
country in which it is executed or the law of the Philippines (CIVIL CODE, Art. 815).
Q: What law governs when the testator is an alien?

ANS: It varies according to place he executed his will.
1. If the alien executed his will in the Philippines, the law that governs may either
be:
a. The law of the Philippines (CIVIL CODE, Art. 17); or
b. The law of the country of which he is a citizen or subject (CIVIL CODE,
Art. 817).
2. If the alien executed his will outside the Philippines, the law that will govern
may either be:
a. The law of the place where it is executed (CIVIL CODE, Art. 17);
b. The law of the place In which he resides;
c. The law of his country; or
d. The law of the Philippines (CIVIL CODE, Art. 816).
508
Note: A will made in the Philippines by a citizen or subject of another country which is
executed in accordance with the law of the country which he is a citizen or subject, and
which might be proved and allowed by the law of his own country, shall have the same
effect as if executed according to the laws of the Philippines (CIVIL CODE, Art. 817).
Q: What aspects of a will are governed by the national law of the decedent?
ANS: The following aspects are governed by the national law of the decedent:
1. Order of succession;
2. Amount of successional rights;
3. Intrinsic validity of testamentary provisions (CIVIL CODE, Art. 16); and
4. Capacity to succeed (CIVIL CODE, Art. 1039).
Q: Does Philippine law still apply if the Filipino citizen is abroad, as to those
aspects of a will covered by Article 16?
ANS: Yes. Laws relating to family rights and duties, or to the status, condition and legal
capacity of persons are binding upon citizens of the Philippines, even though living
abroad (CIVIL CODE, Art. 15). i.4P
Q: Who are qualified to make a #Ip t
ANS: All persons who are not Opress q
ig ohibited
ill Tt-1
by law may make a will (CIVIL
CODE, Art. 796). ':- '4
„el
Q: What requisites mustvricur in older that a person ca ake a will?
ANS: The requisites ate(Not-AS) .#6,
1. He must Not, efpresslyproliii)fr ed by law to ma e ill;
2. Testator rqushebjeast 18 yea of Age; and i
3. He mustqbtef Sandtrrlind (C/V ffODE, Arts. :96-798).
Atl
et" if
•
x % ii
Q: Is it neceks06 thautnCtestator be opsund min&at the:time:pais death?
,, -4-'-A.,--,
- - -,11-
ANS: No. In or to rrakb-Rwill,ittesse-ial that thetejAt r'beePsound mind at the
time of its executipg (ONAGODE4X. 79
;110-A
-4'4
Q: What is meant Fry a sou d mind?

ANS: To be of sound 110 1 .is not necessa g ,,. . testator be in full possession of
all his reasoning facd ties, or tggtriffiarmn - op unbroken, unimpaired, or
unshattered by diseas4,, injurytmother cause. It shall be sufficient if the testator was
able at the time of making e w'll to know: (NOC)
1. The Nature of thwesfa e to be disposed of;
2. The proper Objects of his bounty; and
3. The Character of the testamentary act (CIVIL CODE, Art. 799).
Q: Is the testator presumed to be of sound mind?

ANS: Yes, the law presumes that every person is of sound mind, in the absence of
proof to the contrary, unless: (1-IG)
1. The testator, 1 month or less, before making his will, was publicly known to be
insane;
Note: Evidence of testator's insanity before or recently after the execution of
the will gives rise to the presumption of insanity at the time of execution, and it
becomes indispensable to the validity of the will to show that it was executed
during a lucid interval or after the malady has ceased. However, the
presumption of insanity does not arise when the malady under which the
testator has labored was in its nature accidental or temporary (TOLENTINO,
Succession, supra at 60).
2. The testator made the will after he had been judicially declared to be Insane,
and before such judicial order has been set aside; or
509
14,i1;;;,i11(ific-.rA:r14:76e415g4: ,,S-%
•Cfrgr-P".
3. He was under Guardianship at the time of making his will (Torres and Lopez
de Bueno v. Lopez, G.R. No. 24569, February 26, 1926).
Q: What is the effect of supervening incapacity?

ANS: It does not invalidate an effective will because its validity is determined at the time
of the execution of the will. Neither is the will of an incapable validated by the
supervening capacity (CIVIL CODE, Art. 801).
Q: How are wills classified according to form?

ANS: A will may be either notarial or holographic depending upon the formalities or
solemnities which are observed by the testator in its execution (JURADO, Civil Law
Q: What are the common formalities in notarial and holographic will?

A: Every will must be:
1. In writing; and
2. Executed in a langyage- or dialect knovVrt -to. the testator (CIVIL CODE, Art.
804).
. -1: , •
Q: What are the requisitefoj...,niidarial wills toTi"e'vg,lid?
ANS: The requisite afetltne'SAMPAL)--11-- - • ,-., •••.-
1. In Writit36Q-, '.' / n .t: -, ,_, , 4-,..,; ,
2. Executed In'atangtjage or•diale4knOWn to the r testato ;a , \
3. Subscription "Subscribed at .the end thereof by i e testator himself or by
testatbee,;hame wrikeTi-1*.§5ifiti:itiiii'fffsim in • iurRqence and by his
exprJse:direCtion; 1 ... : :. :..- • I
4. Attestes, 1..,arli subscribed by A Ktroxe. credkle Witnegsesii the presence of
the tistator, and ;droffe anotheTh : i . kir•::::: ,) 1
• -
5. MargTal pigoaturpilt of tha pages., are, signed, e cept.,the last, on the left
margirk139: \ <•:•ii. t,,,, H'• 1...':_....:•:V-:,,•--/ 1 \i l
a 'The testator tor:tyle, 01sOn3; retlijest00 hirridto write/ is name; and.
b. The instilventalAi nesst, ,..-'''..„. ' 4•••
6. Page nattering --,,All thq--a-g7._s•-a h re\ritsibere correlatively ir in letters placed
on the upperpart oatc. a*,•-... ..iiJ-;
7. Attestation clautefeeputqdlay••themit ssetkand
8. Acknowledgment- Rrr!prerly IcisgoblAdg,d•loreffire a notary public by the
testator and the said`Witdesses .(o_veeODE,"Arts. 804-806).
'''..h.............."
Q: Should the signing of the will and the acknowledgement before the notary have
to be a single act?
ANS: No. The signing of the will by the testator and the witnesses, and the
acknowledgement of said will before the notary public do not have to be a single act. It
is enough that they acknowledge to him its due execution (TOLENTINO, Succession,
supra at 102).
Q: Should a notarial will be written by the testator himself?

A: No, it is immaterial who performs the mechanical act of writing the will (Castafieda v.
Alemany, G.R. No.1439, March 19, 1904), so long as it is signed:
1. By the testator himself; or
2. By the testator's name written by some other person in his presence, and by
his express direction (CIVIL CODE, Art. 805).
Q: What is subscription?
ANS: It is the manual act by the testator and his instrumental witnesses of affixing their
signature to the instrument (JURADO, Succession, supra at 55).
510
Q: What is attestation?
ANS: Attestation is the act of three or more credible witnesses of witnessing the
execution of the will in the presence of the testator and of one another in order to see
and fake note mentally that such will has been executed in accordance with the
requirements prescribed by law. Strictly speaking, it is the act of the witnesses and not
that of the testator (JURADO, Succession, supra at 60).
Q: What is an attestation clause?

ANS: It is a memorandum or record of facts wherein the witnesses certify that the will
has been executed before them and that it has been executed in accordance with the
formalities prescribed by law. It must be signed by the witnesses, not by the testator. If
the attestation clause is in the language not known to the witnesses, it shall be
interpreted to them (JURADO, Succession, supra at 74).
Q: What are the required contents of an attestation clause?

ANS: The attestation clause must state:(p1)
1. The Number of pages used;:.,, •
2. The fact that the testator:.:Signe,'ehe will and every page thereof or caused
some other person to *IteAname under his express direction, in the
presence of the instrumeritOhltri,es; and
3. That the instrumental witntil'Ogenkssgd and signed the will and all the
pages in the presence:bf thOffettator - diataitipe$'4Ahother (CIVIL CODE, Art
805). 5 :4).
•
14' .444A t
Q: Is the will renderealiviilid if there are defects and imperfections in the form of
.
attestation or the languagelused therein.?
ANS: No. In theOsence of bagfaith, forgay, or fraud ogundte Nd improper pressure
and influence,Afects and.'imperfectib'ns Mlle form of attestation otthe language used
therein shall lixlier0r-41.0..will ifyalid if provet reat.thAw)1145,!i,tOn
c fact executed
and attested lesubStantiareomplidce wi. I all the rd- Mine.laclArticle 805 (CIVIL
*4i41,,mgrdx•
.-;!
CODE, Art. 809)N,..., 14"
Note: The liberal ifireilAlattn of the rule"dust be limited to disregarding those defects
'that can be supplied by ariAxaminatio of bill itself (Caneda v. CA, G.R. No.
103554, May 28, 199) ,However, opp3ssionOWLich cannot be supplied except
presenting evidence •fofiunde t Mtion clause (TOLENTINO,
gf
Succession, supra at 104. gr,„
Q: What is the test of a suffiblent signature?

ANS: That the testator intended it as his signature (JURADO, Succession, supra at 55).
Q: Is a thumbmark or a part of the name of the testator a sufficient signature?
ANS: Art. 805 which requires that the will shall be signed is satisfied not only by the
customary written signature but also by the testator's or testatrix' thumbmark (Dolar v.
Diancin, G.R. No. L-33365, December 20, /930),If writing a mark simply upon a will is
sufficient indication of the intention of the person to make and execute a will, then
certainly the writing of a portion or all of the testator's name ought to be accepted as a
clear indication of his/her intention to execute the will, as in this case where the name
and surname have been written by different persons (Yap Tua v. Yap Ca Kuan, G.R.
No. 6845 September 1, 1914). However, if the signature is only a mere cross,
without any proof that it is the usual signature of the testator or at least one of the ways
by which he signed his name, it is not a sufficient signature, because a mere cross
cannot and does not have the trustworthiness of a thumbmark (Garcia v. Lacuesta, G.R.
No. L-4067, November 29, 1951).
511
( ..,„...e,.„.4 . ,„:...i.,....-A,t1,i.:,g4.4.i •••.:.....v•!•‘,.?i:,. 1 iirski:iTiIn':ti•rt. • ,4•::k-4
..... , -..-.1. . .!,
, ,
-...k;•
VS:,
'''...4 e'r
....,A
BE
‹; );:l..,:. • • , — f!.
BOOK h
Q: Must the testator actually see the witness subscribe?
ANS: No. The testator and the witnesses need not actually see each other signing. It is
sufficient that they were in such position that they could have seen each other sign if
they choose to do so, and without any physical obstruction to prevent his doing so
(Pascual v. De La Cruz, G.R. No. L-24819, May 30, 1969). This is called the test of
presence.
Q: What are the instances wherein a will may be allowed even if it is not signed in
each and every page?
ANS: As a general rule, a will must be signed on each and every page thereof on the
left margin except:
1. In the last page, when the will consists of two or more pages;
2. When the will consists of only one page; and
3. When the will consists of two pages, the first of which contains all the
testamentary dispositions and is signed at the bottom by the testator and the
witnesses and the second&ontains,oray the attestation clause duly signed at
the bottom by the witnesses (JURADO,
I Silbcession, supra at 72-73).
--7?„ LA, l•-••-•
Q: What will be the effect ot ,in,caseTtne marginal signatures appear on
the right portion, indeed Of-t d'reft? •
ANS: Art. 805 which rellyrVihSaverrfrarCexceptike must be signed at the left
margin is compli98,,tit d,Ven kit dond•cn the right mar in. bgcause the mode of
signing adoptedieveillige afid pro‘Aioril.Pf th'd will islauthelificated&and guarded from
possible alteratiqp in exactlybhe same.,ddgree that ittwould, KA. been
# • I protected by
being signed iiith—e—laftimargirl(Avera ttGercra, G:R71C16. 15566„SeRtember 14, 1921).
1
1
Q: What will be thd effect onikthe iviiLiriCqse'sthe
All ,..: p ges arenumbered with Arabic
Numerals? I ACV I • •
ANS: While the Iffr uir s'-it the will rciust p9g/ed.. ith Lettdrev,aging with Arabic
numerals and ribt4it Aette it.hin4hleighiritcyhettair and is judt as valid as paging
with letters (Neve v. Mkal, 314 o, 'L-21 55--0,ecehib6r 291 1924).
Q: What is the effect if the tte tatien-clauS:c fai.ted to4tate the required contents?
ANS: The following are the sananos-Whdriiherel, sfaffurttorstare the required contents
in the attestation claus&,-e9A'7"', -------
1. If the attestation clause, tolstattlbAumer of pages used, the will is not
10 I
valid unless then urnbtr _ of page . tagd in the will itself or in the
acknowledgment (Taboad'.R.a No. re-ML-36033, November 5, 1982).
2. Failure to state or specifically declare that the witnesses had witnessed the
due execution of a will, there being no possible way to prove such by the face
of the will, is fatal to the validity of the latter (Caneda v. CA, G.R. No. 103554,
May 28, 1993).
3. Failure to state the number of witnesses may be established by the number of
signatures in the will itself (Testate Estate of Abada v. Abaja, G.R. No.
147145, January 31, 2005).
Q: Should the will be allowed if the signatures of the witnesses appear on the left-
hand margin but do not appear after the attestation clause?
ANS: No. An unsigned attestation clause cannot be considered as an act of the
witnesses, since the omission of their signatures at the bottom thereof negatives their
participation (Azuela v. CA, G.R. No. 122880, April 12, 2006).
512
Q: What is the effect if a notarial will is not acknowledged before the notary public
by the testator and the witnesses?
ANS: It is fatally defective, even if it is subscribed and sworn to before the notary public
(JURADO, Civil Law Reviewer, supra at 513). A jurat is that part of an affidavit where
the notary public certifies that before him, the document was subscribed and sworn to
by the executor. On the other hand, an acknowledgment is the act of one who has
executed a deed in going before some competent officer or court and declaring it to be
his act or deed. It involves an extra step undertaken whereby the signor actually
declares to the notary that the executor of a document has attested to the notary that
the same is his own free act and deed (JURADO, Succession, supra at 92-93).
Q: May the notary public to whom the will was acknowledged be also one of the
three instrumental witnesses?
ANS: No. He cannot be considered as the third instrumental witness since he cannot
acknowledge before himself his having witnessed and signed the will (Cruz v. Villasor,
G.R. No. L-32213, November 26, 1973). '
Q: What are the additional requirerrieritktor the validity of a notarial will made by
a deaf, deaf-mute, or blind persiti.0?.:04,
ANS: If the testator is deaf, or a deektifda e must personally read the will, if able to
do so; otherwise, he shall designate Na',Pepropslo&ead it Ocommunicate it to him, in
some practicable manner, the„,cOntent,VotteV(tOWArt. 807),If the testator is
blind, the will shall be reatVolhim twice dice, by one of the subscribing witnesses, and
again, by the notary alio before vfolithe will is acknoyligclged (CIVIL CODE, Art.
808).Art. 808 also applyArt personszho4capable of reading! such as those who are
illiterate or those withAgipaireglwiSiOn, notmerely to blind person (Alvarado v. Gaviola,
G.R. No. 74695 Smtemb .0093).
Q: Who is qtAfffrectliikan instrumenta itness2

ANS: To be alnstrumeritaRritnefA- OSI be: (D-C
1. A person of So littnindr
2. Eighteen'affea**f Age,
3. Not Blind,Ileaf, or camb;
4. Able to Read ‘11,1„yiltite;
5. Domiciled in titty-qPhilippOsTland
6. Not been CorOcted Ortalsification of a document, perjury, or false testimony
(CIVIL CODE," nr<Vh 8)
-
200 and 821).
2
Q: Is it necessary that a witness knows the contents of the will?

ANS: No, the law does not require it. All the law requires is that they must attest and
subscribe the will in the presence of the testator and of each other (JURADO,
Q: Does the subsequent incompetency of witnesses prevent the allowance of a

will?
ANS: No. If the witnesses attesting the execution of a will are competent at the time of
attesting, their becoming subsequently incompetent shall not prevent the allowance of
the will (CIVIL CODE, Art. 822). Competency of a witness is determined at the time of
the execution of the will.
Q: Who is an interested witness?

ANS: An interested witness is one who attests the execution of a will, and to whom or to
whose spouse or parent, or child, a devise or legacy is given by such will (CIVIL CODE,
Art. 823).
513
Q: What is the effect if an interested witness attests to the execution of a will?
ANS: If an interested witness attests to the execution of a will, the devise or legacy shall
be void, so far only as concerns such interested witness or any one claiming under
interested witness, unless there are three other competent witnesses to such will.
However, such person so attesting shall be admitted as a witness as if such devise or
legacy had not been made or given (CIVIL CODE, Art. 823).
Q: Is the rule on the incapacity of interested witness absolute?

ANS: No. The exceptions are:
1. When there are three other competent witnesses to such will (CIVIL CODE,
Art. 823); and
2. The testator's creditors can be competent witnesses to his will (CIVIL CODE,
Art. 824).
Q: What are the requisites for a holographic will to be valid?

ANS: The requisites are: (D-LaWS),,„,,,,,...,.,,,„„
1. The will must be entirely'Written by the andhof the testator himself;
2. The will must bqgatediby,the hand qf 10 testator;
3. The will mustSiAel:1
tA by,the.handLo1Jha , testatorhimself (CIVIL CODE, Art.
810); and /4 N.---:..,...e"
4. The will must be.,ekesuted-iir471:aliguaRbr.dfa'„ lect *flown to the testator
(CIVIL 991M-1. 804). .;,„ •-/). -...,- 't, N..,,'''...) \
Note: A holographicI/Vs subject to-no.5,theriform, andrn'ayi e rude in or out of the
Philippines, an need rt be Witnessed (CIVIL CODE, Art. 81 ',,1
I t .,, .. , 1 1[:: „,.....4 , . .
Q: How manypfitne ses are requir ed for the prob ate of a hOlographic will?
ANS: If uncorliest d, it is recluiredlhat:thprebe at Idast one viiitne's; who knows the
handwriting and' ig aturr6Me teaTatbr;4'fand ex[ffpitli declare that the will and
signature are rt Itanuk4,ritiN Of-treItestator;1/1160, ehekt'it4stimony may be
resorted to. If irate q, • 1 :f.,, s *. :±:ftr ilietp•be.;.:d`;leastAchree135 of such credible
witnesses, if norxperiestimpnm'ay-b fels:pr(e'd.;t0/(CIVIL CODE!, Art 811).
--0,,. \) .6.4 ii
Q: Are there exc eptions tdkieTuftihatt41 . -tiginal,,Of the hopgraphic will should
be presented to theRzl:at, cog fifirt4iShal•wrimifiatiAbcfore it can be admitted
to probate? .er...9,-,, 4.,.....„„.„......''' -6„ 1... /
1I7 • - 34 s-, .o
ANS: Yes. It is possible that,,,
a photostatiqi cp?or\-4.an-ajnimeographed or carbon copy
may be substituted for the cirigieactimbrifyggrii/16 v. Aranza, G.R. No. L-58509
December 7, 1982). After all, in these cat-e-grampliance with the requirements stated in
Art. 811 would still be possible. The authenticity of the handwriting and signature of the
testator may still be examined and tested by the probate court (JURADO, Succession,
supra at 98).
Q: In holographic wills, are the dispositions of the testator below his signature
valid?
ANS: No, the dispositions of the testator written below his signature must be dated and
signed by him in order to make them valid as testamentary dispositions (CIVIL CODE,
Art. 812). When a number of dispositions appearing in a holographic will are signed
without being dated, and the last disposition has a signature and date, such date
validates the dispositions preceding it (CIVIL CODE, Art. 813).
Q: What is the requirement in order to render insertions, cancellations, erasures

or alterations valid?
ANS: In case of any insertion, cancellation, erasure or alteration in a holographic will,
the testator must authenticate the same by his full signature (CIVIL CODE, Art. 814).
514
Q: What is the rule in case of insertion or interpolation by third persons?
ANS: The following are the rules in insertion and interpolation:
1. If the insertion was made after the execution of the will, but without consent of
the testator, such insertions are not considered written;
2. If the insertion was made after the execution of the will with the consent of the
testator, the will remains valid but the insertion is void;
3. If the insertion was made after the execution of the will, and such insertion is
validated by the testator by his signature thereon, it becomes part thereon
hence the will becomes void; and
4. If the insertion was made contemporaneous to the execution of the will, then
the will is void (JURADO, Succession, supra at 95).
Q: May a testator authenticate an inserted testamentary disposition with his

initials?
ANS: No. The act of A in authenticating the inserted testamentary disposition with his
initials is not a valid authentication. This is;clear from Article 814 of the Civil Code which
declares that in case of any insertion, cancellation, erasure or alteration in a holographic
will, the testator must authenticate' the .same,6, by his full signature (JURADO, Civil Law
Q: What is a joint will? ., • r•46103.0k,, •

ANS: It is a single testamentary inStrOnffitlialibliftt tithe wills of two or more
persons, jointly executed by, either for their reciproc'a Whefit or for the benefit of a
4'71
third person (JURAD90:Succession, suprAt 106). 1li
Note: Wills that are WV:Joint Wills: ." i v P
1. Those made; Ongle sheet oppaper, the first,on2th , front, and second on
the rev.e,rSeSide:9'1':',.,, 1
2. Thoeffiade even on the amewige with orA ithout a dividing line between
therwpfkneitqr.Eomtping thOignaturc iecf figjto er,
.,.. (Reason: Here
agaifiRhere art really tWo'iinstrulInts or iwooirg:AVI ' are independent of
each othej) (Railt/A.S, Wills and Accession, supra 25
Q: Can two or morArlls nimake a joi,rE0Bm

:ro4I
ANS: No. Two or morelpesions cannot.OklNIMily, or in the same instrument,
either for reciprocal berbfli or for..deb'efiefiPag:thirdgOgRA (CIVIL CODE Art. 818).
Note: In case of wills lecuteclika foreign country, the prohibition applies only if such
will was executed by Fillpeoplizens and not by aliens (CIVIL CODE, Art. 819).
Alektal
Q: What is a codicil?
ANS: A codicil is a supplement or addition to a will, made after the execution of a will
and annexed to be taken as a part thereof, by which any disposition made in the original
will is explained, added to, or altered (CIVIL CODE, Art. 825).
Note: If the subsequent instrument makes dispositions independent of those in the
original will, without explaining or modifying such original will, then it is a new will
(TOLENTINO, Succession, supra at 126).
Q: What formalities are required in the execution of a codicil?

ANS: The formalities which are required in the execution of a codicil are the same as
those required in the execution of a will (CIVIL CODE, Art. 826).
515
Q: May a will incorporate into itself by reference a paper or document?
ANS: Yes. In order that a will may validly incorporate into itself any document or paper
by way of reference, the requisites are: (EDIS)
1. The document or paper referred to in the will must be in Existence at the time
of the execution of the will;
2.The will must clearly Describe and identify the same, stating among other
things the number of pages thereof;
3. It must be Identified by clear and satisfactory proof as the document or paper
referred to therein; and
4. It must be Signed by the testator and the witnesses on each and every page,
except in case of voluminous books of account or inventories (CIVIL CODE,
Art. 827).
Q: What is revocation?
ANS: It is an act of the mind, terminating the potential capacity of the will to operate at
the death of the testator, manifestedby.someAytward or visible act or sign, symbolic
thereof (JURADO, Successio9Fstifira atil lip. '7,‘ .,,k,„....
t ..,. i, \I :r -.
Q: May a will be revokediFth6testator?..,:, i, e , .
ANS: Yes. A will rri /be reVokaby the testatdr,at zeicy time, before his death. Any
waiver or restrictionfo htygrit is,void1C/V/L-CODE, AY& 80). .:\
Atillir) I i',:o ' :6 ,:•'' ). \
Q: In relation t plate ha laws hotigl betaken into)cpountfor revocation to
be valid? - . L,-.24......-.. --... 1 (in t i
ANS: l'' i ...,.. s
1. If do uts de the hilililitne,-•. bly a person not domiCiled in lhe Philippines, it
is va id whe it is do e accbriling19::_p., 11..1
/
a. Sn4 if th‘pi e wherelliVAII was rpicIe.;:pr
b. in w htertcstatprp4his drniscile at the time
2. If don F'af the thbi4 s if ids caaorclaQ it he praisions of the Civilil
Code CIVIL DE, V:, .2-.9: :1;:'
3. If donebutsideNhe P iiipOjneNtit,h4qomici Philippines, then it
should bk accalance ‘OttLi'AtteiVilOode.
Q: How is a will reva hd?.(li

d.,,,,,.,..,,,w Vi t,
ANS: A will may be revoke• M N:4N- - '
1. By Implication of law,
2. By some will, codicil, or other Min xecuted as provided in case of wills;
Note: It is necessary that the latter will should be valid and executed in
accordance with the formalities required for making the wills (TOLENTINO,
3. By Burning, tearing, cancelling, or obliterating the will with the intention of
revoking it, by the testator himself, or by some other person in his presence,
and by his express direction. If burned, torn, cancelled, or obliterated by some
other person, without the express direction of the testator, the will may still be
established and the estate distributed in accordance therewith, if its contents
and due execution, and the fact of its unauthorized destruction, cancellation, or
obliteration are established according to the Rules of Court (CIVIL CODE, Art.
830).
Q: What are the requirements for a revocation by burning, tearing, cancelling or

obliterating the will may be effectual?
ANS: In order that any of these acts of revocation may be effectual:
1. The testator at the time of performing it must be in possession of his faculties
and capable of making a will;
516
-,,.....,•7.•:..fr.:,:s,..,ip-,;w:.:,,,;:g•Ifik:.•.•,,,:--.4,211.s.:::--y-lrf•kktTLKa.:,.4•E,::
i /
-,.(;•47,...-
c.s, ,1:,.•;•'..-:!.?•:••
''' •• ;..,,w4:,;;':,:.7!",,,,fAi:0,7".•::::%•',..,. ;-::
....el•i•••••.,..-24-4.4.1.-.:.:••/-FA,;,
••••,..,
2. The intent to revoke the will must concur with the physical fact or actual
destruction of the will;
3. The legal act of revocation is complete and effective from the time the intention
is carried out by the execution of the physical act necessary to accomplish fully
the intention to revoke.
Note: Thus, if the complete destruction of the will is prevented due to
interference by some other person and not to change the intention on the part
of the testator, the will is already considered revoked (TOLENTINO,
Q: What are the instances when a will is revoked by implication of law:

ANS: The following are the instances:
1. The commission by the heir, devisee or legatee of some act of unworthiness
under Article 1032;
2. The transformation, alienation, or loss of the thing given as a devise or legacy,
subsequent to the execution of.M will under Art 957;
3. Judicial demand by testato rg:I ff° 04redit which has been given as legacy under
Article 936; . -: :::-. .1*;
4. The preterition of compur,Sqpi;AeOn the direct line under Article 854;
5. The sale of the properhi;gi*•.:atedevise or legacy, for payment of debts of
testator) (TOLENTINO, SliCe$1617zotipna,,at 131)1.*Id
6. When there is a decree of * leKserartiall .: Omisatags in favor of the offending
spouse in the !ixillfillhe innopentspouse sha ree r vpked by operation of law
(Family Code4A'rt. 63(4)). .4, - /Ir.
lii. il I.-.;.ig` /1 I
!6- A , .:.'
Q: What is the effec t opObtequent Wills which dofnot e pressly revoke the
previous ones?'` 'T5' 4ztvr, e .
•. VN
ANS: Subseggtnt wil4,1which do noVrevci'e the previops I o es in n express manner
annul only sgpOlizOpiticts in the prior Is as are,' cons' ent ith or contrary to
those contained in the latterf Wills MAIL c DE, Art 83t).
Note: A revocaticairn"* a sillikequ will shall take. effet even if the new will
should become inkleative btreasqii of t incapacity of the heirs, devisees or legatees
designated therein, or by thernunciatio (OlyiL CODE, Art 832).
Q: What is the Doctrite .ofDeReArelitiZeratiVe• Revocairin? •

ANS: If a testator reOkes dfill with a present intention of making a new one
immediately and as a s6141.L.itel and the new one is not made, or, if made, fails of effect
for any reason, it will be prardmed that the testator preferred the old will to intestacy,
and the old one will be admitted to probate in the absence of evidence overcoming the
presumption, provided its contents can be ascertained (JURADO, Succession, supra at
129).
Q: What is the effect if the revocation is based on a false or illegal cause?

ANS: A revocation of a will based on a false cause or an illegal cause is null and void
(CIVIL CODE, Art. 833). The false or illegal cause must be stated in the subsequent will
otherwise the revocation is of no effect (TOLENTINO, Succession, supra at 142).
Q: What is the effect of the revocation of a will on the recognition of an

illegitimate child?
ANS: The recognition of an illegitimate child does NOT lose its legal effect, even though
the will where it was made should be revoked (CIVIL CODE, Art. 834).
517
Q: Distinguish republication from revival of wills.
ANS: The following are the distinctions between republication and revival:
Republication I Revival
As to nature
Refers to the act of the testator either Refers to the restoration of the validity of
in reproducing in a subsequent will the a previously revoked will by operation of
dispositions contained in a previous law. (JURADO, Civil Law Reviewer,
one which is void as to its form or supra at 528).
which has been revoked or in
executing a codicil referring to a
previous will (CIVIL CODE, Arts. 835
and 836).
As to how is it effected
Republication is effecteck* aCte, of the Revival effected by operation of law

testator (JURADO, ..41RADO,:Sucts,ssion, supra at 133).
at 133). f,\ 4 '4.
•
i',... O" „,,,..--' -.. t. A 1,
Note: A duly exetuNfccidicilibperatee iKa republication bf-th:esonginal will and makes
it speak from tl newlke, insofar is it'Os tidt altered or\evolseglipy the codicil. If a
codicil revokes n_jerm porti6ns_of the WA- it lepuplislies theAljl astof the date of the
codicil with respect6 all pad notsevo5ed:PU RolpO, Succesir,,sut at 132).
Q: What is maw. . J.S6yfthe polbates.' f '',w:ilt;jki‘

;hat ire._the qtrations determinable
by the probatq court? c A :
-÷--n- s- —nlYK.i 1
i , 4
,• a
ANS: The pro& e 6ftwills'is;?Nspecialcproceeding , tot ettablistudielatidity of a will. The
purpose is to p o e be"ore orpe
X i\ ,errpe
\c (.en.-.59q.
tI TTh-tri *(-, '
,..,.,f01..un91 vested with • authority for
that purpose tha the instrument Ali hit-, o ergd1Of probate it: _41
1. Identity NWhethXor riot ills nielitilitdch isbffere;loofor probate is the last
willWnd testarnentbf,th6 4.- TAN,.. .,,,,
-TAN,..-.
2. Due execute itter.,_
OrriotIlhe-WilChaebeeiyexeduted in accordance with
the formalities reS 'be' -pjfIrvr."-‘-' " •+N\,,,) ,:04`.
3. Capacity — WheffiectNepstatOld_tel d"-tee nip l' ary
t '''capacity at the time of the
execution of the will PlYRAD(242i#,ton, supra at 138-139).
Q: Will the statute of limitations apply to probate of wills?

ANS: No. The statute of limitations is not applicable to the probate of the wills. The right
to file an action for the probate of the will does not prescribe on the reason that such
proceedings are not only established in the interest of the surviving heirs, but primarily
for the protection of the testator's expressed wishes (JURADO, Civil Law Reviewer,
supra at 137).
Q: May the testator apply for allowance of his own will?

ANS: Yes, the testator himself may, during his lifetime, petition the court having
jurisdiction for the allowance of his will (CIVIL CODE, Art. 838, par.2).
Q: What is the remedy against the allowance of a will?.

ANS: The remedy against the allowance of a will is appeal. This is true even though the
allowance of a will shall be conclusive as to its due execution (CIVIL CODE, Art. 838,
par.4).
518
Q: Is the probate of a will mandatory?
ANS: Yes. The probate of a will is mandatory as no will shall pass either real or
personal property unless it is proved and allowed in accordance with the Rules of Court
Q: May a probate court resolve questions concerning the intrinsic validity of the
will?
ANS: No. The questions to be resolved by the probate court must be regarding the
personal condition of the testator at the time of its execution and the formalities
connected therewith. However, the Supreme Court has made an exception when
practical considerations demand that the intrinsic validity of the will be resolved as
when:
1. Probability exists that the case will come up once again on the same issue of
the intrinsic validity or nullity of the will as when the cause of the invalidity is on
the face of the will (Nepomuceno v. CA, G.R. No. L-62952, October 9, 1985).
2. Because "practical consideratiort§." demanded it as when there is preterition of
heirs or the testamentary prpyilis are of doubtful legality.
3. Where the parties agree.:.thk.„e intrinsic validity be first determined, the
probate court may also do so "(74eyes v. CA, G.R. No. 12099, October 30,
1997). ::Prik
, . 4.-,
Q: What is the effect of a final.dected4Vgalkka,e
s ''' .-" - --.4-!. qsitN:14
ANS: A judgment or decrq9,490 court wits-jurisdiction jo,pro ate a will is:
Tt
'f. Conclusive ntalthe validity,Ott-e will; . ink
,t.h.
2. Not subject torqollateral
tin, I: attack;
- 41., stands as final, pot modified, set aside, or
revoked by ..,, direr Npeeding, 94reversed on 44 tka higher court; and
3. Concluslvgleehel iplq world (J't' ADO, Successio,, supra at 142).
Note: CriminVelion will 'Ina% agOns rthe forger ofithe thrill which had been duly
admitted to pipbate bylitcourt of compete `t jurisdiction Mercado v Santos, G.R. No.
45629, Septdraer 221.934 '..z.4
,. ..
I,
t sArnbA 1 - 115 ,
Q: What are the growas-tEr,disallciwanc of a will?
ANS: The will shall disallred in '111/ o , tie following cases: (FIDU-SM)
4
1. Formalities reeuiredby law have eecomplied with;
2. Testator was, saftb, or oprxjt:geti Unable of making a will, at the
time of its exk tion; Ai . '
3. Will was exec; throdgh force or under Duress, or the influence of fear, or
threats; e
4. Will was procured y Undue and improper pressure and influence, on the part
of the beneficiary or of some other person;
5. Signature of the testator was procured by fraud; and
6. Testator acted by Mistake or did not intend that the instrument he signed
should be his will at the time of affixing his signature thereto (CIVIL CODE, Art..
839).
Note: Art. 839 is an exclusive list and no other grounds can serve to disallow a will (Sps.
Ajero v. CA, G.R. No. 106720 September 15, 1994).
Q: What is meant by institution of heirs?
ANS: Institution of heir is an act by virtue of which a testator designates in his will the
person or persons who are to succeed him in his property and transmissible rights and
obligations (CIVIL CODE, Art. 840).
Q: What are the requisites for a valid institution of heir?
1. The will must be extrinsically valid;
a. Testator must be capacitated;
519
• ..-1,.:-is A;?..*-t-P.'t,';;;....n.r ,;;We'
b. Formalities must be observed;

c. No vitiated consent;
d. The will must be duly probated;
e. The will must have been the personal act of the testator.
2. The institution must be intrinsically valid; and
a. Legitime must not be impaired;
b. Heir must be certain or ascertained;
c. No preterition;
3. The institution must be effective;
a. No predeceased heir;
b. No repudiation by heir;
c. No incapacity of the heir (PARAS, Wills and Succession, supra at 196-
197).
Q: What is the effect if no heir is instituted In the will?

ANS: A will shall be valid even thougb,,it.shout not contain an institution of an heir, or
such institution should not compyriS the- eritir es), le,„and even though the person so
instituted should not accgotlhefirtieritdse o Should lie capacitated to succeed. In
such cases, the testerhefiaatyrdivositions,.able(intacedhjance with law shall be
complied with and e kniaintier shall pass .to, tie jeia heirs (intestate/legal
succession) (C/V/ 6/3V fr8 "11,,
.`,
2f A\
lm
Q: Does the te$ ato 1) e c mplet fre9 ,onfin the disposition of estate?
ANS: It depen s. If th testafor has Ng,' ulsory hdirs, hit re° An of disposition is
ABSOLUTE in Fis—at w o e es es •1posa•ti le. If thk estapar has compulsory
heirs, his free o f isposit on 'gore",d, ti tie disposable, flee portion of his
estate, but no rtion Orli s se. 'JURA 0, Civil Ltawpeviewer, supra at
162).
In 47‘,:i
Q: What are th or t 1101%4 pitMtiop,. o n h r?
ANS: The follovkg mu be coif) (FU t" /
7-4 A-
1. The testator sh desig Ote he0 and surname but an error in
the name urnam or iqUm e 4.ef shall got vitiate the institution
when it is p ssib,to fig ptispn institu
ted (CIVIL CODE,
Art. 844).
2. In case there re Persons a r -`0:4p same name, the testator shall
indicate some CircanstVce whi th stitnted heir may be known (CIVIL
CODE, Art. 843). If amonTre aving the same names and surnames,
there is a similarity of circumstances in such a way that, even with the use of
the other proof, the person instituted cannot be identified; none of them shall
be an heir (CIVIL CODE, Art. 844).
3. The designation may be made in any other Form, as long as there will be no
doubt as to the identity of the heir/s instituted;
4. Dispositions in favor of an Unknown person shall be void, unless by some
event or circumstances his identity becomes certain; and
5. A disposition in favor of a definite class or Group of persons shall be valid
(CIVIL CODE, Arts. 843-845).
Q: What is the test to determine the validity of institution of an heir?

ANS: The proper test is the possibility of finally ascertaining the identity of the instituted
heir either by intrinsic or extrinsic evidence (TOLENTINO, Succession, supra at 163).
Q: What is meant by the presumption of equality among heirs?

ANS: It means that when heirs are instituted without designation of shares, they are
deemed to inherit in equal parts (CIVIL CODE, Art, 846).
520
•!,"--17:;,' .,' • I••
-
t 1 ••
Q: Is the presumption of equality among heirs applicable in all instances?

ANS: No, the rule is not absolute. It should be understood as referring to heirs who are
of the same class or juridical condition, and to the portion of the. inheritance of which the
testator can freely dispose. For as between one of whom is a compulsory heir and the
other a voluntary heir, without designation of shares, it is not legally possible to give
them equal shares of the entire inheritance. The legitime of the former must first be
separated and allotted to him, because the testator cannot deprive him of it; the
remainder of the free portion is what shall be divided equally between the two
Q: What is meant by the presumption of individuality among heirs?

ANS: It means that when the testator institutes some heirs individually and others
collectively, those collectively designated shall be considered as individually instituted,
unless it clearly appears that the intention of the testator was otherwise (CIVIL CODE,
Art. 847).
Q: What is meant by the presump,tidig ;simultaneity among heirs?

ANS: It means that when the testatKbaltigo.the succession a person and his children,
they are all deemed to have beerggititRecilt imultaneously and not successively (CIVIL
CODE, Art. 849). *" 1 R46?
r.'5
AA
,..
Q: What is the rule on institutioncifio'irp rs-anaisr heirs? :10
ANS: In case of testate ,i.tFOrsiori, thki eritance she)
e e distribut d equally between
all brothers or sisterfwhether full o.. i a blood, unless a i rent intention appears
(CIVIL CODE, Art. 84 bses of Jr1 estate succession, bifot b e ; and sisters of the full
s are4Clduble An that of the b othbrs 11nd
blood shall be entitled o. es
..
sisters of the haft-
blood (CIVIL CODE, i r 1,, it
qt.
A I
I\
Q: Suppose' of 46,,Ins itutiont of heirs, s based,o ,a,,,false,,cause, what is the
`
V ',
-cvaPf
effect of the fa tity of c"causITA
ANS: As a gene rul Is' ofIsuc use would Air no effect. This is clear
from the provision tror cle 50 whip'h de =res that the statement of a false cause shall
be considered as Ebt writt Such ins ay be annulled only when one is
satisfied, after an exams t* of the will, estator clearly would not have made
the institution if he had- own thethairse r2 lb at -Mustria v. Reyes, G.R. No. L-
23079, February 27, 19,7').
Q: What 'are the rules on u cession when an institution is in aliquot parts?

ANS: The rules to be followed are:
1. If the testator has instituted only one heir, and the institution is limited to an
aliquot part of the inheritance, legal succession takes place with respect to the
remainder of the estate. The same rule applies if the testator has instituted
several heirs, each being limited to an aliquot part, and all the parts do not
cover the whole inheritance (CIVIL CODE, Art. 851);
2. If it was the intention of the testator that the instituted heirs should become
sole heirs to the whole estate, or the whole free portion, as the case may be,
and each of them has been instituted to an aliquot part of the inheritance and
their aliquot parts together do not cover the whole inheritance, or the whole
free portion, each part shall be increased proportionally (CIVIL CODE, Art.
852); and
3. If each of the instituted heirs has been given an aliquot part of the inheritance,
and the parts together exceed the whole inheritance, or the whole free portion,
as the case may be, each part shall be reduced proportionally (CIVIL CODE,
Art. 853).
521
( •' ,-.;?0,:C."•:,P -,--;};,=.7t,:f.F.",,:•,,:::::F, ' .,..-ekssi !.4
.12 ,414,• ••• et
1W 1 ‘ , •
Q: What is preterition?
ANS: Preterition is the omission in the testator's will of one, some, or all of the
compulsory heirs in the direct line, whether living at the time of the execution of the will
or born after the death of the testator (CIVIL CODE, Art. 854).
Q: When is there preterition?
ANS: There is preterition when: (CTS)
1. The heir omitted is a Compulsory heir in the direct line;
2. The omission is complete and Total in character; and
3. The compulsory heir omitted Survives the testator (JURADO, Succession,
supra at 174).
Q: In case of preterition, from which part of the estate will the share of the omitted
child or descendant be taken?
ANS: The share of a child or descendant omitted in a will must first be taken from the
part of the estate not disposed of by the 1/11, if any; if that is not sufficient, so much as
heirs (CIVIL CODE, Art. 855)e •-r day.

may be necessary must be takpordrOJOnaliProm,the shares of the other compulsory
\t/
Q: What are the effects 6frteritioIfr— •
ANS: The effects area }
1. It annuls e instito torvcirlieir;
vw
2. The de andleocies at'a valid ins aslhe re ot tnofficious;
3. If the Dmitte compulsory 'fieirsboutordie before er testator; the institution •
shall ffectual,fwithout_pre)Uclice_.to_the) right 'fiiebksentation (CIVIL
COD d54);• and
4. Intes,ate gcessio ensTikc ji'Vht.iid:ieNugaid, G.R.' Pym No.2 423445, June 23,
1966 ,TS,2717,7
sr)
Q: Distinguis pr lentio leo opi
Tlesst th legal trenaltion inter vivos.
ANS: The follovig are he &cesEr
Advancement of Legitime/
Preterition
Donation Inter vivos
As to the omission of an heir
There is total omission otIann hat iv I ‘7"1 hktieYslenot entirely forgotten
As to the legitime
There is total deprivation of legitime of an The heir received less than the
heir portion of his legitime
As to its effect on the institution ofheir
Results in the total annulment of the Remedy: Demand for completion of
institution of heirs legitime
• As to process of contribution/reduction
The share of a child or descendant omitted Testamentary dispositions that

in a will must first be taken from the part of impair or diminish the legitime of the
the estate not disposed of by the will, if compulsory heirs shall be reduced
any; if that is not sufficient, so much as on petition of the same insofar as
may be necessary must be taken they are inofficious or excessive
proportionally from the share of other (CIVIL CODE, Art. 907).
compulsory heirs (CIVIL CODE, Art. 855).
522
Q: What happens if the voluntary and compulsory heir predeceases the testator?
A: A voluntary heir who dies before the testator transmit nothing to his heirs. Meanwhile,
a compulsory heir who dies before the testator, a person incapacitated to succeed, and
one who renounces the inheritance, shall transmit no right to his own heirs except in
cases expressly provided for in this Code (CIVIL CODE, Art. 856). Compulsory heirs
who predeceased or who became incapacitated may be represented but only as to his
legitime (JURADO, Succession, supra at 185).
Q: What is meant by substitution of heirs?

ANS: Substitution is the appointment of another heir so that he may enter into the
inheritance in default of or subsequent to the heir originally instituted (CIVIL CODE, Art.
857). It is an act by which the testator designates the person/s to take the place of the
heir/s first instituted.
Q: What are the different kinds of substitution?

ANS: Substitution may either be:
1. Simple or Common;
2. Brief or Compendious;
3. Reciprocal; or
4. Fideicommissary (CIV/D.VOpE
, 858).
Q: What is simple or commowsubstituttini?- 9„

ANS: Simple •or comm, rgabstitutioi .that which ake's. ace when the testator
designates one or mo 'ersons to slbs tute the heir/s institited in case such heir/s
should:
1. Die before hifw
2. Should olivish Vaq_ cept the in
3. Shoup:be irmAcitated to‘pcce RADO, Succession,
A'
sup lay 12411.41:
Note: A sim0q substit itho -D. Irh it refers, shall
comprise the threeed unres erwise (CIVIL CODE,
Art. 859).
Q: What is brief or compe r tous substt •

ANS: A brief substitute ' is where* t e-re-gile - o m bOpersons designated by the
testator to substitute only r,ie heir. On the other hand, there is compendious
substitution when onelffieir i designated to take the place of two or more heirs
(JURADO, Succession, sup a 189).
Q: When is there reciprocal substitution?

ANS: There is reciprocal substitution when two (2) or more persons are not only
instituted as heirs, but are also designated mutually as substitute for each other. If the
heirs_ instituted in Unequal shares should.be reciprocally substituted, the,substitute shall
acquire the share of the heir who dies, renounces, or is incapacitated unless it clearly
appears that the intention of the testator was otherwise. If there is more than one
substitute, they shall have the same share in the substitution as in the institution (CIVIL
CODE, Art. 861).
Q: What is the effect of substitution?

ANS: As a general rule, the substitute shall not only take over the share that would have
passed to the instituted heir, but he shall be subject to the same charges and conditions
imposed upon such instituted heir.
523
Exceptions:
1. When the testator has expressly provided the contrary; and
2. When the charged or conditions are personally applicable only to the heir
instituted (CIVIL CODE, Art. 862).
Q: When is there fideicommissary substitution?

ANS: Fideicommissary substitution takes place when the fiduciary or first heir instituted
is entrusted with the obligation to preserve and transmit to a second heir, the whole or
part of the inheritance (CIVIL CODE, Arts. 863-865).
Q: What are the requisites for fideicommissary substitution to take place?

ANS: The requisites are:(ESO)
1. There is a first heir called primarily to the Enjoyment of the estate;
Note: He is recognized as an instituted heir and is entitled to the enjoyment of
the property; but he cannot alienate the property (TOLENTINO, Succession,
supra at 211-212). r,..,‘,0,,,.c, 41,.....r.roa.„.„„..,,.
2. There is a Second heirtrand I 1. ). ,„,..,,,

3. There is an Obligrtiottqlearq irJp.s.k:1 0004 first heir to preserve and
transmit to th .4-6eald bek.themhole.or - -,abarlof the .N, estate (CIVIL CODE, Art.
863). ‘‘,•) ''''' -
kt.- i -,,. -‘,.,:
Q: From who f tzli) doesmthd*cg.,nd heir aT:iuy5 'his right over the
property? r hh\\ dcl. (
ANS: He is re Ily a s cond heir instittAhby the testator; qe Inot succeed the
fiduciary for h10 irgs rights from-tire rTment of the testa o s death (TOLENTINO,
Succession, supra-at 293). The secondW?icirsedirac uire thi rightleo the succession,
from the time qf,t>oteistator's ileath,e ipugliihe should die eforelhe fiduciary. The
right of the secOndlIke‘shallass to hiss113 r :(CIVIL 9,Z A 866)
Q: What doeseCgliga e elive..,IirldIrd_le?

ANS: The fiduciaryshalkbe o ge tetiblive?:te) tiep anc to thegecond heir, without
other deductions than t ose lilti e," rorti egit to exOnses, credits and
improvements, sa a in the 4ti e`st prov ded otherwise (CIVIL
CODE, Art. 865, par.
A.\
Q: What are the limitation ed laivApork
, fidet ommissary substitution?
ANS: There are four limitation L BE) /VII 1-1'
1. Substitution must not go-rogMtrene egree from the heir originally instituted
2. Fiduciary and fideicommissary must be Living at the time of the death of the
testator (CIVIL CODE, Art. 863);
3. Substitution must not Burden the legitime of compulsory heirs (CIVIL CODE,
Art. 864); and
4. Substitution must be made Expressly (CIVIL CODE, Art. 865).
Q: How must fideicommissary substitution be made?

ANS: Substitution must be made expressly:
1. By giving it the name of a fideicommissary substitution; or
2. By imposing upon the fiduciary (first heir) the absolute obligation to preserve
and deliver the property to the fideicommissary (second heir) (CIVIL CODE,
Art. 867(1)).
Note: A provision whereby the testator leaves to a person the whole or part of the
inheritance, and to another the usufruct, shall be valid. If he give6 the usufruCt to various
persons, not simultaneously, but successively, the provisions of Article 863, as to
fideicommissary substitution, shall apply (CIVIL CODE, Art. 869).
524
Q: What provisions and substitutions shall not take effect?
ANS: The following shall not take effect:
1. Fideicommissany substitutions which are not made in an express manner;
2. Provisions which contain perpetual prohibition to alienate, and even a
temporary one, beyond the limit fixed in Art. 863. The prohibition to alienate is
good only for 20 years; beyond that it is VOID (CIVIL CODE, Art. 870);
3. Those which impose upon the heir the charge of paying to various persons
successively, beyond the limit in Art. 863, a certain income or pension; and
4. Those which leave to a person the whole or part of the hereditary property in
order that he may apply or invest the same according to secret instructions
communicated to him by the testator (also called "tacit fideicommisum") (CIVIL
CODE, Art. 867).
Q: What happens if a fideicommissary substitution is void?

ANS: It does not prejudice the validity of the substitution of the heirs first designated; the
fideicommissaiy clause shall simply be„wnsidered as not written (CIVIL CODE, Art.
,
868).
• • .
Q: How is the institution of an 110,00n
ANS: As a rule, the institution of k h kOtratbe made:
1. Pure or simple; 61141:
&,
2. Conditionally; '.10 4V. iec.
1122,
3. Fora term; an, d 144,
4. For a certainip • rpose or cap se,( odal) (CIVIL CODE%6It. 871).
Q: What is the principle of ntd'ucliabiliof the legiti

ANS: It meansAhaV the i'es .ator cannot knpose any arg burden, encumbrance,
condition, or sArsfitutiopwilatsoeveriko e legitime o The aimpt.its ory heirs except
1. WheAgeztgitiar;,declares that e heredttA;.. -,esta of be partitioned
for a*eriod notfaedir,20 ye (CIVIL COD 0
2. When there isWiva ( L CODE, A ),
3. Family rZeaertpAm(ky cOpE, A 159);
4. When therestetor expressly forb d the,division of the estate but not to exceed
twenty (20) yeaf,,vidffd 77,
5. When there is valid disr CIVIL C-ODE?Art. 1083).
et
—Q: Are impossible co dins in testamentary dispositions considered as not
imposed?
ANS: Yes. Impossible conditions and those contrary to law or good customs shall be
considered as not imposed and shall in no manner prejudice the heir, even if the testator
should otherwise provide. (CIVIL CODE, Art. 873).
Q: Is an absolute condition not to contract a first marriage valid?

ANS: No. An absolute condition not-to contract a first marriage is always void and will
be considered as not written (CIVIL CODE, Art. 874). Undoubtedly, this condition is
contrary to morals and.public policy because it would deprive a person of one of his
inherent or inalienable rights — the right to choose his own status (JURADO,
Q: Is an absolute condition not to contract a subsequent marriage valid?

ANS: An absolute condition not to contract a subsequent marriage is also void, unless
imposed upon a widow or widower by the deceased spouse or by the latter's
ascendants or descendants (CIVIL CODE, Art. 874). Even so, however, the legitime of
the surviving spouse cannot be impaired.
525
SEDAN RED BO(
Note: The descendants referred to would only be the legitimate children of the
deceased spouse in a prior marriage (TOLENTINO, Succession, supra at 231).
Q: Is a relative prohibition not to contract a first or a subsequent marriage valid?

ANS: A relative prohibition, like those relative with respect to persons, time or place, to
contract a first or subsequent marriage is considered valid unless:
1. It becomes so onerous or burdensome; or
2. The prohibition really amounts to an absolute one (PARAS, Wills and
Q: What is meant by a disposicion captatoria?

ANS: Any disposition made upon the condition that the heir shall make some provision
in his will in favor of the testator or of any other person is what is known as a condition
captatoria. Consequently, if the testator makes a testamentary disposition in his will
subject to such condition, it is known as disposicion captatoria (JURADO, Succession,
supra at 221). Under our law, nst,prily.the„,29ndition but the entire testamentary
disposition shall be void (C/1/114ODE, Airt675). .,.
..., N
Q: When must the co14109,fdttilled?....,„, '
, .A/
ANS: The time of ful It eofkotraiiion are govern d, ytheifo owing:
1. Any purel pot tatiis„c.onditibrtritabsed,upon,a heir{ust riNebe fulfilled by him
as soon — 4) learns of I the
Iv, 'testator's
•, death, ett ,hen the condition,
alread corn lied with, cannot betfulfifted agaiii (C/ VCOIArt. 876);
2. If the otes 4ve ndition impqsed upon the heir (n6aa 'ye, or consists in
not d in—Phe heir, ega.ee ordevisee act3uir s his right as matter of course
withotitiny imitatio oth"ePft-arii ,o0ciffig or not givtn so thing. However,
unde A 'cl 879, in orderilhAs' i v*, le tee or devise hall not perform'
or gi A hich ohibite4A .,Wrequire 1ive bond r security known
as "c ucion uci
a ).
3. If the enditi n is e2,fc.rsdh ,1,0 cient it happens or be
fulfille at an • or% eNttier y.• da h of e test9 or, unless he has --
provide otherw ‘?. S , N4.,,eetifistiseor s &ad ithave been fulfilled at
the time will wa ex ck Angli festator re thereof, it shall be
deemed plied Aii heilit oWled e t reo the condition shall be
considered f faedgrt n.it.is.of.sTa(rAii;e, t it can no longer exist or
be complied witl% ai IVIL (Rivt,rwr
Q: What is caution muciana?
ANS: It is a bond or security given by the heir, legatee, or devisee that he will not
perform or give that which is prohibited (CIVIL CODE, Art. 879).
Q: What is a modal institution or institution sub modo?

ANS: It is the attachment by the testator to an institution of heir, or to a devise or legacy,
of a statement of the:
1. Object of the institution;
2. Application of the property left by testator; or
3. Charge imposed by him (CIVIL CODE, Art. 882).
Q: What are'the rules in determining whether it is a condition or a mode?

1. When in doubt as to whether there is a condition or merely a mode, consider
the same as a mode;
2. When in doubt as to whether there is a mode or merely a suggestion, consider
the same only as a suggestion; or
526
3. The 'condition' suspends but does not obligate; the 'mode' obligates but does
not suspend (for he who inherits with a mode is already an heir; one who
inherits conditionally is not yet an heir (TOLENTINO, Succession, supra at
242-243).
Q: Is the doctrine of constructive fulfillment applicable?

ANS: It depends. When without the fault of the heir, an institution sub modo cannot take
effect in the exact manner stated by the testator, it shall be complied with in a manner
most analogous to and in conformity with his wishes (CIVIL CODE, Art. 883). If the
condition is potestative or mixed, the doctrine is applicable. If the condition is casual, the
doctrine is not applicable since the fulfillment of the event which constitutes the
condition is independent of the will of- the heir, devisee/legatee (JURADO, Succession,
supra at 229).
Q: What are the kinds of term?

ANS: The kinds of term are:
1. Suspensive Term: Rights,ariv,s spended until the arrival of the date or time
designated by the testatplapil
2. Resolutory Term: Rigli Var'e4 mediately demandable but subject to
extinguishment upon thela''r ,.0a , e date or time designated by the testator
(JURADO Succession stip*, 0) .
Note: In an institution with a term, th(epg s a ready tted to the heir upon the
death of the testator; the‘rg mere)/,,„, s Ties to determine demandability of such
right already acquired (i/7,0LENTINO,,S Assion, supra at 2
Q: What is the differOcel atvden-term nd condition?qq

A: With respect toe'rm, thriglit. is alrea • ransmitted toi he lieir pon the death of the -glutt
testator; the berm meigyNerveb takde ine the dgmandabili of rights already
acquired. As itggngitie acqtkition e right de ds %happening of the
theenditio—vd es
condition, sucTilhat if,Fr Kr
happen:4 of succeed. (Id. at
236). '"1,,
4 ,t4
Q: What is a legitirife?t
ANS: Legitime is that 05 t.p ftl e testator' ich he cannot dispose of because
the law has reserved for certaiklitie Wire, called compulsory heirs
(CIVIL CODE, Art. 886)
%1
Q: Who are compulsory rs'?
ANS: Compulsory heirs are those.. for whom the law has reserved -a portion of the
testator's estate which is known as the Iegitime.
In particular, the following are compulsory heirs:
1. If the testator is a legitimate person, the compulsory heirs are the following
(CIVIL CODE, Art. 887): .
a. Legitimate Children and Descendants (LCD);
b. In default of the foregoing, Legitimate Parents and Ascendants (LPA);
c. Surviving Spous6 (SS); and
d. Illegitimate Children and Descendants (ICD).
2. If the testator is an illegitimate person, the compulsory heirs are the following
(JURADO, Succession, supra at 235):
a. Legitimate Children and Descendants (LCD);
b. Illegitimate Children and Descendants (ICD);
'c. In default of the foregoing, Illegitimate Parents only (IP); and
d. Surviving Spouse (SS).
527
Note: The adopted shall be deemed to be a legitimate child of the adopter and entitled
to the same successional rights as legitimate children (CIVIL CODE, Art. 189, FAMILY
CODE, in rel. to R.A. 8552, Secs. 17 & 18). Under the Family Code, there is no more
distinction between acknowledged natural children and illegitimate children. They are all
considered as illegitimate. Thus, the 5:4 ratio under the 2' paragraph of Art. 895 no
longer applies.
Q: What are the rules in legal or intestate succession to the estate of the
adopted?
ANS: In legal and intestate succession, the adopter(s) and the adoptee shall have
reciprocal rights of succession without distinction from legitimate filiation. However, if the
adoptee and his/her biological parent(s) had left a will, the law on testamentary
succession shall govern (R.A. No. 8552, Sec 18).
In intestate succession, the adopter and the adoptee are mutually legal or intestate of
each other. The biological parent,s,,will,,noL,,gel anything because all legal ties are
severed as between them. 19,1115te syccsspn,Ilfghp adoptee and his/her biological
parents had left a will, t4plaw On\rtestazi,e'ntlryjusi*esiqn shall govern. Considering
that all legal ties are se.vgr(d bpt`Webrahe”adopt* 4nd fiis.)61'.11er biological parents, the
latter shall not inherit4nythihgtyficay of legitirrie. 'Ho ever, if t' is still a free portion
left on the estate or tRedeoedent-adopfTr fie- or-A2 e same to his or her
.
biological parentsfyi4 bpul on b .a last w411 or to tamest 4. MARIA Persons,
supra at 737-740. .
Note - Altern er: Its nordieltOether bec. t18 of R1. No.3552 repeals Art.
190 of the FaTily-Soie pro Flirelf4TthellOgit&fules applictire inVegal or intestate
succession to 1,15eState of thkadorit4.00inae onlyrovisions.olLA No. 8552 are
deemed repeledWpdifed amen'd&I%i the la P10-' tY, Family Code,
supra at 323). y
Legal or intesta e\sbcbecio sto}, e estate b fh ;adgpte_tr sha be gdverned by the
following rules:
1. Legitimate and 'Unit' ates.02.1dut,a"C, c'es end"a is and) e surviving spouse
of the adopted shall, in ied yin accordance with the ordinary
rules of leglater inter ate s ccg-
2. When the parentele eir0 ibmate ascendants of the
adopted concur'''wi trieladopte/ wide the entire estate, one-half to
be inherited by the p nL s or agaen d antantrfhe other half, by the adopters;
3. When the surviving spouse children of the adopted concur
with the adopters, they shall divide the entire estate in equal shares, one-half
to be inherited by the spouse or the illegitimate children of the adopted and the
other half, by the adopters;
4. When the adopters concur with the illegitimate children and the surviving
spouse of the adopted, they shall divide the entire estate in equal Shares, One-
third to be inherited by the illegitimate children, one-third by the surviving
spouse, and one third by the adopters;
5. When only the adopters survive, they shall inherit the entire estate; and
6. When only collateral blood relatives of the adopted survive, then the ordinary
rules of legal or intestate succession shall apply (FAMILY CODE, Art. 190).
528
Q: Determine the legitime of compulsory heirs (CH).
ANS: The legitime of compulsory heirs are as follows:
Determination of Legitime
Surviving
Legitime Notes
•Heir
LC % Divide by the number of LC, whether they survive alone

or with concurring CH (CIVIL CODE, Art. 888).
1 LC % The legitime of the SS shall be taken only from the free

portion (CIVIL CODE, Art. 892).
In case of legal separation, the surviving spouse may
inherit if it was the deceased who had given cause for
%
SS the same. qvu_ CODE, Art. 892).
1A Divideg p umber of LC
."?...F* x •
2' or more Same as Thd5160ift,sf the SS shall be taken from the free
LC that of portOrit(V-401C,OREr. rt. 890
each LC ,.. 'W ;' ql -v-eW Nail
--
SS ni #''' i EA-
4L!'"
' , V
LC 1/2 ,I :v. The tegitil of the b IC shaltl bee taken from the free
'' kildirtion (CIVIL CODE, Art. 8' 5).f
IC alitof ;ft' 1
!4C • • lk, ,
i
LC ''. % AV.,:.,'4,
,,i,,iro If there,
1
1 '' 2 or more 1.8niiii7
,a e e Vf
o the SS is the
•Nillvs,
"‘i."4•4 i! same as th pf each LC and it shall be taken from the
SS wri Iree Ortion CIVIL CODE, Arts. 897-898).
de,
'.'b•
a4The legitimao . ,,,_s all be taken from the free
IC 1/2 of
• LC ,. , p? t, on 'pro ided he4ofar *time of such IC shall not
excped the free portion and that the legitime of the SS
•• . g_4
•. must first be fully satisfied (CIVIL CODE, Art. 895, par.
• . . . . ..
The presence of several illegitimate children results to
division of the legitime equally among them, if such
exceeds the free portion — this is based on the principle
that their legitime are first to be reduced due to
preference.
5
1/2 Legitime is fixed at Y2 whether they survive alone or with
LPA
other classes of CH. Rule applies in default of LCD of
decedent; otherwise, they are excluded (CIVIL CODE,
Art. 889).
LPA % The 1/4 to which IC is entitled is taken from the free
portion (CIVIL CODE, Art. 896.
IC % The 1/4 shall be divided in equal shares among several

IC.
529
LPA % The legitime of the SS shall be taken from the free
portion (CIVIL CODE, Art. 893).
SS %
LPA 1/2 The legitime of the SS and IC shall be taken from the
free portion.
SS 1/8
The remaining 1/8 may be freely disposed of by the
IC % testator (CIVIL CODE, Art. 899)
IC % Divide equally among the IC (CIVIL CODE, Art. 901).
SS 1/3 The remaining 1/3 shall be at the free disposal of the

Art. 894).
tes pter(C/VIMODE44.%„,
IC 1/3
dp-f.,„ ix
, r )- ---,,, '''':'$•
/7' N
SS 1/2 y f marriage .is in $.1
\ ) I
a -mo s aQd the deceased dies
' 0 vvithirrrnT§Ph-s-BUT,th y,ha ''beesliving as husband
1
1Q- 40;, and wife r ql more thal fRe *66 - , the remaining 1/2
shall ibe *thEMfree dispos I /of h‘ testator (CIVIL
CODE, Artf9 0). )
1"-•-• I II A
( ee---i 1 a.'"- - pil v.:" i % r— .
1 1/;.4 If majriapellis_ultrtiou/ mortis ?pr:Lstiuse dies within
three (g): s after 1-A, arr age, ••he remaining 2/3
1 4-4 c, hall IA, a`.-t sal of e testator (CIVIL
. ire'
-6 ODE,krt. id
\.<1
.,.. . . •
ci \ ti.14 ‘' e
'J ' "'" ."À
IP 41i
' . Th- ''.* ini,i( • s II be at the de disposal of the
est- Cqt/Nr9PD , . 903).
kr1-,,
IP Excluded *thi ren ihelie nounts established in the
foregotn I
Any child It
.depends •
IP % Only the parents of IC are included.
SS % Grandparents and other ascendants are excluded

LCD - Legitimate Children and Descendants •

SS - Surviving Spouse
LPA - Legitimate Parents and Ascendants
ICD - Illegitimate Children and Descendants
IP - Illegitimate Parents
CH - Compulsory Heirs
530
Q: What happens if an illegitimate child dies before the testator?
A: When an illegitimate child dies before the testator, his rights to the legitime are
transmitted to his own heirs. Representatives may either be legitimate or illegitimate
descendants (CIVIL CODE, Art. 902).
Q: Are illegitimate grandparents entitled to any legitime?
A: No. Inheritance is only up to the illegitimate parents. Illegitimate grandparents are not
considered compulsory heirs (BALANE, Jottings and Jurisprudence in Civil Law
(Succession) (1998), p. 258).
Q: What are the rules of division in case of legitimate parents and ascendants?
ANS: The rules are the following:
1. The legitime shall be divided between the LPA equally;
2. If one of the LPA dies, the whole shall pass to the survivor; and
3. If both LPA die before the testator but is:
a. Survived by ascendant.. of equal degree, legitime shall be divided
equally between the pe at dal and maternal lines.
b. Survived by asceVranisrf different degrees, legitime shall pertain
entirely to the neAadtg,e (CIVIL CODE, Art. 890).
Q: Flow shall the legitime of t e Y. ng spouse and illegitimate children be

determined?
ANS: The surviving spouse, al be 'died to a - ti - amount of which varies
depending upon whet or she su v alone or concufr y with other compulsory
heirs. In case of illegitimate hildren, I ount of their legi varies depending upon
whether they inherit aloV•o as4 d ss oroncurrently witl .ot e classes of compulsory
heirs. The legitime iafifthe s 10ing spous4nd the illegiti at child shall be taken from
the free portion, 4he esta 0, rovided, that
1. In n'O.,c se slial he le itin-Te4of e illegitimatetchil excoed the free portion;
an x, , -,AW-aliaf
2. The legitimeAth unnyi g sp e must firs 4 i Pied (CIVIL CODE,
Art. 896ppar._ 3
n4" ,
Q: In case of legal seqratio. , is the wi.'• ,o. .... dower entitled to the legitime?
ANS: The widow or vkclgderi,vill een - . - eg;;'.e.. enly when he or she is the
innocent spouse. Thelffendin Apbde e • 11 . ded from inheriting from the
innocent spouse by intestate s ccession. Moreover, provisions in favor of the offending
spouse made in the wiPo innocent spouse shall be revoked by operation of law
(FAMILY CODE, Art. 63, pa
Q: What is reserva troncal?
ANS: It is the reservation by virtue of which an ascendant who inherits from his
descendant any property which the latter may' have acquired by gratuitous title from
another ascendant, or a brother or sister, is obliged to reserve such property as he may
have acquired by operation of law for the benefit of relatives who are within the 3rd
degree and who belong to the line from which said property came (CIVIL CODE, Art
891).
Q: What are the requisites of reserva troncal?

ANS: The requisites are the following: (GOD)
1. The property should have been acquired by Operation of law by an ascendant
from his descendant upon the death of the latter;
Note: The term operation of law applies to the transmission of the legitime in
case of testamentary succession and to the entire inheritance in case of
intestate succession, because in one or the other the property passes not by
will, but by mandate of law (TOLENTINO, Succession, supra at 273).
531
•
2. The property should have been previously acquired by Gratuitous title by the
descendant from another ascendant or from a brother or sister; and
3. The descendant should have died without any legitimate issue in the Direct
descending line who could inherit from him (JURADO, Succession, supra at
248).
Q: Who are the parties involved in reserva troncal?

ANS: The following are the parties involved:
1. Origin - Ascendant or brother or sister from whom the property originally came;
2. Propositus - Descendant who acquired the property by lucrative title from the
foregoing;
3. Reservista - Ascendant who received the property by operation of law from the
descendant; and
4. Reservatarios - Relatives within the edegree belonging to the line from which
the property came (TOLENTINO, Succession, supra at 285).
Note: There are two views on the irgerpretaton of the line from which the property
came". One view maintains that' linelinduZe :teyfry relative of the descendant
propositus within the third4fregr4 in tht sanle‘thelalthough the relative may not be
related by consanguinerdifie property. Another view deems it
necessary to considerthe 4..lchllom which the property ca that the relative must
not only be relatelby4oysisanguinity-f9Hrdes‘ndee3prol,pitus, but also to the
source or origirre, opercy putycli Sugcessroft, stipiat 263-264).
Note: Since the ascend nt-rlservista acciOrethihe owversktof S114.tproperty upon the
death of the descends t-propositus subje9tkto the res lutonActi5dition that there must
exist at the time o uts death relatives o escen ant who dr'6',1011 the third degree
and who belo e line trot-R-4-41th eli4i6rty ame, is clear that all of the
attributes of t f owneship betn excl sively, plthott9 conditional and
revocable. As a co questa the acqu Jo. only rec a .limited a "d revocable title.
.
Therefore, aft pibe- attrli anosm.g.6 then rescind the
alienation or eRcumb hichfit is 6 ject has already
been fulfilled (JLTADO,
Q: What are the tIvries o

ANS: The theories are,,L
1. Reserva maximalp erve.shod ap e property that has been
gratuitously acclared om so- e s'-gqdl a•nt- rother or sister, that can be
included within the legiti e of th 8 arthe reserva is'/ of the estate
2. Reserva minima - all the5-rap passing to the reservista must be
considered as passing partly by operation of law and partly by will; hence % of
the properties acquired gratuitously by the gewendant from his ascendant
should be reservable, and the other half should be free (TOLENTINO,
Note: Reserva minima is supported by Filipino and Spanish commentators (JURADO,
Q: Can reservatarios or reservees alienate the property during the existence of

reservation?
ANS: Generally, the reservatarios do not have any other rights over the property during
the existence of the reservation (TOLENTINO, Succession, supra at 295). However, the
reservatarios may dispose of their right In its uncertain and conditional form. Although
they cannot alienate any perfect or definite right over the reserve property, they can
alienate their right in its contingent form. If they die before the reservista, they transfer
nothing because they do not definitely acquire anything, and the transfer becomes void.
But if they survive him, then the transmission is effective, because they have disposed
of that which definitely becomes theirs (TOLENTINO, Succession, supra at 297).
532
Note: There is a right of representation on. the part of the reservatarios who are within
the third degree mentioned by law. These reservatarios have the right to represent their
ascendants (Fiorentino v. Fiorentino, G.R. No. 14856, November 15, 1919).
Q: What is disinheritance?
ANS: It is the act of the testator in depriving a compulsory heir of his legitime for causes
expressly stated by law (CIVIL CODE, Art. 915). The requisites are the following: (LV-
CUTS-RED)
1. Cause must be expressly stated by Law;
2. Effected only through a Valid will;
3. Cause must be Certain and true;
4. Unconditional; . ..
5. Total;
6. Cause must be Stated in the will itself;
7. Will must not have been Revoked; '
8. For an Existing cause:- and
9. The heir disinherited must *Designated in such a manner that there can be
no doubt as to his identityPAR4 Wills and Succession, supra at 380).
Q: What are the effects of disireeiititAel?

ANS: The effects, are. following ,.,.. ,tos
1. Deprivation of the cadiK6u1sOixf eir Aaf:Vinh. fed of any participation in
the inheritanceln,ding the legi e and free portio . n ,
2. The children/descendants 40 erson disinherited pkall take hi,or her place

. and shall presery‘the rigtjtedf ompulsory heirs/TT espect to the legitime;
N IN ..
and • 47' 1?",
or
The disi ritedtargnt shall no., have the usufruct or administration of the
prope4w _., hichEconstitutes
0,-...,
-, the legitime (JURADO,
i
S cceskn, supra at 343).
Note: If the la el, In tpfrnsitkers to,..disinheirdice as depriving ex.,o ulsory heir of his
'. ause thrq'frel portAcoulap dispose
legitime, it is Pe a,stator in favor of an
instituted heir. Holzeveligte testatqr dais not institute a eii-7but simply provides
that the 6ompulsorOfieVis dRinherlted b "him, then the latter, if he is also an intestate
heir, will lose not onlY tbe legume but the pitimacgount that he would have received as
intestate heir (TOLENTt 9,06ccession, triPrW6656);1._
6-1' ‘*Ifiatiir6
Q: When is there an idgerfec4,d3sinheritance?
ANS: It is when the disinWliAe is:
1. Without a specieearn of the cause;
2. For a cause the truth of which, if contradicted, is not proved; or
3. When the cause is not one of those set forth in the Code (CIVIL CODE, Art.
918). .
Q: What is the effect of an imperfect disinheritance?

ANS: If the testator had made a disposition of the entire estate, imperfect disinheritance
shall annul the institution of heirs insofar as it may prejudice the legitime of the person
disinherited; but the devises and legacies and other testamentary dispositions shall be
valid to such extent as will not impair the legitime (CIVIL CODE, Art. 918). It does not
affect the dispositions of the testator with respect to the free portion (TOLENTINO,
If the testator did not dispose of the free portion in his will to others, and the disinherited
heir is also an intestate heir, then, by the ineffectiveness of the disinheritance, the heir
must receive everything that he is entitled to get by the laws of intestacy, and not only
his legitime (Id 360).
533
AVN
Q: What are the sufficient causes for the disinheritance of children and other
descendants?
ANS: The following shall be sufficient causes for the disinheritance of children and
descendants, legitimate as well as illegitimate: (6-FC-DRAMA)
1. When a child or descendant has been found guilty of an Attempt against the
life of the testator, his or her spouse, descendants, or ascendants;
2. When a child or descendant has accused the testator of a crime for which the
law prescribes imprisonment for six 1§1 years or more, if the accusation has
been found groundless;
3. When a child or descendant has been convicted of Adultery or concubinage
with the spouse of the testator;
4. When a child or descendant by Fraud, violence, intimidation, or undue
influence causes the testator to make a will or to change one already made;
5. A Refusal without justifiable cause to support the parent or ascendant who
disinherits such child or descendant;
6. Maltreatment of the testator„by:worapLdeed, by the child or descendant;
7. When a child or descentgrt leadsia Disiporable or disgraceful life; or
8. Conviction of a.,.-4 ,..„.dime hich ksTied ,.. ``with. it penalty of Civil interdiction
(CIVIL CODEA 'Op . ....,....-
• ,0,0'
.,-
..4" 1
Q: What are the sy iciebt,cfu,se.s.fortficditinheritance0 patents or ascendants?
ANS: The followi itt)stAlfbei rsufficiipint Vusqp for lhes‘disin eri nce of parents or
ascendants, wheiherlegifimate or illegitimate: (6FA4RPt)
1. Whenpants h ve AbandptIO'ci their child en or their daughters to
live a or immoral life, or al emp e against therirtRe . ....
2. Whe rent o asc`66 ayst. $slieOrli conVicted °ran' Attempt against the
life o tator, hi or h rir?o!We'scencjants, or §ce nts;
3. Whe renrg
%.,. scendant4fas:;accused- e sTlettator o crime for which •
the Ilir ffeperibei nsonmen ears ohngssre, if the accusation
has been/fouhd to
4. When e pare`qt or
Ise;n
dafitli
f
Adultery or concubina. ge
with the pousef the es
5. When th parenNr dsc,§ tk-b (Ft'," timidation, or undue
influence c ves tDe festIto -tosake-Piivil r o one already made;
6. The loss of Eirvitgaiitlio irtyzfor-cau s spite his Code;
7. The Refusal to Iuggol dit e childreenAte,4aend s without justifiable cause;
or
8. An Attempt by one oft ' nst the life of the other, unless there has
been a reconciliation between them (CIVIL CODE, Art. 920).
Q: What are the sufficient causes for the disinheritance of spouses?

ANS: The following shall be sufficient causes.for disinheriting a spouse: (6-FLARP)
1. When the spouse has been convicted of an Attempt against the life of the
testator, his or her descendants, or ascendants;
2. When the spouse has accused the testator of a crime for which the law
prescribes imprisohment'of six (§) years or More:and the accusation has been
found to be false;
3. When the spouse by Fraud, violence, intimidation, or undue influence cause
the testator to make a will or to change one already made;
4. When the spouse has given cause for Legal separation;
5. When the spouse has given grounds for the loss of Parental authority; or
6. Unjustifiable Refusal to support the children or the other spouse (CIVIL CODE,
Art. 921).
534
ti•
21.± 4.,Vttr 7
Q: What are the effects of subsequent reconciliation between the offender and the
offended party?
1. If no disinheritance has been made yet, no disinheritance can now be done;
2. Disinheritance already made is rendered ineffectual, it is as if there had been
no disinheritance at all; and
3. The heir will receive everything that he would have received had there been no
disinheritance, whether it be under the provisions of the will or by operation of
law (TOLENTINO, Succession, supra at 373).
Note: Reconciliation is the resumption of genuine cordial relationship between the
testator and the disinherited heir, approximating that which prevailed before the testator
learned of the cause for disinheritance, reciprocally manifested by their actions
subsequent to the act of disinheritance.
The pardon must expressly refer to the heir disinherited and specifically to the acts
causing the disinheritance. Furthermorpoluch pardon must be accepted by the heir
(TOLENTINO, Succession, supra at.a70)' The law contemplates a bilateral act, not a
unilateral act of the testator. Hence;ipen: is not effective as a means of reconciliation
(JURADO, Succession, supra at 343) :
Q: Where the cause for n'ce is likeswise a grOnd for unworthiness to

succeed, what is the effect- òf ass .tulgatintkr .R cotc
w4„ nation upon the heir's
capacity to succeed? .,.jt.?,:••
ANS: The effects are t.1*'follpwing:
1. If disinheritartejles been madei, he disinheritance becomes ineffective (CIVIL
CODE, Art 0p);00 :1
2. If disinloitance ,I0nct been e, the heir continles o be incapacitated to
succd unlenspkdoned 133nttie tator under Article 103"3.
Nat:
Q: What are kp rights ofilie detcbcidarits of the per*o,. !gm ted?
ANS: The childrwriaratendM of e person dietifiVriga shall take his or her
place and shall preeellirLfights of corntilsory heirs with respect to the legitime; but
the disinherited parent shall riqt have the1.ff,ruct.• administration of the property which
constitutes the legitimeCLVOCODE, Art. g2-317
0-46
Q: Who are the persot,i,s7that ietestator may charge with legacies and devises?
ANS: They are the folloMpsg•
1. Compulsory heir;
2. Voluntary heir;
3. Legatee or devisee; and
4. Estate.
Note: The legatees or devisees will be considered burdened only when the testator
expressly provides. In the absence of any provision charging a legatee, or devisee with
the payment of legacy or devise toanother person, the heirs iiiritie'testator have the
obligation to pay such devise or legacy (TOLENTINO, Succession, supra at 376). If the
will is silent with regard to the person who shall pay or deliver the legacy or devise, it is
clear that the obligation constitutes a charge or burden upon the estate of the testator
(JURADO, Succession, supra at 343).
535
• • --.•:••••:•4:,•41Y.;!::.•••••:;i••••%.c.,!..;;:f.,%•••!fu..!..
Q: What are the effects of the status of the property given on the legacy/devise?
ANS: The following are the effects:
Effect on the Legacy or Device
Status of Property Given by Legatee/Devisee Effect on the

Legacy/Devise
1. Belongs to the testator at the time of the execution of Effective

. the will until his death
2. Belongs to the testator at the time of the execution of Revoked

the will but alienated in favor of a 3rd person (CIVIL
CODE, Art. 957 par. 2)
3. Belongs to the testator at thq„timelof.the.execution of Legatee/devisee can

the will but alienated irpf8V/67- of the le:gatee-Ordevisee demand
onerously (CIVIL CO.DE, Art. 9331pah 21,-,' P ': -', reimbursement from
/ 24, .."', .1 1,„.,
. 4--,-------...1 -i' .,-; '. the heir or estate
e, S i ,,•0° ., . -,, •.
.. „."
• l'
4. Does not belong to`ttie testa ors t the tirnalhe,alQs .,,,,E ective
executed tk e ha ordered that "tie thi4g be'll-•)
acquired in order that it .1f" Wen to the. . •
legatee/dpvisee/C/V/ _QDZ.A031)..... ._....... 1 (..1
I .,,,° ,..„,.. IP :-...., • • A k,---4
-.' 1 1
thA.Aestakif,g,tc; fie;tirrfe the/will is g Void . ...
5. Does not teloy to __.„‘ -
executed' . he(tbiT@r errott'arcULV'bellevedgOr ' '
the thing pertaked lo,tm,(CIVIkz,,COD4,,,Art. .136),) *".•-ed
AU )-1, • . Y•AN,
'0
4 ,
1t
4 c i\N re M
i
‘: :y \ .66,
r.
,./ . . i
16
6. Does nor belong kthe ‘s,4cir at heott dwill,is i

Effective
executed ut afteri\Vds dopeocrle , , halpfer
title (CIVIL CODE, Art;SQ)<C.,-JEN"-----
,/ ' .....:-kkkk,....._.....00"
\ ,,,,
7. Already belongs to theI CiT
ga.ee/depe -ti4 firrie—of Ineffective .
the execution of the wili;%vel -pgbAtheriierson
may have interest therein (CIVILCODE, Art. 932)
8. Already belongs to the legatee or devisee at the time Ineffective

of the execution of the will even though it may have
been subsequently alienated by him (CIVIL CODE, . .. .
Art. 933)
9. Testator had knowledge that the thing bequeathed Legatee/devisee can

belongs to a third person and the legatee/devisee claim nothing by
acquired the property gratuitously after the execution virtue of the
of the will (CIVIL CODE, Art. 933, par. 2) legacy/devise
10. Testator had knowledge that the thing bequeathed Legatee/devisee can
belongs to a third person and the legatee/devisee demand
acquired the property by onerous title (CIVIL CODE, reimbursement from
Art. 933, par. 2) the heir or estate
536
.-,:tz.:A!••••, .,-Vi•k.
•
.2 1
. ‘ f •
, •
Note: In case of repudiation, revocation or incapacity of the legatee or devisee, the

legacy/devise shall be merged with the mass of the hereditary estate, except in cases of
substitution and of the right of accretion (CIVIL CODE, Art. 956).
Q: What is the legacy of a credit?

ANS: The legacy of a credit takes place when the testator bequeaths to another a credit
against a third person. In effect, it is a novation of the credit by subrogation of the
legatee in the place of the original credit (TOLENTINO, Succession, supra at 392).
Q: What is the legacy of waiver of credit?

ANS: The legacy constitutes a real waiver or remission of a debt existing at the time the
will was made and in the amount outstanding at the time of the death of the testator
Q: What is the extent of the legacy of credit and legacy of waiver of credit?
ANS: The legacy of a credit against a third person or of the remission or release of a
debt of the legatee shall be effective only 1:St regards that part of credit or debt existing at
the time of the death of the testator. •,
Note: The legacies of credit and Waii/a.rAgfedit shall lapse if the testator, after having
made it, should bring an action against for the payment of his debt, even if
such payment should not have been Affigagd at the time of his death (CIVIL CODE Art.
!te"A
935) 1,84 ximtkit
•4'041.4_4,
Q: In case of alternathwledacies or dev es, whose choistrould prevail'?
ANS: In alternative legtae or devisgS1P - e choice is preget ed to be left to the heir
upon whom the obligaeh thelegasy or devise maylb ikposed or the executor
or administrator ofiteestaLtertrito particahr heir is so obliged. If the heir, legatee or
devisee, who nappliave tY0,given„the voice, dies before main g it, this right shall -4,11444
pass to respediiie, heirszPVIL CODENrti 0).
Q: What is thb7effect of:therchois'An a native legactep- eAses'?

ANS: Once made,.thelinegls
. — eevocab CIVIL CODE,4A 9- 0).
*49
Q: Is the legacy ofbeitteric r§rsonal property va, id?
ANS: A legacy of gene,nci patiional prop.9 saa I envalid even if there be no things of
the same kind in the esge (C/VACOCIEC Itt-M
•
Q: Is the devise of gen eric real property valid?
ANS: A devise of indetermil eta real property shall be valid only if there be immovable
property of its kind in the estate (CIVIL CODE, Art. 941, par. 2).
Q: When does the legatee or devisee acquire ownership of the thing in case the
legacy or devise is a specific or determinate one?
ANS: If the legacy or devise is of a specific and determinate thing pertaining to the
testator, the legatee or devisee acquires the ownership thereof upon the death of the
testator, as well as any growing fruits, or unborn offspring of animals, or uncollected
income; but not income which was due and unpaid before the latter's death (CIVIL
CODE, Art. 948).
Q: When does the legatee or devisee acquire ownership of the thing in case the
legacy or devise is a generic one?
ANS: If the legacy or devise is generic (or alternative), there is a right of choice
governed by the provisions of Arts. 941 to 943 of the Code. Once the choice or selection
has been made in accordance with these provisions, the legacy or devise ceases to be
generic; it becomes a pure and simple legacy or devise. It will be only then that the
legatee or devisee can be considered as the owner of the thing which is 'chosen or
selected (JURADO, Succession, qupra at 362).
537
EDAN F
Q: In terms of legacies or devises, what is the order of payment should the estate
be insufficient to cover all the legacies or devises?
ANS: The order of payment will be as follows: (RP-SEDA)
1. Remuneratory legacies or devises;
2. Legacies or devises declared by the testator to be Preferential;
3. Legacies for Support;
Note: A legacy for support lasts during the lifetime of the legatee, if the
testator has not otherwise provided (CIVIL CODE, Art. 944).
4. Legacies for Education;
Note: A legacy for education lasts until the legatee is of age, or beyond the
age of majority in order that the legatee may finish some professional,
vocational or general course, provided he pursues the course diligently (CIVIL
CODE, Art. 944).
5. Legacies or devises of a specific, Determinate thing which forms a part of the
estate; and
6. All others pro rata (CIVIL CODE-rArt„A50
__
Note: The order of payme.., ntipdhli applies vkhein ttlkvonflict is exclusively among
legatees and devisees ay/Ohen))we ar#JoilawpOrtorptsirs and the entire estate is
distributed by the testpFfs'419 aci6s,or.devidet ql• wbe,n, th re are compulsory heirs,
but their legitime hasAreqdteeSii provided fare‘vb.y4lhefe for and there are no
donations inter vivgi(..1,400, Suomi-OW—M I ` pra,at 36 Q..
IC f
r1
.
Q: What are.thigrirrIls for'revocdtiof gacies
le nd Oises?
ANS: The grou1ds are e fol owing: (TALAO)
1. Revo • tow y Tra orma,pn -v Di es ,t.or ra sform e lig bequeathed in
such A er tha it aobS'Ipt etqinpither the for or b denomination it
had; .,,e4
MA' a a y any g..9 forany
2. Revocatioq oy Algt on —6r.k-vp3-r 'se alienates the
k
thing cqueath-e--4e, rx partii le eio. 3-4 bei
all ,
• - wilktlt,
n ers obdeat in the latter case
the I bey-la deJ' „ Jr c only with 'aspect to the part
allenatkd, exchet gji• t qg St.16 .lain long i the testator after
alienatira effected, by o *to& e f th Tight of r purchase;
3. Revocati e by I_As/ds t6p oWi: irtg_hesy, thed is otally lost during the
lifetime of the testajoNuffVfiraeb w thoutp•,fautt of the heir/s; and
4. Revocation b)Iirfgkrction.agai tVto or payment of debt;
5. Other causes, s oiLas. . IviM II.
a. Nullity of the3IIII:
b. Non-complianceatrefftp; i e conditions affecting the bequests;
c. Sale of the thing to pay the debts of the deceased during the settlement
of his estate; and
d. Revocation of legacy of credit or remission of debt (CIVIL CODE, Arts.
957 and 830, par. 1).
C LEGAL OR INTESTATE SUCCESSION

Q: What is legal or intestate succession?
ANS: It is the kind of succession prescribed by law (and presumed by it to be the desire
of the deceased), which takes place when the expressed will of the decedent has not
been set down in a will (PARAS, Wills and Succession, supra at 457).
Q: What are the causes of intestacy?

ANS: The causes of intestacy are as follows: (WISH!)
1. If a person dies without a Will, or with a void will, or one which has
subsequently lost its validity;
538
2. When the will does not Institute an heir to, or dispose of all the property
belonging to the testator (In such case, intestacy takes place only with respect
to the undisposed portion);
3. If the Suspensive condition attached to the institution of an heir does not
happen or is not fulfilled; or
4. If the Heir dies before the testator, repudiates the inheritance, there being no
substitution, and no right of accretion takes place;
5. When the heir instituted is Incapable of succeeding, except in cases provided
in the Civil Code (CIVIL CODE, Art. 960).
Q: What is the rule on preference between lines?

ANS: The rule provides that those in the direct descending line shall exclude those in
the direct ascending and collateral lines, and those in the direct ascending line shall, in
turn, exclude those in the collateral line (JURADO, Succession, supra at 380).
Q: What does the rule on proximity provitde?

ANS: The rule provides that the relapi,g earest in degree excludes the more distant
ones, saving the right of represents d, hen it properly takes place (CIVIL CODE, Art.
. •-•A
962). he
Note: This rule is subordinate to t of preference between lines (JURADO,
Succession, supra at 381). . . 1 ,`t. egrit
.4itedaq
Q: What is the rule of equal ivision
ANS: The rule provide:VP& relativesA e same degree s , inherit in equal shares.
The exceptions are: 14 1 7 • ,,l, '.
1. Division in ttle!asn,dirig line (been paternal a emal grandparents);
-2. DivisiOLLOmong bstikels and side s, some of w • aretof the full and others
of hatgorfOod•,A,T4 I oiN x.
3. Diviaitdbetw,ellegitirnAte and Olegitimate. Wren,: „.,.,1
4. Diva% in cas6s1vherekte
4.-. ,.... nail of represen
-...Q. atibOiketnlace
r4.1..ze- (JURADO,
Succesqon,t170,1at 381-3,82).
Note: This rule is SUBjetetditierule Ef
.. pre erence between lines.
it
t
Q: What is.he distinctorkbetween direct;4.m me- nthcollateral line?
.--e§- e.,.,,,.
.-_:*
ANS: The direct line an ,collateraffiihe,may' ' wrerentiateolas follows:
AV
Direct Line Collateral Line
Constituted by the series of degrees Constituted by the series of degrees

among ascendants and descendants among persons who are not ascendants
(CIVIL CODE, Art. 964, par.2). • and descendants, but who come from a
common ancestor (CIVIL CODE, Art.
964, par.3).
Q: What is full-blood and half-blood relationship?

ANS: Full-blood and Half-blood relationship may be defined/differentiated as follows:
Full Blood Relationship Half-Blood RelatiOnshiri

That existing between persons who That existing between persons who have
have the same father & the same the same father, but not the same
mother (CIVIL CODE, Art. 967). mother, or the same mother, but not the
same father (CIVIL CODE, Art. 967, par.
2).
539
Q: What happens if there are several relatives of the same degree and one or
some of them are unwilling or incapacitated to succeed?
ANS: His portion shall accrue to the others of the same degree, save the right of
representation when it should take place (CIVIL CODE, Art. 968).
Q: What happens if the inheritance is repudiated by the nearest relative, should

there be one only, or by all the nearest relatives, should there be several?
ANS: Those of the following degree shall inherit in their own right and cannot represent
the person or persons repudiating the inheritance (CIVIL CODE, Art. 968).
Q: What is right of representation?

ANS: It is a right created by fiction of law, by virtue of which the representative is raised
to the place and the degree of the person represented, and acquires the rights which the
latter would have if he were living or if he could have inherited (CIVIL CODE, Art 970).
Note: The representative is called to the succession by the law and not by the person
represented. The representative does noLsucceed the person represented but the one
whom the person representesioRbuld have scipqaded, (CIVIL CODE, Art. 971). This
modifies the rule on proxig4(C4 CODE) kt.$962r
Z_
Q: When does the .r,jg,ho
k f representation take plact
ANS: The right of repbr entixtake
atio -s-plar:Ceìn-the4irecti„.escericling line, but never in
the ascending. Iniiktofiatgratiline, itiakes,place onlylp flypi,,-,,ofthe, children of brothers
or sisters, whetihr ofilhe halif-bIckid (CIVIL Cbp8, Arta~ 972). In order that
representation pay tgke place, it is necessary that the mists'tative himself be
capable of su7e/e'4fn =the deeedefir(CIVI4CCIDETA X 973).
4 kill
Q: When doe right of repreientatio'9,,OpplaCe?
ANS: The righ •dfieprsse 'ration takes}oledelp:
1. Pred Cease PT?
2. Incap*a8.0y \
3. Disinhl Rance "Yk;'' .:`1""
Note: In testamentary successibnitt e persgn•repr'esente ust beta compulsory heir of
the testator in the direct deken ingtiiiiwkeFailte. a AT) ntary-heir cannot transmit any
right to his own heirs 'n casa,ke e lafairle.&46stat6i.'0,),com,rftlsory heir in the direct
descending line, on the pepgrgan ''.'ban.transtriir s,fl h ,s dt only with respect to the
legitime (JURADO, Successonkstvraat1990-391
iv n
Q: How shall the division of ta es e e e whenever there is succession by
representation? --
ANS: The division of the estate shall be made per stirpes, in such manner that the
representative or representatives shall not inherit more than what the person they
represent would inherit, if he were living or could inherit (CIVIL CODE, Art. 974).
Q: What is the effect when the division of the inheritance is per stirpes?
ANS: When the division of the inheritance is per stirpes, all those within the group
inherit in equal shares (JURADO, Succession, supra at 405-406);
Note: Division per stirpes is made when one sole descendant or group of descendants
represents a person in intestate succession. The sole representative or group of
representatives are counted as one head. Thus, should a father be survived by a son
and four children of another son who has predeceased him, then the estate will be
divided per stirpes. It will be divided into two equal parts; the first half is given to the
surviving son, and the other half is equally divided equally among the four
grandchildren.
540
Q: Can an illegitimate person be represented?
ANS: Yes. An illegitimate person can be represented by his child or descendant,
whether legitimate or illegitimate (CIVIL CODE, Arts. 902, 989, 998, and 999).
Q: When the children of one or more brothers or sisters of the deceased survive,
how shall they inherit from the latter?
ANS: It depends. They shall inherit by representation if they survive with their uncles or
aunts. But if they alone survive, they shall inherit in equal portions (CIVIL CODE, Art.
975).
Q: Is there a right of representation in collateral lines?

ANS: Yes. The right is possible only in intestate succession, which right can be
exercised only by nephews and nieces of the decedent, whether they be of full or half-
blood, if they concur with at least one brother or sister of the decedent. If the nephews
and nieces are the only survivors, they shall inherit in their own right (CIVIL CODE, Art.
972; JURADO, Succession, supra at 392r393).
if
Q: May an adopted child represent nig•!.adopter who predeceased his legitimate
parents? •• • •• gin,
ANS: No. An adopted child cannot inhentacm the legitimate parents or ascendants of
the adopter either by representation,cr,(0.Nehmijght. Thgalationship established by
adoption does not extend to the relative's. ottogdorraDiriare,pts or of the adopted child
(Teotico v. Del Val, G.R. No:148753, Maiih 26, 1965): '
•
Q: May a renouncer remesent?
ANS: Yes. A persorpaydepreSent him jhose inheritarpe e lias renounced .(CIVIL
CODE, ART 976)40ffa chiltPeep.udiates histtheritance wtien s fatper dies, he may still
represent theAlgtter, wtkeesubsequently,i is grandfather dies (JURADO, Succession,
supra at 36910:
Q: May a renouncer represented?

ANS: No. Heirs-whki-egidige their Aare ay not be represented (CIVIL CODE, ART.
977). •
44* g4
•-.4°
Q: What is The oilier Osubces V'ti`
ANS: It depends. g.
4
tik's
In Regular Order of SucceYsionfDecedent is a legitimate person):
1. Legitimate children or descendants (LCD);
2. Legitimate parents or ascendants (LPA);
3. Illegitimate children or descendants (ICD);
4. Surviving spouse (SS);
5. BrOthers and sisters, nephews and nieces (BS/NN);
6. Other collateral relatives within the 5th. degree (C5); and
7. State (JURADO, Succession, supra at 401).
In Irregular Order of Succession (Decedent is an illegitimate person):

1. Legitimate children or descendants (LCD);
2. Illegitimate children or descendants (ICD);
3. Illegitimate parents (IP);
4. Surviving spouse (SS);
5. Brothers and sisters, nephews and nieces (BS/NN); and
6. State (JURADO, Succession, supra at 401 — 402).
541
Q: What is the principle of exclusion?
ANS: It states that heirs higher in the order of succession exclude those who were lower
in that order, except when the latter are compulsory heirs they preserve their rights to
the legitime (TOLENTINO, Succession, supra at 457).
Q: What is the principle of concurrence?

ANS: The illegitimate children and the surviving spouse, who are not only intestate heirs
but are also compulsory heirs, even when they concur with legitimate children or with
legitimate parents, are not only entitled to their legitime, but are also given a share in the
disposable free portion (JURADO, Succession, supra at 403).
Q: In what instance are illegitimate children superior to the surviving spouse in

terms of exclusion?
ANS: Like legitimate children or descendants and legitimate parents or ascendants,
illegitimate children exclude collaterals. In this sense, they are superior to the surviving
spouse since the latter cannot exclude...brothers and sisters or nephews and nieces
(JURADO, Succession, supra tAiri 6).
Ti
Q: Whit is the rule ofP aiirer etvveemlegitiVe arr.,.thdAlz!itimate family (iron-
clad rule)? \-1. '''''4‘ b•-• .
ANS: It states th9 AV ithate-childlarnosAght.. lizhenklb intestate from the
legitimate childrerT 6' t es of his Ypthe4or rn15the rier3Ilq11 such children or
relatives inherit • ner ftom46- illitimat child( VICCODE, Art. 992).
I'
AiN
Q: Explain ri repre entabon wip respec o thIt. Of le of absolute
separation be, egitimte fibiTspriA tOliiegitirnate fa ily: .1
ANS: If the on w lies ah ad of IL*...A4tlatoils an ilk itima lehIld, his right over his
legitime shall is desal get6, whettf iti ate di- legitimate (CIVIL' '
CODE, Art. 90 el tit elle ate' brent n the inheritance.
However, a le 4k3tw.c that of.1h illegitimate child
(CIVIL CODE, A ....,, -
— ....
If the one who die „ahead ot.the,tz*reits-:afigiti right over his legitime
shall be transmittedivly to jetleatimat..alilblr ,pu su pcth rule of barrier between
legitimate and the illegiVrnilrn hich.provn t lt it egjb ate child has no right to
inherit ab intestate from th egitime (civ(t, pail *9.. 2). Hence, illegitimate children
cannot represent their legitimate4arent Waled crsisioteihe inheritance coming from the
legitimate ascendants of the latter (30PItt) , uccession, supra at 419).
Q: How much can full blood collaterals get from the estate if they survive with
half-blood collaterals? _.
ANS: The rule provides that when full and half—blood brothers_or sisters survive, the full
blood shall take a portion in the inheritance double that of the half—blood (CIVIL CODE,
Att. 1006).
Note: In case of disposition made in general terms in favor of the testator's relatives
under Article 959 of the Civil Code, only the rule of proximity applies (e.g. "to all my
relatives,.
542
Q: How should the estate be proportioned in case of intestate succession?
ANS: The following are the divisions:
Proportion of Intestate Share
Surviving Heir Intestate Share .

Any class alone Entire estate
LC Entire estate
LP Excluded
1 LC %
SS %
(Arcenas v. Cinco,
r,r,1 /48 G.R. No. L-29288, November 29, 1976).
;4,e, tj
2 Or. More LC ' • • Consider. SS' as i LC, and' then divide estate by total
number . •-
SS • - . 't
„, 'V ,
LPA 1/2 ,, ,4t.
. . • : :4,
SS _IA.116,
,Ii:;•,-, , fry '
,,.1.
;1Z , ....„...,1,
..,.
le.,... •
LPA
SS Ak
Itl'
e
I
IC , 9.s.''—' ry IN
, . 01t..r : • \A
_.zw,1
.-:. N,,,
IP re -• -.-,.•>.' lif —
° .•.,- , ., ''--'`'.
Ij°40
SS ,, . . pg,
Thg, lawlis silent. Apply concurrence theory(JURADO,
&recession,
Sue cession, suliLmaiAg).
•
u-
4,1, , •,, --,,:-,.
., •
SS , c, e % etsopai- ..... u
-....4
v
yi, IA V
n
BS/NN il-aLin. at
a!
1 LC First, satisfy legitime. If estate would be insufficient,

reduction must be made according to the rules on legitime.
SS - The legitime of LCD and SS shall always be first satisfied in
IC preference to the ICD.
2 or more LC First, satisfy legitime. In case of excess in the estate,

distribute such excess in the proportion 1:2:2, in
SS accordance with the concurrence theory.
IC
D. PROVISIONS COMMON TO TESTATE AND INTESTATE SUCCESSION

Q: What is accretion?
ANS: Accretion is a right by virtue of which, when two or more persons are called to the
same inheritance, devise, or legacy, the part assigned to the one who renounces or
cannot receive his share, or who died before the testator, is added or incorporated to
that of his co-heirs, co-devisees, or co-legatees (CIVIL CODE, ART. 1015)
543
.BED~►N BRED BOON
Note: Accretion is a right, not an obligation, and may therefore be accepted or
repudiated by those entitled (PARAS, Wills and Succession, supra at 537).
Q: When does the right of accretion take place in testamentary succession?
ANS: The right of accretion takes place when:
1. Two (2) or more persons must have been called to the same inheritance,
legacy or devise, or to the same portion thereof, pro indiviso;
Note: As a consequence of the first requisite, the following circumstances are
necessary:
a. Unity in the object, that is, a single thing, whether it be an inheritance, a
portion thereof, or a specific thing;
b. Plurality in the subject matter, that is, several persons are called to that
single thing; and
c. Absence of any designation as to the share of each thing (JURADO,
Succession, supra at 460-461).
2. There must be a vacancy,i. ,(L tlig„theritance, legacy or devise (caused by
predecease, incapa_cprfbpudiation,),fidil-fujfillment of suspensive condition
attached to thepstilution of ar( hell- or$ designation . of a legatee or devisee,
or void or inelfectiVe,tteptamertafydisRpeitioni) (JURADO, Succession, supra
at 460 and 444). .t4.1„ / ,„.,,, %, ; +
Q: When does ttri irigt

'b*'-
r.454/
acCril
icr
rAta-47Plaiiiii'l44e4Cession?
ra drsucicessi* 0-0 by,the very nature-ethe succession, the
ANS: In legal orfirft'sii
legal heirs are galled b the ldw to the same inheritance, prOndivissiXonly one requisite
is essential in ol-der-that the r ght-of-accretiOn-shall-takelplaceNhare rriust be vacancy in
the inheritanch ca sed b prpdeceagia, in.capacify, or IrapIrd'iation) (JURADO,
SuccesSion, Ira i k 64). (
,a _, IL, 1 ,......3
7:9rrn -,-,
i ( 11.:Th
Q: What are the efficts..p, for-death -heirilficapacityid disinheritance or
repudiation A :t-:.).fitiettiak.
su,, c-le'sonalFFig tg,i)Lheit-Ort'testarrrintiry and intestate
succession? tk \--;si
, \ :1 ''. :''•-•:•,1%;,,,,V/
ANS: The effect are th kllo*I:- .
. • .,
. Cause of. Testamentary succession Intestate
vacancy Legitime. • Free portions Succession
Predecease 1.FZk4,t. ,,,,„.....

1\ 1 11.k›V 1.RR
2. IS .-2rIS 2. IS
Incapacity 1. 1RR 1. A 1.RR

2.IS 2.IS 2. IS .
Disinheritance 1.RR
2. IS
Repudiation 1. IS 1. A 1. A
Legend:
RR - right of representation
IS - intestate succession
A - right of accretion
S - substitution
544
Summary of Rules:
1. In testamentary succession:
a. Legitime
i. In case of predecease of an heir, there is representation if there
are children or descendants; if none, the others inherit in their
own right according to intestate succession;
ii. In case of incapacity, results are the same as in predecease;
iii. In case of disinheritance, results are the same as in
predecease;
iv. In case of repudiation by an heir, the others inherit in their own
right according to intestate succession.
b. Disposable free portion
Accretion takes place when requisites in Art. 1016, Civil Code are
present; but if such requisites are not present, the others inherit in their
own right according to intestate succession.
2. In intestate succession:
a. In case of predecease;.; there is representation if there are children or
descendants; if npf14,.,,.th00.pers inherit in their own right.
b. In case of incapaCittegill4are the same as in predecease.
c. In case of reb404,40,1repjs alvg.ys accretion (JURADO,
Succession, supra atiedPg""'"4''40144.,
Note: Whether the succession is testamentary or intestate, if the right of accretion takes
place, the heirs to whOliilhe vacant or portion is asstked shall divide it in the
same proportion that trt:iriherit-(JU. RAtia Succession, supra at 469).
Q: What are the, requisitesItt. .capacity tcgsucceed?
ANS: The rec -116s ar9te f011owingItz, 1' 7
1. Thelhdif, leadtee'or devisee rnutt e livings) the moment the
.gr .4141,
succession opens and
2. He must not-b-ellkapacit'aVd or djsqualffied bylaw, o succeed (CIVIL CODE,
ry b•
Arts. io210/2.c
t r
Q: When is the capac of 4he heir to i hehtdel ermined?
15r
ANS: The capacity of tlIgheir is riloetecoirfd mime decedent died. The rights
to the succession are ensmitgdPrOm the moment of the death of the decedent. The
legitime is to be computeadtas4 the same moment, and so is the inofficiousness of the
donation inter vivos (NorarGlIglang-Parulan v. Calalang-Garcia, G.R. No. 184148, June
9, 2014).
Q: Who are the persons incapable of succeeding for undue influence or interest:?
ANS: These persons are the following: (PR- GAP)
1. Priest who heard the confession of the testator during his last illness, or the
minister of the gospel who extended spiritual aid to him during the same
period;
Note: The fact that the testator died from some other cause does not
necessarily exclude the application of the disqualification. What is essential is
that there must be an imminent or impending danger of the illness being the
last as far as the testator is concerned at the time he executed the will
(JURADO, Succession, supra at 484).
2. Relatives of such priest or minister of the gospel within the 4th degree, the
church, order, chapter, community, organization or institution to• which such
priest or minister may belong;
3. Guardian with respect to testamentary dispositions given by a ward in his favor
before the final accounts of the guardianship have been approved, even if the
testator should die after the approval thereof; nevertheless, any provision
545
".*
made by the ward in favor of the guardian when the latter is his ascendant,
descendant, brother, sister, or spouse, shall be valid;
4. Attesting witness to the execution of a will, the spouse, parents or children, or
any one claiming under such witness, spouse, parents or children;
5. Physician, surgeon, nurse, health officer or druggist who took care of the
testator during his last illness(CIVIL CODE, Art. 1027).
Note: Not applicable if the one who took care of the testator is his spouse,
ascendant or descendant. Individuals, associations, and corporations not
permitted by law to inherit.
Q: Who are the persons incapable of succeeding based on morality or public

policy?
ANS: These persons are the following: (ACP)
1. Those made in favor of a person with whom the testator was guilty of Adultery
or concubinage at the time of the making of the will;
Note: Previous criminal convictionjugt necessary.
2. Those made in Considerationfof-p cliiiietoLyvhich both the testator and the
beneficiary have3teen feted gCtilt.valtd„.1Ar ,,, , „
Note: Previoustpiricopyjotiond$::nacepary.,:t,
3. Those made in fvokor a Public offter.,on'--his spouse, descendants and
ascendanis,' tegabnst.his.pOlic,officadpii:VOCENItt. 739).
Note: Items (a) ti9V,rof , rf. 11027 anA Artk102g.aprily on1,4)talnentary succession
(JURADO, Sucdessiord upra at 4.0 aug 4$Z). Art. 10Ns 3 applicable not only in
testamentary sitcessi , butlalso in legat,Or„ intestate cucce, ? its is so in spite of
the fact that A 1'032 ses the-ward-"tegtifor'(dURADO, Succession, upra at 491).
I \-6:—, - iiril
' .. -.7.>'• 1.---
Q: Who are thp persons incapableLorsUOCiedIng bated on is o unworthiness?
ANS: These rirs s are thelfOjlowingle(WaCODE, 45r0032), (6-FF-JPAPA)
1. Parents w olhave^6 a donediFIC-bhildrego 3r.:iucg eir daughters to lead
a corrcAth irpor ty.f1 , r arr.tedm9rf:f. . eir virtue;
,,,,?
2. Any person Otio *' ,eeQ[atin ided-Aali Atteplpt against the life of the
testatoAhis/hekpoud
,i, ,Wcen ant4a-sCendasifs;
3. Any person whO\llasc seaftle-:;testOor of a crirg for which the law
prescribeNnprisonThek? fo -a116) .d rslroffir' re, if tpg accusation has been
found groundlus.VC),, ,,,... 0: 1-k
4. Any heir of fullbge-WfVlfaving:kn edgybfltieZent death of the testator,
should Fail to report t lo an ia.g. tla;lacv within a month, unless the
authorities have already bkeruactroni-this prohibition shall not apply to cases
wherein, according to law, there is no obligation to make an accusation;
Note: Under our law, deaths occasioned by crime (violent deaths) are
prosecuted de oficio or at the instance of the government, and thus no one is
required to make any accusation (TOLENTINO, Succession, supra at 529).
Note: In this jurisdiction, there is no obligation imposed by the law to make an
accusation in such cases (JURADO, Succession, supra at 492).
5. Any person convicted of Adultery or concubinage with the spouse of the
testator;
Note: The testator's spouse, who has been convicted of adultery or
concubinage is not rendered unworthy; only his or her paramour is disqualified
to succeed the offended spouse. But if the offended spouse asks for legal
separation, on the ground of the adultery or concubinage, and it is decreed,
then the guilty spouse is rendered incapacitated to succeed the offended
spouse ab intestato or by a will already existing at the time of the legal
separation under Article 63 of the Family Code (TOLENTINO, Succession,
supra at 530). Person who by fraud, violence, intimidation, or undue influence
should cause the testator to make a will or to change one already made;
546
• • il„.5..-it.,:fel.:*;:;:,,
i.r.pS:g1:-VVA';';'StAs,•:?,', :r., :k,u'
6. Any person who by the same means Prevents another from making a will, or
from revoking one already made, or who supplants, conceals, or alters the
latter's will; and
7. Any person who Falsifies or forges a supposed will of the decedent.
Q: Who are the persons incapable of succeeding by operation of law?
ANS: These persons are the following:
1. Incapacity of the guilty spouse to inherit from the innocent spouse if there is a
decree of legal separation; and
2. Incapacity of illegitimate children and legitimate relatives of the decedent to
inherit from each other (JURADO, Succession, supra at 482).
Q: Is there a prescriptive period for the declaration of incapacity of an heir?
ANS: Yes. The action for a declaration of incapacity and for the recovery of the
inheritance, devise or legacy shall be brought within five years from the time the
disqualified person took possession thereof. It may be brought by anyone who may
have an interest in the succession pyll.AoDE, Ad. 1040).
Q: What are the differences betv,yen tdiS nheritance and unworthiness?
ANS: The differences are as folio
Disinheritance Unworthiness
As to how effected
elrfor7p,
Made in a will ay take place by ration of law
0162'
As to scope
I 1,
Applies only to1estate itIccession plies to testate angi intestate succession
1 .r" I
As to the Reed for the act of the decedent
Must be madele?ipreg lay take effeTtingrelant from the act of
41'14- F decedent
As to how will it be without effect
7Afir07.1:3
No particular form foleconcligtion -must-oe-conatmed in writing should the
is required cause be known subsequently by the
decedent.
Reconciliation must be a bilateral If the testator had knowledge of the act of
act, hence, mere pardon, express unworthiness and he executes a will
or implied, without acceptance of instituting the person- who has committed
the heir does not render the the offense as an heir, there will be a tacit
disinheritance ineffectual. pardon.
As to the heirs covered
Applies to compulsory heirs May apply to persons who are not
compulsory heirs of the deceased
As to purpose/conCept
Means given by law to the testator Based on considerations of morality, which
to punish such of his compulsory have made the law deprive of inheritance
heirs who have committed acts those who have made themselves unworthy
which render them unworthy of of it according to ordinary social
benefit appreciation
547
tFa4;15s:fi':
Q: What are the requisites of acceptance and repudiation of inheritance?

ANS: The requisites are the following: (VDI)
1. The acceptance or repudiation must be purely Voluntary and free (CIVIL
CODE, Art. 1041);
2. The Death of the decedent must be certain (CIVIL CODE, Art. 1043); and
3. His right to the Inheritance must be certain (CIVIL CODE, Art. 1043).
Q: When shall the acceptance or repudiation become effective?

ANS: It retroacts from the moment of death of the decedent (CIVIL CODE, Art. 1042).
Q: What are the distinctions between acceptance and repudiation?

Acceptance Repudiation
•• In General
1 h,
Any person hung the freedis.posploptits property
f*''-c(011/IL -CODE,CAlf.J044; Pat.
• '' •
How done
r
May be either expresp,rortacit acts:l3.p A Made in ,aripuolip or authentic
Express: Ma a in a public or private :•`! Itistrume t, o4y, petition presented to
document; havindjuristliction over the
Tacit: resultpom Oe acts by 0-A01 111e 1!- Jestalnerary ,intebepte proceeding
intention to dccep is necesarily" (CIVIL CODE, Art. 1051)!.
implied, orihich orle wouldttiave 'HO7,7272
right to do e
heir (CIVIL deerAft. 1 C(ft§)\ \ .trt
rta or /
Minolt & Incapacitated

(e.g. deaf-mute who cannot read and write, under civil interdiction)
".‘
Guardian or legal reps.esefitatiVe=k„Z-.
_ uerdi r"legal representative with
(CIVIL CODE, Art. 1044Paret9 jud:fieita ..jh?itetion (CIVIL CODE, Art.
jto,fijkcs,g •
If the beneficiary is the poor
Person designated by the testator to Beneficiaries themselves once they are

determine the beneficiaries and to determined (CIVIL CODE, Art. 1044,
distribute the property. par. 3).
In default, the executor. (CIVIL CODE,

Art. 1044, par. 3).
•Ifthe be.neficiary is a oprporation association, institution, or entity
Legal representative (CIVIL CODE, Art. Legal representative with judicial

1045). authorization (CIVIL CODE, Art. 1045).
Public offiCial establishment
With the govemment's approval

(CIVIL CODE, Art, 1046).
548
N,A
rlA
t f•••••'','
Married woman
May be done without husband's consent
Deaf-mutes who can read and write
May be done personally or through an agent
Deaf-mutes who cannot read and write

Shall be accepted by their guardians Guardians may repudiate with judicial
(CIVIL CODE, Art. 1048). approval (CIVIL CODE, Art. 1048).
Legal effect
Acceptance involves the confirmatiWor Repudiation renders such transmission

transmission of successional rigbtp;';' • ' ineffective and is equivalent to an act of
disposition and alienation.
Publicity
Publicity is not necessary,o.i The publicit =required for repudiation is
necessary focrfflte protection of other
heirs and als qdreditors.
et' elk
Peggr"'
(JURADO, Success ie'ton, supraat,505-506)
or
Q: In what forn rhustacc,Rptance be made?
ANS: Acceptance may beVde &pipssl tacitiy.
1. ExpressAcceptirlpe - or16 .0ad a public or p Va ez o btument.
2. Tacit Accelte_neelene resultinc _ ram acts by which the intention to accept is
necessarkirlipliedtor which og have no right to do except in the
capacity of artbeiret•O/V/L COD • .1:p4.9,6
Note: The laOresumnIlatiatcep awe -1 111tran made tacitly:
a. When'p heirgie, donates, or assigns his right to a stranger, or to his
• co-heirstospiany l of them; •
b. When th4Qtrza enounces it even though gratuitously for the benefit of
one or more heirs;
c. When renunciation is in favor of all heirs indiscriminately for
consideration;
d. Other acts of tacit acceptance (CIVIL CODE, Art. 1050); and
e. The failure to accept or repudiate within the prescribed period of thirty
days after the issuance of the order of distribution of the estate (CIVIL
CODE, Art. 1057).
Q: What are the ways by which repudiation of the inheritance may be made?
ANS: They may be made by means of a/an:
1. Public instrument;
2. Authentic instrument; or
3. Petition presented to the court having jurisdiction over the testamentary or
intestate proceedings (CIVIL CODE, Art. 1051).
Note: The manner by which it is made must be clear, express, and formal.
549
Q: What is the remedy of a creditor prejudiced by a repudiation of an heir?
ANS: The creditor may petition the court to authorize them to accept it in the name of
the heir only to the extent sufficient to cover the amount of their credits. The excess,
should there be any, shall be adjudicated not to the renouncer but to the persons to
whom it may belong in accordance with the Code (CIVIL CODE, Art. 1052).
Q: What is the effect if the heir fails to accept or repudiate the inheritance?
ANS: The heir's right shall be transmitted to his heirs (CIVIL CODE, Art. 1053).
Q: When several heirs are called to the inheritance, should all of them accept for
them to receive the inheritance?
ANS: Should there be several heirs called to the inheritance, some of them may accept
and the others may repudiate it (CIVIL CODE, Art. 1054).
Q: May an acceptance be revoked?

ANS: Generally, it is irrevocable. The_exceptioos4re:
1. If made through agodrige cpus3slharVitiqtes consent (mistake, violence,
• intimidation, undufinfltience andfaqd)janp..
2. When an unknow- iiVI.14ears4GII/LcOPE,44rA-1056).
• .•
4s"
Q: What is collati
ANS: It is an actirgf)reit In or reRtpriVtocgle cormo in4A of the estate, either
actually or fictititusiWany ,roperty5whip:h g:.:perso ma , .liavileceived from the
decedent durin • the I per's lifetime, but= ly.hiFh is undeistood,fOrd lagal purposes as an
advance from ej.nlv itancer(JURATOIccestor!, sapra at 1.11.4 I
Note: Every i, rnpuls ry heiq wflayLibc8 :dg:Ciitfrothr com Asory peirs, must bring
into the mass !of t eie.state an/ propextythr,:iciptiwhic he ma§ havd 5eceived from the
decedent, durip 1 • q lifetim o the lalfel'- JK way of 4,64io # or any other gratuitous
title, in order tflat-itagby b ick qn ?,, 9ter7 attd ' of tle.leglime
\,,, of each heir,
and in the accotinttfl pallio C/1//. .CIDROA
:.\:-5'
Q: Discuss whew, shall/hot ki •
ANS: Collation shallnot tak Oa eSEq irs if the donor should have so
expressly provided, oijf the 19g hotil ezitance, unless the donation
should be reduced as ittoffidioys4 400.
Nt:,-J-•
Q: What kind of properties arempilsub abon by provisions of law?
ANS: The following properties are nc71011jSitt o collation:
1. Property left by will is not deemed subject to collation, if the testator has not
otherwise provided, but the Iegitime shall in any case remain unimpaired
(CIVIL CODE, Arts. 1063).
Note: The property left by will (legacy and devise) is not subject to collation in
the sense that it cannot be imputed against the legitime of the compulsory
heirs; it can only be imputed against the disposable portion (JURADO,
2. Parents are not obliged to bring to collation in the inheritance of their
ascendants any property which may have been donated by the latter to their
children (CIVIL CODE, Arts. 1065).
3. Neither shall donations to the spouse of the child be brought to collation; but if
they have been given by the parents to the spouses jointly, the child shall be
obliged to bring to collation one-half of the thing donated (CIVIL CODE, Arts.
1066).
4. Expenses for support, education, medical attendance, even in extraordinary
illness, apprenticeship, ordinary equipment, or customary gifts are not subject
to collation (CIVIL CODE, Arts. 1067),
;:•' 550
Note: Art. 1067 means exactly what it says: there is no collation, even in the
sense of charging what had been given to the free portion. The parents or
ascendant cannot even provide that such expenses shall be collated. The
precept contained in the article is in the nature of a prohibition (JURADO,
5. Expenses incurred by the parents in giving their children a professional,
vocational or other career shall not be brought to collation unless the parents
so provide, or unless they impair the legitime; but when their collation is
required, the sum which the child would have spent if he had lived in the house
and company of his parents shall be deducted therefrom (CIVIL CODE, Arts.
1068).
Note: The expenses for the professional or vocational studies of a compulsory
are not subject to collation in the sense that it cannot be imputed against the
legitime of the compulsory heirs; it can only be imputed against the disposable
portion (JURADO, Succession, supra at 519-520).
Q: What are the steps in the distril*flotof estate if there are donations?
ANS: The steps are the following:
1. Determination of legitimdi
a. Determination or±brbOwe of the estate at the time of the death of
the testator; . _
b. Determination,of all,qebts;$ ti' are chargeable against
'i. vi
the estalip"*.
c. Determpation of thed.OF alue of the estat deducting all the debts
and clsgel from thetroisxs value of the eslat6;
d. Collatpn skddition of t value of all dolons inter vivos to the net
yqtife of the%.ptate; and ,
e 4tetermin.aiion of thg%a aunt of legitime fro th total thus found in
,6 6codirT4spwithtrts. 88 2903.
2. Distrkution of FeerKlitaty'
a. goripkalittpl the vale o jl donations in er ito-s made to compulsory
heirs-aind4their I gitim nd of the value of all donations inter vivos
male to s ngers ag%,r0TWA disposable free portion and the
restoratpte he hereditelpfttrie donation is inofficious; and
i.-Donation4Wrigftirre-h;eh-allaffil e charged to their legitime.
1:fonatiAmade to strangers shall be charged to that part of the
esfategf which the testator could have disposed by his last will.
inans they may be inofficious or may exceed the disposable
portion, they shall be reduced according to the rules established
by the Civil Code (CIVIL CODE, Art 909).
H. Donations which an illegitimate child may have received during
the lifetime of his father or mother, shall be charged to his
legitime. Should they exceed the portion that can be freely
disposed of, they shall be reduced in the manner prescribed by
this Code (CIVIL CODE, Art. 910).
b. Distribution of the residue in accordance with the will of the testator.
Q: What is partition?
ANS: It is the separation, division and assignment of a thing held in common among
those to whom it may belong. The thing itself may be divided, or its value. Partition
includes every act which is intended to put an end to indivision among co—heirs, and
legatees or devisees, although it should purport to be a sale, exchange, compromise, or
any other transaction (CIVIL CODE, Arts. 1079 and 1082).
551
Q: Who may effect the partition of the decedent's estate?
ANS: The partition of the decedent's estate may be effected by the:
1. Decedent himself during his lifetime by an act inter vivos or by will (CIVIL
CODE, Art. 1080);
2. Third person designated by the decedent by means of an act inter vivos;
3. Will (CIVIL CODE, Art. 1081);
4. Heirs themselves (CIVIL CODE, Arts. 1083, 1084); or
5. Competent court in accordance with the Rules of Court (JURADO, Civil Law
Q: What is the rule if the partition was made inter vivos?

ANS: The rules regarding ordinary conveyance of personal and real properties must be
followed. (JURADO, Succession, supra at 529) The partition inter vivos made by the
testator is a mere manifestation of his will; and since such will is subject to change until
his death, the partition may be changed until the last moment of his life (TOLENTINO,
,=our T lk -7-' ,,,
Q: What are the effects p''''
ofA artitign? ' ' '' i - :*',,.
4 .. '-h •' :
ANS: The effects are the fo lowing: - , .,----,,, .k &, .. - ;'44
.0 4. / • wigr's
1. It confers i....ippnNeach „heir the exclusive Bigtrierthip„Of:Ihe property adjudicated
(CIVIL CODE;v4V091);-------1--' — --, „.. '',.,,,:c ? ,,•%
2. After the p4 •• Rio"; th(co-heirs shall bejecipitcallOotirrdV warrant the title to
(warmly a ai st eviction) ad the.qublity of t:warrgit§—agaipst hidden defects)
each rope adjupicated (CIVib,CODE, Ak. log. 011action to enforce
A
warra ,,,,,a eng co-rears must be firopglirwl in teri(TOLyears from the date
the ri litofi ttion adcruetCIV//illirC0.E4::Art. /1094).
it L..,'
4p4ri I . iir,-.777-
Q: When may paqi ion:- „,e, escmde Y--,-...
\ A
ANS: Partition yibp rescpted: —,.. j ..cli.
1. When artitio is Na 13,y r-1 thV s.rtci'-
e ,.,., it on the ground of
lesion .pittn. GOD it. 09): I '
a. Men the egiti ef4e,com eirs A thereby prejudiced;
b. When it appers(42(Snare begaresume • , that the intention of
thebte,statoriwas,gpeWlYe
..6 r
2. When partiticzh rige-ehther.tharrt e-tqs at • may be impugned (CIVIL
CODE, Art. 1098) II x4 ).
a. when any oeeof,„_ e co- ears edihings whose value is less, by at
least one-fourth, thTn.nti-eth re o which .he is entitled, considering the
value of the things atthe time they were adjudicated.
3. The action to rescind the partition must be brought within 4 years from the time
the partition was made (CIVIL CODE, Art. 1100).
4. The heir must not have alienated the whole or a considerable part of the real
property adjudicated to him, but he shall have a right to be indemnified in cash
5. The omission of one or more objects or securities of the inheritance shall not
cause the rescission of the partition on the ground of lesion, but the partition
shall be completed by the distribution of the objects or securities which have
been omitted (CIVIL CODE, Art. 1103).
6. A partition made with preterition of any of the compulsory heirs shall not be
rescinded, unless it be proved that there was bad faith or fraud on the part of
the other persons interested; but the latter shall be proportionately obliged to
pay to the person omitted the share which belongs to him (CIVIL CODE, Art.
1104).
552
Q: What are the effects of a rescinded or nullified partition?
1. The heir who is sued shall have the option of indemnifying the plaintiff for the
loss, or.consenting to a new partitionmade. If a new partition is made, it shall
affect neither those who have not been prejudiced nor those have not received
more than their just share (CIVIL CODE, Art. 1101).
2. A partition which includes a person believed to be an heir, but who is not, shall
be void only with respect to such person (CIVIL CODE, Art. 1105).
V. OBLIGATIONS AND CONTRACTS

A. OBLIGATIONS
Q: What is an obligation?
ANS: An obligation is a juridical necessity to give, to do or not to do (CIVIL CODE, Art.
-•",••••
1156).
Q: What are the elements of an obligatiki?

ANS: The obligation is constituted upOregie concurrence of the following elements:
(JAPO) . .46)1
,,Atentlfuse established by the
1. The Vinculum juris or lurldliqer.,eel (rieltejfi
various sources of- Obligatiops .1law, contre'dtsl,vquasi-contracts, delicts and
t
quasi-delicts); .
2. The subject O'6:rsons who, viewe from the demarOd ility of the obligation, are
the: , r k
x
a. Active subjegt —.known anhe obligee or,tcreditord,who can demand the
"ailment of obligatio 1 }1
b,,a:Passivet;qubject — knout as the obligpl or debto► against whom the
• -" •
juridically derrandable;artd-
3. ObjeciT jhe preAtion or'dOducarequired to eib• e es such as to give, to
do, or nbftAcifi(Tei. Welk'? Gr4p, Inc. v. U-Land Airlines, Co., Ltd., G.R. No.
167519, Apuary1i0201 5). •
tv..„
-. • to'
CI: What are the sourpes,of obli94190,5%[KMAQInam
ANS: Obligations ariseNpm:
1. Law; 4!
2. Contracts;
3. Quasi-contracts; •
4. Acts or omissions punished by law; and
5. Quasi-delicts (CIVIL CODE, Art. 1157).
Note: The list of sources is EXCLUSIVE (Sagrada• Orden v. NACOCO, G.R. No. L-
3756, June 30, 1952).
Q: Does the law require a particular form of obligations?

ANS: For obligations arising from contracts, the law does not require any form because
contracts shall be obligatory in whatever form they may have been entered into,
provided all the essential requisites for their validity are present. However, when the law
requires that a contact be in some form in order that it may be valid or enforceable, or
that a contract be proved in a certain way, that requirement is absolute and
indispensable (CIVIL CODE, Art. 1356).
For obligations arising from other sources, they do not have any form at all (DE LEON,
Comments and Cases on Obligations and Contracts, 2014, p. 3) [hereinafter DE LEON,
Obligations and Contracts].
553
Q: Are legal obligations presumed and how do they become demandable?
ANS: Obligations derived from law are not presumed. Only those expressly determined
in the Civil Code or in special laws are demandable, and shall be regulated by the
precepts of the law which established them; and as to what has not been foreseen, by
the provisions of Book IV (CIVIL CODE, Art. 1158).
Q: What is a quasi-contract?
ANS: Quasi-contracts are juridical relations arising from certain lawful, voluntary and
unilateral acts, by virtue of which the parties become bound to each other, based on the
principle that no one shall be unjustly enriched or benefited at the expense of another
Q: What are the kinds of quasi-contracts?

ANS: The kinds of quasi-contracts are as follows:
1. Negotiorum Gestio, which exists when one:
a. Voluntarily takes chelga.oLtheagency or management of the business
or property qpnitiger; andT -1;.:''''',,,,,
b. Withoutc apfp o0cfrordthe I ftkri. :44),
Note: The offrouk r61pger..is, o t§ect. to coritipue the same until the
termination; i4 ff jr;4d its incidents,'trApYequ,ii•exte person concerned to
substitutelAik e wierisifirycitition,to..sao,,etijCIV/kCODE, Art. 2144).
2. Solutio tn,, Efebitt hich exists whpn:,:.., Itt a
a. orffet ing isireceivard; * .,.m. V'
b.When
i ere is no right tOld and it; and (f).
c. lundul • vere• roug mis
i
,..---4
Note ......,,_ 0tAtrain
nsequentl thalatitaatiti ,...,r; it 1VILAODE, Art. 2154).
„4,1 i '
ligTqw "i
Q: When is n otior m esitio not app 1 ame?
ANS: Negotio n? Qest is %pplicab e iti Fie4fo lo
1. Whenlihd pi. toe Atne iktig-tie or4, ban 64, ed, in which case
the fol pwing am th Mfg garcling unauthorized contracts
shall gobern: i i. if
a. None memo trAoti Opp , another without being authorized
by e latter,'Ior,„14,16 a yorrav ripfft to represent him. A
contra Let* clieo..in—th ampcitpnither by one who has no
authority-11) edarrhpresn!ptiO or Ohs.h.is acted beyond his powers,
shall be unenforq able,. nte 'walled, expressly or impliedly, by
the person on whose as been executed, before it is revoked
by the other contracting party (CIVIL CODE, Art. 1317);
b. Contracts entered into in the name of another person by one who has
been given no authority or legal representation, or who has acted
beyond his powers are unenforceable, unless they are ratified (CIVIL
CODE, Art. 1403, no.1): and
c. Unauthorized contracts are governed by article 1317 and the principles
of agency in Title X of Book IV. (CIVIL CODE, Art 1404); or
2. The manager has been tacitly authorized by the owner, in which case the rules
on agency shall govern (CIVIL CODE, Art. 2144).
Q: Does criminal liability entails civil liability?

ANS: Yes. Every person criminally liable for a felony is also civilly liable (REVISED
PENAL CODE, Art. 100). Every crime gives rise to (1) a criminal action for the
punishment of the guilty party and (2) a civil action for the restitution of the thing, repair
of the damage, and indemnification for the losses (Romero v. People of the Philippines,
G.R. No. 167546, July 17, 2009).
554
Note: Underlying this legal principle is the view that from the standpoint of its effects, a
crime has dual character: (1) as an offense against the state because of the disturbance
of the social order; and (2) as an offense against the private person injured by the crime
(Occena v. Icamina, G.R. No. 82146, January 22, 1990).
Q: Can there be a case when there is criminal liability but no civil liability?
ANS: Yes. Criminal liability will give rise to civil liability ONLY if the felonious act or
omission results in damage or injury to another and is the direct and proximate cause
thereof (Romero v. People of the Philippines, G.R. No. 167546, duly 17, 2009). Hence,
where there are no damages to be compensated or there is no private person injured by
the crime (e.g. crime of treason, rebellion, espionage, and contempt), no civil liability
arises on the part of the offender (Occena v. Icamina, G.R. No. 82146, January 22,
1990).
Note: The civil liability for crimes is extinguished by the same causes provided by the
Civil Code for the extinguishment of other obligations. Such liability continues
notwithstanding the fact that the offend% has served his sentence or has not been
required to serve the same by reasoSonnnesty, pardon, commutation of sentence, or
any other. reason (4 TOLENTINO,tarnif igaries and Jurisprudence on the Civil Code,
p. 75) (hereinafter 4 TOLENTINOpplAcle
%
Q: What is the scope of civil liatilli Altri

`nalronwimes?
r71
ANS: Civil liability includertstiiiiiipp , repa -6 iQn,.„ damage caused, and
sequehtial damage (REVISED P At"
indemnification for conAv ODE, Art. 104).
What is a quasi-deltlt?(
kw-A,
ANS: It is an act or omtssipabria perso ortfeasor) whi us;s damage to another
in his person, pro9,4, orlighLs giving rise o an obligatioI to ay'fpr the damage done,
there being fedit or negli•ence butI rnp -existing coTitrac al Nation between the
parties (O/Vgi
ebbg , rt 76).
Q: What are the; egursiteAf qtAdelia

ANS: To sustain afebiltrtialed onA quardelict, the following requisites must concur:
(DFC)
1. Damage suffe
a he plaintiff
2. Fault or negli ence of theiddrel a
3. Causal conn lion ber en the fault or negligence of defendant and the
damage incur? e plaintiff (Guillang v. Bedania, G.R. No. 162987, May
21, 2009).
Q: Can a single act or omission give rise to different causes of action?

ANS: Yes. A single negligent act may give rise to at least two separate.and independent
liabilities, namely the civil liability arising from a crime and the liability arising from
negligence. These concepts of faults are so distinct from each other that the exoneration
of one does not result to the exoneration of the other (Cancio Jr. v. Isip, G.R. No.
133978, November 12, 2002).
Note: The civil action based on Article 2177 of the Civil Code shall proceed
independently of the criminal action and shall require only a preponderance of evidence.
In no case, however, may the offended party recover damages twice for the same act or
omission charged in the criminal action. (RULES OF COURT, RULE 111, Sec 3).
Q: When is a thing specific or determinate?

ANS: A thing'is determinate when it is particularly designated or physically segregated
from all others of the same class (CIVIL CODE, Art. 1460, par. 1).
555
Q: What are the obligations of a debtor obliged to give a determinate or specific
thing?
ANS: The following are the duties of a debtor in obligation to give a determinate thing:
(CFAT-D)
1. To preserve or take Care of the thing due with the proper diligence of a good
father of family unless another standard of care is required by law or stipulated
by the parties (CIVIL CODE, Art. 1163);
2. To deliver the Fruits of the thing (CIVIL CODE, Art. 1164);
3. To deliver all Accessions and Accessories of the thing although not mentioned
4. To deliver the Thing itself. The debtor of a thing cannot compel the creditor to
receive a different one, although the latter may be of the same value as, or
more valuable than that which is due (See CIVIL CODE, Arts. 1163, 1233,
1244; as to kinds of delivery, Arts. 1497-1501); and
5. To be liable for Damages in case of delay, fraud, negligence or contravention
of tenor thereof (CIVIL COD ,.A.
Note: Accession signifies alippfAttiose filings w,bicrar produced by the thing which is
the object of the obligati asvp(1 as Auk fike .taie incorporated or attached
thereto, either naturally Ilt(OWIL---C6/2Mrt.19).Accessories signifies all of
those things which Tqrilheir object the embellishmyricksuse or preservation of
another thing whiph i e' i portafitTri nd-towhiqh0 a0 not incorporated or
attached (JURAE)94 atr ns Colitracts, 20, 0,‘p:18ph reinafter JURADO,
Obligations and o t 4n.
Q: What are fights orth-FriTtgel o r creditor in an:obligation to give a
determinate pec* lc thin b?
ANS: The righ malt e followIng: (SF*.w .16 - )
1. To cipiii9eil e Vterformand tWith righ ed for damages
(CIVIL FOB A 6
2. Right \FA o deliver it arises
(CIVIL QODE,
3. If the oli(Igor de ‘xs, e iver thesame, hang to two or more
persons MO do notjta Ole/ c9tyere
. t, credit9 has the right to hold
the obligOr espor9itiler-gPi _LIrtultd" untfinhe latter has effected
delivery pi.4 CO ;
4. To demand Resccissro. o the db,ligatn\ ktkgjar o recover damages, should
the obligation be re*Cihr• c I (Claft(b01191rtr1191); and
5. To demand payment of a -a-gunr the other party is guilty of fraud,
negligence, or delay in the performance of their obligation, and those rules in
any manner contravene the tenor thereof (CIVIL CODE, Art. 1170).
Q: When is a thing generic or indeterminate?

ANS: A thing is generic or indeterminate in the sense that it is designated merely by its
class or genus without any particular designation or physical segregation from all others
of the same class, the loss or destruction of anything of the same kind even without the
debtor's fault and before he has incurred in delay will not have the effect of extinguishing
an obligation (Gaisano Cagayan, Inc. v. Insurance Company of North America, G.R. No.
147839, June 8, 2006).
Q: What are the duties of a debtor in an obligation to give an indeterminate or

generic thing?
ANS: The duties are the following:
1. To deliver a thing which is neither of superior nor inferior quality, taking into
consideration the purpose and circumstances of the obligation (CIVIL CODE,
Art. 1246); and
556
2. To be liable for damages in case of delay, fraud, negligence or contravention
of the tenor thereof (CIVIL CODE, Art. 1170).
Q: What are the rights of the creditor in an obligation to give an indeterminate or

generic thing?
ANS: The rights are the following:
1. To ask for performance of the obligation (JURADO, Obligation and Contracts,
supra at 46);
2. To ask that the obligation be complied with at the expense of the debtor (CIVIL
CODE, Art. 1165, par. 2); and
3. To recover damages in case of fraud, negligence, delay, or contravention of
the tenor of the obligation (CIVIL CODE, Art. 1170).
Q: When does the obligation to deliver arises?

ANS: The obligation to deliver arises:
1. Generally, the obligation to delinr the thing due and, consequently, the fruits
thereof, if any, arises frormttig;60 of the perfection of the contract;
2. If the obligation is subjenlgatspensive condition or period, it arises upon
the fulfillment of ' the conditiOthlamval of the period;
3. In a contract of ,sale, tl*cibliVatky arises from the perfection of the contract
tord,.eavaol
even if the obligation iel;•stiegiok§sisp.ensivercondition or a suspensive
period where the primtias been
4. In obligations 401,0 arising, Om law, quasi-contracts, delicts, and quasi
delicts, the tit*Sf performwp,a determined by tD1 Vecific provisions of law
applicable (DELLA9N, Obligatlicir 4 and Contracts, su ra at 36-37).
•:"' -lir"
Q: What are the fruits co' lemplated unlr Article 116/ 1
ANS: The fruitgreonterriplat d under Mid 164 are thelollovng:
1. Na(u%11fruitlich are the spon neous, ro ustsiathe oil; and the young
andl er prod il taf anias;
2. Industrial ftri,,,
cultivatidetta-Wiapd / ri
itiFthich' ate those produced b lands of any kind through
3. Civil fruihich rhby be the rmt_sg, uildings, the price of leases of lands
and other proite,qy,rgAd the arnotrrffiapp tual or life annuities or other similar
income (C/WODE, *01'
W
.,
Q: If the person obliged49 dsomething fails to perform the obligation, or does it
in contravention of theehot• of the obligation, what are the remedies of the
obligee or creditor?
ANS: The obligee or creditor has the right:
1. To have the same executed at the cost of the obligor (CIVIL CODE, Art. 1167);
2. He may ask that may be decreed that what has been poorly done be undone
(CIVIL CODE, Art. 1167); and
3. To recover damages because of breach of obligation (CIVIL CODE, Art. 1170).
Note: A specific performance cannot be ordered in personal obligation to do because
this may amount to involuntary servitude which, as a rule is prohibited under Article III,
Sec.18(2) of the Constitution (DE LEON, Obligations and Contracts, supra at 43).
Q: When the obligation consists in not doing and the obligor does what has been
forbidden, what is the remedy of the obligee?
ANS: The obligee has the right:
1. To have the same undone at the expense of the obligor (CIVIL CODE, Art.
1168); and
2. To ask for damages because of breach of obligation (CIVIL CODE, Art. 1170).
557
Q: Are there cases where the remedy granted under Article 1168 of the Civil Code
(to have it undone'at the expense of the debtor) NOT available?
ANS: Yes. The following are:
1. Where the effects of the act which is forbidden are definite in character — even if
it is possible for the obligee to ask that the act done be undone at the expense of
the obligor, consequences permanent in character and contrary to the object of
the obligation will be produced.
2.' Where it is physically or legally impossible to undo what has been done because
of the very nature of the act itself or of a provision of law, or because of
confliction rights of third persons (JURADO, Obligations and Contracts, supra at
55).
Q: What are the different modes of breach of obligations? (FNDC)

ANS:. Those who in the performance of their obligations are guilty of (1) Fraud, (2)
Negligence, or (3) Delay, and (4) those who in any manner Contravene the tenor
thereof, are liable for damages (ClVIL CQDE,41`. 1170).
Q: What is the fraud contenfj3lated ungerlAch#14;170,44 the Civil Code?
ANS: It is the deliberate/cf.-internal ofitke 9:1-rr,
kaltfulfillment of an obligation.
Article 1170 refers cidvi a yfratcl (doiciileklejekcopiltted in the performance
of an obligation algga`VeytiNgt acause.of.cp&ract‘ ltele.IONbe differentiated from
causal fraud (dol tu‘srite) oand eriitOlo ed iFilheekeRtiorNof a contract under
Article 1338, which die Js cdnsent ,pndlijake rthe contra t`co'idab e and to incidental
fraud under Article 13 also'employed fot,,,the purpos of securing the consent of the
other party to 5tsintgo the ntraet-butIe0;011-fraud-wa§ not t e p inck al inducement to
the making of tpezoptract (D LEONpObliktiond w 2ontrac 4,0 at 56-57).
Note: It is synonymotis to bakfaith. Bdd idlithIlgps no simply 0o, r o bad judgment or
negligence; it i pdrts dishdriRst purribiPts'ome m obli lay an ff conscious doing
of a wrong, a re oflownrdutfthro-ubirso e motive.91,49teiest or ill will that
partakes of the ri r f fr•I GathePAdifralAi 4d. v Spoysbs Vazquez, G.R.
No. 150843, Ma h 14, 003).
Q: What are then Ssificatt9ns(of 11.10 distinctions?

ANS: Civil fraud ma be clasgiffeed2.1 ajEN)..
1. Fraud or dolo m heArf96naiii II • at) (Cto*To,inciciente); and
2. Fraud or dolo the c Istituti n r esfa h At of an obligation (dolo
causante).
The two may be distinguished from each o eras follows:
° Dolo incidente Dolo causante
•
As to commencement of existence,
Present 'only during the performance Present only at the time of the birth of the
of a pre-existing obligation obligation
As to purpose of employment
Employed for the purpose of evading Employed for the purpose of securing the
the normal fulfillment of an obligation consent of the other party to enter into the
contract •
As to result
Results in the non-fulfillment of the Results in the vitiation of consent; it is the
obligation reason for the other party upon whom it is
employed for entering the contract
558
•
As to remedy
It gives rise to a right of the creditor or It gives rise to a right of the innocent party
oblige to recover damages from the to ask for the annulment of the contract if
debtor or obligor the fraud is causal (dolo causante) or to
recover damages if it is incidental (dolo
incidente)
(JURADO, Obligations and Contracts, supra at 63)
Q: Is the responsibility arising from fraud in the performance of an obligation

demandable?
ANS: Yes. Responsibility arising from fraud is demandable in all obligations. Any waiver
of an action for future fraud is void (CIVIL CODE, Art. 1171).
Q: What is fault or negligence?

ANS: The fault or negligence of tt!e;f0Iiitgor consists in the omission of that diligence
which is required by the nature oftelation
er and corresponds with the circumstances
of the persons, of the time. and ottfe,ACIVIL CODE, Art. 1173). It is the failure to
observe for:the protection of the! irkeiVof another person, that degree of care,
precaution and vigilance whiclicairpt, Oanteardtlry dernd, whereby such other
person suffers 'injury. Verily, foresee4 slne-tes ',.trmigence. It is the omission to
do something which a reasonable ma g Aded by those cons). erations, which ordinarily
regulate the conduct COKulnan affait*Zuld do, or the OA of something which a
prudent and' reasonabOirron wciplcishOt j (R Transport pGorpor3tion v. Luisito G. Yu,
G.R. No. 174161, FflIffliarlelq;2015).
oriel 11111R,
1" iligeticuf a good tather f a family
Q: What is thi:$1,
ANS: The 45.0pt•pfitlilecilce bf. a gooc ther of pi Agarlotes reasonable care
consistent witiohat whit On or rily g dent persktiroPe observed when
confronted with e.iqpiaii tsittration . Ida Transport, n v. Heirs of Battung, Jr,
G.R. No. 208802, 01155er 14'i ,2015):
1•.!
Q: When is negligenceNonsidered equi:
ANS: Where the negligeride shofikValttit r is-sotross that it amounts to malice or
wanton attitude on th art of tbre defendant, the rules on fraud shall apply (CIVIL
CODE, Art. 1173).
Q: What are the kinds of negligence according to source of obligation?

ANS: The kinds of negligence are the following:
1. Civil Negligence, which may be:
a. Culpa contractual — fault or negligence of obligor by virtue of which he
is unable to perform his obligation arising from a pre-existing contract;
or
b. Culpa a+quiliana/quasi-delict — fault or negligence of a person, whose
failure to observe the required diligence to the obligation causes
damage to another.
2. Culpa Criminal- fault or negligence which results in the commission of a
crime (JURADO, Obligations and Contracts, supra at 65— 66).
559
'VOL 1.
Via. .40":1; )
2019
Q: Does a pre-existing contractual relation preclude the existence of culpa

aquiliana?
ANS:'. No. There may be an action for quasi-delict notwithstanding that there is a
subsis ing contract between the parties. A liability for tort may arise even under a
contract, where tort is that which breaches the contract. Stated differently, when an act
whichi constitutes a breach of contract would have itself constituted the source of a
quaskielictual liability, the contract can be said to have been breached by tort, thereby
allowing the rules on tort to apply (American Express International, Inc. v. Cordero, G.R.
No. 138550, October 14, 2005).
Q: When does a person obliged to deliver or to do something incur in delay?

ANS: Those obliged to deliver or to do something incur in delay from the time the
obligee judicially or extra judicially demands from them the fulfillment of their obligation.
HoweVer, the demand by the creditor shall not be necessary in order that delay may
exist: (LOTUR)
1. When the Obligation or the Law.expres_tly so declares;
2. , When from the nature,,and thei ,cir urgst 'rites of the obligation it appears that
the designation ortimq hen tbe '011, to,be,deltered or the service is to be
rendered wasj‘CPTiti-oljin potilie,tor4 e e,kablishmee of the contract; and
3. I When dem* w81.110elliseless, as whe fie/ObtiOR as rendered it beyond
]
his powelfro"15a).
Note: In ReciproeSielig trans, neithw parfk incurs in delay er does not comply
or is not ready t !cornolkin a roper inanrt&rwisth whatls inattry pon him. From the
moment one of he patties ful ills his obligalibp, delay b the ot bAins (CIVIL CODE,
Art. 1169).
Q: How is de and,hiade? 61" 11
ANS: A dema crAaytbe mrg 'udiciallkiMfrajudicia 'y r ) is j dicial the creditor files
a comp aint ag st-tN de6@sk r t e ttifi
TPTiejiTar
t "jigatilOrit•itta extrajudicial if the
creditor demanq ro, thele,btok the Ithling5+541,6 ob igationrither orally or in
writing' URADO, Obli tion vaYepilitra tk:tqpra, '",t158). he desnand must refer to
the prestation tha .is due and no 1-Ibtlr44TOL:cNTIN , Civil Code, supra at 104).
SC:1 5
. 1\g
Q: In reciprocal obl' s_.tillrfprs(y in order the other
may incur delay?
ANS: The general rule is htt the tZlfillml fipg pS -), espective • obligations
• • should
be simultaneous. Hence, node - and is., cessary because, once a party
fulfills his obligation and the other part dtisrSrfulfill his, the latter automatically incurs
in delay. But when different dates for performance of the obligations are fixed, the
default Tor each obligation must be determined by the rules given in the first paragraph
of the Article 1169, that is, the other party would incur in delay only from the moment the
other pprty demands fulfillment of the former's obligation (Solar Harvest, Inc. v. Davao
Corrugaied Carton Corp., G.R. No. 176868, July 26, 2010).
Q: What are the kinds of default or mora?

ANS: The kinds of default are the following:
1. Mora Solvendi— delay of the debtor to perform his obligation. It may be:
1, a. Ex re — in obligations to give; or
b. Ex persona — in obligations to do.
2. ' Mora Accipiendi — delay of the creditor in accepting delivery of the thing
which is the object of the obligation. The requisites are:
a. Offer of performance by the debtor who has the required capacity;
b. Offer is to comply with the prestation as it should be performed; and
c. Creditor refuses the performance without just cause.
560
'VOL 1.
2019
3. Compensatio Morae— Delay of the parties or obligors in reciprocal obligations

(JURADO, Obligations and Contracts, supra at 57).
Q: What are' he requisites of default by the debtor?

ANS: The following are the three requisites for the finding of default: (D3)
1. The obligation is Demandable and liquidated;
2. The debtor Delays performance;
3. The creditor judicially or extra-judicially Demands the debtor's performance
(General Milling Corporation v. Spouses Ramos, G.R. No. 193723, July 20,
2011)..
Q: What are the effects of delay?

ANS: The folloWing are the effects of delay:
1. In case of mora solvendi:
a. . The debtor,is guilty of breach of obligation;
0 He is liable , for interestin case of obligation to pay money or for
damages in cther obligations (CIVIL CODE, Arts. 2209 and 1170); and
C. He is liable even ftedf4bitous event when the obligation is to deliver
a determinate thiiig1;440DE,
"tt, Arts. 1165 and 1170).
2. In case of mora accipieMe..• 0
a The creditOr is guiffy;C:flqablotck igation
b He is liable fos4ogmigvVgivoiftaityrtw the debtor;
C. :' He bearsAttisk of lops Of the thing due it L CODE, Art. 1162);
d : Wherefiric .obligaticefistio pay money, t elldebtor is not liable for
A :
interestirpen the timecif t creditors delay; datia
e The,,cle tq6n:lay-telease himself from the pllidation by the consignation
[ . 491fiffe`lhinfkAum due (q.. - IL CODE, Art 12'5 6).
3. In case of compiOnsation drop&
alphe
,-,r, . ., detkilof
I N . the
4 obligor noels out gl f.• e delay of the
, obligee iti . Wice vt(sa; Ns?
'4
b ..lg..,,cagagh . parties ha -committed a bre c of the obligation, the
liaVitylaf tikfirst jnfrac o shall be equally tempered or balanced by
the coprts; it.pt cannot b eteNned which of the parties is guilty of
delay,elhe contract shall 13 d e O./extinguished and each shall bear
his own/ amage_s'' 0-1V (EID laCM2h
Q: What acts are inclulle:djulthe phrase "in any manner contravene the tenor" of
the obligation? s'44441
ANS: It includes not only any illicit act which impairs the strict and faithful fulfillment of
the obligation, but every kind of defective performance (Castro v. Colipano, G.R. No.
209969, September 27, 2017).
Q: What is a fortuitous event?

ANS: Fortuitous events by definition are extraordinary events not foreseeable or
avoidable. It, s therefore, not enough that the event should not have been foreseen or
anticipated, as is commonly believed but it must be one impossible to foresee or to
avoid. The mere difficulty to foresee the happening is not impossibility to foresee the
same (Sicam v. Jorge, G.R. No. 159617, August 8, 2007).
Q: What are the requisites for a fortuitous event to excuse the performance of an
obligation?
ANS: The following are the requisites of a fortuitous event: (IFIF)
1. The event must be Independent of the human will or at least of the obligor's
will;
561
*:-
The event could not be Foreseen, or if it could be foreseen, it must have been
impossible to avoid;
The event must be of such a character as to render it impossible for the obligor
to Fulfill his obligation in a normal manner; and
The obligor must be free from any participation in the aggravation of the Injury
resulting to the obligee (Philippine Realty and Holdings Corp., G.R. No.
165548, June 13, 2011).
Q: Are there exceptions to the rule that the obligor is not responsible for those
acts Which, could not be foreseen, or which though foreseen, were inevitable?
ANS:°Yes. The following are the exceptions to the rule:
11• When expressly specified by law;
a. The debtor is guilty of fraud, negligence, or delay, or contravention of
the tenor of the obligation (CIVIL CODE, Art. 1170);
b. The debtor has promised to deliver the same (specific) thing to two or
more persons who o,„‘not.,tmg, the same interest for it would be
impossible fs;Ati debtpr t c)ompty.34Cth his obligation to two or more
creditors ran 1thout An i fostupua''ev, taking place (CIVIL CODE,
Art. 1 , a ,
c. Theifeebt of _,thirl' :;;;Zraete linateVroceeds from a criminal
off6rigetp/ C 08-17268),
d. h(n to e delOri mislaneric n with the principle
"hat gnus never perishg, (MIL CO1263):
2 When/ ecladd byistipulatiop9Ve basis f et ftiedom of contract
but t l be cl ar stipulaboil
3 Whe ture o the4ligatiorff titre the as mpSiOn of risk—risk of
loss 1)r am ge is e sentiarqd4 ofioblig tio n (Dt- kap Obligations and
Contracts'-84).
What are th ceira i isitesOr ecoveptgvzoti4

( no
ANS:, n order t at motley in rgst reco requisites must be
present: \
1; The payment of inter
1956); \
2. The agreement tinpand
3'.. The interest mugt1)e (C/V,(LiC
1.V
Q: What is the current rate of legal in e st
ANS.•'With
, the amendment introduced by the Bangko Sentral ng Pilipinas Monetary
Board:in BSP-MB Circular No. 799, in the absence of an express stipulation as to the
rate of interest that: would govern the parties, the rate of legal interest for loans or
forbearance of any money, goods or credits and the rate allowed in judgments shall be
6% per annum effective July 1, 2013. This applies prospectively (Dario Nacar v. Gallery
Frames,.G.R. No. 189871, August 13, 2013).
Note: When an obligation, not constituting a loan or forbearance of money, is breached,
an interest on the amount of damages awarded may be imposed at the discretion of the
court ai the rate of 6% per annum. No interest, however, shall be adjudged on
unliquidated claims or damages, except when or until the demand can be established
with reasonable certainty (Dario Nacar v. Gallery Frames, G.R. No. 189871, August 13,
2013):
562
Q: What is the presumption when there is a receipt of the principal obligation by
the creditor?
ANS: The receipt of the principal by the creditor, without reservation with respect to the
interest, shall give rise to the presumption that said interest has been paid (CIVIL
Q: What is the presumption when there is a receipt of a later installment of a

debt?
ANS: The receipt of a, later installment of a debt without reservation as to prior
installments, shall likewise raise the presumption that such installments have been paid
(CIVIL CODE, Art 1176, par. 2).
Q: What are the remedies of the creditor should the obligor fail to perform his
obligation?
ANS: It must be qualified. The following are the remedies:
1. In specific real obligation, thelditor may exercise the following remedies:
'a. Demand specific pa:9'1,cm nce or fulfillment of the obligation with a right
to indemnity for driteSIC/V/L CODE, Art 1165); or
Demand resciss019fitein4llation (in certain cases) of the obligation,
also with right to 1.60x:eltallages (CIVIL CODE Art 1170); or
c Demand, the paymeFOrAmages only w e it is the only feasible
remedy. ,049
2. In generic 7,1obhgation, e creditor may ask t t the obligation may be
performed b third person t l e expense of th btor since the object is
expressed oniSkapdkording f ly or genus (CI ODE, Art. 1165).
. ntisWcif an act ere the personal nd pecial qualification of
Note: If the prestatisf,eq
the obligor; sl theRtIncipatf Op for the stablishment osithelobli ation, the remedy of
the obligee is4e'procee,, ainst theireibli for damageg and -r A tcle 1170 (JURADO,
Obligations aryl* supratat 52-53)
Q: What are the remedies avara 5le t e creditors for- he satisfaction of their
9
claims?
ANS: The remedies,of the creditors for th t'sle tion of their claims are the following:
(SPA2) 4,
1. Specific per °Finance pithe exact Ifillmen f l e obligation with the right to
damages;
2. Pursue the levtig, or to exhaust the property in possession of the debtor
which are not exerrit* om attachment under the law;
3. ACcion Subrogatoria, or to be subrogated to all the rights and actions of the
debtor except purely personal rights in the sense that they are inherent in the
person of the debtor, such as rights arising from purely personal or family
relations or which are public or honorary in character (8 MANRESA, Fifth ed.
Bk 1, p. 267) thereinafter 8 MANRESAJ.
4. Accion Pauliana or to impugn all the acts which the debtor may have done to
defraud the creditor by means of rescissory action at the instance of the
creditor who is prejudiced (CIVIL CODE, Art 1177).
Note: 3rdand 4th remedies are subsidiary to the Island 2nd. It can only be availed of in the
absence of leny other legal remedy to obtain reparation for the injury (JURADO, Civil
Law Reviewer, supra at 717).
Q: What are the requisites of accion subrogatoria?

ANS: The following are the requisites: (IPE)
1. Debtor to whom the right of action properly pertains must be Indebted to the
creditor;
I
563
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. Creditor must be Prejudiced by the inaction or failure of the debtor to proceed

against the third person; and
3. Creditor must have first pursued or Exhausted all the properties of the debtor
which are npt exempted for execution (JURADO, Obligations and Contracts,
supra at 104).
Q: What are the requ)sites of accion pauliana?

ANS:The following are the requisites: (C-SOFA)
1 Plaintiff asking for rescission has Credit prior to the alienation, although
demandable' later;
2. Debtor has made a Subsequent contract conveying a patrimonial benefit to a
•third person;).
Creditor hasIno Other legal remedy to satisfy its claim, but would benefit by
,rescission ofithe conveyance to thethird person;
Act being impugned is Fraudulent; and
Third person'who received the property conveyed, if by onerous title, has been
an AccompliOe in the-fraud P71
il .;4ng,. v. Losloso, G.R. No. 203871,
h
January 15, k1,4K
Q: What are the instances when right of actiorris grantecl'even in the absence of
privity of contrackbeKeA94partierr7----,..„..
ANS: A right of oAtiobis granted even, inIffe absencelof pov,tt4f contract between the
parties in the follAwin \cases:I
o 1r"
1.. In case of StirBLEPLS.E, the subjessee is su sidle ,0 .,r7 liable4 to the lessor for
any ierl e from Iffrleg-sql. However, the sub` spe shall not be
respongible eyondlthe hreediSe from hiritin accordance with the
IlijOntOt
termg ofAhe ublease, at theffi0ofill,Selextrajudicial dcetnaVly the lessor;
Notel PaSini of t in ad`cianaby the suiiire""s'seei-shall' e deemed NOT to
have been\ ade ylOar aa4:ttledessor'srdarm isid000qied, unless said
paymqritelne effected in vifttel0E1WexugterrrrOf placei(CIVIL CODE, Art.
652).‘ y As;;ye
2 In caselOf CO V NTIO P- , thk iendor rllay bring his action
against Afery pos .ks -iscrenved'from the endee, even if in the
,40"
second ckact po' to oul ve b ,en made of the right to
repurchase, vtiltioqt9 etu ibe.to.th rovksicintsi f,the Mortgage Law and the
Land RegistraticrmLa resnectrtArPtesorTS (CIVIL CODE, Art. 1608);
3 In case of a CONTFIACRWRIEO,OFVORK, subject to the provisions
of special laws,
, those whoptitieirtaVir upon or furnish materials for a piece
of work undertaken by the contractor have an action against the owner up to
the amount owing from the latter to the contractor at the time the claim is
made. However, the following shall not prejudice the laborers, employees and
furnishers of materials:
a. PaymeOts made by the owner to the contractor before they are due;
b. Renunciation by the contractor of any amount due him from the owner
4. ri case of SUB;-AGENCY under Art. 1892, the principal may bring an action
against the substitute with respect to the obligations which the latter has
contracted under the substitution (CIVIL CODE, Art. 1893).
Q: Are the rights acquired by virtue of an obligation transmissible?

ANS: Subject to the lawS, all rights acquired in virtue of an obligation are transmissible,
if there has'been no stipulation to the contrary (CIVIL CODE, Art 1178).
564
SArV...:e1
?".tt425?.EPATVAWIti•
. t'43-
11.1.2..A'n!ttiP-C7';1:
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Q: What are ihe classificaticins of obligations?

ANS: The classifications of obligations are the following:
1. As to the primary classification under the Civil Code:
a. Pure and conditional (CIVIL CODE, Arts. 1179-1192);
b. Obligations with a period (CIVIL CODE, Arts. 1193-1198);
c. Alternative and facultative (CIVIL CODE, Arts. 1199-1206);
d. Joint and solidary (CIVIL CODE, Arts. 1207-1222);
e. Divisible ancfindivisible (CIVIL CODE, Arts. 1223-1225); and
L With a penal Clause (CIVIL CODE, Arts. 1226-1230).
2. Classification of a secondary character under the Civil Code:
a. • !Legal, conventional, and penal (CIVIL CODE, Arts. 1158-1162);
b. Real and perSonal (CIVIL CODE, Arts. 1163-1168);
c. Determinate and generic (CIVIL CODE, Arts. 1163-1166);
d. Positive and negative (CIVIL CODE, Arts. 1167-1168);
e., Unilateral and bilateral (CIVIL CODE, Arts. 1169-1191);
f. Individual and collective;(CIVIL CODE, Arts. 1207, 1223); and
g. • Accessory and princirlay(CIVIL CODE, Arts. 1166, 1226).
3. Classification
, • accordinOgSAchez Roman:
a By their juridicalI:Oweld efficaciousness
i. • Natural— if,kOjijidakn is based on equity and natural law;
ii. Civil—Ithe ObljTatibUtipecordanceath positive law; and
iii. Mixec6,1fie alratibifiAitikeOrdanOe with both natural and
•og• .*.
positive law. ,
By panes
parpes or I subjest,,F
i. .Prill6teral ocial kr al — unilateral,' vhere only one party is
k.tiOdtadwdr
.&.03 'bilateral, where bot.r parties are mutually and
reciprocally boundrand
individual or4bollgive — individual, here, there is only one
.,aligrir; orcollectiie where er&are verajkAigors.
z - i,i -44--,,, 4.6 tw
iii. JoOpr SVKlary 1.91nt, when llgoWiable only for his
Ii•l -%,- 45rtionat4shard of the obliga Prbr'klidary, when each
fittedbligkr
-;, may )Se her& iable for the entire obligation.
By h °hie& of the obi- atioi prestation
i. ..iigediPc or gene, px0 c,,the object is determinate; or
generic, wfforgtheO leatedeilFated by its class or genus;
7,- impleibo
, , 1 ,,,,,,.
compound — simple, when there is only one
do. ,
u tiert4ing; and compound, when there are several
un Mings.lVlultiple obligations may be:
1. Conjunctive - when all the undertakings are demandable
at the same time; or
2. Distributive - when only one undertaking out of several is
demandable. Distributive obligations may be:
a. Alternative — when the obligor is allowed to
choose one out of several obligations which may
be due and demandable; or
b. Facultative— when the obligor is allowed to
substitute another obligation for one which is due
and demandable. •
iii. Positive or negative — positive, when the obligor is obliged to
give or do something; or negative, when the obligor must refrain
from giving or doing something;
iv. Real or personal — real, when the obligation consists in giving
something; or personal, when the obligation consists in doing or
not doing something;
565
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,
VOL 1.
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v. Possible or impossible - possible, when the obligation is

capable of fulfillment in nature as well as in law; or impossible,
when the obligation is not capable of fulfillment either in nature
or in law;
vi. Divisible or indivisible - divisible, when the obligation is
susceptible of partial performance; or indivisible, when the
obligation is not susceptible of partial performance; and
vii. Principal or accessory - principal, when it is the main
Undertaking; or accessory, when it is merely an undertaking to
guarantee the fulfillment of the principal obligation.
By their juridical perfection and extinguishment
i. Pure- the obligation is not subject to any condition or term and
is immediately demandable;
ii. Conditional - the obligation is subject to a condition which may
be:
1. SusiNnsive...in,eich case the happening or fulfillment
Hofthe conditionIeqttlir,tpe birth of the obligation; or
2r f*solutoin,Wilichi
kU tartfae happening or fulfillment of
t onditiontesults th'e extinguishment of the
tVa term-orpTrird'=-th subject to a term or

enod
4
1. Suspensive,grr 2rrom
,4
a day am I- the obligation is
demandapielonly upon tlp exp o f the term; or
Hesolutoio
ryir a day certain - or ation terminates
1h-w.epirs'atiOff of he term (JU1 4DO, Obligations
upon.
and C-dig Octs- 'u'pra a 3-6; D 1.1E0 Obligations and
ontrac\t, at 10 0_
1
Q: What is a p reic)11hgati e,i'•,
. -ey-,
..-;,.. 1
ANS: A pure oblc ' ation Is on , flea j xtin ishmeitt does not depend
•• .#7 '
on the fulfillment r non-fbitIlmdn d tiOn the xpiratio,9 of a term or period,
c 0'
and hence said illigationN' • dab e. (JURADO, Obligations and
Contracts, supra at f 7).
Note: The quality of i edia ,degili ndabilityls not-Viola hen a reasonable period
is granted for performanc /UR°, ObRgAtIqs1!rOc‘ern rads, supra at 108).
„. iv i .4:00.40'
Q: What are the obligations that are =media ely demandable?
ANS: The following obligations are demandable at once:
1. Pure obligations (CIVIL CODE, Art. 1179, par. 1);
2. Obligation subject to Resolutory condition (CIVIL CODE, Art. 1179, par. 2);
3. Obligations with a Resolutory period (CIVIL CODE, Art. 1193, par 2); and
4. Obligations subject to a condition not to do an Impossible thing (CIVIL CODE,
Art. 1183, par 2).
Q: What is a conditional obligation?

ANS: A conditional obligation is one wherein the acquisition of rights, or the
extinguishment or loss of those already acquired, depends upon the happening of the
event which constitutes the condition (CIVIL CODE, Art. 1181).
Q: What is a condition?
ANS: A condition may be defined as a future and uncertain fact or event upon which an
obligation is subordinated or made to depend (JURADO, Obligations and Contracts,
supra at,108).
566
ZVOL 1.
DAN,RED 8 2019
Q: When is e condition potestative, casual or mixed?

ANS: A condition is potestatiVe when the fulfillment of which depends upon the will of a
party to the Obligation. A condition is casual when its fulfillment depends on chance
and/or the will of a third persOn. Lastly, a condition is mixed when its fulfillment depends
partly on thelOil of a party to the obligation and partly on chance and/or will of a third
person (JURADO, Civil Law Reviewer, supra at 720).
I ,
Q: Is the conditional obligation void if its fulfillment depends upon the will of the
debtor?
ANS: It depends.
1. When the fulfillment of the condition depends upon the sole will of the debtor,
the conditional obligation shall be void (CIVIL CODE, Art. 1182); and
2. When the fulfillment depends upon the will of a party to the obligation and
partly upon chance' and/or the will of a third person, the obligation including
such condition shall take effect (JURADO, Obligations and Contracts, supra at
118).
Note: Although the law is silent witivf4gald to potestative conditions whose fulfillment
depends exclusively upon the willif4h0fe,clitor, it is undeniable that it cannot have the
effect of nullifying the obligation or,s,ktettached. This is so because the creditor is
naturally interested in the fulfillmebt,cah jbondition since it is only by such fulfillment
that the obligatiOn can become eft:active*/ Obligatp and Contracts, supra at
116). 400 ,...44
Q: What is the rule in;' condihI obligation?
ANS: The rule in a rigediconditioa§ ligation is that h nhe condition was not
fulfilled but tile .ObligosOdidAkiro'hig powe o comply witll th obligation, the condition
should be deemed atisTheliVn(emationa ;Hotel Corporation Rt. ncisco Joaquin, Jr.,
G.R. No. 15836,1 April 10 V013). 1
-‘
a.
-44 ktp. .v•
Q: What are impossible co ditiogg
ANS: Impossible ,99 n d Dig re ffiAie c ary to goo slams or public policy and
those prohibited b 11.4 caog Art. 83).
Q: When does Articlek33,io impossib fans ply?

ANS: Article 1183 refatrto suspg. TatonditidlitlitTlares only to cases where the
impossibility already xsted is the time the obligation was constituted. If the
impossibility arises after eation of the obligation, Article 1266 governs (DE LEON,
Obligations and Contracts,' 1% at 134).
Q: What are fhe effects of impossible conditions?

ANS: The following are the effects of impossible conditions:
1. In an, obligation with a suspensive condition, impossible conditions annul the
obligation which depends upon them (CIVIL CODE, Art. 1183, par. 1);
2. If the 'condition is negative, that is, not to do an impossible thing, it is
disregarded and the obligation rendered pure and valid (CIVIL CODE, Art.
1183, par. 2);
3. If the ';obligation is divisible, that part thereof which is not affected by the
imPossible or unlawful conditions shall be valid (CIVIL CODE, Art. 1183, par.
1); and
4. In an obligation with a resolutory condition, where the obligation is pre-existing,
and therefore, does not depend upon the fulfillment of the condition for its
existence, only the impossible condition is void (JURADO, Obligations and
Contracts, supra at 123).
567
VOL 1.
2019
Q: When is a conditipn suspensive?

ANS: ;Ai condition is suspensive when its fulfillment results in ACQUISITION OF
RIGHTS arising out of the obligation (JURADO, Obligations and Contracts, supra at
109).
Q: When is a condition resolutory?

ANS: A condition is resolutory when its fulfillment results in EXTINGUISHMENT OF
RIGHTS, arising out of the obligation (JURADO, Obligations and Contracts, supra at
110)H 1 I
1
Q: What is the extent of retroactivity in case of fulfillment of a suspensive
condff,ion?
ANS:'In Case of a suspensive condition:
1 ,, 'In obligatione to give, once the condition has been fulfilled, it shall retroact to
the day of the constitution of the obligation. Nevertheless, when the obligation
imposes RECIPROCAL pr,estations„,qps2n the parties, the fruits and interests
during the pendeng„.oftne copditiorqp411'be„deemed to have been mutually
compensated. Ifoffie ol4gatiori L... isjUNILATERAL%the
-1. Ai z , ,
r,.
debtor shall appropriate
, Ithe fruits and/•ifiterestslrebeivedrunless
• ..=&=.•
frOm
! pie,- matvre and circumstances of
the obligatiprOt stiouldobe inferred that tife,‘i tentio \dfkthe person constituting
the same i'ival'Afferent;or------7.---
, ,,, .,!, ---,„ ‹... \
Az
In obligalipz o o di not-tp dbylhexourtslha4eter ire, in each case, the
retroactive effect of he conditioWthatthas been co lied)!vith (CIVIL CODE,
Art 1(87). it •1.e '..
Note: The prirl 1151,0 retroac ivity can only apply fiCa-pnsens el cqntocts. It can have
no app icetion bleat pontractls, siklatAle" oklailedgdor corn olden which can only
be perfected b deliWry. Nei er 5pwappliation to thus contracts in which
the obligation rising .!there o can 8,11-itlie' realiz ..cv.v4thin; succesive periods or
interva s, ;such as p se, hi service, al s l'ar tracts (JURADO,
Obligations an &on rIts, sti a t 12A
Q: What is the extn of r tret t of a resolutory

condif on? I
ANS: In case of a resolutoryc
‘K,,
SQIF,NT‘N
1. When the conditions ale ontheirpu yguishment of an obligation
to give, the parties,ypi,Lon he nditions, shall return to each
other what they havereceived (CIVIL E D , Art. 1190, par. 1); or
2. In obligations to do and POTTiftlirtlie courts shall determine, in each case, the
retroactive effect of the condition that has been complied with-(CIVIL CODE,
Arts. 1190 and 1187).
Note: An; examination of Article 1190 reveals that in obligations with a resolutory
condition, the fulfillment of the condition and its retroactivity have the effect of signifying
the non-existence of the obligation and what is nonexistent must not give rise to any
effect whatsoever. Consequently, the fiction of retroactivity must be carried to its full
consummation (JURADO, Obligations and Contracts, supra at 135).
Q: When is there a constructive fulfillment of a suspensive condition?

ANS: The condition shall be deemed fulfilled when the obligor voluntarily prevents its
fulfillment (CIVIL CODE, Art. 1186).
Q: What are the requisites of a constructive fulfillment?

ANS: For the application of Article 1186, the following must concur:
1. The intent of the obligor to prevent the fulfillment of the condition; and
2. The actual prevention of the fulfillment
568
Note: Mere intention of the debtor to prevent the happening of the condition, or to place
ineffective obstacles to its compliance, without actually preventing the fulfillment, is
insufficient ?International Hotel Corporation v. Joaquin, Jr., G.R. No. 158361, April 10,
2013).
i
Q: When the :conditions have been imposed with the intention of suspending the
efficacy ofIan obligation to give, what are the rules that must be observed in case
of improvement, loss or deterioration of the thing during the pendency of the
condition?1
1. If ithe thing is lost without the fault of the debtor, the obligation shall be
extinguished;
2. If the thing is lost ,through the fault of the debtor, he shall be obliged to pay
demages; it is understood that the thing is lost when it perishes, or goes out of
commerce, or disappears in such a way that its existence is unknown or it
'
ca'nnot be recovered;
3. When the thing deteriorates withtfut the fault of the debtor, the impairment is to
be borne by the creditor; Vii`_,
4. Ifiit deteriorates through. the 41t of the debtor, the creditor may choose
between the rescission of theig4pation and its fulfillment, with indemnity for
damages in either case; ..:, im314,
441,v).
5. If the thing is improvedVby itSi'riet_te, r69att mpe3 provement shail inure to
the benefit of the creditor, or . ? .
._._. :4,.• o the debtor, he sp Iiave no other right than
6. If it is improvgdat the expeOei
that'granted tqthefusufructA CIVIL CODE, Art. 1 dg .
r1 , '''
- Q: What are the4aquisitagzfoxtthe above entioned rules to be pplicable?
ANS: The foljAing arefath6 i'requisitd.Sqor e rules mentioned in Aticle 1189 to apply:
(RSS-FP) tiv ,,,,,,,0,-„k„, ,..
1. The- tligation iSliReal Ott! g a t i o
2. The object is Specific or ddter pate thing;
3. The Obliglphig siect t tofa Suspensive condition;
4. The conditioniiis 'Fulfilled; and , .-fi.tcne
•
5. There is lossksleseft8ration, or impriaveWeAlpf the thing during the Pendency
of The happen Kg on oriprolitiliton DElirgaPDbligations and Contracts,
supra at 14711' ti
, %-,
t• A
q,,/
Q: What is the effect wheY alresolutory condition in obligation to do or not to do
happens and . there is improvement, loss or deterioration of specific thing?
ANS.: In case of the loss,,deterioration or improvement of the thing, the provisions with
respect to the debtor laid down-in Art. 1189 shall be applied to the party who is bound to
return (CIVIL CODE, Art. 1190 par 2).
Note: The "debtor" in this case is the person obliged to return, while the "creditor" is the
person to whorn the thing must be returned.
Q: What is meant by reciprocal obligations?

ANS: Reciprocal obligations are those which arise from the same cause, and which
each party is a debtor and a creditor of the other, such that the obligation of one is
dependent upan the obligation of the other. They are to be performed simultaneously,
so that the ,peformance of one is conditioned upon the simultaneous fulfillment of the
other (Cortes v. Hon. Court of Appeals, G.R. No. 126083, July 12 2006).
Q: When is the remedy of rescission under Article 1191 available?

ANS: The power to rescind obligations is implied in reciprocal ones, in case one of the
obligors should not comply with what is incumbent upon him (CIVIL CODE, Art. 1191).
569
Q: Can the injured party choose rescission after he has chosen fulfillment of the
obligition?
ANS: Generally, the injured party must choose between fulfillment and rescission of the
obligation, with payment of damages in either case. However, he may also seek
rescission even after he has chosen fulfillment if the latter should become impossible
(CIVIL CODE, Art. 1191, par. 2).
Q: Is rescission available to casual breaches of contract?

ANS: No. For a contracting party to be entitled to rescission (or resolution) in
accorlance with Article 1191 of the Civil Code, the other contracting party must be in
substantial breach of the terms and conditions of their contract. A substantial breach of
a contract, unlike slight and casual breaches thereof, is a fundamental breach that
defeats the object of the parties in entering into an agreement (Maglasang v.
Northwestern University, Inc., G.R. No. 188986, March 20, 2013).
Q: What is a period or term? .,..,,,,.........---...„,..,

ANS: A period is a future ankcdiain eyent uptonAte.arrival of which the obligation (or
right) subject to it either arises cit,l's terkintssidlibElLeON Obligations and Contracts,
supra at 190). It is a cl4 errItu..wojch.must.ne, cestar6 co , although it may not be
known when, like th$411eath ,,f Orson (CIVIL CODEk4irt: 10 ,.ca:
,
3).
. 1
Q: WhO are the Vgnct ns etwev a bnctition V"
‘1'.."--.."."---.,..
rn?'o.Aqteod?
ayte, tn•
ANS: They may e uis ed as Milo A \ rrl
_.: .
Condition Term/Period
In General
INEta
Refers to anteg efers nteg val ot time
■ /
• As to Requisites •
Requires futun and u e al ___AfF7
s fut ef
ity and , ertainty
I '
As to Fulfillment
fkliVcoKe to pass, although it
May or may not happe
ot; KILt::Wrnown when
As to Influence upon Obligation
Exerts an influence upon the very Exerts an influence only upon the time
existence of the obligations itself of demandability or extinguishment of
an obligation
As to Retroactivity of Effects
Has retroactive effects Does not have retroactive effects unless

there is an agreement to the contrary
f:::: •
As to Effect of Will of Debtor
When (condition is left exclusively to the When the duration of a term or period is
will of the debtor, the very validity of the left exclusively to the will of the debtor,
obligalion is affected the obligation is still valid
(JURADO, Civil Law Reviewer, supra at 730) '
570 '
Q: Whenever a period has been designated in an obligation, for whose benefit is it
presumed? I
ANS: Whenever in an obligation a period has been designated, it shall be presumed to
have been established for the benefit of both the creditor and the debtor (CIVIL CODE,
Art. 1196). Consequently, the creditor cannot demand the performance of the obligation
before the expiration of the designated period; neither can the debtor perform the
obligation before the expiration of the period. This rule, however is not absolute
(JURADO, Obligations and Contracts, supra at 152-153). If from the tenor of the
obligation or other circumstances it should appear that the period has been established
in favor of one or of the other, the general rule is no longer applicable (CIVIL CODE, Art.
1196).
Note: In cohtracts of loan, if the loan is gratuitous or without interest, the term is
ordinarily fort the exclusive benefit of the debtor, who may therefore pay in advance. But
if interest is ,stipulated, the period is generally for the benefit of both parties, and the
debtor cannot pay in advance unless he pays the full interest for the period agreed upon
(4 TOLENTINO, Civil Code, supra at 1941,1,,
Q: When the period should appekthh.e been established for the benefit of the
debtor, what are the effects?
ANS: The effects are the following;
1. He! may oppose any ,5ret,, atucklEeM d on thZpart of the creditor for
performance of the opjigation6V-
2. If he so desire,9Ag4may renotmce the benefit o eriod by performing his
obligation in ,911.V.Cnce (JURADO bligations and cts, supra at 154).
Q: What are the in% cetvbefi t e deb r loses the bine it c?tf the period?
ANS: The debta losepw right to ke use of the,fieri d: (If-IF-VA)
1. Whte FTENhe zi
h been conacte he becomes Insolvent,
1'
un lessivssfre,gy,0 uaranty or se6 ity for e-,_4
Notel The ins tney d o be judicalfr n an insolvency
proceeds0.
2. When heitatlio .urnish..4o th redit6r the guaranties or securities which he
has, promi ed•
3. When by his n ts he has I *guaranties or securities after their
establishmenr4and whe g -6 (igatit they disappear, unless he
immediately gnies ne o, es equally satisfactory;
Nate: Should s of the securities be by reason of a FORTUITOUS
EVENT; there msr a total disappearance in order to deprive the debtor of
the'benefit of the term.
4. When the debtor Violates any undertaking, in consideration of which the
creditor agreed to tiTe period; or
5. When the debtor Attempts to abscond (CIVIL CODE, Art. 1198).
Q: When does the obligation with a resolutory period take effect?

ANS: Obligations with a resolutory period take effect at once, but terminate upon arrival
of the day certain (CIVIL CODE, Art. 1193).
Q: When can the court fix a period?

ANS: The court may fix the period:
1. If the obligation does not fix a period, but from its nature and the
circumstances it can be inferred that a period was intended; or
2. When it depends upon the will of the debtor (i.e., under Art. 1180, when the
debtor binds himself to pay when his means permit him to do so) (CIVIL
CODE, Art. 1197).
571
Note: In every case, the courts shall determine such period as may under the
circumstances have been probably contemplated by the parties. Once fixed by the
courts the period cannot be changed by them (CIVIL CODE, Art. 1197). The prohibition
againt changing the period refers to the courts, not to the parties. The period fixed in a
final judgment is res judicata, and as such forms an integral part of the imperfect
contract which gave rise to its designation by the court, and thenceforward part of a
perfect and binding contract (Barretto v. City of Manila, G.R. No. 4372, March 27, 1908).
Q: When the obligation fails to fix a period, or when it depends upon the will of
the debtor, what should the creditor do before he can demand payment?
ANS: The creditor must ask the court to set the period before he can demand payment.
The period to be fixed by the court becomes part of the contract and until it has expired
no action to enforce payment can be maintained (CIVIL CODE, Art. 1197).
Q: Are there instances when the courts cannot change the fixed periods?
ANS: Yes. The courts cannot change,the,fixed,periods in the following cases:
1. Period agreed up?.py:the pqrties 1 If at has already lapsed or expired, the
court cannot fix anotherperio4 ) 4 ;
2. Period fixed I21threcluFt becomes,trit taw governing the parties' contract.
3. Period fixe/yr finakjagment — res judicafd epctk(DE LEON, Obligations
and Con(racA,;,
,(Styra
, f at.2.1-2:213f vc1
,.
/0‘'‘)
differences etweeli alternative an fac
Q: What are thediffdre lye 8bligations?
ANS: The differences ate the following: ft • (if)
Alternative Obligation II ' Facultative Obligation
As to number of objects
Several obje Only
1:.,, 1;1
c t Ate('
s,
As to compliance
It may be complied with by de,Iiiry , ayy be cgmplied with by the deliveryof
one Of the objects or by pert p...r Tan• ffel-4,olizttor by the performance of
of ore of the pre tatiqtriv)q!bh.,a_ra. antherpit2rfc in substitution of that
alternatively due. -"Vi
nwikicKNIJ,e).
; As to *the right of choibe
Choice generally belongs to the debtor Choice pertains only to the debtor.
unies's it has been expressly granted
to the creditor (CIVIL CODE, Art.
1200).
As to extinguishment in case of loss
Loss/impossibility of. ALL objects/ Loss/impossibility of the object/

prestations due to fortuitous event prestations due to fortuitous event is
shall extinguish the obligation. sufficient to extinguish the obligation.
As tp‘CulPahleioss before 'choice
It may give rise to liability on the part of It does not give rise to any liability on the
the debtor. part of the debtor.
(JURADO, Obligations and Contracts, supra at 174)
572
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‘.Pf:0-'3
tc,7-;
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-...v.tA•r", BED N RED
,•• ... .Itt:;'•
2019
Q: What are the limitations on the debtor's right to choose?

ANS: The following are the limitations on the debtor's right to choose:
1. The 'debtor cannot choose prestations which are impossible, unlawful, and
could not have been the object of the obligation (CIVIL CODE, Art. 1200, par.
2). H
2. No more right of. choice when among the prestations whereby he is
alternatively bound, only one is practicable (CIVIL CODE, Art. 1202).
3. The debtor cannot choose part of one and part of another prestation (CIVIL
Q: What are the effects in case of loss of specific things in an alternative

obligation?
1. When choice belOngs to debtor:
a. ;Due to Fortuitous Event:
i. All are lost - debtor is released from the obligation;
ii. Some' but notAlt are lost - deliver that which he shall choose
from•amood tile 44i- ,/;•:,winder; or
,... ..1
iii. Only one remains iver del that which remains.
b. iDebtor's fault: .'..' ... .,, ,,,.
i. All are loat-L:dieArgrispallDaye a rigtto indemnity for damages
based .ott ttiaitalUekiekte.4§3a ..-Sq c tfihn which disappeared or
,omxA
W..
,sersice which become impossible; 4
ii. _lu:Prile but nci,,t114.e lost - deliver*kwhich he shall choose
lir9rti. amongpire . ainder without 9a .. ages; or
iii. lOnl.brte'L delivelbat which rema ns
2. When choice befiRgs,to - - crediral:
. ,.,
a, -IFIDue togortuitous Eliarlt: Ifs_
Aklare lost, debtot s released o_ theos ligation;
,4':' V
ii. Some but IL O; all arelost - de 1 htill he shall choose
•iv... '-
q ttriVamoglfie
v.v,* ,....-0-i4t re Binder; or
• !, ilLterr ,Onlyane remains .deliver that which remains.
b • Del6tor;s faur
• ti arelost - credito the price/value of any of them
Om, inde irre— r damages
ii. tt8Orne iuOnot all are lost - creditor may claim any of those
bststkg without a right to damages OR price/value of the
thilitrdst with right to damages (CIVIL CODE, Arts. 1204-1205).
Q: What is the effect of loss In case of facultative obligation?

ANS: The following is the effect of loss in case of facultative obligation:
1. Before substitution - The loss of the thing intended as a substitute with or
without the fault of the debtor does not render him liable since it is not due.
2. After substitution - If the substitute is lost, the liability of the debtor depends
upon 'whether or not the loss is due to his fault or not. The substitution
becomes effective from the time it has been communicated (CIVIL CODE, Art.
1206)
Q: What is the liability when there is concurrence of two or more creditors or of

two or more, debtors in one and the same obligation?
ANS: As a general rule, the obligation is presumed to be joint (CIVIL CODE, Art. 1208).
Consequently:
1. There are as many debts as there are debtors;
2. There are as many credits as there are creditors;
573
3. The debts and/or credits are considered distinct and separate from one
another;
4. Each debtor is liable only for a proportionate part of the debt;
5.i, Each creditor is entitled only to a proportionate part of the credit (DE LEON,
Obligations and Contracts, supra at 231-232).
Note: The presumption, however, is disputable in character, as when the obligation is
solidary (JURADO, Civil Law Reviewer, supra at 743).
Q: When is an obligation solidary?

ANS: The obligation is solidary when: (LON)
1., The Law requires solidarity (e.g. CIVIL CODE, Arts. 927, 1824, 1911, 2146,
2157, 2194) tort, quasi-contracts, liability of principals, accomplices and
accessories of a felony, obligations of devisees and legatees, bailees in
commodatum;
Note: Our law recognizes solidary responsibility for wrongful acts whether they
are crimes or quasi-delict_,
s. 4.,moral,wrgpg cannot be divided into parts; hence
the liability for it mustkrklidary.
2. The Obligation express Aptate4th t there ie8o idarity;
3. Nature of tliedigilig tionIequires..soibian
' • I' y LC/1.4 CODE, Art. 1207) e.g.
criminal offe'' ses ap to
I lb. )1
1
Q: What are theffitfOrq etweenjOint artd•soliaa Wigations?
ANS: The following- aei ie di erencet between-joint arid so ida'ry obligations:
e
• Joint Obligations Solidary Obligations
As to definition
One in which ghtof toa

uJE • W - de in
• kill • liaby for the. entire
only fOr a pro l
,r115.pke pal.)pNhe dopt, e Ch't itor is entitled to
and each cr dlfor erit tlgd•;,‘\o,plttt .fickh wh re obligation (Id. at 217).
proportionate art o the\Scredt(4
TOLENTINO, C Code,• upra •
As to demand by the creditor

1,bk. 4,`•-
The demand by one credito educes cliFipoL,the solidary creditors may
the effects of default only Nt respect tt evemay be useful to the others,
the creditor who demanded ut..o'hot anything which may be
debtor on whom the demand was made prejudicial to the latter (CIVIL CODE, Art.
(Id. at 219). 1212). Hence, each solidary creditor may
constitute the debtor in default (Id. at
232).
• As to breach of obligation by reason of the act of one
1.In case of a joint divisible obligation, If there was fault on the part of any one
the Other debtors cannot be compelled of the solidary debtors, all shall be
to answer for the liability of others as responsible to the creditor, for the price
the debt is divided into as many equal and the payment of damages and
shares as there are debts (CIVIL interest, without prejudice to their action
CODE,Art. 1208); or against the guilty or negligent debtor
2. In -case of a joint indivisible obligation, (CIVIL CODE, Art. 1221 par 2).
it gives' rise to indemnity for damages
from the time any one of the debtors
does not comply with his undertaking.
The debtors who may have been
574
ready to fulfill their promises shall NOT
contribute to, the indemnity beyond the
corresponding portion of the price of
the thing or of the value of the service
in which the' obligation consists (CIVIL
CODE, Art. 1224).
. As to insolvency of one debtor

11 I, i
If one of the'
, joint debtors should be When one of the solidary debtors cannot,
insolvent, the others shall not be liable because of his insolvency, reimburse his
for his share CODE,
(CIVIL Art. 1209). share to the debtor paying the obligation,
such share shall be borne by all his co-
debtors, in proportion to the debt of each
(CIVIL CODE, Art 1217, par. 3).
As to persomal defenses
l ,...it$
The vices of each obligation arising frOrri to solidary debtor may avail himself of all
the personal defect of a particular debtor- defenses which personally belong to the
or creditor Clo'not affect the obligation o ,., .,ogle_rp only as4egards that part of the
the right of, the others (4 TOLENT1Ndpi:, adlolKit4whWie latter are responsible
Civil Code, (supra at 219).... (CIVIL CODE'ird. 1222).
Q: When is there a joint indivisible tion and what*e the effects?

ANS: If the diviSionirnegifire, the rig: of the creditois may - e prejudiced only by
their collectiVeleaS; and figt . ant can bet: nforced only by proceeding against all the
debtors. If On%of, the latter should invent, the others hall riot be liable for his
share (CIVI41 1:99DEpArt.i2a9).
Note: The indRisibility,g,gobligat5n does not necess nI -4gPie se to solidarity. Nor
does solidarity eitseg ir.410 6divisibtlity (CIV IL CODE Art 12 0).
g
. - •
Q: What arethe effects of mutual agenoyMilt, solidary creditors?
ANS: The.effeCts are tf#,Ifolitlring;,.
1. The debtor etigy. pay any iilie oflhe se)" icfary creditors; but if any demand,
judicial or exfOudiciil,Ilas been made by one of them, payment should be
made to him (614tDE, Art. 1214); and
2. NOvation, compensation, confusion or remission of the debt, made by any of
the solidary creditOrs or with any of the solidary debtors, shall extinguish the
obligation, withold prejudice to the provisions of Art. 1219 which provides that
the remission made by the creditor of the share which affects one of the
solidary debtors does not release the latter from his responsibility towards the
cociebtors, in case the debt had been totally paid by anyone of them before
;;
the remission was effected. The creditor who may have executed any of these
acts, as well as he who collects the debt, shall be liable to the others for the
share in the obligation corresponding to them (CIVIL CODE, Art. 1215).
I;
Q: What are the effects of mutual guaranty among solidary debtors?
1. The creditor may proceed against any one of the solidary debtors or some or
all of them simultaneously. The demand made against any one of them shall
not be an obstacle to those which may subsequently be directed against the
others, so long as the debt has not been fully collected (CIVIL CODE, Art.
1216);
575
,J„.: •
•
Payment made by one of the solidary debtors extinguishes the obligation. This
is subject to the following rules:
a. If two or more solidary debtors offer to pay, the creditor may choose
which offer to accept;
b He who made the payment may claim from his co-debtors only the
share which corresponds to each, with the interest for the payment
already made;
c If the payment is made before the debt is due, no interest for the
intervening period may be demanded; and
d When one of the solidary debtors cannot, because of his insolvency,
reimburse his share to the debtor paying the obligation, such share
shall be borne by all his co-debtors, in proportion to the debt of each
3. A solidary debtor may, in actions filed by the creditor, avail himself of all
defenses which are derived from the nature of the obligation and of those
which are personal to hirrifrok,pertairiA9. his own share. With respect to those
which personally befortrfo the ciiherR, ;11'611-lay avail himself thereof only as
regards that part:Ortheidebt fotyvhicli the latterarp responsible (CIVIL CODE,
Art. 1222). /0::(c-N, r-,-, ..„-_,....,„„•i..,/ • i 7N
Q: What are the e eeteof preiu,dicialIbTedOmmitedtOsoligary creditor?
ANS: The effects Othr)011o rng: To '-r -,,,,,, \ 4o \
it
1. . As fel-4 e debotor o debtors aretconderned, prejudicial act performed by a
solida • creditor shall be valid,ina..,binding b4caus8` f ie twinciple of mutual
ion i
' tAr
' reprem whiq• exists amoriT the credifols; and ,.....,„.4
2. As faras-th g solids credijarsa e:edhAVnedt the creditorr o performed the
)1
act sha lipur th obligagff findemni ing thbl”sote s • for damages
1, (Alf& bligiat7 and Coda& i, supra
•1 ,,r VA .9 3.1.n
Q: What is th ,e Of any kvatipp, ...omPe or remission of
debt executed ay a so yaryvaeditorVi .'
ANS: The 'effectetqre the folIowing. N..,,,, .
1. • In case of1/4novatioui SC7 - N.--)
t -,'
a. If preludiciarlla solid -credi or-4whOi>ejfec ed the novation .shall
reimbNe-tfi el ervdamage4Oulylhem;
b. If beneficta e credloff hafffe.dtesikt e novation is able to secure
performance of,=th,
e oblig'tions sjb,,creditor shall be liable to the others
for the share whichiftgr15118s to them, not only in the obligation, but
also in the benefits;
c If effected by substituting another person in place of the debtor, the
solidary, creditor who effected the novation is liable for the acts of the
new debtor in case there is deficiency in performance or in case
damages are incurred by the other solidary creditors as a result of the
substitution; and
d. If effected by subrogating a third person in the rights of the solidary
creditor responsible for the novation, the obligation of the debtor or
creditors is not in reality extinguished; the relation between the other
creditors not substituted and the debtor/s is maintained.
2. 1 In case of compensation and confusion:
a. Partial rules on application of payment shall apply, without prejudice to
the right of other creditors who have not caused the confusion or
. compensation to be reimbursed to the extent that their rights are
diminished or affected; and
576
VOL 1.
2019
ff.& A-ellA-4
Total: obligation extinguished, what is left is the ensuing liability for

reimbursement within each group — the creditor causing the confusion
or compensation is obliged to reimburse the other creditors; the debtors
benefited by the extinguishment of the obligation are obliged to
reimburse the debtor who made the confusion or compensation
possible.
3. In case of remission:
a! Entire obligation: obligation is totally extinguished but the solidary
debtor who obtained it does not entitle him to reimbursement from his
co-debtors; i
Reason: Said debtor gives or loses nothing.
b. For the benefit of one of the debtors covering his entire share: he is
completely released from the creditor/s; and
c. For the benefit of one of the debtors and it covers only part of his
share: his character as a solidary debtor is not affected (JURADO,
Obligations and Contractsp,supra at 197-201).
4
Q: What are 'the differencesibetweeri divisible and indivisible obligations?
ANS: The differences between divisible4antindivisible obligations are:
Divisible Obligations Indivisible Obligations

As to object
.„4;t*:•:
Those which havel*,,their object a Those whicAave as their object a
prestation which is susceptible oft prestation vihrohNs not susceptible of
performanCe withoyath4essance of te partial ipeprmance, because,
obligation bin.d"'chafig641:::, (JURADO, otherwise t,e èssence of the
Obligations:andContracti, 'Supra at '12) obligation will be chhnged (Id. at 212).
As to when deerlied di
An obligation iNteereedi :!divisible w An obligation is deemed indivisible in

)i7
(EAN) , 4 tl)e following: (D-NIL)
1. The obligation has foralts object tR1 4M%Nations to give Definite things;
Execution of a certain nymberioftda9st.ofo 2. Othigall'obs which are Not
work; .1 d i susceptible of partial performance;
2. The obligation hag,Lfy dlits object the 3. Obligations Intended by the parties
.
Accomplishment of - orK.. by metrical to be indivisible even if thing or
units; ! service is physically divisible;
3. The obligation which by its Nature is 4. Obligations provided by Law to be
susceptible of partial performance indivisible even if thing or service is
(CIVIL CODE, Art. 1225, par. 2). physically divisible (CIVIL CODE,
Note: In obligations not to 'do, divisibility or Art. 1225, pars. 1 and 3).
indivisibility shall be determined by the
character of the prestation in each particular
case (CIVIL CODE, Art. 1225, par. 4).
Q: Is the obligor liable for damages despite the fact that the obligation is with a
penal clauSe?
ANS: No. The penalty shall substitute the indemnity for damages and the payment of
interests in case of non-compliance. However, there are exceptions:
1. If there is stipulation to the contrary;
2. lf,the obligor refuses to pay the penalty; or
3. The Obligor is guilty of fraud in the fulfillment of the obligation.
577
Note: The penalty may be enforced only when it is demandable in accordance with the
provisions of the Civil. Code (CIVIL CODE, Art. 1226).
Q: Can the debtor ,exempt himself from the performance of the obligation by
paying the penalty?
ANS: No. The debtor cannot exempt himself from the performance of the obligation by
paying the penalty, EXCEPT when this right has been expressly reserved for him (CIVIL
CODE, Art. 1227).
Q: Can the creditOr demand the fulfillment of the obligation and the satisfaction of
the penalty at the same time?
ANS: , No. The creditor cannot demand the fulfillment of the obligation and the
satisfactipn of the penalty at the same time, UNLESS this right has been clearly granted
him. However, if after the creditor has decided to require the fulfillment of the obligation,
the performance thereof should become impossible without his fault, the penalty may be
enforced (CIVIL CODE, Art. 1227
Q: Is proof of actual c129.2s cess1 Ty3o the penalty?

ANS: Proof of actual agel suffecedoby4114,e itoriis..NOT necessary in order that
the penalty may be 6r Lane CODE, Att.
Q: What are the Rc9 wften thtspe altypay b rektduc.e

ANS:Penalty m heeruced in angf tl4follOwing: (Tu)N
1. ' When prir~tipal dbligation tta`09en Partly ompfif
2. '; 'VVhe cipal tgation fia0een irregui rly comp ith; and
3. ' Ever e has be441147:),Iirfcliffilaiite, if the is iniquitous or
Un ble (C/ L 2'9).
Q: What is th o the Orkiiipal obligation?

ANS: The nulli th "of tha a rincipal obligation
(CIVIL CODE, A
_
Q: What is the e eci of the unit& rrOpa oyigation t the penal clause?
ANS: The' nullity of t principalliltagt
‘c,.. eOlth it ro the penal clause (CIVIL
CODE, An. 1230, par. 2)- 90
Q: What are the modes of extinguishm ons?

ANS: Obligations are,extinguished(PIR2M0 RAP-DWERC)
1. j By Payment or performance (CIVIL CODE, Arts. 1232-1260);
2. By the Loss of the thing due (CIVIL CODE, Arts. 1262-1269);
3. By the condonation or Remission of the debt (CIVIL CODE, Arts. 1270-1274);
4. By the confusiOn or Merger of the rights of creditor and debtor (CIVIL CODE,
Arts. 1275-1277);
5. By Compensation (CIVIL CODE, Arts. 1278-1290);
6. By Novation (CIVIL CODE, Arts. 1291-1304);
7. Fulfillment of a resolutory condition;
8. Rescission;
9. Annulment;
10. Prescription (CIVIL CODE, Art. 1231 par. 2);
11. Death of one of the contracting parties in purely personal obligations;
12. The Will of one of the contracting parties in certain contracts;
13. Expiration of the resolutory term or period;
14. Renunciation or waiver by the obligee or creditor, or
15. Compromise.(JURADO, Obligations and Contracts, supra at 230).
578
Q: When is an obligation understood to be paid or performed?
ANS: A debt shall not be understood to have been paid unless the thing or service in
which the obligation consists has been completely delivered or rendered, as the case
may be (CIVIL CODE, Art. 1233).
Exceptions:
1. When the obligation has been substantially performed in good faith (CIVIL
CODE, Art. 1234);
2. When the obligee accepts the performance, knowing its incompleteness or
irregularity, and without expressing any protest or objection (CIVIL CODE, Art.
1235).
Q: Can the debtor make partial payments?

ANS: No. Unless there is an express stipulation to that effect, the creditor cannot be
compelled partially to receive the prestations in which the obligation consists. Neither
may the debtor be required to make partial payments. However, when the debt is in part
liquidated and in part unliquidated, the cre itor may demand and the debtor may effect
the payment of the former without w in or the liquidation of the latter (CIVIL CODE,
Art. 1248).
Q: Who are the persons from wbcs reditor must accept payment?
ANS: The creditor is bound to accdptl' a t.1314erformandtic, torn the following:
1. Debtor, 0:11441;4'.
2. A third person w. c:t, as an inter-z tin the fulfillmen o he obligation; or
3. A third perso 6 has no,,,ipte Ast in the obligati hen there is stipulation
that he can ma, e ayment (0 VI CODE, Art. 123 , a ti).
•1
, 11
410.
Q: What is the effect of payment made a third person i or er to extinguish the
obligation?
ANS: The effetirarag owing: *wrtrafgkizE:vgtit?,t :••
1. The „editor is' oh oundlb)lacc p paymen 06' y a third person
who hasm, intlni in the fill e, t of the oblige on; .n ess:
a. TiieWea sMulatiq to t contrary (CIVIL CODE, Art. 1236, par. 1); or
b. When it is nip by a thi • e,o who has an interest in the fulfillment
of the MI' anon, such as • eblos, uarantor, or surety (JURADO,
Oblig 1616 - 61 , • .
2. Whoever pays er may demand from the debtor what he has paid,
except that if h -.Laid
a. Without t 74R wledge; or
b. Against the will of the debtor.
Note: He can recover only insofar as the payment has been beneficial to the
debtor (CIVIL CODE, Art. 1236, par. 2).
3. When a person pays on behalf of the debtor without the knowledge or against
the will of the latter, he cannot compel the creditor to subrogate him in his
rights, such as those arising from a mortgage, guaranty, or penalty (CIVIL
Note: Partial payment by a stranger without the authorization of the debtor will
not stay the running of the prescriptive period.
4. When payment is made by a third person who does not intend to be
reimbursed by the debtor, it is deemed to be a donation, which requires the
debtor's consent. But the payment is in any case valid as to the creditor who
has accepted it (CIVIL CODE, Art. 1238).
Note: Once the debtor's consent is secured, then the rules on ordinary
donations will apply. Otherwise, the rules stated in Articles 1236 and 1237 will
still apply.
579
Ari,,45,7,,V, .:',:,',:. i;i.i.,' •a:.•4.,-:?...,„,
1$:
f:;,1 t4f1
44.:
4C V--:'..:7, :: " ' '...,•:. '''4;:: ';,,,k.,sx, i'' r
K
•0:::1,4:-.-St.";=':a.'-i:., 1:
Q: Who has the burden of proving payment?

ANS: As a general rule, one who pleads payment has the burden of proving it. Even
when the plaintiff must allege non-payment, the general rule is that the burden rests on
the defendant to prove payment, rather than on the plaintiff to prove non-payment.
When the existence of a debt is fully established by the evidence contained in the
record, the burden of proving that it has been extinguished by payment devolves upon
the debtor who offers such a defense to the claim of the creditor (BPI v. Spouses
Royeca, G.R. No. 176664, July 21, 2008).
Q: To whom must payment be made?

ANS: Payment shall be made to the person in whose favor the obligation has been
constituted, or his successor in interest, or any person authorized to receive it (CIVIL
CODE, Art. 1240).
Q: What is the effect of payment to an incapacitated person?

ANS: Payment to an incapacitated_Rersorkisaqt,xalid unless such incapacitated person
kept the thing paid or delivsedlso that it; iswopecgssary that it should have been
invested in some profitablpventfrkori4s.befiefi edtby;the,payment (CIVIL CODE Art.
1241, par 1). 40000.0.S.P
:14...
...,
I
fr ii '
ktvc, \
Q: What is the effect ot;'\- aytnv,tto-altifill-rarson? N < ',.
ANS: Payment tot it ears 1i is noblvali0-tinlgss it hi es re ou eatto the benefit of the
creditor. Howevel, ben; to tie creditor need tiOt be p? ve The following cases:
1. Subrogation he payer in credit-Ms right; )%
•ti
2. Ratificenity the c e i or, 1141 __, , . .,...r.A.
3. Esto he as of thel.redifoi-.(plel2C0 E, Attil241,) Tr. 2).
full' ., !,:ra...1
--it.lkiLV.1
IL 4;1 rr--,
Q: Can paymep be4rde though a promt sory no ,.... s/or bills orephange?
,
ANS: Genera0,439y nt T ,era na e e,q ..tri herhilipliTes. However, the-
delivery of prot eory b le gAor erg exchange fir other mercantile
\
documents shal toroduc ebt ajt ent''
1. When they havebeen p
2. When thro,ugh the uIt WI tcifte,y a,'been inraired. •
Note: In the meantihte, the;actiorille • ahrth pgiaal obligation shall be held in
abeyance (CIVIL COD rt:A4
Note: The rule that the fa Itoftth creditWAIimpai.slhe instrument, produces the
1.A
effect of payment is applicabrav to a apex o ment executed by third persons
and delivered by the debtor to the cr iterrio o instruments executed by the debtor
himself (Compania General de Tabacos v. Molina, G.R. No. 2091, October 18, 1905).
Q: Is the requirement of payment in Philippine currency absolute?

ANS: No. As a general rule, all monetary obligations shall be settled in the Philippine
currency which is legal tender in the Philippines. However, the parties may agree that
the obligation or transaction shall be settled in any other currency at the time of payment
(R.A. No. 8183, otherwise known as An Act to Assure the Uniform Value of Philippine
Coin and Currency, Sec. 1).
Q: What is the rule in payment in case of extraordinary inflation or deflation?

ANS: The value of the currency at the time of the establishment of the obligation shall
be the basis of payment, unless there is an agreement to the contrary (CIVIL CODE,
Art. 1250).
Note: In order that this may occur, it is essential that:
1. There must be a decrease or increase in the purchasing power of the currency
which is unusual or beyond the common fluctuation in the value of said
currency; and
580
( , ,,liffv.,:.
vy:f.:acqz..i,.f..1;ki;c:::::sf,,, ,,,,,.„,,,,4,v..;,,..„.
., ..,,,-,15-s.,:w;,,.,,,.,
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:4,.-.•.e. Lei
2. Such decrease or increase could not have been reasonably foreseen or was
manifestly beyond the contemplation of the parties at the time of the
establishment of the obligation (JURADO, Obligations and Contracts, supra at
262).
Q: Where shall obligations be paid?

ANS: The following are the places where obligations shall be paid:
1. If there is a stipulation, the payment shall be made in the place designated..
2. If there is no stipulation and the thing to be delivered is specific, the payment
shall be made at the place where the thing was, at the perfection of the
contract. -
3. If there is no stipulation and the thing to be delivered is generic (and in any
other case), the place of payment shall be the domicile of the debtor (CIVIL
CODE', Art, 1251).
Q: What is the effect if the debtor changes his domicile in bad faith or after
incurring in delay?
.. 9
N,,-.1,
ANS: If the debtor changes his dorpote mad faith or after he has incurred in delay, the
additional expenses shall be borne,:113 . 'hiifike VIL CODE, Art. 1251, par. 4).
Itrigv ..v
Q: What is the concept of applicOtion Fis,, ynlent?
ANS: It is the designation of theAegfroltelapa ,TeAust be applied when the
debtor has several obligati° Of•theNagig ind in fa ft'dittiOsame.creditor (JURADO,
Obligations and Contras S9 upra at 268)..
Q: What are the requisites'iln order. athere will be an ,application of payment?
— - ANS: The requisitekagthhilleNing: (OSDI) 1 :4 'I.
1. Therm:gmbe 4 Pone debtor ill only one creditog an xception is provided -‘1444
uncieKAJ,ticle,492, whemb7apAcation of pa entrmay e had even if there
arefita
.1,21. credift th-e4AartneL itlip- and‘th rtner (JURADO,
Obligations at.99ntraclupipt 269). Btt:i .' ttiei s such application
in favdtko,Watiaging ' artner only if the persona credit of the partner
should be ore oner9us totiim;
Note: Neittlep.theAquirement &lust be only one debtor militates
against the Ptissibtfy ol, sctsiiirtg esi,oniapplication of payment to
fi PU11,00,kgile la s an tantracts, supra at 268).
solidary oblidairns
2. There must be; , ,E., oignore debts of the Same kind;
Note: The fact' bStlhdebts are of the same kind is reckoned from the time of
the application orriWnent, not from the time of constitution of the obligation. A
non-monetary obligation, for instance, may be converted into one of damages
at the time of application of payment.
3. All the debts must be Due, except:
a. If there is stipuiition to the contrary; or
b. Application of payment is made by the party for whose benefit the term bat.
has been constituted (CIVIL CODE, Ait.1252); and
4. Amount paid by the debtor is Insufficient to cover the total amount of all the
debts (JURADO, Obligations and Contracts, supra at 268).
Q: Is the creditor also given the right to apply payment?
ANS: Yes. Article 1252 gives the right to the debtor to choose to which several
obligations to apply a particular payment that he tenders to the creditor. But likewise
granted in the same provision is the right of the creditor to apply such payment in case
the debtor fails to direct its application. It is the directory nature of this right and the
subsidiary right of the creditor to apply payments when the debtor does not elect to do
so that makes this right waivable (Premiere Development Bank v. Central Surety &
Insurance Company, Inc., G.R. No, 170246, February18, 2009).
581
Q: What are the rules in application of payment?
ANS: The following rules shall be applied:
1. The payment shall be applied according to the designation of the debtor (CIVIL
2 •If the debtor accepts from the creditor a receipt in which an application of the
payment is made, the former cannot complain of the same, unless there is a
cause for invalidating the contract (CIVIL CODE, Art. 1252, par. 2).
3. When the payment cannot be applied in accordance with the preceding rules,
or if application cannot be inferred from other circumstances; the debt which is
most onerous to .the debtor, among those due, shall be deemed to have been
satisfied (CIVIL CODE, Art. 1254, par. 1).
4. If the debts due are of the same nature and burden, the payment shall be
applied to all of them proportionately (CIVIL CODE, Art. 1254, par. 2).
Note: If the debt produces interest, payment of the principal shall not be deemed to
have been made until the interests have been covered (CIVIL CODE, Art. 1253).
Q: What is dation in paymesailfhat law-goverrIgihksame?

ANS: Dation in payment isoikherOropektyjh iiibitatld 671132 creditor in satisfaction of a
debt in money. It shall b4RerredkiyJhe.lamotsalOs (pyllNCODE, Art. 1245).
1/4 \r )
Q: What are the rrufsitp ;,..tatiorrinWzient?
ANS: The followi eth re uisitestRif 9,n\in/pay
1. There us -46/ Performari6e thepresta ion lieu of payment (animo
solve i whip's m4 consist i r itTeklielivery o a corpt2t ing or a real right
or a e_pa dai nst a it• persons
2. Ther aust som glinqeilye petVean'the restatibn du nd that which is
give in sub titution aliudp -a
3. Ther :akt •- een th debtor that the
oblig ti im erformance of a
prestaV ystem Phil., Inc.,
G.R. N
Q: What is payme 1r5,

9 isltes?
ANS: Cession or asss A s'a §p‘cia rm4af payment whereby the
debtor abandons all o tipthe.bengfinkfiffi editors in order that from the
proceeds thereof the latte ain plyphtIf4eiccFedits (8 MANRESA, supra at-
606). In order that the debtor availtiltrpayment, it is essential that the
following requisites must concur: (PP
1. plurality of debts;
2. Partial or relative Insolvency of the debtor;
3._ _ The assignment must involve all the Properties of the debtor; and _
4. acceptance of the cession by the creditors (JURADO, Obligations and
Q: What are the effects of payment by cession?

ANS: The following are the effects of payment by cession:
1. Unless there is a stipulation to the contrary, the assignment does not make the
creditors the owners of the property of the debtor.
2. The debtor is released from his obligation only up to the net proceeds of sale
of the property assigned. The debtor is still liable if there is a balance.
3. Creditors will collect credits in the order of preference agreed upon, or in
default of the agreement, in the order ordinarily established by law (PARAS,
Obligations and Contracts, supra at 417).
582
Q: What is the difference between a tender of payment and consignation?
ANS: Tender of payment is the manifestation of the debtor to the creditor of his decision
to comply immediately with his obligation; preparatory act and extrajudicial in character;
whereas consignation is the deposit of the object of the obligation in a competent court
in accordance with the rules prescribed by law, after refusal or inability of the creditor to
accept the tender of payment; principal act and judicial in character.
Note: In case of exercise of right of repurchase by tender of check, such tender is valid
because it is an exercise of a right and not made as mode of payment of an obligation.
Article 1249 is not applicable (Adelfa Properties, Inc. v. Court of Appeals, G.R. No.
111238, January 25, 1995).
Q: What are the requisites of consignation?

ANS: The requisites of consignation are the following: (DT-NDN)
1. A Debt is due;
2. The creditor to whom Tender of payment was made refused without just cause
to accept the payment, or the veditor was absent, unknown or incapacitated,
or several persons clairne, same right to collect, or the title of the
obligation was lost;
I:If
3. The person interested i mance of the obligation was given Notice
OM
before consignation waspaSlal.
Note: Lack of previous nbti: oetintitivalidateft consignation, but simply
makes the debtor liable pe 'Arateitolp thereby. With respect to
the creditor, tjalOcliice ca; made simurtarausly with the tender of
payment (i.erivay of wartil.4)g hat should the pifent be not accepted the
thing will be qposited in ou . Separate notid41 must be given to other
interested aritleucti'as gua a tors (4 TOLE7TI 0 Civil Code, supra at
4P
324); '41:1
4. Theainount .ptitt
was laced at tfib, Dsiosal of the
5. The erswterested in the pe mance was given Notice
afte e consig Pion attma (Dalton and Development
Corpo ion,ee o. 1177, Jn ary 19, 201
Q: What are the instances here a co Lstglation produces the effect of payment
even without prior tender, ayment?4.
ANS: The instances a reitli e fo Hop"' (AIR
1. The creditor Absetc or unknown, or does not appear at the place of
payment;
Note: Absence ted ot be judicially declared. He must however, have no
legal representative to accept the payment
2. The creditor is Incapacitated to receive the payment at the time it is due;
3. When without just cause, the creditor Refuses to give a receipt;
4. When two or more persons ° Claim the right to collect (as in the case of
interpleader); and
5. When the title of the obligation has been Lost (CIVIL CODE, Art. 1256).
Note: The list is not exclusive. The rule also applies if the creditor, prior to the tender of
payment, intimated that he will not accept the debtor's payment.
Q: What are the effects of consignation?

ANS: The effects of consignation are the following:
1. If the creditor accepts the thing or amount deposited without contesting the
validity or efficacy of the consignation, the obligation is cancelled/extinguished;
or
2. If the creditor contests the validity of the consignation or if the creditor is not
interested or unknown or is absent, the result is litigation. If during the trial, the
plaintiff-debtor is able to establish that ail the requisites of consignation had
583
been complied with, the obligation is extinguished (JURADO, Obligations and
Q: May the debtor withdraw the consignation made? If yes, what are the effects?
ANS: YES. The debtor may withdraw the thing or sum deposited:
1. Before the creditor has accepted the consignation;
2. Before judicial declaration that the consignation has been properly made
(CIVIL CODE, Art. 1260); or
3. The creditor should authorize the debtor to withdraw the same.
Note: In (1) and (2), the obligation shall remain in force, while in (3) the creditor shall
lose every preference which he may have over the thing. The co-debtors, guarantors
and sureties shall also be released (CIVIL CODE, Art. 1261).
Q: Does the loss of a determinate thing due to fortuitous event in an obligation to

give result in the extinguishment of the obligation?
ANS: It depends:
1. The obligation shall,,bgIxtinguiiheg if;
a. It should bets* destkled itithbutth6' faylt of the debtor; and
b. Before/6.'6k incthethin.dei4X94.1/ILICODE:4, Art 1174 and Art. 1262,
parylk
2. ipt- braftripished; N<?
The obligati an jtalr
a. W .0raw so proyjdeS•daVIL CdbiE, Actq:4174 and1262 par. 2);
b. he yitlis stipulated. thaflhe.4.6bligor shall bettlable even for fortuitous
eventiCMLICODE, Art:4174 and Art
if the nature of thal,.Taliga ion r sumption of risk
*WI CODE, Air.062) Pk-A>1
of the t ing p, fault of the-
Jiptto the for (Tan Chiong
'81aq . I sti & L-6 Ralardh 8,
1 2);
of Ilifiglis,fopt in th0p4asesilon;df he debtor, it shall
Dtgihm at4ha€lbs4,kaCd a/ 6 is fa t, unless there is proof to
'the contrary. s:bresd oe'S,hot apply in case of earthquake,
4 YCIVA CODWArt 1265)
ikod, storm or ottfenatu,31, lirhit-y
e. Lags of the.„,thi6gSb - KO ip5tor inc rred in delay (CIVIL
CO5f, Arts-yr2-62--
f. Wheri‘e4iiaori p omises47`65114 th ,sa e thing to two or more
persons •cloi,2ot ha/v erat (CIVIL CODE, Art. 1165
par. 3);
g. When the obligation'tntlelr er arises from a criminal offense (CIVIL
CODE, Art. 1268); or
Note: Unless the thing having been offered by the debtor to the person
who should receive it, the latter refused without justification to accept it
h. When the obligation is to deliver a generic thing (CIVIL CODE, Art.
1263).
Q: When shall a debtor in an obligation to do be Moiled from the non-

performance of his obligiiion?
ANS: The instances are the following:
1. When the prestation becomes legally or physically impossible without the fault
of the debtor (CIVIL CODE, Art. 1266); and
2. When the service has become so difficult as to be manifestly beyond the
contemplation of the parties, the court should be authorized to release the
obligor in whole or in part (This is also referred to as the Doctrine of
Frustration of Enterprise or Doctrine of Unforeseen Events) (CIVIL CODE,
Art. 1267).
584
Q: What is condonation or remission?
ANS: As a mode of extinguishing an obligation, condonation or remission of debt is an
act of liberality, by virtue of which, without receiving any equivalent, the creditor
renounces the enforcement of the obligation, which is extinguished in its entirety or in
that part or aspect of the same to which the remission refers (Dizon v. Court of Tax
Appeals, G.R. No. 140944, April 30, 2008).
Note: It is an essential characteristic of remission that it be gratuitous, that there is no
equivalent received for the benefit given; once such equivalent exists, the nature of the
act changes. It may become dation in payment when the creditor receives a thing
different from that stipulated; or novation, when the object or principal conditions of the
obligation should be changed; or compromise, when the matter renounced is in litigation
or dispute and in exchange of some concession which the creditor receives (Dizon v.
Court of Tax Appeals, G.R. No. 140944, April 30, 2008).
Q: What is the effect of.renunciation of principal debt on accessory obligation?

ANS: The renunciation of the principal Ott shall extinguish the accessory obligations;
but the waiver of the latter shall leaye.thetdrmer in force. (CIVIL CODE, Art. 1273).
Note: If the obligation is joint, the remikpjckan only affect the share of the creditor who
makes the remission and the cOn'Opori00p share of the debtor in whose favor the
remission is made, since the pec4liar fAn.thre of this type of obligation is the division of
the credit or of the debt into as manyi:d:tiqttarova thereM creditors or debtors, the
credits or debts being considered'distinct yrn'onevanitimpr CODE Art 1208).
.40V"
Q: What are the requisites in ordqrrilha$ there will be a rni ission or condonation
which will result in tligitorS1 or partial atinguishment otidelqbligation?
ANS: The requisites 01 (4,EteiP)
1. It mustp.e.,1Gratuit§als,
2. It mugfire Acy„eged by the fibligo
3. ThettAi6a,AIRAUst be Demand ble;
I
4.
5. Partlit must hilhe CO,Nity;
Not inolgiocilk byerne4iby or regarding s donations - CIVIL
CODE, A01-750-f52 and 771); and
6. Must comPly (withle FormalitieZpAscaoed for donation (CIVIL CODE, Art.
748-749) if remission isexpress 1P1,._L ill;(00DE, Art. 1270).
4.0
- 1WW
. -CLARZA
_Q: What are the instaffdes of rnp ied condonation or remission of debt?
ANS: The instances are.
1. The delivery of &tidy to document evidencing the, credit, made voluntarily by
the creditor to the debtor (CIVIL CODE, Art. 1271, par. 1);
Note: If in order to nullify this waiver it should be claimed to be inofficious, the
debtor and his heirs may uphold it by proving .that the delivery of the document
was made in virtue of payment of the debt (CIVIL CODE, Art. 1271, par. 2);
and
It is presumed that the accessory obligation of pledge has been remitted when
the thing pledged, after its delivery to the creditor, is found in the possession of
the debtor, or of a third person who owns the thing (CIVIL CODE, Art. 1274).
Q: What are the requisites for the implied condonation or remission of debt?
ANS: The requisites are: (DPV)
1. The document evidencing credit was Delivered by the creditor to the debtor;
2. such document is a Private document; and
3. the delivery was Voluntary (CIVIL CODE, Art. 1271).
Note: Whenever the private document in which the debt appears is found in the
possession of the debtor, it shall be presumed that the creditor delivered it voluntarily,
unless the contrary is proved (CIVII. CODE, Art. 1272),
585
Q: What are the requisites of confusion or merger of rights?
ANS: The requisites are the following: (MPC)
1. Merger of the characters of the creditor and debtor must be in the same
person (CIVIL CODE, Art. 1275);
2. Must take place in the person of either the Principal creditor or the principal
debtor (CIVIL CODE, Art. 1276); and
3. Must be Complete and definite (Valmonte v. Court of Appeals, G.R. No. L-
41621, February 18, 19990).
Note: Third requisite means that whether the merger refers to. the entire obligation or
only part thereof, it must be of such character that there will be complete and definite
meeting of all qualities of creditor and debtor in the obligation or in the part thereof
affected by the merger (JURADO, Obligations and Contracts, supra at 307).
Q: What is the effect of merger in the person of the principal debtor or creditor?
ANS: Merger in the person of the principal debtor or credit& extinguishes the obligation.
Hence, the accessory obligation of_goranty.' !so extinguished in accordance with the
principle that the accessory fa offig-the rirrcip I 'L.EON, Obligations and Contracts,
supra at 412).
Q: What is the effect of.mef jriirtrez;e7sue.

I dicto
ANS: The extingui m 4h
."„accsiMpbliga n11 arty with it that of the
principal obligati Ge n qu,ently, ner ? wjlich ta es Inc it the person of the
guarantor, while ex shes the Ara , !Ayes the pri CI al obligation in force (Id.
at 412).
Q: What is th Cffec of con siiiriffirtxj, jq,irkrafrd olida ebla ion?

ANS: In a joi t _skit ation, e ch debtor-.0spisaown reditor a-̀-wh he is liable and
confusion taki -Vac fiel' son orijedel)tor or 10 or d es no affect the others.
In other words, t e fus extin 's 9 rt e_ ..., COr bpprf ng to the creditor . -
or debtor in who t e o a•tem. rr .. ary bligN on, merger in the
person of one o the so dary elAo h ekt - sir he e ire obli ation because it is
also a merger in e othe solid /deb a
Q: When does corn ensation

ANS: It takes place w p onsrin ht are creditors and debtors
of each other (CIVIL COD
8). MA-
Q: What are the kinds of compensa
ANS: The kinds of compensation are the following:
1. As to cause, compensation may be:
a. Legal, when it takes effect by operation of law from the moment all of
the requisites are present (CIVIL CODE, Arts. 1286-1290);
b. Voluntary, when the parties who are mutually creditors and debtors
agree to compensate their respective obligations, even though all of the
requisites for compensation may not be present (CIVIL CODE, Art.
1282); and
c. Judicial, when it takes effect by judicial decree (CIVIL CODE, Art.
1283).
2. As to effect, compensation may be:
a. Total, when the two debts are of the same amount; and
b. Partial, when the debts to be compensated are not equal in amount
586
Q: What are the requisites of legal compensation?
ANS: The requisites are the following: (PS-DL-NoNo)
• 1. There must be two (2) Parties, who, in their own right, are PRINCIPAL
creditors and PRINCIPAL debtors of each other (CIVIL CODE, Art. 1279)
except in case of a guarantor (CIVIL CODE, Art. 1280);
2. Both debts must consist in Sum of money, or if the things due are
consumables, they must be of the same kind and quality (CIVIL CODE, Art.
1279);
3. Both debts must be Due (CIVIL CODE, Art. 1279), except voluntary
compensation (CIVIL CODE, Art. 1282);
4. Both debts must be Liquidated and demandable (CIVIL CODE, Art. 1279);
5. There must be No retention or controversy commenced by third persons over
either of the debts and communicated in due time to the debtor (CIVIL CODE,
Art. 1279); and
6. The compensation must Not be prohibited by law (CIVIL CODE, Arts. 1287-
1288). 4A
Note: Requisite No. 2 contempl5teffoRy obligations to give for, the reason that
compensation is as a general rulegiii Wt ssible in obligations to do because of the
differences in the capacities of ,tht 8 Ors URADO, Obligations and Contracts, supra
at 317). .4'
Q: What is the effect when a.4
1 qi 6..1 i ,.._ ,,.
Il the 1;0441s, ae-Zo'.„VR„ entittion are present?
ANS: When all the said regMigites amis.(' sent, compena, takes effect by operation
of law, and extinguisheAtith debts togthe oncurrent amou tY 'yen though the creditors
and debtors are not arareje the corffSgri ation (CIVIL CO" A . 1290). It takes place
even though the debrmiympo payable-at different place ••ut there shall be an
_ indemnity for expArire'i ofielOnge or t sportation t of payment (CIVIL
CODE, Art. 1286K
IS
Note: If a R.Ltii shcaLhave%egainst several 01,9, susceptible of
compensationlhe ruGAIVhe APA.IC ON OF P-At 8 17Si, HALL APPLY to the
order of the connpensatio F .,0 VIL 6ODE, 1289). 44't
-12,11 -- ix ."
Q: Can a claim foi rlemagev, e used to .ff-set an obligation?
ANS: Yes. If one of thlmt.ijs to a suit obii•ation has a claim for damages
..against the other, the fo_rmer may ettik
.,....A., one= 'VS11 ht to said damages and the
amount thereof (CIVIL CODE 4 '283).
Note: The relationship between bank and its depositor is that of creditor and debtor.
For this reason, a bank hathtright to set-off the deposits in its hands for the payment
of a depositor's indebtedness (Equitable PCI Bank v. Ng Sheung Ngor, G.R. No.
171545, December 19, 2007).
Q: When is compensation facultative?

ANS: Compensation is 'facultative when it is effected by a party who is entitled to
oppose the compensation because he would be prejudiced thereby. It differs from
conventional compensation because it is unilateral while the latter depends upon the
agreement of both parties (4 TOLENTINO, Civil Code, supra at 367).
Example: When the obligation of one is with a term, while that of the other is pure, and
the former renounces the benefit of the term, consequently making the compensation
possible (JURADO, Obligations and Contracts, supra at 311).
Q. When is compensation not proper?
ANS: Compensation shall not be proper.
1. When one of the debts arises:
a. From contracts of depositum;
b. From the obligations of a depositary; or
c. From contracts of commqdaturn,
587
i
-:1 L.:1"461iTiti::44:
'9•773
. ..c.,-.1421...;:i
l 'tri '- ....: ,...1.,-jd:',,,r.:f7ge, i .1., .t .,..-:.41;.7447;Itfl41). -;:;!,,StikV...",.,4^fi:- .
Note: The law uses the word "depositum" and not deposit so as not to confuse
it with "bank deposits" which can be subject to compensation. In (b) and (c),
the depositor and the lender may claim facultative compensation.
2. Neither can compensation be set up against a creditor who has a claim for
support due by gratuitous title, without prejudice to the provisions of paragraph
2 of Article 301 (CIVIL CODE, Art. 1287);
Note: Support in arrears, however, can be compensated.
3. If one of the debts consists in 'civil liability arising from a penal offense (CIVIL
CODE, Art. 1288);
4. Certain obligations in favor of the government, such as taxes, fees, duties and
others of similar nature; or
5. A partner is responsible to the partnership for damages suffered by it through
his fault, and he cannot compensate them with the profits and benefits which
he may have earned for the partnership by his industry (CIVIL CODE, Art.
1794).
Note: Only the offender is compensation.
,,,,e06' 1, .} -N.hk.
Q: What are the instance.s"Whepovaiior; tliee4 place:?c,4
--.....,4 4'; ,ji , „ N
ANS: The instances arpiliidlio ifti;g;,,,,,,,
1. Changing til'iriebigelpprbrincipal conditions;,'' , ."^,,I.N.
2. Substituti ''g The,person of-thetrebibrand..., - \..,' A,
3. Subroga ki: Third persorbin 'the rights o the• cfedito? (CIVIL CODE, Art.
1291)/ '``"s,' tr * a. ir'
( A
Q: In order fob Art.;bb igatiorifoThe extinguishec easont!
op„—
no-Vation, what form
of extinguishment4 requir d?
ANS: It may eilh9,c,be
ii
1. Expri.dVA/ e extinguishment by errii:on of nation must be so
declaiepl peckiAca terms. o i
2. ImpliecOheA.kthe'dcpa.ki eveloint incompatible
with each other (C/I.`/ 4.08101' E,2A
Q: What are the two forms f no4tio ulYstitution o f debtors?

ANS: The two formeet novalapar-d.4-4
1. Expromisiolt,iktheWslftition.of.debibr kl-23h; consent of the creditor at
the instance of the„41,ewilebtorqvgn the/knowledge or against the will
of the old debtor (berief ial reirrinf ehrt)e"`
2. Delegacion is the substituion f'd'ebtors is effected with the consent of the
creditor at the instance of the old debtor with the concurrence-of the new
debtor
Note: Kinds of Expromision:
1. Substitution with the knowledge and consent of the old debtor; and
2. Substitution without the knowledge or against the will of the old debtor
(JURADO, Obligations and Contracts, supra at 339).
Q: Can a substitution of a new debtor in the place of the original one be made
without the knowledge or against the will of the latter?
ANS: Yes. Novation which consists in substituting a new debtor in the place of the
original one may be made even without the knowledge or against the will of the latter,
but not without the consent of the creditor. Payment by the new debtor gives him the
rights mentioned in Articles 1236 and 1237 (CIVIL CODE, Art. 1293).
588
Q: What are the effects of a substitution of a new debtor without the knowledge or
against the will of the original debtor?
1. The new debtor can recover only insofar as the payment has been beneficial
to the debtor (CIVIL CODE, Art. 1236);
Note: However, he cannot compel the creditor to subrogate him in his rights,
such as those arising from a mortgage, guaranty, or penalty (CIVIL CODE, Art.
1237);
2. The new debtor's insolvency or non-fulfillment of the obligation shall not give
rise to any liability on the part of the original debtor (CIVIL CODE, Art. 1294).
Note: In expromision, should the substitution be with the knowledge or consent of the
old debtor, the insolvency or non-fulfillment of the new debtor shall REVIVE the liability
of the original debtor to the creditor (JURADO, Obligations and Contracts, supra at 345).
Q: When the substitution of the debtor was proposed by the original debtor and
accepted by the creditor, what is the effect of insolvency of the new debtor?
ANS: The insolvency of the new dov,6;:. ho has been proposed by the original debtor
and accepted by the creditor, shalilhotO iVe the action of the latter against the original
obligor, except when:
1. Said insolvency was alread :4%itig and of public knowledge; or
81 a gd is debt :CIVIL CODE, Art 1295).
2. Known to the debtor, livh ;n:60101..
0.
Q: May an accessory0bligation;' subsist when the principal obligation is
extinguished?
44'
te.
ANS: Yes. As a genet641e, extiptlis tRent of principal obli ation extinguishes the
_ accessory obligation„iFe , vxistion is piLovided in Article 1496 f the Civil Code that
accessory -obligatipti% ma:Aujpsist whey` he principal obit atio is extinguished in
_ consequencee noVio but onlylksofa , as they ma. be •fit • third persons who did
not give theirecesent OWL: COD , Ad. 2-96).
Note: The cidaViCation ttaVrefereee tot-, i stipulati hgpburga f CIVIL CODE, Art
4r4agit
v
1311, par. 2). %,,,.,.. P• -
..d i .
,yold?
Q: What is the effect If the nsw obligatioRL,,,,
- ANS: If - the new obligatid . is void, thesigifiVipt.s
.,_
hall subsist, unless the parties
intended that the forme elation straCilat-eleiMareltiMhy event (CIVIL CODE, Art
-
1297). Ya 4
Q: What is the effect if the o iainal obligation is void?
_ANS: If the original obligation is void, the novation is void, except when:
1. Annulment may be claimed only by the debtor; or
2. When ratification validites acts which are voidable (CIVIL CODE, Art. 1298).
Q: If the original obligation was subject to a condition, should the new obligation
be under the same condition?
ANS: Yes. When the original obligation was subject to a suspensive or resolutory
condition, the new obligation shall be under the same condition, unless it is otherwise
stipulated (CIVIL CODE, Art. 1299).
Q: What are the kinds of subrogation of a third person in the rights of the
creditor?
ANS: Subrogation of a third person in the rights of the creditor is either:
1. Legal; or
2. Conventional.
589
Note: Legal subrogation is not presumed and it takes place by operation of law, except
in cases expressly mentioned in this Code; conventional subrogation must be clearly
established in order that it may take effect (CIVIL CODE, Art. 1300). Conventional
subrogation of a third person requires the consent of the original parties and of the third
person (CIVIL CODE, Art. 1301).
Q: When is legal subrogation presumed?

ANS: It is presumed that there is legal subrogation: (PAI)
1. When a creditor pays another creditor who is Preferred, even without the
debtor's knowledge;
2. When a third person, not interested in the obligation, pays with the express or
tacit Approval of the debtor; and
3. When, even without the knowledge of the debtor, a person Interested in the
fulfillment of the obligation pays, without prejudice to the effects of confusion
as to the latter's share (CIVIL CODE, Art. 1302).
Q: What are the effects of sprOtation? T x 4°4%,

ANS: Subrogation shall fjp4thettgilowirliOffepts1
1. Subrogation,rtran‘fas fo 11.19..persons4Kogit9s144credit with all the rights
thereto appertainihg/_ Rif& against the cfebtqror against third persons, be they
guarantoKo 0 ,otrirdTglijesrsOject tcOtiput tion in a conventional
subrogation DE, Ast. 103)ond
2. A credfor,a*, om artial fraynlept kids been ma ay e ercise his right for
the re aind 1', an he shalybfrwreferred to th who has been
subr hisace in virtu ofd e fpa al pa ert,p the same credit
(CIVIL'©© , Art. f 047.54111 C
Note: Unlike ttie,oth r forms of nc(Vatl„FiCeasory bligatio 's-a+ not extinguished
because in suc,hh • atio persoks bibb' ated a cquires
,a all the rights which
the original cre cto 61 a Nhirdrrtorpi The' pltdatiokkoft,ffits rule is absolute
with respect to le al aibro ab•nkho pt toionvahAtional subrogation,
such accesso obligaTons reduced depending upon the
agreement of the arties OURA D 0 0 Bligpra r •r/c1 ontraj&s, sup at 353).
411.
B. CONTRACTS .2C/ENT\
1:9
Q: What is a contract?
ANS: A contract is a meetin kominds ns whereby one binds himself,
with respect to the other, to give s mettag,gac4rerer some service (CIVIL CODE, Art.
1305).
Q: What is the binding effect of a contract?

ANS: Obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith. Unless stipulations in a contract are
contrary to law, morals, good customs, public order or public policy, the same are
binding as between the parties (Rodolfo Morla v. Corazon Nisperos Belmonte, G.R. No.
171146, December 7, 2011).
Q: What are the essential characteristics of a contract?

ANS: The following are the essential characteristics of a contract: (MARCO)
1. Mutuality of contracts— The contract must bind both contracting parties; its
validity or compliance cannot be left to the will of one of them (CIVIL CODE,
Art. 1308).
2. Autonomy of contracts — The contracting parties may establish such
stipulations, clauses, terms and conditions as they may deem convenient,
provided they are not contrary to law, morals, good customs, public order, or
public policy (CIVIL CODE, Art. 1306).
590
3. Relativity of contracts - Contracts take effect only between the parties, their
assigns and heirs, except in case where the rights and obligations arising from
the contract are not transmissible by their nature, or by stipulation or by
provision of law. The heir is not liable beyond the value of the property he
received from the decedent (CIVIL CODE, Art. 1311, par. 1).
4. Consensuality of contracts - Contracts are perfected by mere consent, and
from that moment the parties are bound not only to the fulfillment of what has
been expressly stipulated but also to all the consequences which, according to
their nature, may be in keeping with good faith, usage and law (CIVIL CODE,
Art. 1315).
Note: Real contracts, such as deposit, pledge and commodatum, are not
perfected until the delivery of the object of the obligation (CIVIL CODE, Art.
1316).
5. Obligatory force of contracts - Obligations arising from contracts have the
force of law between the contracting parties and should be complied with in
good faith (CIVIL CODE, Art.1 qv.
Q: Can the determination of th.e 0Rance of an obligation be left to a third

person?
ANS: Yes, the determination of tt,_ ance may be left to a third person, whose
decision shall not be binding untrit cf,p knowia,19 both contracting parties
(CIVIL CODE, Art. 1309). Th,,ai aliii6V3-06ligatory if it is evidently
inequitable. In such caOthe cou hall decide wh is equitable under the
circumstances (CIVIL .CODE, Art. 13
Q: What is a stipulation pokkotitrui? W at are the requ

ANS: A stipulaWOour atitrijilsA provisio in favor of a ..„.,,
ri not a party to the
*.,4 o. L-207.
contract (Bonffacto Bros.,Inc. v. MbreV. -,v. 67). The requisites
of a stipulatidadir aultilike: (FkCUAR pr ...—' A„„,agt70
rs,._-, tr.---...-
-=,rd--t
.
1. TheRis a stipulatien in Favor
_rn,. of el') i rd p e • ' 1%i,ir - •
2. The stiftulationtart,lio -the to I e , of the co — -
3. The conacting pales Clparly d deliberately conferred a favor to the third
person—thetera not an inc ii7 al,le eft;
4. The favor is coaditional and If! coup: = --Ited•
5. The third perssn commtri-Tati ';' ance of the favor before its
revocation; arrd
6. The contractin arcs do not Represent, or are not authorized by, the third
party (Spouses liaratz v. Spouses Alciso, G.R. No. 165907, July 27, 2009).
Note: If a contract should contain some stipulation in favor of a third person, he may
demand its fulfillment provided he communicated his acceptance to the obligor before its
revocation. (CIVIL CODE, Art. 1311, par. 2).
.
Q:W hat are the essential requisites of a contract?
ANS: There is no contract unless the following requisites concur (COC)
1. Consent of the contracting parties;
2. Object certain which is the subject matter of the contract; and
3. Cause of the obligation which is established (CIVIL CODE, Art. 1318).
Q: What is consent?
ANS: Consent is manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract. The OFFER must be certain
and the ACCEPTANCE absolute. A qualified acceptance constitutes a counter-offer.
Acceptance made by letter or telegram does not bind the offeror except from the time it
came to his knowledge. The contract, in such a case, is presumed to have been entered
into in the place where the offer was made (CIVIL CODE, Art. 1319).
591
17e
Q: What are the requisites of consent?

ANS: The requisites are the following:(CCI)
1. Must be manifested by the Concurrence of the offer and acceptance (CIVIL
CODE, Arts. 1319-1326);
2. Parties must possess the necessary legal Capacity (CIVIL CODE, Art. 1327);
and
3. Must be Intelligent, free, spontaneous, and real (CIVIL CODE, Arts. 1330-
1346;).
Q: When is an offer certain?

ANS: In order that an offer can be considered certain, it must not be vague, misleading,
or made as a joke (JURADO, Obligations and Contracts, supra at 400).
Q: What are the requisites of a valid acceptance? .

ANS: The acceptance must be absolute in character (CIVIL CODE, Art. 1327) In other
words, it must be plain and uncon59flak,,consgauently, if it involves any new proposal
constitutes-°a" counter-• ffey -241n,,which case it is essential before
if it is qualified, it constitute
there can be a perfected coritrac at thkre e dOfinite and absolute acceptance
by the original offeror ofrkic ter.,offer4ruazo DePRosario-Suarez, G.R. No.
168325, December ie 012),-
Q: What is meaneploptect of contc.pct •(

r,
ANS: The objectof a'cesitractimay
b e defik'ed et,the tilli
ng, right or service which is the
subject matter 9f the obligati° which is c'r'eated or este lished,(VRA90, Obligations
and Contracts, t 456). 11;
I
.., isites o a valtdmplegpf2a con
Q: What are the reci
ANS: The reqgites.4 re afq ws: (C'
1. Must
....,
I7.-IR the C°Rmerce,o
2. Shduld be R ql or okbte; \ \0. e,
3. Shoulke Licit; and\lp N„,.
4. Should be Det&mina et° dtest opt'155 e aof determi ation as to its kind
(JURADOObligaioes kng --iNcit64.up 3057).
Note: The genus or kidotthebebt-rnTst.be-ex resrd.10,„,
Q: What things, rights ors& 111 ic p/ canikotibglh

. 1.1hVjec -of contracts?
ANS: The following cannot beth —bject bricotiteaetsv-(01F — SIN)
1. Things which are Outside -et tiiffiffeitTOf men;
2. Intransmissible rights;
3. Future inheritance;
4. Services which are contrary to law, morals, good customs, public order or
public policy (CIVIL CODE, Arts. 1347);
5. Impossible things or services; and (CIVIL CODE, Arts. 1348);
6. Objects which are Not determinable as to their kind (CIVIL CODE, Arts. 1347).
Note: If the parties enter into a contract with respect to the above objects, the contract is
void or inexistent (JURADO, Obligations and Contracts, supra at 457).
Q: What are the exceptions to the rule that no person can enter into a contract
with regard to future inheritance?
ANS: They are:
1. The future spouses may give each other in their marriage settlement their
future property to take effect upon the death of the donor and to the extent laid
down by the provisions of the Civil Code relating to testamentary succession
592
1010
\
BED
2. A person may make a partition of his estate among his heirs by an act inter
vivos, provided that the legitime of the compulsory heirs is not prejudiced
Note: As a general rule, future things may be the-object of a contract. Exception is with
regard to future inheritance (CIVIL CODE, Art. 1347).
Q: What is meant by the cause or consideration of contracts?

ANS: Consideration is the why of the contracts, the essential reason which moves the
contracting parties to enter into the contract (Spouses Villamor v. Court of Appeals, G.R.
No. 97332, October 10, 1991). In particular, in onerous contracts, the cause is
understood to be for each contracting party, the prestation or promise of a thing or
service •by the other; in remuneratory contracts, it is the service or benefit which is
remunerated; and in contracts of pure beneficence, it is the liberality of the benefactor
Q: What are the requisites of cause?

ANS: The requisites are as follows:1E0)4
1. Existing at the time of the.celebr'ati9n of the contract;
2. Licit or lawful; and
3. True (JURADO, Obligatkink4' -ontracts, p. 472).
Att
Q: May a moral obligation congiitUte:-q.StifficieritUtiveZupport an onerous
A,'
contract?
ANS: It depends. Whetg.the moral 91:111991 on arises whollyr9rri.ethical considerations,
unconnected with any',Ciyili,§bligatiqpn as such, is denyrflaye only by conscience
and not by law, it cmi;rot 'institute a cau to support an ogercikis contract (Fisher v
Robb, G.R: No. 46274,14ember 2, 193 but where stichirnoral obligation is based
upon a previctib" civil obligation whiCh h6% already prescribed at the time when the
contract is eillet.'0 fistiti,kt!s a stfieient caus*.cpasisle 0.9, to support said
contract (Villartal EstratiaG.R.Vb,
' 47 62, Decern86194p
,,7.4.1
4
Q: What are the diffetdrice§petween c • use and object of contracts?
ANS: The differenA are thltollowing:
Cause I Object
As to Remuneration
The service or benefit in9Egnerated The thing which is given in
remuneration
As to Donation
The liberality of the donor or benefabtor The thing which is given or donated
As to the Thing
Prestation or promise of a thing or The thing or service itself

service by the other
As to Contracting Parties
Different with respect to each party May be the same for both the parties
(JURADO, Obligation and Contracts, supra at 464)
593
Q: What are the differences between the cause of a contract and the motives of
the contracting parties?
Cause Motive
As to Proximity
Direct and most proximate reason of a Indirect or remote reason

contract
As to Characteristic of Reason
Objective or juridical reason of a Psychological or purely personal reason
contract
As to the Contracting Parties
Always the same for each,,,ctffraCitig - Differsle each contracting party
party t
As to Effect in the Validity of Contract
1
Its legality affe9tb -.----"7"-
existence -1. --
oP,,, Its"'''a
leg lN'
d es
g no affect the existence
validity of the cAritr c / p ft. .yvalidi
,,. ...il.
VA ,A %
of e FontrTt
- -
(JURADO, Oblrat, and Cottractsrsupp485) ( -..0 i •
t„...041\
V67'--, 1:11 tr`P);,
Q: What is the tei tiof the on-obserV nce he r quired orm
ANS: A certai resc7A-dily21 for a yr-oT th o ng purposes: for
validity, enforc abi ter-effica
%. tile-conk-S he the required is for
validity, its no -Os 'ers # oh act & d of o ieffect. When the
required form i Jar en ewit will 11'91 permit, upon the
objection of a party, the alid,bto be pr • ved or enforced by
action. Formalitieintende nven ence or bind third persons,
if not done, woulNt adv.e enforcf bility of the contract
between the contractt g paitif§ Ou ss Apacionado, G.R. No.
132474, November 19,1 99)0
Q: What contracts are require y.1 certain form in order to be valid?

ANS: These contracts maybe classified as follows:
1. Those which must appear in writing, e.g. sale of a piece of land or any
interest therein through an agent (CIVIL CODE, Art. 1874);
2. Those which must appear in a public document, e.g. contract of partnership
where immovable property is contributed (CIVIL CODE, At 1377); and
3. Those which must be registered, e.g. articles of incorporation (REV/SED
CORPORATION CODE, Section 18) (JURADO, Obligations and Contracts,
supra at 480).
Q: What contracts are required by law to be in a certain form in order to be

enforceable?
ANS: Contracts covered by the Statue of Frauds must be in writing in order to be
enforceable. The following are: (PPAG-LSR)
1. An agreement that by its terms is not to be Performed within a year from the
making thereof;
2. A special Promise to answer for the debt, default, or miscarriage of another;
3. An Agreement made in consideration of marriage, other than a mutual promise
to marry;
594
4. An agreement for the sale of Goods, chattels or things in action, at a price not
less than five hundred pesos, unless the buyer accept and receive part of such
goods and chattels, or the evidences, or some of them, of such things in
action, or pay at the time some part of the purchase money; but when a sale is
made by auction and entry is made by the auctioneer in his sales book, at the
time of the sale, of the amount and kind of property sold, terms of sale, price,
names of the purchasers and person on whose account the sale is made, it is
a sufficient memorandum;
5. An agreement for the Leasing for a longer period than one year, or for the sale
of Real property or of an interest therein;
6. A Representation as to the credit of a third person (CIVIL CODE, Art. 1403,
no.2).
Note: Under Art. 1443, express trusts concerning real property or any interest therein
are "deemed" to be covered by the Statute of Frauds (Penalber v. Ramos, G.R. No.
178645 January 30, 2009).
4.14111
Q: What contracts are prescribeci.lp yo to be in a certain form for convenience or
efficacy? 111-
', 4
ANS: The following must appear! n p 6 iaa ocument: .
1. Acts and contracts whiiac e r their object the creation, transmission,
modification or extinguishmentI s over ii11 ovable proper* sales of
real property or of appier t4 4,1741) articles 1403, No. 2, and
1405; oiro
2. The cessionerepiNiation or„fk, iation of heredi ights or of those of the
conjugal' parepirgip of gaiOr
3. The power tochaister prope or any other dower ich has for its object
an act„apirearinaMohich shd appear in public ocument, or should
prejudice a thiLdderson; ..
4. Th4Wsimpfctions Apr rights ceedin .7f man ring in a public
docutent.(C/V/0.0DE, par. 1). ito
Note: All other contracts 'a re fife mo involved undred pesos must
appear in writing, e alavngle one But ales of goods, chattels or things in action are
governed by articles-1403, N612 and 140 L DE, Art. 1358, par. 2).
1.54-
Q: When can a party o.e• ec e- e necessary form?
ANS: If the law requir do ent or other special form, the contracting parties may
compel each other tooi Vry that form, once the contract has been perfected. This
right may be exercised sirriiin eously with the action upon the contract (CIVIL CODE,
Art. 1357).
Note: The Article applies only when the required form is needed for convenience or
efficacy, not for validity or enforceability (Cenido v. Spouses APacionado, G.R. No.
132474, November 19, 1999).
Q: What is the doctrine of reformation of instruments?._

ANS: When the true intention of the parties to a perfected and valid contract are not
expressed in the instrument purporting to embody their agreement, by reason of
mistake, fraud, inequitable conduct or accident, one of the parties may ask for the
reformation of the instrument so that such true intention may be expressed (CIVIL
CODE, Art. 1359).
Q: What are the requisites to avail of reformation?

ANS: In order that there can be a reformation of the instrument, the following requisites
must concur. (MIM)
1. There must be a Meeting of the minds of the parties;
2. Their true Intention is not expressed in the instrument; and
595
•
3. Such failure to express their true intention is due to Mistake, fraud, inequitable
conduct or accident.
Note: If mistake, fraud, inequitable conduct, or accident has prevented a meeting of the
minds of the parties, the proper remedy is not reformation of the instrument but
annulment of the contract (CIVIL CODE, Art. 1359).
Q: What are examples of instruments which may be reformed?

ANS: The following are examples of instruments which may be reformed:
1. When a mutual mistake of the parties causes the failure of the instrument to
disclose their real agreement (CIVIL CODE, Art. 1361);
2. If one party was mistaken and the other acted fraudulently or inequitably in
such a way that the instrument does not show their true intention (CIVIL
CODE, Art. 1362);
3. When one party was mistaken and the other knew or believed that the
instrument did not state their real agreement, but concealed that fact from the
former (CIVIL CODE, Art. 1.363);...„,
4. When through the igporaliCe, lack;of skr, 'ffegjtgence or bad faith on the part of
the person draftinOhelinstrumr eorkthe
,S btl*of typist, the instrument does
not express pelit:le iiiitenfion.of,the,Parties:Y(C/y/b-b(VE
, Art. 1364);
5. .If two (2) prtie0a9seeupon the morbage& le.dge of real or personal
property,putttiOstru enettaralllat-the,prime is g Id absolutely, or with
a right citf u chase civikpode, Art.- 1365). "
J1 , •
Q: Who are the p rties ;who can. bring the action ce•fte ?rmation of the
instrument? 1111" v...0.4 I
ANS: In case 9f/ utu I mist*, the;p5rtylUtvhd"catfbri g the action is ither party or his
successors in Interns - otherwise, the'Ortyl,w0loan b • ng the 4dtionii4 the injured party
or his heirs and Ussigris (eV_ CODE, kit Ak88).
k
Q: What instrijera calm• t efe2 e
ANS: The folloOw instkmenfaArTate efa <1 WV
1. Simple d9natiori inter ncrto ditio4s impoqed;
2. Those Mitre the Thal A
3. Wills (CIA CODE,/trt81
What is a contract of eQi?

ANS: A contract of adhesion deined as e . ...ivhfch one of the parties imposes a
ready-made form of contract, whichlfirijthbrty may accept or reject, but which the
latter cannot modify. One party prepares the stipulation in the contract, while the other
party merely affixes his signature or his "adhesion" thereto, giving no room for
negotiation and depriving the latter of the opportunity to bargain on equal footing. These
types of contracts have been declared as binding as ordinary contracts, the reason
being that the party who adheres to the contract is free to reject it entirely (Philippine
Commercial International Bank v. Court of Appeals, G.R. No. 97785, March 29, 1996).
Note: Should there be ambiguities in a contract of adhesion, such ambiguities are to be
construed against the party that prepared it. If the stipulations are not obscure, but are
clear and leave no doubt on the intention of the parties, the literal meaning of its
stipulations must be held controlling (Pilipino Telephone Corp. v. Tecson, G.R. No.
156966, May 7, 2004). However, it is stricken down as void and unenforceable or
subversive of public policy when the weaker party is imposed upon in dealing with the
dominant bargaining party and is reduced to the alternative of taking it or leaving it,
completely deprived of the opportunity to bargain on equal footing(Radio
Communications of the Philippines, Inc. v. Verchez, G.R.• No. 164349, January 31,
2006).
596
Q: What are the rules in the interpreting a contract?
ANS: The following are the rules in interpreting a contract:
1. If the terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall control (CIVIL
CODE, Art. 1370, par. 1);
2.If the words appear to be contrary to the evident intention of the parties, the
latter shall prevail over the former (CIVIL CODE, Art. 1370, par. 2);
3. The contemporaneous and subsequent acts of the parties shall be considered
4. If the terms in a contract are general, they shall not be understood to
comprehend things that are distinct and cases that are different from those
upon which the parties intended to agree (CIVIL CODE, Art. 1372);
5. If some stipulations admit of several meanings, it shall be understood as
bearing that import which is most adequate to render it effectual (CIVIL CODE,
Art. 1373);
6. Various stipulations of a contraqt,shall be interpreted together (CIVIL CODE,
Art. 1374); • - . . it
7. Words with different sigritticatiqnshall be understood in that which is most
keeping with the nature 0,00310pf the contract (CIVIL CODE, Art 1375);
8. Usage or customs of the",04hall be taken in the interpretation of the
ambiguities of a contrObt4t tjAllafillVe omissions which are ordinarily
established (CIVIL CODE Niel 6). .V *4:0 0
9. Interpretation ql,:cpbscure wordsl or stipulations shall not favor those who
caused the ogiairity (C/VII4C)4E, Art. 1377); and n‘
10. Rule 123 of triapdles of CoUttlkall likewise be obse ed in the construction of
contracts poi_ ODDE;- Art. 1379
g'- ...04,. / k
Q: What is thelble on doubts in gr'fityitotis contracts?A \
i
ANS: When 485tt,egi;i1gssible to settlb:4oubts by,t1JL
efujes le, rid,,,
i§; doubts only refer
to incidental dirpurriitarsktthe tagtt tra gm
' ission of Wrests shall prevail
(CIVIL CODE, Art4p8; -fit. •-
Q: What is the rule'oh,doull, in onerou arts?

ANS: When absolutelyjitmossible to settibp1 rgyayftWes and the doubts only refer
to incidental circumstar*s, thefitt lifigri81116eisettlditMgror of the greatest reciprocity
of interests (CIVIL COCF Art itep, par. 1).
Q: What is the rule on 4;tibteiupon the principal object?
ANS: If the doubts are in sbefi5a way that it cannot be known what may have been the
intention or will of the parties, the contract shall be null and void (CIVIL CODE, Art.1378,
par. 2).
Q: What are the requisites of rescission?

ANS: The requisites are as. follows: (RORO-4)
1. Contract must be Rescissible under Articles 1381 and 1382;
2. Party asking for rescission must have no other legal means to Obtain
reparation for the damages suffered by him (CIVIL CODE, Art. 1383);
3. Person demanding rescission must be able to Return whatever he may be
obliged to restore if rescission is granted (CIVIL CODE, Art. 1385);
Reason: The effect of rescission if granted would be the restoration of things
to their condition prior to the celebration of the contract (JURADO, Obligations
and Contracts, supra at 513).
4. Things which are the Object of the contract must not have passed legally to
the possession of a third person acting in good faith (CIVIL CODE, Art. 1385);
and
5. Action must be brought within four j41 years (CIVIL CODE, Art 1389).
597
Note: A rescissible contract is a contract which is valid because it contains all of the
essential requisites prescribed by law, but which is defective because of injury or
damage to either of the contracting parties or to third persons. (JURADO, Obligation and
Q: What contracts are rescissible?
ANS: The following contracts are rescissible: (GAFULI)
1. Those entered into by Guardians where the ward suffers lesion by more than
% of the value of the things which are objects thereof;
2. Those agreed upon in representation of Absentees, if the latter suffer lesion by
more than'/ of the value of the things which are object thereof;
3. Those undertaken in Fraud of creditors when the latter cannot in any other
manner collect the claims due them;
4. Those which refer to things Under litigation if they have been entered into by
the defendant without the knowledge and approval of the litigants or of
competent judicial authority;
5. All other contracts egpeCigirigralthy,Law to be subject to rescission
(CIVIL CODE, A-4389; and
6. Payments m5le,:in-al stire-oflq,scl xe4 f9t T ,..r
- Nti
ob
). .
ig23. olis to whose fulfillment the
debtor coutd.• of be-cornrened at thebrikthefwece effected (CIVIL CODE,
Yof,'
Art. 1382 ?' e) ....0• „,---_.....,.--..t.,
4-1-, --......_.t. NI5,C •
e
_ A
Q: When is th r04)ptesugiptio9th00:,F2ntract is altered into in fraud of
creditors? i o f..‘
ANS: The law s that. reisfrai.,ficreclitors_i the &Irckiti cases:
1. All cor---, traits y virtue oWlicktke debtor ile ates iloperfy- y gratuitous title
are i.esurld to ha been - ,,,:g• 'n'to in fr ud of ci dito when the donor
4 • ill--
did o es rve Li icient- prme ., otzlpay II-debts con .r cted before the
donation C /L g tr-Art.-1.38 - .-Al). ,C(--) I ),
2. Alien ti s orbAl s;title glkojo 4* d fr udu e when made by
4.;
perso , agai st o '''s g cl§art w ee issue The decision or
attachRent ne no ele . thelr_op ienat , and peed not have been
obtainethby the 13 Alg h aci si (CIVIL CODg, Art. 1387 par. 2).
T ...."
Q: What are the chawterist s tss tratsck.
ANS: Rescissible conte'acks(p_,si pep follow! milaqgristics: (IVDAC)
1. Their defect consi§eri _njurylvicpdag eller to one of the contracting
parties or to third persons 1 ‘1••).-
2. Before rescission, they are rgli an , erefore, legally effective.
3. They can be attacked Directly only, and not collaterally.
4. They can be Attacked only either by a contracting party or by a third person
who is injured or defrauded.
5. They are susceptible of Convalidation only by prescription, and not by
ratification WURADO, Obligation and Contracts, supra at 503).
Q: What are the requisites for rescission of contracts, on the ground of lesion,
entered into by a guardian in behalf of his ward or by a legal representative in
behalf of an absentee?
ANS: The following requisites must concur: (GLANP)
1. The contract must have been entered into by a Guardian in behalf of his ward
or by a legal representative in behalf of an absentee (CIVIL CODE, Art. 1381,
pars. 1 and 2);
2. The ward or absentee must have suffered Lesion of more than one-fourth of
the value of the property which is the object of the contract (CIVIL CODE, Art.
1381, pars. 1 and 2);
3. The contract must have been entered into without judicial Approval (CIVIL
CODE, Att. 1386);
598
7j+ :•;1.f.::" • '
4. There must be No other legal means for obtaining reparation for the lesion
5. The person bringing the action must be able to return whatever he may be
obliged to restore (CIVIL CODE, Art. 1385, par. 1); and
6. The object of the contract must not be legally in the Possession of a third
person who did not act in bad faith (CIVIL CODE, Art. 1385, par. 2).
Note: If the object of the contract is legally in the possession of a third person who did
not act in bad faith, the remedy available to the person suffering the lesion is
indemnification for damages and not rescission (CIVIL CODE, Art. 1385, par. 3).
Q: What are the requisites for rescission of contracts on the ground that it has
been entered into in fraud of creditors?
ANS: The following requisites must concur:
1. There must be a credit existing prior to the celebration of the contract;
2. There must be a fraud, or at least, the intent to commit fraud, or at least, the
intent to commit fraud to the preldice of the creditor seeking the rescission;
3. The creditor cannot in any oft% t legal manner collect his credit (3 CASTAN,
7th Ed., p. 422); and . V.
4. The object of the contrAalt::;440t be legally in the possession of a third
person who did not act iiitreiNithi(C/V/L'CODE, Art 1385, par 2).
••:$ ft-,i
Q: What is the prescriptive period pf* idhitoitlzawtsion?
ANS: As a general rule, the,dortion forVereScission otat,bonftiact must be commenced
within four years. Under:gon of Articlh 1381, this period musq e counted from the time
of the termination of thAictpacity of'die ,hard; under No. 2lit' st be counted from the
time the domicile of theatgentee iiknowa under Nos. 34an 4%nd also under Article
..,5.4.-- i -,
1382, it must be Cc)oted fro the time ofxr ; e discovery o th 'fra4 In certain cases of
contracts of sale' are SiTecially4ecp ed by law to be rescissible, however, the
prescriptive pifiod for tfi101ammencement; i the actiorms six onth or even forty days,
counted fromtthe
.,,.; der& deliv,ery PV/L CC*, Art. 1-5,,,3, cr4517).
4
,i0174-:,:.1*.,-I*.. ..1-0
‘,
Q: What are the -dffered-at" between resc ssion and resolution?
o,- .
ANS: The differencesbetween between , rerescission
scissi on under Article 1380 and resolution under
:1
1A be
Article 1191 are as follows: r
Vg40.• .ii.. Mk
Rescission • Resolution
As to whether the court may deny the same
-ttelnapi
Any reason to justify extension of time It may be denied by the court when there
does not affect the right to ask for is sufficient reason to justify extension of
rescission. — time for the defendant to perform.
As to grounds
There are various reasons of equity The non-performance is the only ground.
provided as grounds.
As to applicatio'n
There are various reasons of equity Applied only to reciprocal obligations.
provided as grounds.
As to who may ask the court
It may be demanded by a THIRD It is demanded ONLY by a party to the -
PARTY prejudiced by the contract. contract
(4 TOLENTINO, Civil Code, supra at 571)
599
Q: What are the voidable contracts?
ANS: The following contracts are voidable or annullable, even though there may have
been no damage to the contracting parties:
1. Those where one of the parties is incapable of giving consent to a contract;
and
2. Those where the consent is vitiated by mistake, violence, intimidation, undue
influence or fraud.
Note: Voidable contracts are binding, unless they are annulled by a proper action in
court. They are susceptible of ratification (CIVIL CODE, Art. 1390).
Q: Who are the persons incapacitated to give consent to a contract?

ANS: The persons who are incapacitated to give consent to a contract are: (MID)
1. Minors;
2. Insane or demented persons, and deaf-mutes who do not know how to read
and write; and
Note: This incapacity is suMeato.the,mpdifications determined by law, and is
understood to be withciirprejudice to, special, disqualifications established by
law (CIVIL CODErkt. .329); f
3. Person in a stdteiiftirCaenneis
• or:.'duli.n6 a hypnotic spell (CIVIL CODE Art
1328). ft ,
Q: What is mistake? Kr''L.)

ANS: Mistake orferro she fhse notion of thing or aifact materiall lto the contract (DE
LEON, Obligati ns anfContfacts, supra'at, 555). Mistake day bc.:ideflned not only as
the wrong con 14-dniqf a thinTjblit- also,las the lacklof knoypge‘with respect to a
thing (JURAD8rObliYation arid CUriaCtsillSuptaate429).
lE. .
VZfiM7-j1:7
Q: What is the ch erinceratween a mistake of factigri&a mistsa f law?
ANS: There is 'sta e 8 AW,Wen one otfi-Orfe..0.6ntr4etilep,arties believe that
a fact exists whe n4 'p.lity it'*es,,rotM f6lich(fal
atitioes•-:'not egigt when in reality it
• -
does. On the otAer hanZyheik ista e cif;j9v3-dn orie or both of the contracting
parties arrive at an erroneouscoriclp too redasding'the ipferpretation of a question of
law or the legal eff4cts of certain ks..GetranoVftittpURAbO, CiviPLaw, supra at 845).
Note: As a genei-e-\rule, nly-rfiritake-cif lad Which Hill vitiate consent thus
rendering the contract'Voiddbnke.of.iawriin-f160.5Aland, does not render the
contract voidable becaus"*N well-km:1v ptgiiplelhatworance of the law does.not
excuse anyone from compl •c4J:iereini
: 0191urra' v. Linatoc, G.R. No. 48403,
October 28, 1942). As an exception,iiT - att1grgrror as to the legal effect of an agreement
when the real purpose of the parties is frustrated, may vitiate consent (CIVIL CODE, Art.
1334).
Q: What mistakes of fact will render a contract voidable?

ANS: The mistakes of fact which will render a contract voidable are the following:
1. Mistake as to the object of the contract. This may refer to: (CISQ)
a. Mistake as to the Condition of the thing, provided, such condition has
principally moved one or both of the parties to enter into the contract;
b. Mistake as to the Identity of the thing;
c. Mistake as to the Substance of the thing; and
d. Mistake as to the Quantity of the thing, provided that the extent or
dimension of the thing was one of the principal reasons of one or both
of the parties for entering into the contract (JURADO, Obligation and
2. Mistake as to the person - this refers to mistake with regard to the identity or
with regard to the qualification of one of the parties (JURADO, Obligation and
600
( .4. •,... , ?. 1/4'2: 7. '''' " , ' '' '''', 4 c...f"-=:Ft-,;-;',...t.',1a,
..e.); !t...
-ki W z 71:;4,.,,,Lt-.;*-::a,,v:-.: 4:4A-,,,,,,if...t.5,7
Note: Mutual error as to the legal effect of an agreement when the real purpose of the
parties is frustrated may vitiate consent (CIVIL CODE, Art. 1334). However, if the party
alleging the mistake knew the doubt, contingency or risk affecting the object of the
contract, there is no mistake (CIVIL CODE, Art. 1333).
Q: Who has the burden of proving the mistake when one of the parties is unable
to read or is unable to understand the language of the contract?
ANS: The person enforcing the contract (not necessarily the capacitated party) must
bear the burden of showing that the terms thereof have been fully explained to the
former (CIVIL CODE, Art. 1332).
Q: When is there violence?

ANS: There is violence when in order to wrest consent, serious or irresistible force is
employed (CIVIL CODE, Art. 1335).
Q: When is there intimidation?

ANS: There is intimidation when one. qt. the contracting parties is compelled by a
reasonable and well-grounded fear of anikriminent and grave evil upon his person or
property, or upon the person or prOpertY4Vhis spouse, descendants or ascendants, to
give his consent (CIVIL CODE, Art 13354pr. 1).
Note: To determine the degree of se:tiand condition of the person
shall be borne in mind (CIVIL pobE;.AIT, •
rh5l
• ks
akoo
Q: When will intimidgp not vitiatks9asent?
et.
ANS: A threat to enfoit.,q6e's clairwth'rolgh competent alhonw, if the claim is just or
legal, does not vitiate‘onskib(CIV/L CODE Art. 1335 par.,3).
oiagi. 4 'Irlrgi.v,
Q: What is thedffect ifttrie violencz.pr np imidation is employed by third person
who did not iriWpacaritihe contract?
ANS: ViolendKor intimidgtrdn shitann l;'-the oblig4
a Re i..11Pirmay have been
employed by a third perr%who'd10 no td c (CIVIL CODE, Art.
1ke part in the con ral
1336). VE.zer ' •
Q: When is there undueinfluence? , ,

ANS: There is undue influence
ue wtieifftersbnll ake-s4troper advantage of his power
over the will of anothegdepriyika the latter of a reasonable freedom of choice. The
following circumstanceiVik considered: the confidential, family, spiritual and other
relations between the partge* the fact that the person alleged to have been unduly
influenced was suffering from mental weakness, or was ignorant or in financial distress
Q: When is there fraud?

ANS: There is fraud when:
1. Through insidious words or machinations of one of the contracting parties, the
other is induced to enter into a contract which, without them, he would not
have agreed to (CIVIL CODE, Art. 1338);
2. Failure to disclose facts, when there is a duty to reveal them, as when the
parties are bound by confidential relations (CIVIL CODE, Art. 1339);
Note: Under the Principle of Tolerated Fraud or dolus bonus, the USUAL
exaggerations in trade, when the other party had an.opportunity to know the
facts, are NOT in themselves fraudulent (CIVIL CODE, Art. 1340).
3. Mere expression of opinion was made by an' expert and the other party has
relied on the former's special knowledge (CIVIL CODE, Art. 1341); and
4. Misrepresentation by a third person which has created substantial mistake and
the same is mutual (CIVIL CODE, Art. 1342).
601
Note: Misrepresentation made in good faith is not fraudulent but may
constitute error (CIVIL CODE, Art. 1343).
Q: What is the requirement in order that fraud may make a contract voidable?
ANS: In order that fraud may make a contract voidable, it should be:
1. Serious; and
2. Should not have been employed by both contracting parties (CIVIL CODE, Art.
1344).
Note: Incidental fraud only obliges the person employing it to pay damages
Q: When should an action for annulment be brought?

ANS: An action for annulment should be brought within four (4) years. This period shall
begin:
1. In case of intimidation, violence or undue influence, from the time the defect of
the consent ceases;
2. In case of mistake or f ud, ropn t m ,ofjl-ie discovery of the same; and
3. When the actin ef? to ico)tr9 IsT/tBred into by minors or other
incapacitated , rom.akti e the uapi..t1 *p ceases (CIVIL CODE,
Art. 1391). @tea.1,-""
Q: What is ratificatio whiraZli—elfeCts 'n an-actinnkto annul voidable
contract? IA 7
ns zA . •
ANS: Ratificati is tti act r means tinvhich efficacy is iyenAto a contract or an
obligation whic from exting •!sties e'acticin to annul
voidable contr c I L CO Akte,394113atifi99.tion leans he4contract from all its
defects from t e mo nt it w conitiWreAlfCtre. COW, Art. /096
Note: Ratifica o o s npt-r uire itirazgfj:3-rnify of Ihp-sontr ctin party who has no
right to bring ttic pc bti foen Ment4GTCODErA • 95)
Q: What are th requi ices ftcaf

ANS: The requis es are
1. - Contrac s tainte f bein cured./
2. Confirma ri is effe e b. K:ektitled tiyao so under the law;
3. It is effecte ith p ledge r-Ite ectfrtjb6 contract; and
4. The cause of e ulII > j> de ec s ouldLicAte Ire‘dy disappeared (JURADO,
Obligations and Con cti, suPi , 5fla -4,
''''
v LI-
Q: Who can effect ratification in case of incapacitated persons?
ANS: Ratification may be effected by the guardian of the incapacitated person (CIVIL
CODE, Art. 1394).
Q: .Who are the persons who may institute an action for the annulment of
contracts?
ANS: The action for the-annulment of contraats 'Maybe instituted by all who are thereby
obliged principally or subsidiarily. However, persons who are capable cannot allege the
incapacity of those with whom they contracted; nor can those who exerted intimidation,
violence, or undue influence, or employed fraud, or caused mistake base their action
upon these flaws of the contract (CIVIL CODE, Art. 1397).
Q: What is the effect after an obligation has been annulled?

1. The contracting parties shall restore to each other the things which have been
the subject matter of the contract, with their fruits, and the price with its
interest, except in cases provided by law. In obligations to render service, the
value thereof shall be the basis for damages (CIVIL CODE, Art. 1398);
602
2. However, when the defect of the contract consists in the incapacity of one of
the parties, the incapacitated person is not obliged to make any restitution
except insofar as he has been benefited by the thing or price received by him
3. Whenever the person obliged by the decree of annulment to return the thing
cannot do so because it has been lost through his fault, he shall return the
fruits received and the value of the thing at the time of the loss, with interest
from the same date (CIVIL CODE, Art. 1400).
Note: Take note that as long as one of the contracting parties does not restore what in
virtue of the decree of annulment he is bound to return, the other cannot be compelled
to comply with what is incumbent upon him (CIVIL CODE, Art. 1402).
Q: What are the effects when the thing which is the object of the voidable contract
is lost through the fault or fraud of the plaintiff?
1. The action for annulment of contracts shall be extinguished when the thing
which is the object thereof if4osPthrough the fraud or fault of the person who
has a right to institute thejzfpcpdings; and
2. If the right of action is bAcISiggilhe incapacity of any one of the contracting
parties, the loss of the ifilderainot be an obstacle to the success of the
action, unless said lossclo6 "place, through the fraud or fault of the plaintiff
vzgogAzoi.,
(CIVIL CODE, art 1401) .maattz-bg
Q: What are the instayes.When a contract is unenforceablet?
ANS: The following cokiacls are undifOlaable, unless the aTe ratified: (NSI)
a
1. Those entekilto4ri ittte Name another persop once who has been given
autho y,
"Eir'19,0presentati94,
,òr or who has atte beyond his powers;
Note:, nauthorizgedthtracts ark governed by' More 1317 and the principles
of age oy. X
Z. Thy hardO t'Comply.twith theJatute of . sta-egellY6ffh in Article 1403
of the"Civil Cod; 40z
Note: ITIVIg.wasm, an agree nt made shall be unenforceable by action,
unless thglame, 6some not or memorandum, thereof, be in writing, and
subscribedbrrarty charge s anent; evidence, therefore, of the
agreement ca ;lot receiagg tth f
or a secondary evidence of
its contents; 4
3. Those where both parties are Incapable of giving consent to a contract (CIVIL
CODE, Art. 146):
Q: How may unenforceable contracts be ratified?

ANS: Ratification of unenforceable contracts may be made expressly or impliedly.
1. In case of an unauthorized contract, it may be ratified expressly or impliedly,
by the person on whose behalf it has been executed, before it is revoked by
the other contracting party (CIVIL CODE, Art. 1317);
2. In case of contracts under the Statute of Frauds, they are ratified impliedly by:
a. The failure to object to the presentation of oral evidence to prove the
same; or
b. By the acceptance of benefit under them (CIVIL CODE, Art. 1405).
Note: When a contract is valid and enforceable under the Statute of Frauds,
and a public document is necessary for its registration in the Registry of
Deeds, the parties may avail of the right under Article 1357 (CIVIL CODE, Art.
1406).
3. In case of contracts when both parties are incapable of giving consent, the
express or implied ratification by the parent, or guardian, as the case may be,
of one of the contracting parties shall give the contract the same effect as if
only one of them were incapacitated. pon§q9pently, the contract becomes
603
voidable. If ratification is made by the parents or guardians, as the case may
be, of both contracting parties, the contract shall be validated from the
inception (CIVIL CODE, Art. 1407).
Note: Unenforceable contracts cannot be assailed by third persons (CIVIL CODE, Art.
1408).
Q: What are the differences between void contracts and inexistent contracts?
Void Contracts I Inexistent.Contracts
• • As:to the presence of requisites
All of the requisites of a contract are Inexistent contracts are those where One
present, but the cause, object or or some or all of those requisites which are
purpose is contrary to law, morals, essential for the validity of a contract are
good customs, public order or p .absolutely lacking, such as those which are
policy, or contract itself is pre Red' bs'icilsuceV-sknulated or fictitious, or those
or declared void by law -0'" ..)Arti,previhe'cq* or object did not exist at
the.time.tif thje trakhsaction.
....- 'N.
As to availability of relief from court
Do not allow er eretorfo "top'elito attack eveparties thereto.
be heard a invO e its unlawful \
Vc,
character as pawner for r
1111111111111111111111
(JURADO, Ob • gym and Itraseg'ppp at5r0575
Q: Enumerate tliVso tr cts̀I hat are mexis ent an • Y,bi )fro thekrginning.
d
ANS: The folio n ntra t are line ent and aid),fro thet \
eginning are those:
(CANOSIP) Je,
1. Whose cause, bje os is-Oo to lgw, mo.cals, good customs,
public o der or OlioPt) !
2. Which arklbsolu elvi I Ift Ir istent),
3. Whose caLibq or op ckl* t-a
? e iiitRiei
transaction (inexistent);
4. Whose Objecr oufsi e mmer e of e 'ojdy;
5. Which contemplate rij ossi6I,Mee OI
6. Where the Intention oftt e artiedire ah e,tol e principal object of the contract
cannot be ascertained (void ; an
7. Expressly Prohibited or declared void by law (void).
Note: These contracts cannot be ratified. Neither can the right to set up the defense of
illegality be waived (CIVIL CODE, Art. 1409).
Q: What is the Principle of In Pori Delicto?

ANS: It is a principle which states that when the defect of a void contract consists in the
illegality of the cause or object of the contract, and both parties are at fault or in pari
delicto, the law refuses them every remedy and leaves them where they are (JURADO,
Obligations and Contracts, supra at 592).
Q: What are the exceptions to the Principle of In Par! Delicto?
ANS: The following are the exceptions: (U-RIPE-OL)
1. Payment of Usurious interest. In such case, the law allows the debtor to
recover the interest paid in excess of that allowed by the usury laws, with
interest thereon from the date of payment (CIVIL CODE, Art. 1413).
2. Payment of money or delivery of property for an illegal purpose, where the
party who paid or delivered Repudiates the contract before the purpose has
been accomplished, or before any damage has been caused to a third person.
604
In such case, the courts may allow such party to recover what he has paid or
delivered, if the public interest will thus be subserved (CIVIL CODE, Art. 1414).
3. Payment of money or delivery of property by an Incapacitated person. In such
case, the courts may allOw such person to recover what he has paid or
delivered, if the interest of justice so demands (CIVIL CODE, Art. 1415).
4. Agreement or contract which is not illegal per se but is merely prohibited by
law, and the prohibition is designed for the protection of the plaintiff. In such
case, such plaintiff, if Public policy is thereby enhanced, may recover what he
has paid or delivered (CIVIL CODE, Art. 1416).
5. Payment of any amount in Excess of the maximum price of any article or
commodity fixed by law. In such case, the buyer may recover the excess
6. Contract whereby a laborer undertakes to work longer than the maximum
number of hours fixed by law. In such case, the laborer may demand for
Overtime pay (CIVIL CODE, Art. 1418).
7. Contract whereby a Laborer accepts a wage lower than the minimum wage
fixed by law. In such case, the @borer may demand for the deficiency (CIVIL
CODE, Art. 1419).
Q: What is the effect of a simulated or fibtltious contract?
ANS: An absolutely simulated or fictitious 60.1rtfact is void. &relative simulation, when it
does not prejudice a third person and is nOtihtdri*.for,.00,purpose contrary to law,
morals, good customs, public order or 'public policsi: biiiElOhe parties to their real
agreement (CIVIL CODE, Art. 1346). 4-
Q: What are the distinctions among void; voidable, resOsible, and unenforceable
contracts?
ANS: The disti Ctkins are tfie'following: Jr j
. Vold Voidable I Rescissible " Unenforceable

As to Cause of Defect
ire ".1.077
Defect is caused Ii "Defeb ,Wis caused Defect is caused Defect is caused by
by lacking by Aiation of pintlaff injury/ excess or lack of
absolutely either &dent or (in..ti idartaMeither authority, does not
in fact or in law legal incapacity to one of the comply with the
one or some of of onel"Erl the parties or to a Statute of Frauds, or
Pt'
the elements of contracting third person both contracting
validity parties. parties are legally
incapacitated
As to . ffect '
Do not, as a Valid and Valid and en- Cannot be enforced
general rule enforceable until forceable until by a proper action in
produce any annulled by a rescinded by a court
legal effect competent court competent court
As fo Tir9.scription
Action for Action for Corresponding action
Action/defense annulment or rescission may for recovery, if there
for the defense of prescribe was total or partial
declaration of annullability may performance of the
nullity or prescribe unenforceable
inexistence does contract under No. 1
not prescribe or 3 of Article 1403
may prescribe
605
As to Curability
Not cured by Cured by Cured by Not cured by
prescription prescription prescription prescription
As to Ratification
Cannot be Can be ratified Need not be Can be ratified
ratified ratified
As to Challenging Party
Assailed by a Assailed only Assailed by a Assailed only by a

contracting party by a contracting contracting party contracting party
and a third party and a third person
person whose who is prejudiced
interest is directly or damaged by the
,,nrcea
affected contract_
dF -v
As to Direct/Collateral Assailment •
cit
Assailed irreirr Assailexlirect Assailed directly or
or 0,0
directly or, la —only '444.
collaterally
r 44i \ ,•0$1P.
i
f ZAN
C NATURAL OBLIGATIONS
Q: What are nitt04 obligatio ns
ANS: They ar thos based n euity-4.amdnacc; ral law, w.hic • ff' o grant a right of
action to enf rce th 'r perfp mance;ta
.,LtUrgfief.' vol fu fifirrieh by the obligor,
authorize the r tent o of as-beenidiered-or-r ht./red
ht./red ,y,9son thereof (CIVIL
CODE, Art. 14 ?): J)
4.?
Q: What are the enditiops-n~
ANS: The conditio s are:
~`Ce‘,s f r nat Lions? *g
1. That there, e juridical, A1),Q
- EI-
TH141,9 e ;and
2. That this tie not npeffct o awt4,(J D ation and Contracts,
supra at 636).
Q: What is difference betwe n a obligation and a moral obligation?

"Natural Obligation 1 Moral Obligation

As to Juridical Tie
There is a juridical tie between the No juridical tie whatsoever
parties which is not enforceable by
court action
As io Effect of Voluntary Fulfillment
Voluntary fulfillment of such produces Voluntary fulfillment of such does not

legal effects which the court will produce any legal effect which the court
recognize and protect will recognize and protect
•its to Legal Effect of Voluntary Fulfillmenj

Within the domain of law Within the domain of morals
(JURADO, Obligation and Contracts, supra at 911)
606
Q: What are examples of natural obligations found in the Civil Code?
ANS: The following are examples of natural obligations:
1. Performance after the civil obligation has prescribed (CIVIL CODE, Art. 1424);
2. Reimbursement of a third person who paid a debt that had prescribed (CIVIL
CODE, Art. 1425);
3. Performance after action to enforce civil obligation has failed (CIVIL CODE,
Art. 1428);
4. Payment by heir of a debt of the decedent exceeding value of property
inherited (CIVIL CODE, Art. 1429); and
5. Payment of legacy after the will has been declared void for lack of formalities
D ESTOPPEL
Q: What is estoppel?
ANS: Estoppel is condition or state by virtue of which an admission or representation is
rendered conclusive upon the person rnaklio it, and cannot be denied or disproved as
against the person relying thereon Article 1431).
Q: What are the different kinds 076.0*01

ANS: Estoppel may be classified to:
1. Estoppel in pais or hy'CittiVriaat pcidris when one by his acts,
representations oWriiissidritl by his sigii &VAT he ought to speak out,
intentionally gatiVough culpOlej4egligence, induceknother to believe certain
facts to exiitAnd(such hffully relies an acts on such belief, as a
consequenceeklich,leowoul be prejudiced [: tie ormer is permitted to
deny the_eXisten6:elef such facts JURADO, Obligations: nd Contracts, supra
at 640)*'
2. Technical estop el
dPigstopffelldee'd44 tha virtue o a deed and his
leclu,ded) fro asserting a al Atte other party and his
ritiyleiAn ,ripht or title i erogation of the deed; or from denying any
materialfac4sserted therein.
b. Estcipplel by, r.,ecord, is th iffTe of which a party and his privies are
preclutIteffom d,,etrApis Onagers set forth in a record,
wheths&judicial4)%gisla itao-641).
3. Laches is the'lia' urego ,neglect, for an unreasonable and unexplained length
of time, to do 1;41ia ,4. bich, by exercising due diligence, could or should have
been done earlier; it is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert it
either has abandoned it or declined to assert it (Tijam v. Sibonghanoy, G.R.
No. -L-21450, April 15, 1968).
Mole; Estoppel is effective only as between the parties thereto or their successors-in-
interest (CIVIL CODE, Art. 1439).
Note: The government is not estopped by mistake or error on the part of its officials or
agents (4 TOLENTINO, Civil Code, supra at 668).
Q: What are the elements of laches or stale demands?

ANS: The following are the elements of laches: (CD-LI)
1. Conduct on the part of the defendant, or of one under whom he claims, giving
rise to the situation of which complaint is made and for which the complaint
seeks a remedy;
2. Delay in asserting the complainant's rights, the complainant having had
knowledge or notice of defendant's conduct and having been afforded and
opportunity to institute a suit;
607
,i;a
4L1
(
1C-44.40.74,G.IAgfilF:•4.6'IN '.6I-Z1,- ,i1;:4AV7i4:Frz.21:C44 1.:.5Y;F4.f;i?:-. ,
3. Lack of knowledge or notice on the part of the defendant that the complaint
would assert the right on which he bases his suit; and
4. Injury or prejudice to the defendant in the event the relief is accorded to the
complainant, or the suit is not held to be barred (Miguel v. Catalino, G.R. No.
L-23072, November 29, 1968).
Q: What are the differences between prescription and laches?

Prescription • Laches
As to its Relation to Delay •
Concerned with the fact of delay Concerned with the effect of delay
As to Nature
Question or matter of time r,,,,e• 6 'Question of inequity of permitting the
MimfePkenforced
As to BasiS • 0
Statutory
As to Application
Applies in fall
/ I Applies ~n eqt)itkp
•
As to Availability as a Defense
•'....: IILL.
Cannot be avoiled of tnlesd- it-Tvls, 17Being dodefanst 4rrelitlity, it need not
,i.,,.. •
---...., g r'rt 4,
specifically leaded as n \a:firma e:•-
„,„„\ Ily pleaded
allegation
As to Basis in Respect of Fixed Time
Based on a fixektime ,ot e
wa
used on a fixed time
r:NT
(JURADO, ObligatiorNend4 itr.44etsau
----Tir;r&a
'
E. TRUSTS
Q: What is a trust?
ANS: A trust is the fiduciary relationship between one person having equitable
ownership in property and another owing the legal title to such property, the equitable
ownership of the former entitling him to the performance of certain duties and the
exercise of certain powers by the latter for the benefit of the former (DE LEON,
Comments and Cases on Partnership, Agency, and Trusts, 2014, p. 628, 2014)
(hereinafter DE LEON, Partnership] or of another person.
Q: Who are the parties in a trust?

ANS: A person who establishes a trust is called the trustor; one in whom confidence is
reposed as regards property for the benefit of another person is known as the trustee;
and the benefit for whose benefit the trust has been created is referred to as the
beneficiary (CIVIL CODE, Art. 1440) or the cestui que trust (DE LEON, Partnership,
supra at 632).
608
Q: What are the characteristics of trust?
ANS: The characteristics of trust are the following:
1. It is a relationship;
2. Fiduciary in character;
3. With respect to property, not one involving merely the personal duties;
4. Involves the existence of equitable duties imposed upon the holder of the title
to the property to deal with it for the benefit of another; and
5. Arises as a result of a manifestation of intention to create the relationship
(Morales, et al. v. CA, et. Al G.R. No. 117228, June 19, 1997).
Q: Who has the burden to prove the existence of trust?

ANS: The general rule is that the burden of proving the existence of a trust is on the
party alleging its existence; and to discharge this burden, it is generally required that this
proof be clear and satisfactory and convincing (Ramos v. Ramos, G.R. No. L-19872,
December 3, 1974).
Q: What are the kinds of trusts?

ANS: Trust are either express or implied Express trusts are created by the intention of
the trustor or of the parties. tome into being by operation of law (CIVIL
CODE, Art. 1441).
Q: What is an express trust?,:-•

ANS: Express or direct twtiire create y the direct an Titive acts of the parties,
by some writing or deOPO'r.will, or qm declaration in wo islevincing an intention to
create a trust (Estate ofig4cungar3
. fet o, G.R. No. 175070,14ugust 15, 2011).
41 i X
,„1 rs' - t•
Q: How can the:eld§ encepta,trust be eyed? 1 lk
ANS: No expre'ss trustszonceming dttim vable or an interest therein may be proved
*
by parol evidelIe0.0,9,DE,A,tt. 14431 An expos . trust overl p_arnal property or
any interest WI' Tein nnaffqfprovOpy o Vevidencere glinership, supra at
643). ,,,, pAgrik. OA .
.01 w ,A.
Q: Is there a form reqgiredo, create a t ust.
ANS: No particular woltlyare required deati
,..,-. 4era, 'on
..__ gf an express trust, it being
....---4.-7--
sufficient that a trust isfearly intelicireCtVILOOEPArtP1444). However, by virtue of
Art. 1443, the writing lerequiriliot for validity but for purposes of proof. Hence by
analogy, this requiremerktly• so be included under the Statute of Frauds (Cuaycong
v.Cuaycong, G.R. No. L-21618, ecember 11, 1967).
Q: Is the acceptance by the trustee necessary?

ANS: No trust shall fail because the trustee appointed declines the designation, unless
the contrary should appear in the instrument constituting the trust (CIVIL CODE, Art.
1445). In the case of an express trust, the acceptance of trust by the trustee is
necessary only to charge him with the office of the trustee; however, his acceptance of
the trust is not necessary to its existence and validity (DE LEON, Partnership, supra at
648).
Q: Is the acceptance by the beneficiary necessary?

ANS: Yes. Acceptance by the beneficiary is necessary. Nevertheless, if the trust
imposes no onerous condition upon the beneficiary, his acceptance shall be presumed,
if there is no proof to the contrary (CIVIL CODE, Art. 1446).
609
i .4%..:;::::: , .,,,Z.;',!..1,,"45:FP.Y4 ;V:',"if:',F::,;:;fiv,i'lr,O;:.,,:.'t J•W ::::-
*— {,1:1
,:.71
~BEDAN
-ikg,•;::-,,,' • ‘,.... •
Q: May !aches and prescription constitute a bar to enforce an express trust?

ANS: As a general rule, the express trust disables the trustee from acquiring for his own
benefit the property committed to his management or custody, at least while he does not
openly repudiate the trust and make such repudiation known to the beneficiary
(JURADO, Civil Law Reviewer, supra at 922). 003
Q: Enumerate the modes of extinguishment of an express trust:

ANS: The modes of extinguishment are as follows: (THE-MAD2-RAMP)
1. Total loss of the object of the trust;
2. Happening of the resolutory condition, if any;
3. Expiration of the agreed term;
4. Mutual agreement of all the parties;
5. Annulment or rescission of the trust;
6. Decision of the court declaring the trust terminated;
7. Death or legal incapacity of the trustee when the trustor intended no other
person to administer the 4-ust,(Caezo,,4 Rojas, G.R. No. 148788, November
23, 2007); ---..-v- T -1 s. ' • '1',4*$,._
A 1 , -4,,.
8. Revocation by tjaelu'at6r:, if sui c‘joIrtis rpsarvegi;
}- ,
9. Accomplishraelttfilrtupose=of-the„Vg, 1.,„ it
10. Merger of Ititiriglitsphe trustor and the lnotee,„*,6n the trustor waived his
beneficialildhti„ki avor-of•thelfirp ree7 orwipe*VeA án
11. Prescripto -i,- \
...s .r,-) , , '.):,
A Zil; SIN.
. .
Q: What is anIi mpliedtrusta ,A,. )
ANS: Implied rulftP. * also 1ca ‘ le-cf""trifslr y opera pin of I w," ",(ndirect trusts" and
"involuntary trusts' arise b leaalTriiplicriticerWed n the Oresuned intention of the
parties or on qgulab e principles intldeeNeDefelf the o articula2 irate ion of the parties.
They are thos" hiq , wqfi:Al ing ei.firs.ped, are icible frorfi the nature of the
transaction as rmtti oNhiant or, Ill epen .1 ,ent y of e p3tticil61 intention of the
parties, as beingiriferr d fra h ra '§:Actilioff by--o ptgtipn ofiaw ba9 tally by reason of
equity (Estate of abacuTan., ;..1 1 2. o G R. No 7407/3, A5gust 15 011.).
Q: How may an irNelied try t b cam/ %,. lo, pxycess rust?

ANS: An implied trutt,pay be verr -. f r estili t tkr ugh the recognition by
ii 'Ak--,
the implied trustee orthe-rig.tvtg jhavrope ner"(DE LEON; 'Partnership,
supra at 656). (.. i I
Q: What are the kinds of implied trugt?

ANS: Implied trusts are ordinarily subdivided into:
1. Resulting trust - is a trust raised by implication of law and presumed always
to have been contemplated by the parties, the intention as to which is to be
found in the nature of the transaction but not expressed in deed or instrument
of conveyance (JURADO, Civil Law Reviewer, supra at 918). Specific
examples of resulting trusts may be found in the Civil Code, particularly
Articles 1448, 1449, 1451, 1452 and 1453(Estate of Cabacungan v. Laigo, .
G.R. No. 175073, August 15, 2011):
a. Purchase money resulting trust (CIVIL CODE, Art. 1448);
b. Donation made to a person but the latter has no beneficial Interest or
only a part thereof (CIVIL CODE, Art. 1449);
c. Legal title to land inherited by heir placed in the name of another (CIVIL
CODE, Art. 1451);
d. Legal title to property purchased taken in one co-owner (CIVIL CODE,
Art. 1452); and
e. Conveyance under a promise to hold for, or transfer to another (CIVIL
CODE, Art. 1453).
610
•- .;•;: ••-• •
BOO
2. Constructive trust (trust de son tort) — is a trust created by the construction
of equity in order to satisfy the demands of justice and prevent unjust
enrichment. They arise contrary to intention against one who, by fraud, duress
or abuse of confidence, obtains or holds the legal right to property which he
ought not, in equity and good conscience, to hold. -Constructive trusts are
illustrated in Articles 1450, 1454, 1455 and 1456 (Estate of Cabacungan v.
Laigo, G.R. No. 175073, August 15, 2011):
a. Purchase with borrowed money and the conveyance is made to the
lender to secure the payment of the debt (CIVIL CODE, Art. 1450);
b. Absolute conveyance of property to a person to secure the
performance of grantor's obligation (CIVIL CODE, Art. 1454);
c. Purchase of property with use trust funds (CIVIL CODE, Art. 1455); and
d. Acquisition of property through mistake or fraud (CIVIL CODE, Art.
1456).
Q: May laches constitute a bar to enforce an implied trust?

ANS: Laches constitutes a bar to aptjqto enforce the trust, and repudiation is not
required, unless there is a conceals 0141 the facts giving rise to the trust(Fabian v.
Fabian, G.R. No. L-20449, Januat$4 A94.
, •
Q: May prescription constitute djb oskeAn impligkrust?
ANS: Yes, however the followit4 r , is' 4§;4,.•reiquired 'q re period of prescription
may start: (UKC) Ot
-,MOP
1. The trustee 17,1as, performedP U quivocal acts of udiation amounting to
ouster of thereepiary;.
2. Suchpositilactwo .9pui:fiation ve been mad K o ,p to the beneficiary;
3. Evidenc hereo! nik,, lear and p ,,itive (Vda. D?Ca rera v. Court of Appeals,
G.R. 0. 108547, Feruaryg3,4199Z .
1)
Q: What is periiibik prescription& of an ac prm or =co eyance of real
0 • • •,...,
property based on amispelied trust?
ANS: The followiftgtareelhe4: les onrriresdi tion and laches in an action to recover the
vrykg,
property held in trust?
'Nt, 4
Ground Prescriptive Period •
If the action for re,pnvegtoce The period of prescription is four (4) years from
involves the annuliii a the discovery of friud.
voidable contract whiclAbeCame
the basis for fraudulent Reason: The action for annulment of voidable
registration of the subject property contract shall be brought within four years
If the action does not involve an The period of prescription is ten (10) years from
annulment of a contract, but there discovery of fraud.
was fraud in the registration of the Reason: An action based upon an obligation by
subject property law must be brought within ten (10) years from
the right of action accrues (CIVIL CODE, Article
1144(2)).
If the action involves the The action is imprescriptible.

declaration of the nullity or
inexistence of a void or inexistent Reason: The action or defense for the
contract which became the basis declaration of the inexistence of a contract does
of fraudulent registration of the not prescribe (CIVIL CODE, Art. 1410).
subject property
611
If the plaintiff or the person The action is imprescriptible. In effect, the
enforcing the trust is in action for reconveyance is an action to quiet the
possession of the property property title, which does not prescribe.
Reason: The one who is in actual possession

of the land claiming to be its owner may wait
until his possession is disturbed or his title is
attacked before taking steps to vindicate his
right. His undisturbed possession gives him a
continuing right to seek the aid of a court of
equity to ascertain and determine the nature of
the adverse claim of a third party and its effect
on his own title, which right can be claimed only
by one who is in possession (Gabutan v.
G.R. Nos. 185857-58 & 194314-15,
June 29;2016):,
4 ;
(JURADO, Civil Law RQI:ne0 '441: 1
VS1".
• :E*4
Q: Distinguish express4d4stXom.imphedTrust,
ANS: The distincy<tafel
Express Trust I Implied Trust
As to creation of trust
g
. 7 ill
Created by dire • Vend pose ac 6-tS.f:g 3j21-"Sie wit„IvLt being] $xpressed are
the parties, ()y-s me w Am. writ.in'' - --• eductiblelkfrom /the nature of the
or deed or will vide cirib,a_mintentiork transactio /2,.18--)6y
;t7 belion of law as
• #
to create trus 1-E!.71 ‘471ki..1.
to .o
qui , ind tgendently of the
pOcu lèiterl n of the parties
As to proof of trust
No express trust 00,13444-4'q, .'"a MargrIkvibirparol evidence (CIVIL

immovable or any inter 16dreiri may E, 67).
be proved by parol eviden CIVIL
CODE, Art. 1443).
As to the effect of Laches and Prescription
Do not constitute a bar to enforce an As to resulting trust,it does not constitute

express trust, at least while the a bar to enforce an express trust, unless
trustee does not °Ripply repudiate the -there is repudiation. This is similar to
trust, and ma,"'.' known such express trusts because in both, there is
repudiation to theVetieficiary • the intention to create the trust.
As to constructive trusts, it may constitute

a bar to enforce an implied trust, and no
repudiation is required unless there is a
concealment of the facts giving rise to the
trust (Fabian v. Fabian, G. R. No. L-
20449, January 29, 1968).
(JURADO, Civil Law Reviewer, supra at 919-920)
612
5 7:fMAV:4:,.e:441-0Nl
k :4 4.itria
%
v.r re • 1.A., ,•
4•441Mt,
VI. SALES
A. NATURE AND FORM OF CONTRACT
Q: What is a contract of sale?
ANS: A contract of sale is one in which one of the contracting parties binds himself to
transfer the ownership of and to deliver a determinate thing, and the other to pay
therefore a price certain in money or its equivalent (CIVIL CODE, Art. 1458).
Q: What are the characteristics of a contract of sale?
ANS: The characteristics are: (NoP-BiO-Co2A)
1. Nominate— it has been given a particular name by law;
2. Principal— it can stand on its own, and does not depend on another contract for
its validity;
3. Bilateral — it imposes obligations on both parties;
4. Onerous— it imposes a valuable. consideration;
5. Commutative— it is a contract Wherein a thing of value is exchanged for equal
value;
6. Consensual —it is perfect:6k i 1.e consent (VILLANUEVA, Law on Sales
(2009), p. 5-14) (hereinafferl+ IL4tUEVA, Law on Sales]; and
7. Aleatory in some cases (es+lin e-of sale of afttope or emptio spei) (CIVIL
CODE, Art. 1461). :I'
4-'''
Q: What are the essential- equisitesfpf
ANS: The elements artir(COC)
0o: .44
1. Consent or meetipgtoLtjle•rliinds.,
2. Object ootiactiter: ii
a. $E:asting, bave'potential oods, or contingent or
-.--subjectirsolvtory con 4ion (CIVIL OD Arts 1347, 1461, 1462
.r/ ,,
•ant11465 0 ',3
b `.Licit and the vendolous ,.,,Ive
, ,lave a right o de ath ownership thereof
kr Aijfierlis deliared OWL CIVILCODE, Art 1459); and
-,--- ,
c. De erminatekor at least de erminable (CIVIL CODE, Art. 1460)
3. Cause or congideratitin
Vt.':" p,,tam9DLO0,_ 4' ,alatogp
a. For thepeiler: • . - _,DE, Art 1458); and
b. For th ''' uyer:d Lansfer of ownership and delivery of the thing (CIVIL
CODE, Art. 1458.); and the vendor must have a right to transfer the
ownership aeof at the time it is delivered (CIVIL CODE, Art. 1459).
Q: What is the distinction between Emptio Rei Speratae and Emptio Spei?
ANS: The distinctions between Emptio Rei Speratae and Emptio Spei are:
Emptio Rei Speratae Emptio Spei
The sale of a thing with potential Sale of a mere hope or expectancy

existence, subject to a suspensive (CIVIL CODE, Art. 1461) (e.g. sale of a
condition that the thing will come into sweepstake ticket for P100 where the
existence. If the subject matter does not buyer purchases the ticket with the hope
come into existence, the contract is that upon the draw the ticket would win
deemed extinguished as soon as the him a million pesos. The object of sale is
time expires or if it has become not the prize, but rather the ticket or the
indubitable that the event will not take chance to win) (VILLANUEVA, Law on
place (CIVIL CODE, Arts. 1184 and Sales, supra at 76).
1461; VILLANUEVA, Law on Sales,
supra at 75).
613
Q: What are future goods?
ANS: Future goods are goods to be manufactured, raised or acquired by the seller after
the perfection of the contract (CIVIL CODE, Art. 1462).
Q: May future goods be the object of a contract of sale?

ANS: Yes. Future goods may be the object of a contract of sale (CIVIL CODE, Art.
1462). If the object of a contract is future goods, it is valid only as an executory contract
to be fulfilled by the acquisition and delivery of goods specified (DE LEON, Comments
and Cases on Sales and Lease 0006) pp. 28) [hereinafter DE LEON, Sales and Lease].
Q: What is a future inheritance?

ANS: Any property or right not in existence or capable of determination at the time of the
contract, that a person may in the future acquire by succession (J.L.T. Agro Inc. v.
Cadayday, G,R, No. 141882, March 11, 2005).
Q: May future inheritance be subLagtof.a.cqntoct of sale?

ANS: No. No contract may, Weliterecl into vpotrfuture inheritance except in cases
expressly authorized by OW py,g. CObg Art\1347). ;The law prohibits the sale of a
future inheritance upopowfiidft 6o_'5,:ontract.CAQ,,;_bem@dpiaher than those making a
division inter vivos ofidn'esf4tel(DEIEON, Sales -a4nd4.6-6.se,14pra at 478).
t' AN
Q: May hereditarbfjigt)t.4/be sold? ,: pj 'T .v..
ANS: Yes. Herlditarwribhtslin an Jestatgcaabe va idlyNoj out need of court
approval (EscaglEr v. CIA, G. . No. 1197:7kOctober 2 193 y e hereditary rights
may be sold, fLittleritancet may no rr„.7r . p„. p...4
3
Q: May the so owner of a the SellAt _bnClivided interest therekn?
i .i.e.yse
ow er of a third- la
ANS: Yes. T. el'ol9Itlit, II an •iyided inteNst therein (CIVIL
CODE, Art. 1 ^ .05 he '''4g \-uf fun Idle go. 's, ej ' ay Vet-sesSe of an undivided
share of a spec ism s, *1 9 these lq,i0 rt d se 'lane* buyer to buy a
definite number, weight r me 5-,d'telo,flthe godds„16^,t. ma..s, and though the number,
weight measure f the aqpds`tivtk_ern sArdny ermined. By such sale the buyer
becomes owner 1 cornmo'h%9f 61.0----A. rip e pass as e number, weight or
measure bought beatsto thegib b-e-Oidrg r-me,asqe the ass (CIVIL CODE, Art.
1464).
90,1 tkINA\l‘fri
Q: What isprice? .1.
ANS: Price is the sum stipulated as • Iva ent of the thing sold and also every
incident taken into consideration for the fixing of the price, put to the debit of the vendee
and agreed to by him (Inchausti and Co. v. Cromwell, G.R. No. L-6584, October 16,
1911).
Q: What are the requisites of a valid price?

ANS: The requisites of a valid price are: (CRIM)
1. Certainty at the time of perfection (CIVIL CODE, Art. 1469);
2. Real and not simulated (CIVIL CODE, Art. 1471);
3. Gross inadequacy of the price does not affect a contract of sale except as it
may indicate a defect in the consent, or that the parties really intended a
donation or some other act or contract. (CIVIL CODE, Art. 1470); and
4. Paid in Money or its equivalent (CIVIL CODE, Art. 1458).
Q: When is price certain?

ANS: Price is considered as certain when it is expressed and agreed in terms of specific
pesos and/or centavos (VILLANUEVA, Law on Sales, supra at 112).
614
Q: When is price considered as ascertainable?
ANS: Price is ascertainable when it is:
1. Fixed by a specified third person;
Note:
a. If the third person is unable or unwilling to fix the price, the contract is
inefficacious unless the parties subsequently agree upon the price
b. If the third person is prevented from fixing the price by fault of either the
seller or the buyer, the party not in fault may have such remedies
against the party in fault as are allowed the seller or the buyer, as the
case may be (CIVIL CODE, Art. 1469).
c The designation of a third person is not a prerequisite to the perfection
of a contract of sale. Even before the fixing of the price by the
designated third person, a contract of sale is deemed to be perfected
and existing albeit conditional (VILLANUEVA, Law on Sales, supra at
112).
2. Fixed by the courts where,t0e Jrrd person fixes the price in bad faith or by
mistake (CIVIL CODE, MileRlA,
3. Fixed by reference to algIrpittlia ,‘ y, particular exchange or market, or when
an amount is fixed abovtortbighe price on such day, or in such exchange
or market, provided sayoarktifigeeM4CIVILINDE, Art 1472); and
4. Fixed by reference tq.anoth4thi :icertainfaMWDE, %wra, A Art 1469).
Q: What is the effect pf t'oss inadequacy of price in a co tact of sale?

ANS: Gross inadequacko price does n%, affect a contr c Orisale, except as it may
indicate a defect in 4Sboattatorbr'fhat tia parties really tel-id d a donation or some
other act or contradfIC/VIMOpE, Art 0). There is4 rosp inadequacy in price if a
reasonable nigp-will not,agree'to dis-ppse his property at that a ount (Dorado Vda.
De Delfin v. Dallbta G,I341o. 143697, Jan ary 28, 20043,g,
-4154
Q: What is the effectlf; vricei 'ululated?
ANS: If the pricAtliz atek the safe is lid, but the act may be shown to have been
in reality a donatiodti somelither id or tract (CIVIL CODE, Art. 1471).
Q: May the fixing of tittpece beloft cD,Wae on,9,A f. he parties?

ANS: The fixing of theipnce caateverlDe iscrEtion of one of the contracting
parties. However, if there hced by one of the parties is accepted by the other, the
sale is perfected (CIVIL 00,14
10,E4Art. 1473).
Q: May a contract of sale subsist despite the lack of price?
ANS: Yes, provided that. it is supported by consideration despite the lack of price.
Consideration, more properly denominated as cause, can take different forms, such as
the prestation or promise of a thing or service by another (Torres v. Court of Appeals,
G.R. No. 134559, December 9, 1999).
Q: What is the effect if there is no priOe agreed upon?
ANS: Where the price cannot be determined in accordance with articles 1469-1473 of
the New Civil Code, or in anyother manner, the contract is inefficacious. However, if the
thing or any part thereof has been delivered to and appropriated by the buyer he must
pay a reasonable price therefore. What is a reasonable price is a question of fact
dependent on the circumstances of each particular case (CIVIL CODE, Art. 1474).
Q: What is reasonable price?

ANS: Reasonable price is generally the market price at the time and place fixed by the
contract or by law for the delivery of the goods (DE LEON, Sales and Lease, supra at
74).
615
Q: Must the manner of payment be agreed upon?
ANS: Yes. Before a valid and binding contract of sale can exist, the manner of payment
of the purchase price must first be established since the agreement on the manner of
payment goes into the price such that a disagreement on the manner of payment is
tantamount to a failure to agree on the price (Sps. Navarra v. Planters Development
Bank, G.R. No. 172674, July 12, 2007).
Q: What are the formal requisites for the validity of a contract of sale?
ANS: Subject to the provisions of the Statute of Frauds and of any other applicable
statute, a contract of sale may be made in writing, or by word of mouth, or partly in
writing and partly by word of mouth, or may be inferred from the conduct of the parties
Q: What is an example of a sales contract that needs to be in writing to be valid?

ANS: Article 1874 of the Civil Code requires for the validity of a sale involving land that
the agent should have an authorization in writing, without which the resulting sale
entered into in behalf of the pririciplelk74,66";Void,(6aet v. Court of Appeals, G.R. No.
128016 September 17, 1998)'r
.
Q: What actions witlyr:edkrdle-e.elelnnisTu&InNritu-inr p to be enforceable?
ANS: The following .n to,be„eriforceaEile: (PROF)
1. Sale of geoprial ropertYlt a Price naress-thany-50, A
2. Sale ofiRealZro or anv.&riter4;s1 th7elein;. te%
I
3. Sale of properfy no to be perfO'rmed within One jlebr frqrn ▪ the date thereof;
and ?, .)q,: 4 V)
4. Whe r R4 lbp
j_ livable statute4eqdires.thpyhe jontracilof,salAn a certain Form
(CIVILCOD , Art. 14 ‘03;Nr4),Ibi
t
- Q: When is a contract ofs „e\deemergaCted?

—aii
"
I
ANS: In a coitrperit sate-OR eerfeqtipn tscconsum, d 'the.4rpoment there a T '
meeting of thelinds utvn t6Obj.etV6f. e ccfntracl'and upon the price.
Consent is maniffsted by the r.pWti 'CT thelfer.* the Aceptaute of the thing and
the cause, which're
moreto ckstitute t rttgadi rgi of D,. Mario g Intac and Angelina
Mendoza-Intac v. G.R. No A3_,..5Zitco 162 201%
Q: When is there meett gv3,4witids,?
ANS: There is meeting o !n/duce t arp I cOngi1rrece between the offer and the
acceptance upon the subject tteL. con tartrterms of paymerit,.p contract [of
sale] is produced. (Heirs of Faultri'lgIffHome Bankers Savings and Trust
Company, G.R. No. 177783; January 23, 2013).
•• -
Q: When is the ownership of the thing transferred to the vendee?

ANS: The ownership of the thing sold shall be transferred to the vendee upon the actual
or constructive delivery thereof (CIVIL CODE, Art. 1477). • -
Q: Can there be a perfected contract of sale even if, at the time of the perfection,
the seller is not the owner of the thing sold?
ANS: Yes, there is a perfected contract of sale as long the seller is the owner at the time
of delivery (CIVIL CODE, Art. 1459). Otherwise, he may be held liable for breach of
warranty against eviction (CIVIL CODE, Art. 1548).
Note: When a person who is not the owner of a thing sells or alienates and delivers it,
and later the seller or grantor acquires title thereto, such title passes by operation of law
to the buyer or grantee (CIVIL CODE, Art. 1434).
Q: What is the effect of a promise to buy and sell a determinate thing?

ANS: A promise to buy and sell a determinate thing for a price certain is reciprocally
demandable. An accepted unilateral promise to buy or to sell a determinate thing for a
616
price certain is binding upon the promissor if the promise is supported by a
consideration distinct from the price (CIVIL CODE, Art. 1479).
Q: What is an earnest money?
ANS: It is something of value given by the buyer to the seller to show that the buyer is
really in earnest, and to bind the bargain (DE LEON, Sales and Lease, supra at 137). It
is considered as part of the purchase price and as proof of perfection of contract (CIVIL
CODE, Art. 1482).
Q: What is policitacion?
ANS: Policitation is an unaccepted unilateral promise to buy or sell (CIVIL CODE, Art.
1479, par. 2). This produces no juridical effect and creates no legal bond. This is a mere
offer, and has not yet been converted into a contract (VILLANUEVA, Law on 'Sales,
supra at 136).
Q: What happens to a unilateral promise to sell if it is not withdrawn by the offeror
before acceptance?
ANS: It becomes a bilateral contract to sell and to buy, because upon acceptance by
the creditor of the offer td sell by the deb01, there is already a meeting of the minds of
the parties as to the thing which is deterritete and the price which is certain. In which
case, the parties may then reciproppljy;d4RKI.performane9p (Serra v. CA, G.R. No.
103338, January 4, 1994; ALBANO, Civil 14 sukrgtet 638).
'' : 7:14.%Ar
Q: What is an option contract? . a

ANS: An option contractis one granting in favor,Of one person, for which he
It
has paid a consideratipn, f:gsjving, him thekight to buy certaip merchandise or certain
- —specified property ettdust tcrt.wilVithin the_agreed period ay a Ixedwrice (VILLANUEVA,
Law on Sales, supra 140):''',,
,
5, P 1
411
Q: What are tfrkilistiocffiSrp between ear est money an • • 11 borkpioney?
ANS: The disitittions
• Atio:
Earnest Money ' Option Money
T. nsfer of ownership
'VI 1
Title passes to the 6.re-r upogtigrfell) Min 11 ''1140 is reserved to the seller
the thing sold "f4t. t4r and is not to pass until full payment
Effect of non-payment
An action for specific performance or for There can be. an_action• for specific
rescission can be filed by the injured party performance
.;,,;Consideration
Part of the purchase price (CIVIL CODE, Money is given as a distinct
Art. 1482) consideration for an option contract
Obligatiop of the-biiYer upon .payrrient of consideration
When given, the buyer is bound to pay the The would-be buyer is not required
balance to buy
:perfectipn of sale
There is already a sale Applies to a sale not yet perfected
(Adelfa Properties, Inc. v. CA, G.R.
No. 111238, January 25, 1995).
617
BEDANRED BOOK
Q: What does the option refer to?
ANS: The option is not the contract of sale itself. The optionee has the right, but not the
obligation, to buy. Once the option is exercised timely, i.e., the offer is accepted before a
breach of the option, a bilateral promise to sell and to buy ensues and both parties are
then reciprocally bound to comply with their respective undertakings (Ang Yu Asuncion
v. Court of Appeals, G.R. No. 109125, December 2, 1994).
Q: May an offer to sell be withdrawn?

ANS: Yes. When the offeror has allowed the offeree a certain period to accept, the offer
may be withdrawn at any time before acceptance by communicating such withdrawal,
except when the option is founded upon a consideration, as something paid or promised
Q: What if the period is not itself founded upon or supported by a consideration?
ANS: If the option is given without a consideration, it is a mere offer of a contract of
sale, which is not binding until accepted gyx CODE, Art. 1324; Atkins, Kroll and Co.,
Inc., v. Cua, G.R. No. L-9871,Jqptrdirl -TT8
Q: How must the rightt be ex rc s sl?
ANS: The right to withiara hob vairrfkirriett himsically or arbitrarily;
e
otherwise, it could iv rise t 51312Ag
i 9 .t the Civil Code which
di-r
ordains that "eve pgtsorii rriust, in the ex4a cise ofhis, n kitsvd1,19 the performance of
his duties, act withgiv6 eveirdneihis andlobeer'hOn'esty and good faith"
(Ang Yu Asuncicfn v. G.R No. 10g125nlamber 2 199' .cr )
Q: What is the rriir9f first refu‘a,

k:k... 0 1.rranr.1
ANS: It is a gh iken by he dilhtac cilrosp.ctive b yera riority option to
purchase the t 'mei& wilLbq old liStitrgebie7- Equal() fal Rellirble elopment, Inc. v.
Mayfair Theatft fric4 i ii.s• b 1.41 9.).
Note: There s ide • the ter sprt51 co s o e t the optionee and
all other prospTcfive 1,uyer ere t opti Goys the rig t of first priority
(Guzman, Bocalr g & Co v. BciFie : a, Mar Z 19 2).
Q: What is the dis "nction i r3itract afid Righ First Refusal?
ANS: The distinction re a
Option Contract Right of First Refusal
v "ir >-
A separate and distinct contra ate• ral part of the contract of lease, the
that which the parties may enter into consideration of which is built into the
upon the consummation of the option reciprocal obligations of the parties
and must be supported by a (Equatorial Realty Development Inc v.
consideration (Spouses Untonjua v. Mayfair Theater, Inc., G.R. No. 106063,
L and R Corp, G.R. No. 130722, November 21, 1996).
March 27, 2000).
As towhen exercised
The party who has an option may In a right of first refusal, while the object
validly and effectively exercise his might be made determinate, the exercise
right by merely notifying the owner of of the right of first refusal would be
the former's decision to buy and dependent not only on the owner's
expressing his readiness to pay the eventual intention to enter into a binding
stipulated price. (DE LEON, Sales juridical relation with another but also on
and Lease supra at pp. 85) terms, including the price, that are yet to be
firmed up (PUP v. Golden Horizon Realty
Corp, G.R. No.183612, March 15, 2010).
618
Q: What is the nature of advertisements for bidders?
ANS: Advertisements for bidders are simply invitations to make proposals, and the
advertiser is not bound to accept the highest or lowest bidder, unless the contrary
appears (CIVIL CODE, Art. 1326).
Note: Unless it appears otherwise, business advertisements of things for sale are not
definite offers but mere invitations to make an offer (CIVIL CODE, Art. 1325).
Q: Are business advertisements of things for sale considered as definite offers?

ANS: It depends:
1. If appears to be a definite offer containing all the specific particulars needed in
a contract, it really is a definite offer. Example: "For Sale: 900 sq. meter lot
with a brand new 1-1/2 storey house at 1445 Perdigon, Paco, Manila for P10
million cash." This is a definite offer, from which the advertiser cannot back
out, once it is accepted by another.
2. If important details are left out, the advertisement is not a definite offer, but a
mere invitation to make an oftmExample: "For Sale: 1000 sq. meter lots at
P100 million to P150 milligginat South Forbes Park Tel. 88-00-00." This is
clearly .merely an invitatpAtq' ake an offer, which the advertiser is free to
accept or to reject (PARISAQ A
iations and Contracts, supra at 618).
Q: What are the distinctions betWesq,‘Cont tlt?:-of. Sale a o Contract to Sell?

ANS: The distinctions are: S
. . .
Contract of Sale Contract to Sell
As to Effect of perfection of contract
Gives- rise to reciproc emanl ble • I
Only give ripe Tlo a reciprocal
obligations,, suspensive cortilitionL obligation (i.e.
1. On selle to transne?s'bip
fgrsoy and non-darg5fife '66liggbn until the
deliver possessiopobtfiLe thing condition'44,' hs) ari the seller to
2. On buyer 2ttreflArprice certain transfer ownership only when the buyer
(CIVIL CODE,' rt. 1458 1' paid the price in full
At M,
As to Transfer of ownership
Title passes to the brk upon tlelivery Ownership will pass only upon full
of the thing sold (QV DE, Art. payment of the price (CIVIL CODE, Art.
1496). ,1478)..
As to. Effect of non-payment of price
Failure to pay is a negative resolutory It is not a breach, of the contract but

condition, which puts an end to the simply an event that prevents the
transaction (CIVIL CODE, Art 1179). obligation of the vendor to convey title
from acquiring a binding force (Manuel
Uy & Sons, Inc. v. Valbueco, Inc., G.R.
No. 179594, September 11, 2013).
As to Remedy in case of non-payment of price
1. Specific performance Action to recover possession - if the

2. Rescission (CIVIL CODE, Art. buyer refuses to surrender the thing to
1191). the seller
619
AN.
As to Ownership of vendor
Vendor has lost and cannot recover the Title remains in the vendor if the
ownership until and unless the contract of vendee does not comply with the
sale itself is resolved and set aside condition precedent
As to Execution o f sale document
Vendee becomes the owner of the Vendor still need to execute another
property upon delivery of the thing sold instrument conveying the property to
the vendee (e.g. deed of absolute sale)
(DE LEON, Sales and Lease, supra at 21-23).
Conditional Contract of Sale vs. Contract to Sell
Coilditional Contract of Sale I • Contract to sell

As to Execution of Deed of Sale
Upon the perfection th contract. Uporr,,,thg' fu illment of the condition
C.A
Okntract.
As to Presertce of Consent
Consent is P s5i
f QQn.s,ez will on
n-
e piesent upon the
Niroen of the sonditi~n stipulated in
":- 1, I. i's•thOtontract.
As to When title passes .
le nt c ck,
Parties may stigulatetto re the tle _,,..q.bi
e tiffeVesilvMoe'athe owner even
to the ownertil thelorice '"•:•1 eir %fulfillment ofl e condition, the
\\\. a \- „ti sfses/pon thef execution of the
a4d d •f said:
rr
(Tan v. Benolirao, G. di
."07,4gtusjA,2
Absolute Cont act,04ale -vei2Addional ontract of Sale
Absolute Contract of Sale Conditional Contract of Sale*

As to When Title Passes
Title passes to the buyer upon There is a stipulation reserving the title to
delivery. the seller until the fulfillment of the
condition even if there is delivery.
0
As to Right to, rescind the contract
Both parties have the right to rescind There is a stipulation that the seller may
the contract. unilaterally rescind the contract in case of
non fulfillment of the condition:
(DE LEON, Sales and Lease, supra at 15)
620
. • ...I, :•fs
EDAN .7: •
ED BOOK VV.!,
B. CAPACITY TO BUY OR SELL

Q: Who may enter into a contract of sale?
ANS: All persons who are authorized in the Civil Code to obligate themselves may enter
into a contract of sale (CIVIL CODE, Art. 1489).
Note: All persons are authorized to enter into a contract of sale except those who are
disqualified either by absolute incapacity, relative incapacity and other special
disqualifications (CIVIL CODE, Art 1327 and 1329).
Q: When is incapacity absolute?

ANS: Incapacity is absolute in case of persons who cannot bind themselves, as in the
case of minors, insane and demented persons, imbeciles, deaf and dumb persons,
prodigals and those subject to civil interdiction. As their personality is restricted, they
have no capacity to purchase and sell by themselves personally, but only through their
legal representatives (CIVIL CODE, Arts. 1327).
Q: What is the effect of purchase by409nor?

ANS: The contract is voidable (QIWOODE, Art. 1327 and 1390 par. 1). However,
where both parties (seller and buM'Ii . 4nors, the contract is unenforceable (CIVIL
CODE, Art 1403, par 3). ; ,1.44: 4 ,r ,
:;,'•• ., :,;.z, ,...
Note: Where necessaries are sold Kciaver,scl to a mino or other person without
capacity to act, he must pay a reg'sdMelptak,eforadVL 42,tr 4
CODE, Art. 1489, par
2). ,.
z.tee.
Q: When is incapacituelative? ,i,...140
ANS: Incapacity is relative When, certain ersons, under 9,A circumstances cannot
buy certain propertyAVo(&trii. Estate Vf Martinez, GtfR L-5970, October 13,
1911). --mg
,(61,
- ?"511.' z,..1., i
4Nt
.f.' .4, 1, .i.:
Q: May the tikargadd:wife sell properly to eac
vtt. 1 4•!` tW.
ANS: As a general rule,. no. The hilsba tgand the I property to each
'44. !t .
other. .N.-
WV,.• A
Exceptions:
1. When a sepa ationtof property s, agreed upon in the marriage settlements;
Or .f.-a
.
..4* ....-4.1
2. When there t%s been agydictal s Para ton f-prOjierty under Article 135 of the
Family Code (EVIL GEODE, Art.1490).
Note: While Art. 133 dfl ah ivil Code considers as void a donation between the
spouses during the marriage, olicy considerations of the most exigent character as
wen as the dictates of morality require that the same prohibition should apply to a
common-law relationship (Calimlim-Canullas v. Fortun, G.R. No. L-57499, June 22,
1984).
Q: What are the special disqualifications?

ANS: The following cannot acquire property by purchase, even at a public auction,
either in person or through the mediation of another: (PAGE-JO)
1. Public officers and employees, with respect to the properties of the
government, its political subdivisions, or GOCCs, that are entrusted to them;
2. agents, with respect to the property entrusted to them for its administration or
sale, unless the consent of the principal has been given;
3. Guardian, with respect to the property of his ward;
4. Executor or administrator, with respect to the property of the estate under
administration;
5. Judges, justices, prosecuting attorneys, clerks of courts, etc., with respect to
the property in custodia legis; and
6. Any Other person specially disqualified by law (CIVIL CODE, Art. 1491).
621
C EFFECTS OF THE CONTRACT WHEN THE THING SOLD HAS BEEN LOST
Q: What is the effect of a loss or destruction of a generic thing?
ANS: In an obligation to deliver a generic thing, the loss or destruction of anything of the
same kind does not extinguish the obligation (CIVIL CODE, Art. 1263). The exceptions
are:
1. In case of sale of fungible things, made independently and for a single price, or
without consideration of their weight, number, or measure (CIVIL CODE, Art.
1480, par. 2);
2. In case fungible things be sold for a price fixed according to weight, number, or
measure, when they have been weighed, counted, or measured and delivered;
3. When the vendee has incurred in delay (CIVIL CODE, Art. 1480, par. 3);
4. Where delivery of the goods has been made to the buyer or to a bailee for the
buyer, in pursuance of the contract, and the ownership in the goods has been
retained by the seller merely to secure performance by the buyer of his
obligations under the contract, the goods are at the buyer's risk from the time
of such delivery (CIVIL pDODE;7(F-mp4so4 1); and
5. Where actual deliverkli s beetr d lakd'ithro.t1gb. the fault of either the buyer or
seller, the good are ak he risk-•o thelparh qt fault (CIVIL CODE, Art. 1504,
par. 2).
Note: In such case, e.;lgss shall be atthe_vgnAes'ArLsk and>tlie obligation is deemed
extinguished. do"'' -•k•
k.
Q: Who bears the riskif loss when los, '9ccurs before p cction?
ANS: The send: beas;the rist.of_loss.-RefOrit-dorninciappli N-1118 seller still owns the
thing becauseh file no de ivery,oNtra s er_of,oynership ye VILOINUEVA, Law on
Sales, supra 1347) /' 4:
•
Q: Who bears,theifs when-loss occurs-u
ANS: The pars@60). e qrsedIfecti of loss. Res perk . .
domino applie VILLA UE A,tcL on ,a &eor
Q. What is the general rule th o jec ,the, entirely lost?

ANS: The contracts all be vat • obOhifiRAV 493, par.1).
Q: What is the effect if oWt7of t ractlial.bben partially lost?

ANS: The vendee may choo bteneen: \->
1. Withdrawing from the contract,pr
2. Demanding the remaining part of the object, paying its price in proportion to
the total sum agreed upon (CIVIL CODE, Art. 1493 par.2)
Q: What is the effect when specific goods, without the knowledge of the seller
have perished?
ANS: Where the parties purport a sale of specific goods, and the goods without the
knowledge of the seller have perished in part or have wholly or in a material part so
deteriorated in quality as to be substantially changed in character, the buyer may at his
option treat the sale:
1. As avoided; or
2. As valid in all of the existing goods or in so much thereof as have not
deteriorated, and as binding the buyer to pay the agreed price for the goods in
which the ownership will pass, if the sale was. divisible (CIVIL CODE, Art.
1494).
622
•
-••- • ‘;‘. •
Q: Who bears the risk of loss when it occurs after perfection but before delivery?
ANS: It is governed by the stipulations in the contract. In the absence of a stipulation,
there are two conflicting views, which are:
1. Res petit creditori or BUYER bears the risk of loss (according to Paras, Vitug,
Padilla, and De Leon); and
2. Res petit domino or SELLER bears the risk of loss (according to Tolentino,
Jurado, Baviera, and Villanueva).
Q: Who bears the risk of loss in case of deterioration?

ANS: When the thing deteriorates without the fault of the debtor, the impairment is to be
borne by the creditor (CIVIL CODE, Art. 1189, par. 3).
Q: Who bears the risk of loss when ownership is transferred?

ANS: Res petit domino applies. The buyer is the owner; hence the buyer bears the risk
of loss (VILLANUEVA, Law on Sales, supra at 356).
D. OBLIGATIONS OF THE VENDOR :,.

li'igfci: .'
Q: What are the obligations of thamfid.i .
ANS: The obligations of the vendor: are - WC - PECN)
1. Transfer ownership (CIVIL CV ,- its 1458 and 1e 95)
2. Deliver the thing sold (CA/ IggibAlitiftkiLa ne1 495)
3. Deliver the fruits nOccesS-Offes:(CIV/L CObalisl 1164, 1166, and 1537)
4. Make Warranties C/VIL CODE, rts. 1495, 1545-1,50V
5. Take Care dike thing, perlin peril elivery, with grope diligence (CIVIL CODE,
Art. 1163); 4'4 t,,,,,,w,
6. Pay for tilwexxpe., Vu lor the exetion and regislati ,n lathe sale unless there
is stiRlation to the cbrifrary,a(C/VACODE, Art. i '487, s),4
7. Accord the buStIlhe right to ExeMne the goo s (CIVIL CODE, Art. 1584);
8. Enteitinto,,eaotitinct iivith, the Ranier oirt9 -W: Telruifer as may be
4v.; •'0 0-
reasonable undept, e cirp' stancs (CIVIL coo 44-1, -'
t
523); and
9. Notify fPre4bgfp_Pre5arding,lie ngessity to insure goods if it is usual to insure
them (CIVICCODEArt. 1523).
Q: When is ownershimp he thing ,04 fr ire eti:.,m-.

ANS: The ownership (Me thin >4tifld sha e rans erre -ZITO- the vendee upon the actual
constructive deliverere af CIVIL CODE, Art. 1477). The ownership of the thing
sold is acquired by the ve 8ee:, om the moment it is delivered to him in any of the ways
specified in Articles 1497 to 1501, or in any manner signifying an agreement that the
possession is transferred from the vendor to the vendee (CIVIL CODE, Art. 1496).
Q: What are the kinds of delivery?

ANS: The kinds of delivery are:
1. Actual or Real - placing the thing under the control and possession of the
buyer (CIVIL CODE, Art 1497); and
2. Legal or Constructive - delivery is represented by other signs or acts indicative
thereof (CIVIL CODE, Art. 1498-1501).
Q: What are the requisites of constructive delivery?

ANS: The requisites are: (CUI)
1. The seller must have Control over the thing;
2. The buyer must be put Under control; and
3. There must be an Intention to deliver the thing for purposes of ownership (DE
LEON, Sales and Lease, supra at 183-184).
623
Q: What are the kinds of constructive delivery?
ANS: The kinds of constructive delivery are:
1. Execution of Public Instrument — When the sale is made through a public
instrument, the execution thereof shall be equivalent to the delivery of the thing
which is the object of the contract, if from the deed the contrary does not
appear or cannot clearly be inferred (CIVIL CODE, Art. 1498);
2. Traditio Symbolica— With regard to movable property, its delivery may be
made by the delivery of the keys of the place or depository where it is stored or
kept (CIVIL CODE, Art. 1498);
3. Traditio Longa Manu — The delivery of movable property may be made by the
mere consent or agreement of the contracting parties if the thing sold cannot
be transferred to the possession of the vendee at the time of the sale (i.e. by
mere pointing) (CIVIL CODE, Art.1499);
4. Traditio Brevi Manu — The delivery of movable property may likewise be
made by the mere consent or agreement of the contracting parties if the
vendee already had it in Die,possessipn for any other reason (CIVIL CODE,
Art.14991
.4- R. Ni.'›N.
5. Constitutum Possess.glumt_Atit trey.ocperfection, the seller held
possession 3f4kibbject>atter.ina conce t plbikner, and pursuant to the
contract, the"seller-4tifiues to hold phys cal possoviRn thereof as lessee or
other foref)POsdsion•othelTaTilhe.cqpN tqf o ner (CIVIL CODE, Art.
1500); 4 „c1") .• a
.
6. Quasi-fraditio delivery or ngks, coedits orrcorpoyeal operty, made by:
a. kxecu public instkihlent; or
b. ownersiiip'''iin the handsjof buy .
r feiZMIej ase—iPilghtf (C/V/6 , Art. 1501; DE
LEO nd Leqp, L bO'at 2321
Q: When is tit pp9tliFs ear despSe Worm? / Nip"'

ANS: Title is nd Irdnsf‘rre Rite d9pie n e of
1. Sale b non-ownerVie-. r tVvaki- cause it ha passed perfection
stage t trans 14 of titlyik.
Note: Th rational is etti.ella_t-43, ed).po hab4t (nobocif can dispose of that
which does of belpn m lc' icrod c,r
2. Pactum res aft orrit tr4.(contra ti of. title) — Express
reservation of o rs6ipf C/V/LIn3DTrio,
3. Contract to sell;
4. Sale on Acceptance / Trial prZinT7 atisfaction (CIVIL CODE, Art 1502) —
Ownership passes to the buyer only when:
a. He signifies his approval or acceptance to the seller or does any act
adopting the transaction; or
b. He does not signify his approval or acceptance to the seller but retains
the goods without giving notice of rejection, then if a time has been
fixed for the return of the goods, on the expiration of such time, and, if
no time has been fixed, on the expiration of a reasonable time.
Note: In '!Sale or Return," the ownership passes to the buyer upon delivery,
but he may revest the ownership in the seller by returning the goods within the
time fixed in the contract, or, if there is no time fixed, within a reasonable time
(CIVIL CODE, Art. 1502 (1)).
5. Implied Reservation of ownership:
a. Where goods are shipped, and by the bill of lading the goods are
deliverable to the seller or his agent, or to the order of seller or of his
agent — seller reserves ownership in the goods (CIVIL CODE, Art.1503
(2));
624
b. Where goods are shipped, and by the bill of lading the goods are
deliverable to the order of the buyer or his agent, but the possession of
the bill of lading is retained by the seller or his agent — seller reserves a
right to the possession of the goods (CIVIL CODE, Art. 1503 (3)); or
c. Where the seller of goods draws on the buyer for the price and
transmits the bill of exchange and bill of lading together to the buyer to
secure acceptance or payment of the bill of exchange, and the buyer
does not honor the bill of exchange (Here, the seller is the drawer and
the buyer is the drawee). If the buyer, as drawee, does not honor the
bill of exchange, he shall return the bill of lading. If he retains the same,
he acquires no added right thereby (CIVIL CODE, Art. 1503).
Q: What right does a buyer acquire in case of sale made by a non-owner?

ANS: In a sale made by the non-owner, the buyer acquires no better title to the goods
than the seller had (CIVIL CODE, Art. 1505). No one can give what he does not have —
nemo dat quod non baba Therefore, ev. f11 if a person be a bona fide purchaser, he
succeeds only to the rights of the vealSr U.S. v. Sotelo, G.R. No. L-9791 October 3,
1914). OA.
Exceptions: ,_
1. Owner is estopped or prec14,94.13.f bisricluct (CM& CODE, Art 1505);
2. Sale made by the registeregtr oiilezin....
:40ordance with registration
laws (CIVIL CODE; Art 1505);
3. Sales sanctiqed by judicial4r,rs tutory authority cgt k. i CODE, Art 1505);
4. Purchases iqp3qrchant's.Atirellairs or marketsfitv,3 de the thing must be on
display to maim iC •arttf the gob, s for sale to barrIco ery by the true owner
(CIVIL 90E,. Afp • 05); i arLd1 delivers a thing, and
5. Wheea per§on' who is fitkt
,'A owner sells
subWently;aViiiires title thereto? the title •apsesfiy oyantion of law to the
buyer cattp Art x!;434); tf li .."' s" %.f.,
6. When tile seitafig a vtlielgble 't1e which has no seen avoided at the time of
the sale (VVILYCOcig, Artil 506
7. Sale by co-owner ofwhole propeiprAl -ciefinite portion thereof, and
8. Special rightshgripaid seller (C telb0 )3E7Arts. 1526-1533).
t-k ,Em
-4olori4ri
*,
Q: What is the effect !:the sql1V of goods has a voidable title thereto but his title
has not been avoided at,L_ he ittrie of the sale?
ANS: Where the seller of VoW6'ds has a voidable title thereto, but his title has not been
avoided at the time of the sale, the buyer acquires a good title to the goods, provided he
buys them in good faith, for value, and without notice of the seller's defect of title (CIVIL
CODE, Art. 1506).
Q: Is possession equivalent to title as to movable properties?

ANS: Yes, the possession of movable property acquired in good faith is equivalent to a
title (CIVIL CODE, Art 559).
The exceptions are when:

1. Owner lost the movable; or
2. Owner has been unlawfully deprived of the movable.
Note: In these cases, the possessor cannot retain the thing as against the owner, who
may recover it without paying any indemnity, except when the possessor acquired it in a
public sale (2 TOLENTINO, Civil Code, supra at 309).
625
•-• •t
DAN
Q: In what condition is the vendor bound to deliver the thing sold?
ANS: The vendor is bound to deliver the thing sold and its accessions and accessories
in the condition in which they were upon the perfection of the contract. All fruits shall
pertain to the vendee from the day the contract was perfected (CIVIL CODE, Art. 1537).
Q: What are the remedies of a buyer if the seller delivers to him a quantity of
goods less than what he contracted to sell?
ANS: The buyer may:
1. Reject them;
2. If the buyer accepts or retains the goods so delivered, knowing that the seller
is not going to perform the contract in full, he must pay for them at the contract
rate; or
3. If, however, the buyer has used or disposed of the goods delivered before he
knows that the seller is not going to perform his contract in full, the buyer shall
not be liable for more than the fair value to him of the goods so received (CIVIL
CODE, Att. 1522).
..,,,,,,,,-- T i , 4..,,,,,,,_
Q: What are the remedie<Of t:Ije buyer jf t ejeller:delivers to him a quantity of
goods larger than whatlfe abntr3bted.to.sell v ./ 2.:"k'
ANS: If the seller deficers ta.theybuyer a quantity Ofgodas J,ir 04. than he contracted to
sell: 4" ''''''C''''--..
/ -e ."'*'-'m
1. The buynvijay cce i. the gqpdS-Apcluled in the co ntract and reject the rest;
2.. If The. bayel'aepepts he whcle of he goods sl delkced, he must pay for them
at thektralrate; r __.t.- --
,;•• ':e_. % (:.
1
3. If theLsalbjktrmatte iTifiaqi§iblhe buyer may reject ole of the goods
(C/V/t 'COO , Art. 1 22K - -- !Pi ,., - 2.,17`
be ‘• ,, ,
*.,‘ itu
Q: What are telr vii diet- he buyera i ii-
eq e seller liVers to him goods which he
contracted to elliand lit4 wit
.,6-5 7s..15 — al iffe0 description not
included in th contract? ,..,..\\\ 4,•(,-; eN.,, '-i
ANS: TheThe remedies are\ 'UN, %.:t. .,,„.,
1. The bu v may ‘cceptytfte)gbo,,,,s, refi\ e in &ordance with the contract
and rejed&the restkr S --;-7---''"-N.
2. If the subject matter ili ivitl eit - eP ab..pje t the whole of the goods
(CIVIL CODEN„ rt!iji,i ‘ ... -cv,
Q: What are the rules on tb'sat9L)f reAitl a 'e -

ANS: If the sale of real estate should i a statement of its area at the rate of
a certain price for a unit of measure or number
, ., 1. The vendor shall be obliged to deliver to the vendee, if the latter should
demand it, all that may have been stated in the contract; or
2. Should it be not possible, the vendee may choose between:
a. Proportional reduction of the price; and
b. Rescission of the contract, provided that the lack in the area is not less
than one-tenth (1/10) of that stated (CIVIL CODE, Art. 1539).
Q: What are the rules if any part of the immovable is not of the quality specified in
the contract?
ANS: The same rules above will apply if any part of the immovable is not of the quality
specified in the contract, even when the area is the same. The rescission in this case
shall only take place at the will of the vendee when the inferior value of the thing sold
exceeds one-tenth (1/10) of the price agreed upon (CIVIL CODE, Art. 1539).
Note: If the vendee would not have bought the immovable had he known of its smaller
area or inferior quality, he may rescind the sale (CIVIL CODE, Art. 1539).
626
Q: When shall the action prescribe arising from the sale of real estate mentioned
in Art. 1539?
A: Said actions shall prescribe in six (6) months, counted from the day of delivery (CIVIL
CODE, Art. 1543).
Q: What are the requisites for double sales?
ANS: The requisites are: (TOSC)
1. Two or more transactions must constitute valid sales;
2. They must pertain to exactly the same Object or subject matter;
3. They must be bought from the same or immediate Seller; and
4. Two or more buyers who are at odds over the rightful ownership of the subject
matter must represent Conflicting interests (VILLANUEVA, Law on Sales,
supra at 268; Spouses Roque v. Aguado, G.R. No. 193787, April 7, 2014).
Q: What are the rules of preference in double sales?

ANS: The rules of preference are:
1. Personal Property — first posses -P or •in good faith
2. Real Property ::Ti
_ is .
a. First registrant ingeFtfeit second buyer must register the document
in good faith; otiVrcyjsetp does not have a better right (Fudot v.
Cattleya Land .Inc,iGX.
,, el
016„...1Z 008, Se4te ber 13, 2007); if none,
ipm:44,.
then IP:' `41' C.'1 41,47V,
b. First possessor"in good4 h; if none, figriA"
c. Persoqpitholdest titI6 in ood faith (Martine Court of Appeals, G.R.
No. 1354-r May 2104 4
41 ?,
— ' '"
Q: When is the rulelen-dotiblnales inatplicable? I
ntto.
ANS: Article 1 "of the Civil Code has ,...
noV plication in the f•llowi g cases:
1. Not-the gr
eletegs are present
2. Theo differ -dontects l e of s are mad o13. e A)ersons, one of
them of being.-a. owner if theafroperty said Salera v. Spouses
Rodaje, ,o R #11900,1 gust#1, 2007);
3. Sales invoLing unregIstered landg(fict No. 3344);
4. Mere registraion dkr otta sale in one oes not give him any right over the
land if the ye' ffortSs not a
.ety. ny0
•.,4 _rldthe land, having previously
sold the sarnNto so body else, even i f11- 6-5arlier sale was unrecorded
(Radiowealth%anca o. v. Palileo, G.R. No. 83432, May 20, 1991);
5. The first sale occu1%. hen land is not yet registered and the second sale is
done when the land is already registered (Dagupan Trading Co. v. Madam,
G.R. no. L-18497, May 31, 1965);
6. When the property was already registered under the Torrens System, the first
buyer's registration of sale under Act No. 3344 is not effective for purposes of
Art. 1544 (Sps. Abrego v. De. Vera, G.R. No. 154409, June 21, 2004);
7. When the owner had previously sold his property (and dominion already
transferred) and thereafter executed a second sale in favor of another person,
the latter cannot acquire any right (DE LEON, Sales and Lease supra at pp.
280);
8. When the earlier transaction is a pacto de retro sale of an unregistered land
and the subsequent conveyance is a donation of the land in favor of another
by the vendor a retro (Spouses De Guzman v. C.A., G.R. No. L-46935,
December 21, 1987);
9. Where one sale is absolute and the other is a pacto de retro sale and the
period to redeem has not yet expired (Teodosio v. Sabala, 102 Phil. 118)
10. Where one of the sales is subject to a suspensive condition, which was not
complied with and the other is an absolute sale (Mendoza v. Kalaw, G.R. No.
L-16420, October 12, 1921);
627
11. Where one is sale and the other is an assignment of the right to repurchase
the same property (Dichoso v. Roxas, G.R. No. L-17441, July 31, 1962);
12. Where one transaction is sale and the other is a mortgage (Mamuyac v.
Abena, G.R. No. L-45742, April 12, 1939);
13. In a contract to sell, a third person buying such property despite the fulfillment
of the suspensive condition cannot be deemed a buyer in bad faith (Coronet v.
Court of Appeals, G.R. No. 103577, October 7, 1996).
Q: Who is a purchaser in good faith?

ANS: A purchaser in good faith is one who:
1. Buys the property without notice that some other person has a right to, or
interest in, such property; and
2. Pays a full and fair price for the same at the time of such purchase or before
he has notice of the claim or interest of some other person in the property
(Agricultural and Home Extension Development Group v. Court of Appeals,
G.R. No. 92310, Septembe 3,4992),
)- , .
Q: Who has the burden f rolif g the st to f akiluyerin good faith?
ANS: One asserting aso uyer—rn...ggoki afislicir value has the burden of
proving such status, 111'0 o s,, eyond a mere InVoceronpf4 e ordinary presumption
of good faith(KryseRqtyileveloprt o.196117, August 13,
2014). V \
A
Ct:;) zrg.N. .11.
Q: What is the jrror octri e? ,:el, ;J.\
1)1\
ANS: It is a co ai: ere e ery person ea ing wit r gister SIand 1.---, ay safely rely on
the correctnes 1.--th certifi to' Iip IPstkatOhere pr and no., y obliged to go
beyond the ce ifi f to dete ine i ridL tib-ri.iof th ' rope r(hop in v. Hizon, G.R.
lilLa
No. 204369, S pter to ,
. i..., ,
Q: When is th b y r eqt7e%• o exam' -• e• ',ate o Title.
ANS: When the exist r po 'Ma vifd (gate su 6icion 1 a reasonable man
.
to go beyond the resenttile a /to eag hose th preced01 it (Sps. Sarmiento
v. C.A., G.R. No. 1.2627, S pte AO . g 0 D.,.
i I- '-
Note: The general le is tie%bu,/ ry rl ihe fsn itle of the seller (AFP
Mutual Benefit Associalion-4&0-C•.GA.4%16.
!, 104 9, h 3, 2000).
\
Q: What is the effect of sale unr red an .
ANS: Under Act 3344, registration o in POfn s affecting unregistered lands is "without
prejudice to a third party with a better right", which means that mere registration does
not give the buyer any right over the land if the seller was not anymore the owner of the
land having previously sold the same to somebody else even if the earlier sale was
unrecorded (Acabal v. Acabal, G.R. No. 148376, March 31, 2005).
Q: What is-a condition?

ANS: It is an uncertain event or contingency on the happening of which the obligation of
the contract depends (DE LEON, Sales and Lease, supra at 374).
Q: What are the effects of non-fulfillment of condition?

ANS: The effects of non-fulfillment of condition are:
1. If the obligation of either party is subject to any condition and such condition is
not fulfilled, such party may either:
a. Refuse to proceed with the contract; or
b. Proceed with the contract, waiving the performance of the condition
628
2. If the condition is in the nature of a promise that it should happen, the non-
performance of such condition may be treated by the other party as a breach
of warranty (CIVIL CODE, Art. 1546).
Q: What is a warranty?
ANS: It is a statement or representation made by the seller of goods,
contemporaneously and as a part of the contract of sale, having reference to the
character, quality, or title of the goods, and by which he promises or undertakes to
ensure that certain facts are or shall be as he then represents them (Ang v. Court of
Appeals, G.R. No. 177874, September 29, 2008).
Q: What are the kinds of warranties?

ANS: The kinds of warranties are:
1. Express warranty — imposed by the parties. It can be:
a. Warranty relating to the contract or the transaction
b. Warranty relating to the opject of the contract
c. Warranty relating to,t0Nrty of the contract
2. Implied warranty — impqSdebla
*Lort. e
sw (DE LEON, Sales and Lease, supra at
377). 1-4.&
Q: What is an express warranty.'

ANS: It is an affirmation of facOor artylp relating to the thing, the
natural tendency of whicheaS induce:Ili buyer to purc is the thing and the buyer
thus induced, purchase" he same (D N, Sales and Lease supra at 378).
Q: What are the re uigites o ,Et6 expres arranty?

ANS: An express arran
1. Musp e an A irhiation of Not any promi e by the ler relating to the
U
subjliattk, e sale; `se,
2. TheILatural tende y ()Mich a ation or pshq s duce the buyer to
purchase the „ nd
3. The buyaWd", rc ases the jiiing 126Iying on such affirmation or promise (CIVIL
CODE, ArTh1546). V&A ,
•1, r.4 "4411;
iii
. ,...P2r.V9911
Q: What is an implied arrant •
ANS: An implied watr is at which the law derives from the nature of the
transaction or the relativ ion or circumstances of the parties, irrespective of any
intention of the seller to crea ele(VILL4NUEVA, Law on Sales, supra at 495).
Q: What are the kinds of implied warranties?

ANS: The kinds of implied warranties are as follows: (THIEF)
1. Implied warranty as to seller's Title (CIVIL CODE, Ad. 1548);
2. Implied warranty against Hidden defects or unknown encumbrance (CIVIL
CODE, Art. 1561);
3. Implied warranty as to the legality and Existence of assigned credit (Sonny Lo
v. CA, G.R. No. 149420, Oct. 8, 2003).
4. Implied warranty as to Fitness or merchantable quality (CIVIL CODE, Art.
1562).
Q: When is an implied warranty inapplicable?

ANS: Implied warranty is inapplicable in the following instances:
. 1. "As is and where is" sale;orwhen the vendor makes no warranty as to the
quality or workable condillo6 o'f:Itiegoods. In this case, the vendee takes them
in the condition in which they found and from the place where they are
located;
629
2. Sale of second-hand articles;
3. Sale by virtue of authority in fact or law (R. A. No. 7394, otherwise known as
the Consumer Act of the Philippines, Art. 68).
Q: To which does the warranty of the seller "that he has a right to sell" refer?
ANS: It refers only to the transfer of ownership at the point of consummation and not to
any representation as to ownership and the capacity to transfer the same at the point of
perfection (VILLANUEVA, Law on Sales, supra at 496).
Q: What are the requisites to recover under a warranty against eviction?

1. Vendee is deprived, in whole or in part, of the thing purchased;
2. Deprivation is by virtue of a final judgment (CIVIL CODE, Art. 1557);
3. Judgment is based on a right prior to the sale or an act imputable to the
vendor;
4. Vendor was summoned in Atte_suit.forAviction at the instance of the vendee to:
a. Enable the scjleidfd proye hits qaTriT,‘41,1,.
b. Avoid multiOliciqlsuitkaftdA/ 4%.
c. Satisfyedue prcges.,,;CC(4/2.60,2,,E,. rt. '558):•
5. No waiver orwarrIpqr,brthe vendee (DE1. EON, Pa' ership, supra at 129).
A
Q: What are uisites ..foro wlanit against niori-apparent burden or
servitudes? ,
ANS: The requO*6es are: ';3\ ,
r
'
1. Immo.tECGrebld is ncum ere fyii i non-apiarent burden or servitude not
mentpeed4 the ag penlary,,n e.:12T4f
2. Natu Ae n-appa? nt serVvdi ,.9cetitirden p such t at=ittritist be presumed
that tie of haveAtqiiired it e been awake thereof (CIVIL
CODiek60
\.(
Q: What are thkrequis
ANS: The•requisites are: tSHE-
1. Defect isleriouscirAnic(Q._L. grftlittV'.
a. TheNtddendellect-s.h "ulande sublesta m er unfit for the use for
which it4-ingpi di?trr
,,
b. The hiddeLvIeley sho0 d di' ilso, thpt ing's fitness such that the
buyer would ribt ave ach I it- dtild have given a lower price for it
had he been aware o ,
2. Defect is Hidden;
3. Exists at the time of the sale;
4. Vendee must give Notice of the defect to the vendor within a reasonable time
Note: Remedies must be brought within the period of six (6) months from
delivery of the thing, or forty (40) days from date of delivery in case of animals
(CIVIL CODE, Arts. 1571 and 1577).
5. No Waiver of the warranty (DE LEON, Sales and Lease, supra at 410).
Q: What are the requisites for breach of warranty in sale of goods to apply?
ANS: The requisites are: (IDE)
1. That the buyer sustained Injury because of the product;
2. That the injury occurred because the product was Defective or unreasonably
unsafe; and
3. The defect Existed when the product left the hands of the seller (Nutrimix
Feeds Corp v. Court of Appeals, G.R. No. 152219, October 25, 2004).
630
*F•1•••'
Q: What are the kinds of waivers?

ANS: The kinds of waivers are:
1. Waiver Consciente — voluntarily made by the vendee without the knowledge
and assumption of the risks of eviction. Vendor shall pay only the value which
the thing sold had at the time of eviction; and
2. Waiver Intencionada — made by the vendee with knowledge of the risks of
eviction and assumption of its consequences, in which case vendor is not
liable provided he did not act in bad faith (CIVIL CODE, Art. 1554).
Q: What are the buyer's options in case of breach of warranty by the seller?
ANS: The bUyer may, at his election:
1. Accept or keep the goods and set up against the seller, the breach of warranty
by way of recoupment in diminution or extinction of the price;
2. Accept or keep the goods and maintain an action against the seller for
damages for the breach of warranty;
3. Refuse to accept the goods, ar‘d maintain an action against the seller for
damages for the breach of warranty;
4. ReScind the contract of ,40'authefuse to receive the goods or if the goods
have already been received 40 them or offer to return them to the seller
and recover the price or ana4tfiereof
y„fb which has been paid;
Note: When the buyer4460:9405Id /peen granted a remedy in any of
abovementioried, nov9ther retrieciS)%cariihereIffegelgranted, without prejudice
to the provision ,gist secorepkagraph of Article 91 of the Civil Code.
Note: The inkra party mayeAse between the f, 011,cnent and the rescission
of the obligatldrbkith the payment of damages in either case. He may also
seek rescispiA,Vonfafter hek, as chosen fu fi4ent, if the latter should
becomarrptissitgetp.V/L CODE=, rt. 1191).
' se of bi-each of Oarra tel of quality
5. In the!ica in the absence of
spebigfteircubstkces showing ppximate da ARatgr amount, is the
A0-4-4 , eidetiVery to the buyer
difference between the vatue of,11 goods
and theyaltieThe woCildlfiave ad if they ha ered to the warranty
(CIVIL COOCOO rt. 99): 1
.
Q: What are the consequences of the buy'sjetestt. grir
n to rescind?
ANS: The contequen sce:
1. He shall cease fo be Iiaei for the price upon returning or offering to return the
goods.
Note: If the price art thereof has already been paid, the seller shall be
liab e to repay what has been paid and to return the goods; and
2. If the seller refuses to accept an offer of the buyer to return the goods, the
buyer shall be deemed to hold the goods as bailee for the seller,
Note: Subject to a lien to secure payment of any portion of the price which has
been paid, and with the remedies for the enforcement of such lien allowed to
an unpaid seller by Article 1526(C/V/L CODE, Art. 1599).
Q: When is the buyer not entitled to rescind the sale?

ANS: Should the goods have been delivered to the buyer, he cannot rescind the sale in
any of the fol owing instances: (KNoRe)
1. If he Knew of the breach of warranty when he accepted the goods without
protest;
2. If he fails to Notify the seller within a reasonable time of the election to rescind;
or
3. If he fails to Return or to offer to return the goods to the seller in substantially
as good condition as they were in at the time the ownership was transferred to
the buyer (CIVIL CODE, Art. 1599).
631
Note: However, if the deterioration or injury of the goods is due to the breach of the
warranty, such deterioration or injury shall not prevent the buyer from returning or
offering to return the goods to the seller and rescinding the sale.
E. OBLIGATIONS OF THE VENDEE

Q: What are the obligations of the vendee?
ANS: The vendee is bound to: (APECaLI)
1 Accept delivery, and
Pay the price of the thing sold at the time and place stipulated in the contract
3. Bear the Expenses for the execution and registration of the sale and putting
. the goods in a deliverable state (De Leon, Sales, supra at 435).
4. To take Care of the goods without the obligation to return, where the goods
are delivered to the buyer and he rightfully refuses to accept it (CIVIL CODE,
Art. 1587).
5. To be Liable as a cl2positd7rrffe'vol tarily constituted himself as such
(CIVIL CODE, Art. 158 ).
6.' To pay Interes) r-t, d MR thing and the payment of
the price inp o 9w n cat" s.
a. Intere t sppu
b. Efb etY) co at:Te receiOd byre‘vsn &fro tqe thing sold
C. V n g ' ty of dpauyeeXeon, a j les, u a -455)
Q: Can the bu er-rej of.goods

ANS: Yes, if th e41v of isAy,,ins gilments,unl e parties (CIVIL
CODE; Art. 15 3). 11111\
-1 .to
4-11-
Q: When are oodV ccepted
ANS: Goods a tere' d wh
1., the bu er inti odi e e th *cepte them
2. the go s have-peen
3. the busk does àny a t --re ichis 'nconsistent with the
ownership of the sell
4. or after a relsonak9 ods without intimating to.
the seller thatejecfe 585).
Q: What are the effects of a gr'ar totArace.Reno o the obligation of the debtor?
ANS: A period is a right, not an obligation, of the debtor. When unconditionally conferred
the grace period is effective without further need of demand either calling for the
payment of the obligation or for honoring the right. The grace period must not be likened
to an obligation, the non-payment of which, under Article 1169 of the Civil Code, would
generally still require judicial or extrajudicial demand before "default" can be said to
arise (Bricktown Dev't. Corp v. Amor Tierra Dev't Corp., G.R. 112182, December 12,
1994).
Q: How must a grace period provided fo'r in the contract of sale be construed?
ANS: When a grace period is provided for in a contract of sale, it should be construed
as a right, not an obligation of the debtor, and when unconditionally conferred, the grace
period is effective without further need of demand either calling for the payment of the
obligation or for honoring the right (Bricktown Development Corp. v. Amor Tierra
Development Corp., G.R. No. 112182, December 12, 1994). In the sale of immovable
property, the buyer has the right to pay even after the expiration of the period agreed
upon, as long as no demand for rescission of the contract has been made upon him
either judicially or by a notarial act (CIVIL CODE, Art. 1592).
632
F. BREACH OF CONTRACT
Q: What are the actions available for breach of contract of sale of goods?
ANS: The actions available for breach of contract of sale of goods are:
1. Action by the seller for payment of the price (CIVIL CODE, Art. 1595);
2. ActiOn by the seller for damages for non-acceptance of the goods (CIVIL
CODE, Art. 1596);
3. Action by the seller for rescission of the contract for breach thereof (CIVIL
CODE, Art. 1597);
4. Action by the buyer for specific performance (CIVIL CODE, Art. 1598); and
5. Action by the buyer for rescission or damages for breach of warranty (CIVIL
CODE, Art. 1599).
r
Q: When may an action for the price be exercised?
ANS: It may be exercised when:
1. The ownership has passed to the buyer and he wrongfully neglects or refuses
to pay for the price;
2. The, price is payable on a d'ay'ce ain and he wrongfully neglects or refuses to
lig,:t ...,-
pay for the price, irrespeetive,pt delivery or transfer of title; or
3. The; goods cannot rearli1010 Id for a reasonable price and the buyer
wrongfully refuses to accept - 4ypakefore the ownership of the goods has
4
poised, if Art 1596 isdpp in10 IMIISODE ...,0%. 1595).
Q: When may an actiottfelamageS)bsexercised?

ANS: It may be exercip: -- A
1. In case of vvrigigknegled or r sal by the bu eq toNaccept or pay for the

thing soldprOLAVot, Art. 15 „par. 1);
g
2. In amicel cutory 4ionrect, were the ownership in t e goods has not passed,
andfftsellertannot maintain ar action to recove i the price (CIVIL CODE,
Art.t695);.Prvfr .4.0.-1 •A n ,V,ef
\li ' Lfit
3. If the gpods,argAt yet} tifi sat the time tf- 11,Writract or subsequently
(Dg LEOltS210agd Lease, suRa at 389).
j
Q: What is the measufg ofLe damages
ANS: The measure ofSeklamag.eat '..directly and naturally resulting
in the ordinary course f,eventsltom the •uye s 'reac o contract. When there is an
available market for the (:)odsrie measure is, in the absence of special circumstances
showing proximate dams e sVpa different amount, the difference between the contract
price and thelmarket or current price at the time or times when the goods ought to have
been accepted, or, if no time was fixed for acceptance, then at the time of the refusal to
accept (CIV./.4.00DE, Art. 1596).
Q: When may the seller totally rescind the contract of sale?

ANS: A seller may totally rescind the contract of sale under the following instances by
giving notice of his election to do so to the buyer, provided that the goods have NOT
been delivered to him:
1. The buyer has repudiated the contract of sale, or
2. The buyer has manifested his inability to perform his obligations there under,
or 1 '
3. The" buyer has committed a breach thereof (CIVIL CODE, Art. 1597).
Q: What does the term "seller" include?

ANS: The term "seller" includes:
1. An agent of the seller to whom the bill of lading has been indorsed;
2. A consignor or agent who has himself paid, or is directly responsible for the
price; or
633
It„vty:
;
/VOL 1.
2019
. Any other person who is in the position of a seller (CIVIL CODE, Arts. 1525-
1535).
Q: Who is deemed to be an unpaid seller?

ANS:, The seller of goods is deemed to be an unpaid seller when:
1. When the whole of the price has not been paid or tendered; or
2. When a bill of exchange or other negotiable instrument has been received as
conditional payment, and the condition on which it was received has been
broken by reason of the dishonor of the instrument, the insolvency of the
buyer, orotherwise (CIVIL CODE, Art. 1525).
Q: What are the remedies of an unpaid seller?

ANS::The remedies of an unpaid seller are: (R31)
1;, Lien on the goods or right to Retain them for the price while in his possession
(CIVIL CODE, Arts. 1527-1529);
2: Right of stopping the goodsjr6tranap. in case of Insolvency of the buyer
(CIVIL CODE, Art. 1.520)r
Right of Resale_RIVIL ODE, rt 159 ;
4. Right to Rescirrda' C ,,V./LE..60 • A
,,.46
Q: When may ao peossessd e-agaTd'fit:1?--...,„,
ANS: it may be ie 9giseci, heerWIC3) .scp.
1 The g dsil'e air be sold Withatft ariSKstipul tion s o cre it;
2. The g/ods h e be n sold on din, but the t rm o e i h s expired; or
3 Thehjur'----43 comes nso ven II~i GOD • rt. 152
7ff,
• /
Q: What are t isites f r a stOtiegq-Tql.ig ods n trans it?
ANS: The req (T \--iu1-1
,"11
1.` Goo tns e nsit -
Buye Insbiv CI
3i Seller List be _np
Lir . Seller St gith1/4
a. A wally taiZ s d; or
o. Giv oficep AVM r 14er erson in possession of -
the goods L Da...old:45g?
The seller must'5 rr r the e o ra ent of title, if any, issued by
the carrier or bailee CO , 5 _ , '.ar. 2); and
The seller' must bear the _xp= elivery of the goods after the exercise
of the right (CIVIL CODE, Art. 1532, par. 1).
Q: When may a special right of resale be exercised?

ANS: It may be exercised only when the unpaid seller has either a right of lien or has
stopped the goods in transitu and under any of the following conditions: (PED)
1. Goods are Perishable in nature;
2. The right to resell is Expressly reserved in case the buyer should make a
default; or
3. The buyer Delays in the payment of the price for an unreasonable time (CIVIL
CODE, Art 1533).
Q: When may the special right of rescission be exercised?

ANS: If the seller has either the right of lien or a right to stop the goods in transitu and
under either of 2 situations:
1i Where the right to rescind on default has been expressly reserved; or
2. Where the buyer has been in default for an unreasonable time (CIVIL CODE,
Art. 1534).
634
DAN
Q: May an unpaid buyer exercise the aforesaid remedies granted to an unpaid
seller?
ANS: Yes. Under the circumstances in Art.1599 of the Civil Code, where the buyer is
entitled to rescind the sale and elects to do so, if the seller refuses to accept an offer of
the buyer to return the goods, the buyer shall thereafter be deemed to hold the goods as
bailee for the seller, but subject to a lien to secure payment of any portion of the price
which has been paid, and with the remedies for the enforcement of such lien allowed to
an unpaid seller by Article 1526 of the Civil Code.
Q: When is' there automatic rescission in the sale of movables?

ANS: There is automatic rescission in the interest of the seller, if the buyer, upon the
expiration of the period for delivery of thing:
1. Should not have appeared to receive it; or
2. Having appeared, should not have tendered the price at the same time (CIVIL
CODE, Art. 1593).
Q: When is there anticipatory breac

ANS: Seller, may sue for RESCISIt) e following concur: (PNG)
1. There is delivery of frog':
2. Vendee has Not yet padird t ce• nd
3. Vendor has reasonable Grci ear e4(9ss of pyserty and loss of price.
Note: When. there is no such redcon% tfrealsigrshall be observed (when
the vendee does not comply whatli cumbent upon Ktrn) CIVIL CODE, Art. 1591).
Q: When is'suspensiortgipaymer), ticipation of bre applicable?

ANS: It is applicable whenattige
1. The ven ceirs diegyiked in.poss sion or owne f the thing bought; or
2. Ven.deehas re_ sonable grotqd ear that his ssionor ownership would
be ilTerikra a vindicatory on or a fo ortgage) (CIVIL
CODE, Art. 1590 Pi
Q: What is the effeCtekai ure on thee pa of buyer to pay the price?

ANS: As a generalltle., the vendor may scission of the contract if the vendee
failed to pay the agr4t4pnce (CIVIL, f 7L 494) The sale of real property,
however is subject tot fielerties and to the provisions of
Art. 1592 which provIlOs for riu Spayment of the purchase price as a resolutory
condition (DE LEON, Sales4 n Lease, supra at 459).
Note: The law uses the Ara e "even though", emphasizing that when no stipulation is
found on automatic rescission, the judicial or notarial requirement still applies (Irifigan v.
Court of Appeals, G.R. No. 129107, September 26, 2001).
Q: May installment payments made by the buyer in a subdivision or condominium

project be forfeited?
ANS: No. No installment, payment made by the buyer in a subdivision or condominium
project for the lot or unit he contracts to buy shall be forfeited in favor of the owner or
developer when the buyer, after due notice to the owner or developer, desists from
further payment due to the-failure of the owner or developer to develop the subdivision
or condominium project according to the approved plans and within the time limit for
complying with the same (P.D. No. 957, otherwise known as the Subdivision and
Condominium Buyers' Protective Decree, Secs. 23-24).
635
VOL 1.
2019
Q: What is the remedy of the buyer in case of failure of seller to deliver?

ANS: The buyer may seek an action for specific performance without giving the seller
the option of retaining the goods on payment of damages. The judgment may be
unconditional, or upon such terms and conditions as to damages, payment of the price
and otherwise, as the court may deem just (CIVIL CODE, Art. 1598).
Q: What are the remedies of the buyer in case of breach of seller's warranty?
ANS: The buyer may, at his election, avail of the following remedies: (SARR)
1. Recoupment- accept the goods and Set up the seller's breach to reduce or
extinguish the price;
. Accept the goods and maintain an action for damages for breach of warranty;
3. Refuse to or the goods and maintain an action for damages for breach of
warranty; or
4. Rescission - rescind the contract and refuse to receive the goods; or if goods
have already been received, return them and recover what was paid or any
part of it concurrently withsgurn:or.imme,diately after it.
Note: These are ALTERNATAtElemecitesT wititopt'pr,ejudice to paragraph 2 of Article
1191of the Civil tCode w,hic 1311:1videedliht zid\paOy Olex still seek rescission after
choosing specific performafialifihelatter•is,iripossifole (CIVI CODE, Art. 1599).
v 0,0 -
Q: How is the amOn tpe Isas.irraardtbreacti of.yV.4rarlyof quality?
ANS: Such loss,in t" ende- of sRecidllcirciirpstankess4owirm koximate damage of
a greater amount, is 6 diyerencebet4en(Ithe vale olt:ttie ootds at the time of
delivery to the Et.yer d th value thyi.Wbuld have ad if th iiabl, answered to the
warranty (C/VI C)Dg, Art. 1 99)—
•''"?.:Pr
Q: When is rescission by th buyerlic#M1q* ed? ice.1
ANS: It is notilirvikcin t owing inaNti i§:
1. If the, buye acc abhct:f warranty without
protedp
2. If he fatls to no of his 'election to rescind;
or
3. If he fairy() ret r9V-csp urp' Gds in ubstantially as good
condition as4hey w,er t e6Ftfie rantfevf • wnership to him (CIVIL
• CODE, Ad. 15991. Sh Tets - ;
Q: What are the rights and obligationslfiA case of rescission?

ANS: The rights and obligations ofZEtyera s follows:
1. The buyer shall cease to be liable for the price, his only obligation being to
return the goods;
2. If he has paid the price or any part thereof, he may recover it from the seller;
3. He has the right to hold the goods as bailee for the seller should the latter
refuse the return of the goods; and
4. He has a right fo-have a lien on the goods for any portion of,the price already
paid which lien he may enforce as if he were an unpaid seller (CIVIL CODE,
Art. 1599).
Q: What is a sale by description?

ANS: Sale by description occurs where a seller sells things as being of a particular kind,
the buyer not knowing whether the seller's representations are true or false, but relying
on them as true; or, as otherwise stated, where the purchaser has not seen the article
sold and relies on the description given him by the vendor, or has seen the gciOds but
the want of identity is not apparent on inspection. (DE LEON, Sales and Lease supra at
pp. 111)
636
(1.7:7
.e 5"Z'
.4,•4'.;2,-;:r:"
1,1,.. ..„
t =,
BEDAI •
W . w1..CtqlSo6U.A....04•;,.., ;... .„, .„,
... . ravz*e.,....-s-..i.,,,i
i ...S, ..me..,A.... • 1,
Q: What is a sale by sample?

ANS: To constitute a sale by sample, it must appear that the parties contracted solely
with reference to the sample, with the understanding that the bulk was like it. But a mere
exhibition of a sample by the seller in the absence of any showing that it was an
inducement of the sale or formed the sole basis thereof, does not amount to a sale by
sample as where the quality of the articles to be furnished is expressly described in the
contract without reference to the sample or the parties agree that the goods ordered
shall differ'from the sample in some particular matter. Whether a sale is by sample is
determined by the intent of the parties as shown by the terms of the contract and the
circumstances surrounding the transaction. (DE LEON, Sales and Lease supra at pp.
111)
Q: In a sale of goods by description or by sample, when can a buyer demand

rescission?
ANS: The buyer may demand rescission:
1. In a contractòf sale of goods byldescription OR by sample, if the bulk of the
goods do not correspond wi1.1iAtildescription OR sample; or
2. In a contract of sale of g015444,description AND sample, if the bulk of the
goods do not correspon4:06ttleilescription AND sample (CIVIL CODE Art.
1481). -
Q: What are the requisites forittie keifilicatio-OfgReclertle

—'
4' ' 100
,
ANS: The requisites are as161rOws: (CP1F
1. Contract of Sdlet /
2. Personal proilerty‘
3. Payable on lqstallrrontd; and
4. In the th0cond and tftg;d remedies, that t ere as been a Failure to
paytVeor mminstallmentglyCi
—Nh
IL CODE, Are 148 ).
Q: When is Recto Law i;nteplicayAg

ANS: The RectoUyv the''=. lowing: (Pe- o-Re)
1. Sale of P'agbnal koperty)payaffl in straight terms - When there is an initial
paymentAd.the balance is payable '• the future (Levy Hermanos, Inc. v.
Gervacio, G.14,No046306, Odd 9;
2. Sale or Mortg0 of real staler
3. Action for Replevin; 4te
4. Contracts to sell *Movables (Villanueva, Law on Sales, supra at 381).
Q: What are the remedies of the buyer under the Recto Law?
ANS: Under Article 1484 or the Recto Law, in a contract of sale of personal property the
price of which is payable in INSTALLMENTS, the vendor may exercise any of the
following remedies: (FCF)
1. Exact Fulfillment of the obligation, should the vendee fail to pay;
2. Cancel the sale, should the vendee's failure to pay cover two or more
installments; OR
3. Foreclose the chattel mortgage on the thing sold, if one has been constituted,
should the vendee's failure to pay cover two or more installments. In this case,
he shall have no further action against the purchaser to recover any unpaid
balance of the price. Any agreement to the contrary shall be void (CIVIL
CODE, Art. 1484).
Note: The remedies under Article 1484 have been recognized as alternative, not
cumulative, in that the exercise of one would bar the exercise of the others (Nita
Motor Sales Corporation v. Niu Kim Duan, G.R. No. 61043, September 2, 1992).
637
Q: Does the vendee have a cause of action for rescission before final judgment?
ANS: No. Under Article 1590 of the Civil Code, the vendee has no cause of action for
rescission beforeF final judgment; otherwise the vendor might become a victim of
machinations between the vendee and the third person. It is applicable in the following
cases:
1. Where the vendee is disturbed in possession or ownership of the thing bought;
or
2.' Vendee has reasonable ground to fear that his possession or ownership would
be disturbed (by a vindicatory action or a foreclosure of a mortgage).
Note: In both instances, the vendee may retain only the price that has not been paid to
the vendor. He is not entitled to recover what has already been paid.
Q: When does the vendee have no right to suspend payment?

ANS:, he vendee has no right to suspend payment: (SPAFC)
1. If the vendor gives Security for the return of the price in a proper case;
2. If it has been stipulated thataotwithstArding any such contingency the vendee
must make Payment;''`"'' I T
If the disturbancplta rrte e Ackof,tre
— .4. Isibr
.4,
Note: There"."" ..:01'6 e:..
i--auto.f.rtrespass ben bthel-tfii d person claims no right
whatever 1 it--- %.;„
If the verylee paidtirp715e--...,_
If the viiklbr? c used Itl-)e tturb,ance "br d npepo Cease (DE LEON,
1
Sales fad rb e, supra at 457)4 L A
Note: When e disturbance is.,,b&Upd by no -appaceplPrxitude, the remedy
is resciOrdninot supension Or payment pvt CODEaai 560).
i44-1 :ca-'-:.2,.111111 4:V
Q: What are t e racqsites for the kinf:atiolliof the
ANS: The req jsit8s.tfor M Law tkapflrare: (RD
1. ', Trania9tp D,k cts inyol ngsttle sjai finOnbiri of !leaf estate on
installIn'ent payrmentst1rk Ludiii4 r aiiii0tiaf on °minium apirtments; and
2. , Buyer Vefaul in NpdY '4—of sigke ,_ clihY ins Ilmente (R.A. No. 6552,
othetwi e;know s th Re ty.,Inztaifirfell ct, Se 3).
Q: When is the Maceda Lar ri,edeF7 s. z\,

ANS: it is applicable in't
e l-66 i g irrstancesf"'-
1.. Contract of sale;
2. Contract to sell (VIL NLIEry.,f1 ,..,_.,...
r 7.0.„,a e , supra at 414); and
3. Financing'transactions.
Q: When is the Maceda Law inapplicable?

ANS: It is inapplicable in the following instances: (CASI)
1. Sale covering Commercial buildings (and commercial lots by implication); -
2. Sale to tenants under Agrarian reform laws;
3., . Sale of larids payable in Straight terms; and
4. Sale covering Industrial lots (R.A. No. 6552, Sec. 3).
Note: The enumeration is not exclusive (VILLANUEVA, Law on Sales, supra at 415-
416).
638
Q: What are the rules if the buyer has paid installments?
ANS: The rules are:
At least 2 years of Installments Less than 2 years of installments
1. There shall be one (1) month grace 1. The seller shall give the buyer a
period for every one (1) year of grace period of NOT less than sixty
installment payments made (R.A. No. (60) days from the date the
6552, Sec. 3); Note: This right shall installment became due. If the buyer
be exercised by the buyer only once fails to pay the installments due at
in every 5 years of the life of the the expiration of the grace period, the
contract AND its extensions, if any seller may cancel the contract after
(R.A. No. 6552, Sec. 3). thirty (30) days from receipt by the
2. Actual cancellation can only take buyer of the notice of cancellation or
place after 30 days from receipt by the demand for rescission of contract
the buyer of the notice of cancellation by a notarial act (R.A. No. 6552, Sec.
or demand for rescission by a n9tArial 4); and
act and upon full payment of 00044 2. The buyer shall have the right to sell
t
surrender value to theAlootall his rights or assign the same to
(Olympia Housing v. Pqril, iroj I another person OR to reinstate the
Travel Corporation, G.R. No41 4 (1:9r, contract by updating the account
gym. 0,4m
January 16, 2003); .eip." *II. ir;5rz,-,. ci,
nrIgiati prace period and before
Note: The seller shall efund tonh ac-tafftiiigation of the contract
buyer the cash statider value ofd (R.A. No. 6042‘Sec. 5);
payments on thelirpOrty equvalen 3. The buyersall have the right to pay
to 50% of the tote ppontsInadeg in advana a$ y stallment or the full-
After five (5)dears4fifotallments-T unpaid b5lanpe o the purchase price
there shall;154ean additional 5%,exe any Um" wit 'but i terest and to have
year bueatt to 4b.led 90% of lhe — such a the purchase
total paympntrthTdelk. „ A. ad ...055 pricrfto e certificate of
Sec. 3). % kiuvek 1 title coVenn operty (R.A. No.
3. The buyer stralltafM right 6 se 14 6552, Sec. 6).
his rights orTtsgign 'e same t Note: Down payments, deposits or
another person 0 instate the ps= 9 the contract shall be included
contract by upd CCQ 119:0tion of the total number of
during the grace nd before installment payments made.
actual cancellation:is e' contract
(R.A. No. 6552, Sec.'5)
The buyer shall have the right to pay in

adv6nce any installment or the full-
unpaid balance of the purchase price
any time without interest and to have
such full payment of the purchase price
annotated in the certificate of title
covering the property (R.A. No. 6552,
Sec. 6).
Q: What is the operative act to effect the cancellation of the contract of sale
covered by the Maceda Law?
ANS: The payment of refund will be the operative act to make effective the cancellation
of the contract (Layug v. IAC, G.R. No. 75364, Nov. 23, 1988).
639
G. EXTINGUISHMENT
Q: What are the causes for the extinguishment of the contract of sale?
ANS: Sales are extinguished by: (PaLoCo3 - PARe-FuN)
1. Same causes as in other obligations (CIVIL CODE, Art. 1231).
a. E2yment or performance of obligation;
b. Loss of the thing due;
c. Condonation or remission of debt;
d. Confusion or merger of rights;
e. Compensation;
f. Prescription;
g. Annulment;
h. Rescission;
i. Fulfillment of a resolutory condition; or
j. Novation (CIVIL CODE, Art. 1231).
2. Redemption.
The two kinds of redemption.'ar'''''''''
a. ConventiopPr g j`k
b. Legal 46
\
Q: What is conventiottalredeffiptio
.04
ANS: It is the rigV, lc f ie yeti' or resers—tn iii-ns itkt-rnyuire the property sold
provided he retum t thr ven ee: ((PEON • 't
.ilirL :A\
1. Price df the s le. /
2. Experfse f gm co tract.
3. Any Ot,ber le ipmatq paymentsredeltpspfor ,
4. NecerssaTile periest mad4riethe, ifiln4-solcit;,And
5. Usef I.e e se e orANKtiiitig018 (CI .17C9DE,Wa 601 and 1616).
Q: What are t Osp to Purchase?

ANS: The distinctions
Right to Redeem I Option to Purchase

As to the Nature
Not a separate contracV.wit-rnr ly part.°
a main contract of sale
As to the Consideration
Does not need its separate consideration To be valid, it must have a consideration
in order to be valid and effective separate and distinct from purchase
price
As to the Maximum Period for Exercise of Right
Cannot exceed ten (10) years May be beyond ten (10) yeais
As to How Exercised
There must be a tender of payment of the May be exercised by notice of its
amount required by law, including exercise to the offeror
consignment thereof if tender of payment
cannot be made effectively on the buyer.
(DE LEON, Sales and Lease, supra at 488).
640
;',..edfr,. •;;;..
Q: What is the period of redemption when no period of payment is agreed upon?

ANS: It shall last four (4) years from the date of the contract (CIVIL CODE, Art. 1606).
Q: What is the period of redemption when there is a period of payment agreed

upon?
ANS: The Period cannot exceed ten (10) years (CIVIL CODE, Art 1606). If it exceeds
ten (10) years, the agreement is valid only for the first ten (10) years.
Note: When a period of redemption is agreed upon by the parties in a sale a retro,
although the Stipulation as to period may be unclear or void, it is the 10-year period and
not the 4-year period that shall apply (Tayao v. Dulay, G.R. No. L-21160, April 30,
1965).
Q: What is the effect when the period of redemption has expired?

ANS: In the grant of 30-day redemption right in case of litigation, when the period of
redemption` has expired, then ipso jure the right to redeem has been extinguished.
However, even when right to redeem hastpired, and there has been a previous suit on
the nature of the contract, the selleriK still exercise the right to repurchase within
thirty (30) ,ays from the time fina1,049190 was rendered in a civil action on the basis
that the contract was a true sale wi'ti ;rigI tiVI .epurchase (CIVIL CODE, Art 1606).
Note: This is not applicable to abgOl(tterske: his is applicable only where the nature or
character of the transaction, as Aptiailwtfo. pactok,cle retro sale or equitable
mortgage, was put in issue befdre lifetcoLifflAbd alWohseng, G.R. No. 146651,
August 6, 2002). 't71• 0'
"-4
If
,.. A
Q: What should the vet do' do in older o exercise his rig' ft to repurchase?
ANS: The vendor shogjd atprnko the ven ee:
1. The pricgatthe stikf itm
2. The dkrenses.ot the contraahan her legitimi expenses; and
3. Thate- des,„szApkusefol expe s madeon ihg.solal C VIL CODE Art
161W ' " k, }LL`
r- 5i;
k
Q: What is' the efftbtlf4heigendorfaile. o comply with the provision of Art. 1616
in exercising his Wahl to re itrchase? ... '- ,
ANS: In case of real pr e the cons° atm : ;'ow
o in the vendee by virtue of
the failure Of the ven 9r to colvffilYfei • Anlai§ioriFjOf Article 1616 shall not be
recorded-in-the Regist of Propesty without a judicial order, after the vendor has been
duly heard (CIVIL CODE607).
Q: Under 1607, how shall the consolidation of ownership in the vendee a retro be
effected? ,
ANS: Such consolidation shall be effected through an ordinary civil action, not by a
mere motion, and the vendor a retro should be made a party defendant, who should be
served with summons in accordance with Rule 14 of the Rules of Court and failure of
the court to serve summons is sufficient cause for attacking the validity if the judgment
and subsequent orders on jurisdictional ground (Tacdoro v. Arcenas, L-15312,
November 29, 1965).
Q: Against whom may the vendor bring his action for redemption?
ANS: The vendor may bring his action against every possessor whose right is derived
from the vendee, even if in the second contract no mention should have been made of
the right to repurchase, without prejudice to the provisions of the Mortgage Law and the
Land Registration Law with respect to third persons (CIVIL CODE, Art. 1608). The
vendor a retro may also register his right to repurchase under the Land Registration Act
and may be enforced against any person deriving title from the vendee a retro (Vda. De
Rigonan v. Derecho, G.R. No. 159571, July iq, ?Qcq. The vendor shall respect the
641
.'",•:::',':•4•:4?itiv77;;g1:1••':,..,:;:. 7
leases which the vendee may have executed in good faith, and in accordance with the
custom of the place where the land is situation (CIVIL CODE, Art. 1618).
Q. What are the rules regarding the right of redemption over undivided immovable
properties?
ANS: The rules regarding the right of redemption over undivided immovable properties
are:
1. The vendee of a part of an undivided immovable who acquires the whole
thereof may compel the vendor to redeem the whole property, if the latter
' wishes to make use of the right of redemption (CIVIL CODE, Art. 1611).
2. If several persons, jointly and in the same contract, should sell an undivided
immovable with a right of repurchase, none of them may exercise this right for
more than his respective share (CIVIL CODE, Art. 1612).
3 If the person who sold an immovable alone has left several heirs, each of the
latter may only redeem the part which he may have acquired (CIVIL CODE,
Art. 1612). ,,,,,,,,.........
4. In case of #2 and # ethe ven eeimay d emad of all the vendors of co-heirs
that they come to n akeemet dpoPtyeppgrollese of the whole thing sold;
and should t efOittp.ilo• othe-vendee.can bt.bNompelled to consent to a
partial red pkonNg / CODE Art. 1612) ' .).
5. Each of 9whd-Tay-have„,,,Fiolitqlis 9, ,Tre separately, may
indepe rciase theiElght-Af reRurchaste at,,.r.q4dshis own• share, and
the vepdee not oompealhim6:to redeem the wliolq property pia CODE,
Art. 16 4). ,..,yiih
, \-I
,.1,.
___ \ 1
If the es de shoul, e,ave sevep ejls,.. e ction tovgjerption cannot be
brou [if-against eaci ortiferke iiierlricirAis own• share, vvtlether the thing be
undi id81 13i it has been perti tied mbng t em (C/thb.-600 E, Art. 1615).
1 J
Q: Whatis thkightpr lecA
ANS: The right toteisbbrogat siand conditior stipulated in the
contract, in the pace ofDa
ne v) ,DA)
1. Purchase;
2. Dation inNkaymen , °I P',•
3. Any other r nsactioiN !ja'e`rsh by onerous title (CIVIL
CODE, Art.
‘164‹ 9 IN.M
9) 0
Q: What are the rules on leg 1=1- -Lmpti rt. A-
Should any of the heirs sell his hereditary rights to a stranger

before the partition, any or all of the co-heirs may be subrogated
As among to the rights of the purchaser by reimbursing him for the price of
CO-HEIRS the sale, provided they do so within the period of one month from
the time they were notified in writing of the sale by the vendor
A co-owner of a thing may exercise the right of redemption in case
the shares of all the other co-owners or of any of them are sold to
a third person. If the price of the alienation is grossly excessive,
the redemptioner shall pay only a reasonable one. Should two or
As among
more co-owners desire to exercise the right of redemption, they
CO-OWNERS
may only do so in proportion to the share they may respectively
have in the thing owned in common (CIVIL CODE, Art. /620).The
right of redemption of co-owners excludes that of adjoining owners
(CIVIL CODE, Art. 16231 par,2),
642
Ifelf:jr:VM;77Aff
A co-owner of a thing may exercise the right of redemption in case

the shares of all the other co-owners or of any of them are sold to
a third person. If the price of the alienation is grossly excessive,
the redemptioner shall pay only a reasonable one. Should two or
more co-owners desire to exercise the right of redemption, they
may, only do so in proportion to the share they may respectively
As among
have in the thing owned in common (CIVIL CODE, Art. 1620). The
ADJOINING
right of redemption of co-owners excludes that of adjoining owners
OWNERS of
(CIVIL CODE, Art. 1623, par.2);
RURAL LAND
Note: However, a co-owner may exercise the right of redemption
only when part of the community property is sold to a stranger.
When the portion is sold to another co-owner, the right does not
arise because a new participant is not added to the co-ownership
(Fernandez v. Spouses Tarun, G.R. No. 143868, November 14,
2002).
Whenever a piece rrban land which is so small and so situated

that a majorOialaereof cannot be used for any practical
purpose withiaqa$Able time, having been bought merely for
speculation, isfalicpWe re-sold, the owner of any adjoining land
As among
has .a.,right ot,iiretOtio • MR , easonakie price. If the re-sale has
ADJOINING
been beL feeted, thtb nanf) 75161-' land shall have a right
OWNERS of.
of regrafirition, also a a reasonable pric When two (2) or more
URBAN LARD
overspf adjoini ds wish to exercisee right of pre-emption
or redetnption,,,t e d ner whose in* lieckl use of the land in
it- .4'0,4.
puesticmappears bes justified shall ice prerrd (CIVIL CODE,.
OArt. : 1622 )11.
tion
tby a de should..2 ther incorporeal
t_
Redemption • , .
itigationVe sot. by thea c'
d rd person (CIVIL
by Debtor
CODE Art. 1674)1
Q: What are the distiraions• etween afre718 i and Pre-emption?

ANS: The distinctions are as follows.,w, T4
- .,411—
' ztcg
Pre-Emption Redemption
As to when the right arises:
Arises before sale Arises after sale
As to the Right to Rescind:
No rescission because no sale as yet There can be rescission of the original
exists sale
As to'where the action is directed:
The action here is directed against Directed against the buyer
prospective seller
As to Effect:
The effect of redemption is to The effect is to prevent the birth .or

extinguish a contract that has already perfection of a contract
been perfected or even consummated
(5 PARRS,' Civil Code, supra at 293)
643
Q: Within what period must the right of pre-emption or redemption regulated by
Articles 1620 to 1622 be exercised?
ANS: The right must be exercised within 30 days from the notice in writing by the
prospective vendor, or by the vendor, as the case may be (CIVIL CODE, Art. 1623).
Q: Wben must the equity of redemption be exercised in case of judicial

foreclosure?
ANS: The defendant-mortgagor is given a period of not less than 90 days nor more than
120 days "from the entry of the judgment" within which to exercise the equity of
redemption (RULES OF COURT, Rule 68 Section 2).
Q: When must the right of redemption be exercised in case of extra-judicial

foreclosure?
ANS: The right must be exercised within one (1) year from the date of registration of the
certificate of sale (ACt 3135, Sec. 6).While the right of redemption of one year is retained
for both judicial and [extrajudicial foregtosureAttmception is now created under Section
47 of the General Sanking LoPcif".2000t irgthe,catetokextrajudicial foreclosures where
the mortgagor is a furidicpierskiredelystioki Vavi 'ailaidle,prily until the registration of
the certificate of forectogi4'414, Ityllich:shallAt no more than three (3) months after
foreclosure, "whicheArr•is 7s,agier''' (R.A. No. 8791Ntkerwiae,Iknown as The General
Banking Law of 2000,AS6047Jr-----77-----...„ 'er
# .,/ ,-_,...
irki>';e4f ID
Q: When may redem Jon bl madenn algredlosure
A\ Ni t
a rural bank?
ANS: If the la ' is in 'Nag d to a rurplfienk, mortgagor tr
e'likem within two (2)
years from the, foreclosure or trorp the registration of tt eliffs certificate of
sale at such fOre os re if tile prbl* " int:0re 06 or is ver 444 respectively, by
Torrens 'Title. ortga tor failiflq7exercise suci/ right, gei-or hIs heirs may still
repurchase wi earscfiii expiratillfthOe two-ye r r de ption eriod pursuant to
Section-119 of he rtiNic LAV , Act (Rural /3 Ilk of i-Goti of Appeals, G.R.
Liz
No. 83992, Jantilrk g , 1991)..?e . 1
, 1 ' /r% ?
. --;, 1 ,/.4
%'
Q: What is an ecluitable mortg g'd ••
ANS: An[equitableortgaXis ofie91,110Taill Iv in so e formality, or form or

words, or other requ sites de -b.rac,
le 1
11itat
--c1=0,
.. les reveals the intention of
the parties to charge ea( e as-secari 4 tit, and contains nothing
impossible or contrary to ngulhViiddabr4 f 2 (Lis, G.R. No. 115033, July
11, 1997).1 II/ 1..r0-
Q: When is a contract of sale with right of repurchase deemed as an equitable

mortgage?
ANS: The contract shall be presumed to be an equitable mortgage, in any of the
following cases: (UPERTOD)
1. When the price of a sale with right to repurchase is unusually inadequate
(CIVIL CODE, Art. 1602 Par.1; Cachola v. Court of Appeals, G.R. No. 97822,
May7, 1992); ,
2. [When the vendor remains in Possession as lessee or otherwise (CIVIL CODE,
Art. 1602 Par.2; Capulong v. Court of Appeals, G.R. No. L-61337, June 29,
1984);
3 When upon or after the expiration of the right to repurchase another instrument
extending the period of redemption or granting a new period is executed
(CIVIL CODE, Art. 1602 Par.3; Lacorte v. Court of Appeals, G.R. No. 124574,
February 2, 1998);
4. When the purchaser Retains for himself a part of the purchase price (CIVIL
CODE, Art. 1602 Par.4; Camus v. Court of Appeals, G.R. No. 102314, May 26,
1993);
644
ZVOL 1.
2019
5. When the vendor binds himself to pay the Taxes on the thing sold (CIVIL
CODE, Art. 1602 Par.5; Lumayag v. Heirs of Nemeno, G.R. No. 162112, July
3 2007); or ,
6. Id any Other case where it may be fairly inferred that the real intention of the
parties is that the transaction shall secure the payment of a debt or the
performance of any other obligation (CIVIL CODE, Art. 1602 Par. 6); or
7. In case of Doubt, a contract purporting to be a sale with right to repurchase
shall be construed as an equitable mortgage (CIVIL CODE, Art. 1603).
Note: The provisions of Article 1602 shall also apply to a contract purporting to be an
absolute sale (CIVIL CODE, Art. 1604).
Note: The presence of any of the circumstances set forth in Article 1602 suffices for a
contract to be deemed an equitable mortgage. No concurrence or an overwhelming
number is needed (Spouses Solitarios v. Spouses Jaque, G.R. No. 199852, November
12, 2014).
H. ASSIGNMENT OF CREDITS
Q: What is assignment of credit? p.,
ANS: It is' the process of. transf,epee,eght of the assignor to the assignee, who
would then be allowed to proceed4104h$ debtor. It may be done either gratuitously
or onerous y, in which case, the a-sqlovalp-ggaRtfectepilar to that of sale (Nyco
Sales CorpliV. BA Finance Corp; G.R fAugelittM99 ).
0,4-9
Q: What is the effect,iack of cons t. f the debtor?
ANS: The consent of thgAibtor is ndrfeiz. ssary in order tDa t e assignment may fully
produce the legal-effegts DEILEOFI, sum? at 599) His du to pay does not depend
upon his cOhser$640 "lament. Othi. ise, all credforsiwokd be prevented from
assigning theirAledits because of the ility of the ebtoPs refusal to give consent.
(RodrigueE y.itWGZ;0-41 /3 2 4220 March 1992).
• • ,,e•
What ara:thetrecg" ssignivnt?
ANS: The effects dross! pmppt areas fol s: (AAE)
1. It.iterely eft ts thelfransfer of r9 ts h the Assignor has at the time to the
assignee (C agyena v. Cot_t2 Is G.R. No. 115410, February 27,
1998);
2. It !transfers a t tt)e Avelsory rights such as guaranty, mortgage, pledge or
preference (C I COVE, Art. 1627);
3. Debtor can set anst the assignee all the defenses he could have set up
against the assignor (Koa v. CA, G.R. No. 84847, March 5, 1998);.
4. The assignee acquires not only the credit itself but also the right to Endorse it
asj against the debtor of the assignor (South City Homes, Inc. v. BA Finance
C6rporation, G.R. No. 135462. December 7, 2001).
Q: What are;the effects of assignment against third persons?
1. If Personal prOperty.is involved — a public instrument is needed to make the
assignment effective against third persons
2. If real property is involved — registration in the Registry of Property is needed
CODE,Art. 1625).
Note: As between the parties, the assignment is valid although it appears only in a
private docurhent (Sonny Lo v. CA, G.R. No. 149420, Oct. 8, 2003).
•
Q: What are the effects of payment by the debtor after the assignment of credit?
1. Before notice of the assignment — payment to the original creditor is valid and
debtor shall be released from his obligation (CIVIL CODE, Art. 1626);
645
1••: • -•;:
2. After notice of assignment - payment to the original creditor is not valid as

against the assignee and debtor can be made to pay again by the assignee
(DE LEON, Sales and Lease supra at 593).
Q: Is a written notice to the debtor required for there to be a valid assignment?
ANS: Formal notice is NOT required. As long as the debtor has knowledge of the
assignment, he is not released from the responsibility should he pay the original creditor
(PINEDA, Sales, supra at 593).
Q: What are the warranties of the assignor of credit?
ANS: The warranties of the assignor of credit are as follows: (LES)
1. Legality of the credit, unless he sold it as doubtful;
2. Existence of the credit at the time of assignment;
3. Solvency of the debtor, if expressly stipulated, or if the insolvency of the debtor
was prior to the sale and of common knowledge (CIVIL CODE, Art. 1628,
par.1).
Q: What are the liabilities of-theassiglioijof,cre-diejor,xiolation of his warranties?
ANS: The liabilities are: •- k,. %.- -1 li. .3. =,
,o, it i '\..
1. Assignor in gooa fen — -iatiiiitreTrirrrilted;.%nlyitolheqprice received and to the
expensestof,t e contract, aq.cLarly.atbzlegltva fWrqents by reason of the
assignmyntIQ tiptpD‘Art. 028, par.2)nNi
2. Assignor inLbac), faith — AnTWeraVegi the pay alp expenses and for
damages (CIVIL CODE; Ad. 16.284par.2). .
CP
ti---
„,z 1
Q: What is the, duration of the warrantypr te,..debtor's sol erncy?
ANS: In case there iiio timelagAlupb 'tai ''' 4 -7. • • — - _._
1. One teargr`
----1 m the
r iti e of theFaistknight if t, e..qerio hteil eady expired;
2. One yearfr m nrtal ,ntyiLthe-dieldibsbould..13 p,)
':-.— ..—
,p5yab wit i aA term or period
which ha not yetapkir3/4\ d (C/* ODE, A 09).
\k•-! \ • 1? ,,(`--/
Q: What is the liability of the it§ti Kid,- ruffs, r.o.4m)nher ance sold?
ANS: The vendo shall ply the'vefh eZ\suies4; c(ontra has b en stipulated (CIVIL
CODE, Art. 1632). -- •
8°7-.0
Q: What is the duty at eii ?
5Reri -s,, ','''
ANS: The vendee shall r utselfhe vendor/fpitat &the vendor may have paid for
the debts of and charges on e state Allan ' the Gedits he may have against the
same unless there is an agreement irttiercoritrary (CIVIL CODE, Art. 1633).
TiTirl1711
fitglAierr.......-rActo‘ttave •
A. GENERAL PROVISIONS
Q: What is a contract of lease?
ANS: An agreement whereby one person (lessor) binds himself to grant temporarily the
enjoyment or use of a thing or to render some work or service to another (lessee) who
undertakes to pay rent, compensation or price therefor (DE LEON, Sales and Lease,
supra at 703).
Q: What are the characteristics of lease of things?
ANS: The characteristics are: (C3OBPIT-DONE)
1. Consensual;
2. Commutative;
3. Subject matter must be within the Commerce of man;
4. Onerous (there must be rent or price certain);
646
5. Bilateral;
6. Principal;
7. Purpose to which the thing will be devoted should not be Immoral;
8. Period is Temporary (not perpetual; hence, the longest period is ninety-nine
(99) years;
9. Period is either Definite or indefinite;
10. Note: If no term is fixed, Article 1682 or Article 1687 should be applied. If a
term is fixed but the term is indefinite, as when the tenant may use for as long
as he desires, the court will fix the term.
11. Lessor need not be the Owner (e.g. a usufructuary may lease the premises in
favor of a stranger, such lease to end at the time that the usufruct itself ends);
12. Nominate;
Purpose is to allow Enjoyment or use of a thing (person enjoying is the lessee;
the person allowing the enjoyment by another is the lessor).
Q: What are the distinctions between Lease of Services and Contract for a Piece
of Work?
ANS: The distinctions are as follows
agr
Lease of Services I Contract for a Piece of Work
(Locatio Operatum) (Locatio Operas) •
Object of contract •
4110'
The object is the labor' pe.gormed The object istult of the work done
lessor
Payment"for labor performed
41 "'" .
The resultiVgenerAM of portant The result Inportant; the
hence the id,l2oreri? en 14,0d to -15'9 pai price is• .3 -1.0 I the work is
even if there ikdestfiretiolj of tire or - complete , maid price cannot be
through fortuitotikpyph lawfully demanded if the work is
dent oyed before it is finished and
ted
(5 PARAS, Civil Code, f-338)
Q: May a mere lessee sublet=fhe thing leased?

ANS: Yes. When there is no express prohibition, the lessee may sublet the thing leased,
in whole or in part, without prejudice to his responsibility for the performance of the
contract toward the lestbr (CIVIL CODE, Art. 1650).
Q: Distinguish subleasing from assignment of lease.

ANS: In a sub-lease, there are two leases and two distinct judicial relations although
intimately connected and related to each other, unlike in a case of assignment of
lease, where the lessee transmits absolutely his right, and his personality disappears;
there only remains in the juridical relation two persons, the lessor and the assignee who
is converted into a lessee (Marimperio Compana Naviera v. CA, G.R. L-40234,
December 14, 1987).
Q: Is consent of the lessor necessary in an assignment of lease?

ANS: Yes. The consent of the lessor is necessary because the assignment of lease
would involve the transfer not only of rights but also of obligations. Such assignment
would constitute novation by the substitution of one of the parties, i.e., the lessee
(Sadhwani, et.al. v. CA, G.R. No. 128119, October 17, 1997).
647
Q: What is the nature of the contract between a vehicle owner and a pay parking
area?
ANS: It has been held that the act of parking a vehicle in a garage, upon payment of a
fixed amount, is a lease. Even in a majority of American cases, it has been ruled that
where a customer simply pays a fee, parks his car in any available space in the lot,
locks the car and takes the key with him, the possession and control of the car,
necessary elements in bailment, do not pass to the parking lot operator, hence, the
contractual relationship between the parties is one of lease (Mamaril v. The Boy Scout
of the Philippines, G.R. No. 179382, January 14, 2013).
B. RIGHTS AND OBLIGATIONS OFLESSOR

Q: What are the obligations of the lessor?
ANS: The obligations of the lessor are: (CT-DAN)
1. Cannot alter the form of the thing leased in such a way as to impair the use to
which the thing is devoted under the terms of the lease (CIVIL CODE, Art.
1661); "
2. The obligation toproteM the Itess e p?Iferi..acts of Third persons and of the
lessor (Bercer0.- Cap;ital Deveerrient Corp's,Z G.I. No. 154765, March 29,
2007). e`„,"
3. Delivery
ry lit gt4n such„axpnditi,czn as render it t for the use intended
(CIVIL go E,71 654, par.1);..:,
4. Mainteria eaceful a Fia Adie,q00 poserqsicl iA,4 CODE Art. 1654).
The olligatioriArisei only whe0)egktrespatss disturpiet e lessee's peaceful
enjoyirtent„thireof (bercero..14Xiiitol-Dettelo ment Go ,1G.R. No. 154765,
March ,2Odo7); and
5. Maki g of n cessar)Reptg,-' I
Q: May the le t or rilig _ption-directt si:against-

ANS: Yes, underft e o low.stancO?
1. Witho t prejudice offtis0,,b , ligitiirrtp 3, AM sub-lessor, the sub-lessee is
bound 2 the lessor rd 41e1s. whicji theAse and preservation of the
thing le5sed in 'the mai n rAtipdate betwe n the lessor and the lessee
(CIVIL CODE, Art.N5f), ClEgrkr`''
2. The sub-lessee 1sikubsidiarIxab;WpAhl.lesVStrp any rent due from the
lessee. Howe'NE,:thentlessee sfil-n, ,dkbe,rdsponsible beyond the amount
of rent due from hifrINLa cordate:, itffleSerKs of the sub-lease, at the time
of the extra-judicial demand, lessor: Payments of rent in advance by the
sub-lessee shall be deemed not to have been made, so far as the lessor's
claim is concerned, unless said payments were effected in virtue of the custom
of the place (CIVIL CODE, Ad. 1652).
Note: In said two Articles, it is not the sub-lessee, but the lessor, who can bring the
action (Marimperio Compana Naviera v. CA, G.R. L-40234, December 14, 1987).
Q: What is the right of the lessor of a business or industrial establishment?

ANS: The lessor of a business or industrial establishment may continue engaging in the
same business or industry to which the lessee devotes the thing leased, unless there is
a stipulation to the contrary (CIVIL CODE, Art. 1656).
Q: Can the lessor alter the form of the thing leased?

ANS: No. The lessor cannot alter the form of the thing leased in such a way as to impair
the use to which the thing is devoted under the terms of the lease (CIVIL CODE, Art
1661).
648
Q: When does the obligation of the lessor to ensure enjoyment of the use of the
premises, arise?
ANS: The obligation of the lessor arises only when acts, termed as legal trespass
(perturbacion de derecho), disturb, dispute, object to, or place difficulties in the way of
the lessee's peaceful enjoyment of the premises that in some manner or other cast
doubt upon the right of the lessor by virtue of which the lessor himself executed the
lease, in which case the lessor is obligated to answer for said act of trespass. The
lessee has the right to be respected in his possession and should he be disturbed
therein, he shall be restored to said pOssession by the means established by the law or
by the Rules of Court. Possession is not protection against a right but against the
exercise of a right by one's own authority (Bercero v. Capitol Dev't Corp., G.R. No.
154765, March 29, 2007).
Q: May a lessor or his successor-in-interest eject a lessee by reason of sale?

ANS: Yes, as a rule, the purchaser of a piece of land which is under a lease that is not
recorded in the Registry of Property maVerminate the lease, save when there is a
stipulation to the contrary in the contra6tipf sale, or when the purchaser knows of the
existence of the [ease (CIVIL cop,:-Art.:ip,76). However, the lessee may demand that
he be allowed to gather the fruitkOttiparvest which corresponds to the current
agricultural year and that the vendor incemnijy him for damages suffered (CIVIL CODE
Art. 1676 par. 2).
wilnre."
Exceptions: wt
1. If the sale is fotitious (CIVIL ,QIYJE, Art. 1676 par. 3)A
2. The purchaseti4 sale INA% right of redempdocannot make use of the
power to etqt.:thtirsge until the end of the peri txl or‘he redemption (CIVIL
CODEAtirA1677'ftiv.
3. All contracts 9fA: se under ihe caerage of thdiRen Control Act of 2009 (Rent
Con 4c( 0,260 R.A. 9563 S fttion 10)
• .41.4
Q: When may thNeseo:Oicialqject hie lessee?
ANS: The lessor rripti'diciit eject.) he lessee when:
1. When the i3eliod agreed upon, tt at w .ch is fixed for the duration of leases
under articles,_? 1687, h
2. Lack of paymareqf the 00%10 ate
3. Violation of an of the7cojiditions agreed upon in the contract;
4. When the lessee otes the thing leased to any use or service not stipulated
.
which causes he etenorabon thereof; or if he does not observe the
requirement in No: 2 of article 1657, as regards the use thereof (CIVIL CODE,
Art. 1673).
C RIGHTS AND OBLIGATIONS OF LESSEE

Q: What are the obligations of the lessee?
ANS: The obligations of the lessee are: (PU2N2R)
1. To Pay rent (CIVIL CODE, Art. 1657, par. 1);
2. To Use the thing leased as a diligent father of a family, devoting it to the use
stipulated; or in the absence thereof, to that inferred from the nature of the
thing leased according to the custom of the place (CIVIL CODE, Art. 1653, par
2);
Note: The lessee is liable for any deterioration caused by members of his
household, guests and visitors (CIVIL CODE, Art. 1668).
3. To allow Urgent repairs even if annoying to him (CIVIL CODE, Art. 1662, par.
1) unless the place becomes uninhabitable (CIVIL CODE, Art. 1662, par. 2);
4. To pay Expenses for the deed of lease (CIVIL CODE, Art 1657);
649
5. To Notify the lessor of usurpation or untoward acts (CIVIL CODE, Art. 1663);
6. To Notify the lessor of need for repairs (CIVIL CODE, Art. 1663, par. 2); and
Note: Notification is not essential if the lessor actually knows the need for the
repairs
7. To Return the property leased upon termination of the lease in the same
condition as he received it save what has been lost or impaired by:
a. Lapse of time;
b. Ordinary wear and tear; or
c. Inevitable cause or fortuitous event (CIVIL CODE, Art. 1665).
Q: What is the effect if the thing leased is totally destroyed by a fortuitous event?
ANS: If the thing leased is totally destroyed by a fortuitous event, the lease is
extinguished. If the destruction is partial, the lessee may choose between a proportional
reduction of the rent and a rescission of the lease (CIVIL CODE, Art. 1655).
Q: If the lessor refuses to accept thexentals.,4hat are the remedies of the lessee?
ANS: If the lessor refuses to aced% theipar,cit,..lha.lepee had a remedy provided for
by law, namely consignapern 44cirt ortlePosrtleafilanykin the lessor's name with due
notice to the lessor. Failtir(Oicjimilly,wiiii-the4p:sp.IirerSientis a ground for ejectment.
Delayed consignationi;r,deb,90Vill not extinguisrthoofiligatr6q.of the lessee (Alfonso
v. CA, G.R. No. 7804,-*Dpbemb r,20;-tgg6!) ----., 'i,- 'r ''r ' .,
‘k
IlD Py C`''' Ve7e.-
Q: What are the1 4'
rule'sr improyemerits?
its?
ANS: The rules/are: : ''.*f,i',i,
i
Vn
1. If the 4i.--ts-e makestin good fait}, imp ovemanOtuph are suitable to
the u AR hich th lea'§iisint4ndek4ithO t alteri. g the form or substance
of th property leas d, thadl4s,s01:.'itwOm the terpinati ri-ofq4 lease shall pay
the I sgekote-ka f, the val44.%titi,e impro. 4p:eLpts t that time;
2. ShoutfIrttrylqsscice k se to F9 •Ksp sal aibunt theA6isee may remove
the imphAdrrTents, a'Vs'eFittiougIA t 6.:1).,E1t15114(ig y suffer damage thereby.
He sh.dil not, kwe,?.4,.,stabOi.:
- ye.,(p/ r. e upon the property leased
than is n@cessaryis \\/
3. With reg8 d to orrtamet*e _q. tsit t . lessee shall4riot be entitled to any
reimburse ent, byiNe,,may-tedoVe eArrnaNntar objects, provided no
damage is aused.9ittie:principakthln17-tasrld pe)essor does not choose to
retain them bylhindahthr valwat #tic ie. elease is extinguished (CIVIL
CODE, Art. 1678). - 1Y
Q: What are the requisites of an implied new lease?

ANS: An implied new lease or tacita reconduccion will set in when the following
requisites are found to exist:
1. The term of the original contract of lease has expired;
2. The lessor has not given the lessee a notice to vacate; and
3. The lessee continued enjoying the thing leased for fifteen days with the
acquiescence of the lessor (Samelo v. Manofok Services, G.R. No;, 170509,
June 27, 2012).
•
650
4 '
ED ••• 1"V",
ED 7: VI"-
VIII. PARTNERSHIP
A. GENERAL PRO VISIONS
Q: What is a partnership?
ANS: It is a contract where two or more persons bind themselves to contribute money,
property, or industry to a common fund, with the intention of dividing the profits among
themselves (CIVIL CODE, Art. 1767).
Q: Does a partnership have a separate personality?

ANS: Yes. A partnership has a juridical personality of its own, distinct and separate from
that of each of the partners. In our jurisdiction, partnerships, except general professional
partnerships, are treated as corporations for income tax purposes and taxable as such
(DE LEON, Partnership, supra at 9).
Q: What are the essential features ofa,ipartnership?
ANS: The essential features are asi f91(914
1. There must be a valid cohtt446*,
a. Partnership is a troidbette g ation created by agreement of the parties.
There is no suchlifribtale artnership created by law, or by operation
or implication of 10,42ez, ,
Note: Since aftnergifp. iglfanIeffrnetitif .490. ractual, all the essentials
of a vgd,1 1,66tract must' le present, specifically: consent. object, and
cause (DE LEON, Pattriership supra at 14).11‘-
.1. ri -ri-4c---(a
2. The partnerstp,celatiorl is„eVideVed by the terns of tqe contract which may
be oral, wriati; irffpilied,. or exprels from the actsjor eclazations of the parties;
3. The parties
.441','
(two4,8r4inore persorN must have egal capacity to enter into the ....Rill
.,
contract. t
at,.1 tlk ,
4. There-must- cutup' cont etion of im,0 , or industry to a
vd ---° .,..4-4 . vo,,,
common funC, ; 4,4,. 4,4
5. The prini,&Mamose must)e t 'obtain profits and o divide the same among
the partie§:4•Tra(dgq..EON( Part rship, supra at 12).
44
A partnership 4arpreparatory.cg kgffse_i is formed for the purpose of
'0-, •,,,d.kr• ;ra'-'.4.--,
- 45411:Fr;
carrying on ie. business of-t'proli entenng into commercial contracts and
transactions t erefore,
It is not necessa a the business entered into has actually generated profits
because all that is needed is a profit motive, or an intention to generate profit
from the business formed out of the partnership. Hence, even an unprofitable
business can be a partnership provided that the goal of the business is to
generate profits and to return these profits to the owners.
Pecuniary profit need not be the only aim, it is enough that it is the primary
purpose (DE LEON, Partnership, supra at 24).
6. The purpose of the partnership must be lawful;
Q: Enumerate the parties who cannot give consent to a contract of partnership.

ANS: The following CANNOT give their consent to a contract of partnership: (MIDCIP)
1. Unemancipated Minors;
2. Insane or demented persons;
3. Deaf-mutes who do not know how to write;
4. Persons who are suffering from Civil interdiction; and
5. Incompetents who are under guardianship (DE LEON, Partnership, supra at
17);
651
6. Persons covered by Art. 1782, NCC: Persons who are prohibited from giving
each other any donation or advantage cannot enter into a universal
partnership.
Note: Article 87, NCC: Every donation or grant of gratuitous advantage, direct or
indirect, between the spouses during the marriage shall be void, except moderate gifts
xxx
Note: Article 739. The following donations shall be void:
1. Those made between persons who were guilty of adultery or concubinage at
the time of the donation;
2. Those made between persons found guilty of the same criminal offense, in
consideration thereof;
3. Those made to a public officer or his wife, descendants and ascendants, by
reason of his office.
Q: What comprises a partner's contribution in a contract of partnership?

ANS: A partner's contribution can brdoney,„p49erty, or industry, or any combination
thereof.
T I .7 -
1. Money— currencyhic legpagn4 tY6 Pltiligpines
2. Property — Maybe s I ersonalreozr0alcir)ncoceoreal
3. Credit evi405ced`tbr ugh promissory nabs, and otherovidence of obligation
•-.. .o.4 )
may be coiltribatel. incepertdiraVightsar&COQsigere personal property.
4. Busine tr, ddiirm y alsoa, e eritributed. 1 '' .k.
Note: In partne hip, 1 ne essaniC o Avelthat there was contribution of money,
property, or indipstry to corrtmon fund Mq.dq by at lea §t 2 pels'eritsAith the intention of
dividing the in : di-
03r rats obtained the l„ rom. v....,...4 1
1 ,.—...1 ".'"'• -A if,T'7-.1-1• .
' - 1
Q: May the delive of the ks, diu , ,2 pc missory not to order be
considered a c tr butr f money_ _ . ,(r) I
,1 ...-N. %
ANS: No. The pre-291y epr s ntativ,qp of, Rloneyipiek is tidcofi ibution of money
until they have &II tdshe CO,ET Irit,;412 9):4_1.Y 'y
ZS
....:31/ ,-,....
....:.s.0 i
Q: Can a partne ontribt#e "crOlk"...? t leiparmership,,V
---
ANS: Yes, credit eVenceditrob fitma erytno esfiffd otheri evidence of obligation'
may be contributed .§ince p — •o• eredlpei rsorial property (DE LEON,
Partnership supra at )9), hip mays de , t e .to4xist among parties who
agree to borrow money to -curs busi esi a to,Vtvi egSe profits or losses that may
arise therefrom, even if it is'lho,' that 1.1 h e" ndrcontributed any capital of their
own to a "common fund" as their con ildatitrillnuch
r fund could be an intangible like
credit or industry (Lim Tong Lim v. Philippine Gear Industries, Inc., G.R. No. 136448,
November 3, 1999).
Q: Explain "industry" as contribution to partnership.

ANS: The word "industry" has been interpreted to mean the active cooperation, the work
of the party associated, which may either be personal manual efforts or intellectual and -
for which he receives a share in the profits (not merely salary) of the business (DE
LEON, Partnership, supra at 20).
Q: Distinguish a partner contributing his industry or services from one who is a

lessor of services.
ANS: A partner contributing his industry or services is independent of the other partners,
that is, he is not subject to the supervision of the other partners, while the lessor is
under the supervision of the lessee or employer (DE LEON, Partnership, supra at 20).
652
" • v:-.•:'.',..Z.'06:,
:t;•,:t.:;:, ..`:".:'•=;,
-?4.44:13',1"
Q: May a partnership be formed for the exercise of a profession?

ANS: Yes. Two or more persons may also form a partnership for the exercise of a
profession (CIVIL CODE, Art. 1767). While strictly speaking the exercise of a profession
is neither a business undertaking nor an enterprise for profits, the law considers the joint
pursuit thereof, for mutual help, as partnership (5 PARAS, Civil Code of the Philippines
Annotated (2016), p. 5780 [hereinafter 5 PARAS, Civil Code)
Q: What are the consequences if the object or purpose of the partnership is

unlawful?
ANS: The following are the consequences: (VFC2)
1. The contract is Void ab initio and the partnership never existed in the eyes of
the law (CIVIL CODE, Art. 1409, par. 1)
2. The profits shall be Confiscated in favor of the government;
3. The instrument or tolls and proceeds of the crime shall be Forfeited in favor of
the government; and
4. The Contributions of the party s shall not be confiscated unless they fall
under number 3 (DE LEOMarfRership, supra at 59).
Note: A partnership is dissolved by open of law upon the happening of an event
which makes it unlawful for the blisedA13 1he partnership to be carried on, or for the
'members to carry it on in partner§fit ON
-CODE, Art.1830 par 3). A juridical decree
is not necessary to dissolve an unfalfiglgr erstrii1 ivisable to be secured for
.3,But it ital
the convenience of the partnerpt6rti-e'N'hifi&
itt.
rikategetsons.
,..p..i.,
-0 EF''' ' h
Q: What are the rules i rk determinhigge existence of pa ership?
•44-A e
ANS: The rules are astfolloWs: di-1.•;1,-,.."
Mar Po
1. Except as provided by 1 _. 5, persons whla n t partners as to each
other arel ofparkft,as to third ersons; .1
2. Co-o nership...-prti co-posses'sjoruloes not offitsel establish a partnership,
,,,
-
6`
wholt0-isucti0=bwners or co-possessors obr
--,,,,,- -0-4 '`;•• ,t, ..s... hare any profits made
by tn% use of the propinfia
3. The shapi dr-
ng gross returliWdoet.pot of itself es a'ish- partnership, whether
or not trretsofa'haringthem ave a joint or common right or interest in any
kA, vli
property from whichune returns se de ' d;
4. The receipt b jR'grson of a 0
_ ,zfits of a business is prima facie
evidence that, e is a oft VinSetfitigih ssPle no such inference shall be
drawn if such(' 'Wits Ota received in payment: (DIWAC)
a. As a De t)b,4 'stallments or otherwise;
b. As Intereg on loan, though the amount of payment varies with the
profits of the business;
c. As Wages of an employee or rent to a landlord;
d. As an Annuity to a widow or representative of a deceased partner; and
e. As the Consideration for the sale of a goodwill of a business or other
property by installments or otherwise (CIVIL CODE, Art. 1769).
Q: What are the tests to determine whether or not a partnership exists?

ANS: To determine whether a partnership exists, the tests are:
1. Whether or not there is an agreement to contribute money, property, or
industry to a common fund; and
2. Whether or not the contracting parties intended to divide the profits among
themselves (CIVIL CODE, Art. 1767).
653
Q: Assuming that there is a mutual contribution of money, property, or industry to
a common fund, is the receipt by a person of a share of the profits of a business
conclusive evidence that he is a partner in the business?
ANS: No. It is merely prima facie evidence that he is a partner (JURADO, Civil Law
Reviewer, supra at 1043)
Q: Explain the sharing of profits as an essential feature of partnerships.

ANS: A partnership is essentially a business enterprise established for profit. It is
necessary that there is an intention to divide the profits among the members, although
not necessarily in equal shares (DE LEON, Partnership, supra at 25).
Q: Is sharing of losses implied in a contract of partnership?

ANS: Yes. It is not necessary for the parties to agree upon a system of sharing losses,
for the obligation is implied from the partnership relation (DE LEON, Partnership, supra
at 26).
Q: Are partnerships and labovinidiriin-pirarh-,,,..

ANS: No. Partnerships and,Idolilnionslh4e some characteristics in common, but they
have different purposesiffsopkirpose ofjgttnershipis erilakie its members to conduct
a lawful business, tr509.epsrpfe:ision for pecuiiarmaini -Whila labor union's purpose
is for collective bargaining trdgalin _with-qmployers concenin'gierms and conditions of
employment (DE LEON rtn ip,supriat17„). ' 4 .49\1,
teNe-
Q: Distinguish artner hi0 from busirip§.s trusts.
ANS: The diffeiery§petwee partnerstii0hd.businest trustate
11111 I
Business Trust Partnership
• As to liability
\
When certa;fprops en st their5 Tpe>partu itS011 tPcoriflered as agents
property or heyiolothe \Nik3 aptWOte rrf an onef9 them may do
manage the s4me fo the fgthie aleitil /bin the partnership (CIVIL
business trust is creat In '111)e COD , A. . 18f) par. 11, and all partners,
business trust, beaefieLaff 1 zindjii0r1g)indu§lrial ones, shall be liable pro
(cestui que trust) do,pot - VIta--Wittyeall 10,15 property and after all
the management; hl-ikce re ..partrigfEhOPAVetsfhave been exhausted,
exempted from personakka , in filr dntractdchich may be entered into
that they can be bound or17hto.„,the iii— 'nig' and for the account of the
extent of their contribution ( nershlp (CIVIL CODE, Art. 1816).
PARAS, Civil Code, supra at 590).
As to the existence of mutual agency
All of the members are principals Trustee is only a principal and is not an
and are agents of each other agent (DE LEON, Partnership, supra at 47).
Q: Distinguish a partner from an agent.

ANS: An agent never acts for himself but only for his principal. A partner is both a
principal (for his own interests) and an agent (for the firm and the others) (5 PARAS,
Civil Code, supra at 591).
Q: May a corporation become a partner?

ANS: The majority view is that a corporation cannot become a partner on ground of
public policy. However, a corporation can enter into a joint venture with another where
the nature of the venture is in line with the business authorized in its charter (5 PARAS,
654
47 4.
Yl..Y.4.414,4: ;: A • ")::;:?1,..c.
Q: Explain the different kinds of partners.

ANS: The following are the different kinds of partners:
. As to membership
Real Partner — one who is really a Partner by estoppel or quasi-partner —
contributing member of an existing legal one who is not really a partner but
partnership like a general, limited, or represents himself as one.
industrial partner.
As to Ilability • .
General Partner —his liability to third Limited Partner — liable to third persons
persons extends to his separate property only to the extent of his contribution.
when assets had been exhausted.
As to the nature of contribution
Capitalist Partner — contributes capitp4 Industrial Partner — contributes industry
(money or property). or labor.
"'
As to exposure to public perception
Secret Partner — participates!'` ▪ 1114 itOstensible Partner —publicly takes
profits and losses of the firm bUt jsno "active part in the business of the firm and
publicly known as a partner: ZIfircitknown,Vg, a partner.
4-iogoritsom
.
Silent Partner - particirdtes in the prbfitli Dormant Partner-- does NOT take an
and losses of the fintbuWdoes not iategl active part in t#44siness of the firm and
any active part krttlre.„„eartnershipl NOT publiclyJCngwnfas a partner.
although may be, known dsIiirtper.
3.0B3.3,
(PINEDA, PajelershipPOncy sand Ti gts (2006) pi 4 • einafter PINEDA,

hk
Partnership) --!4t •s*
Q: What are the foil alitie'slequire11 in qgnstituting a partnership?

ANS: Generally, a partnershigmay be co"tituted4 any form (CIVIL CODE, Art. 1771).
The exceptions are thapjlqhfag: _4144;
1. In cases wheilimmov b Omperty-2or4 - 3 are contributed, regardless
of value: (WIRS)
a. It musNegip4, . riiing in a public instrument (CIVIL CODE, Art. 1771).
Without Cher' blic instrument, the partnership is void and has no
juridical personality even as betwedn the partieS (Art. 1773);
b. An Inventory of said property should be made, signed by the parties,
and attached to the public instrument;
c. It must be Recorded with the Register of Deeds where the immovable
is located to bind third persons; and
d. Where the contract falls within the Statute of Frauds, the contract itself
must be in writing in a public instrument (CIVIL CODE, Art. 1773).
2. In cases Where perScirial property is contributed:
a. If capital is less than P3,000, no special form is required for its validity
or existence (CIVIL CODE, Art. 1772); or
b. Where the contract of partnership has a capital of 3,000 pesos or more,
in money or property, the same shall appear in a public instrument and
must be recorded in the Office of the Securities and Exchange
Commission. However, a partnership has a juridical personality and is
valid even in case of failure to comply with this requirement (CIVIL
CODE, Arts. 1772 and 1768). Without the contribution of real property,
a partnership formed orally though more than P500 is contributed is
655
valid. Art. 1358 applies only for the purpose of convenience and not for
validity and enforceability (5 PARAS, Civil Code, supra at 606).
Note: For the effectivity of the contract insofar as innocent third persons are concerned,
the same must be registered in the Registry of Property if real properties are involved (5
Q: If two persons agree to form a partnership in the future, does the partnership
immediately arise from the moment of said agreement?
ANS: No. An agreement to form a partnership does not of itself create a partnership.
When there are conditions to be fulfilled or when a certain period is to elapse, the
partnership is not created until after the fulfillment of the conditions or the arrival of the
term and this is true even if one of the parties has already advanced his agreed share of
the capital (5 PARAS, Civil Code, supra at 610).
Q: What is the purpose of registration with the Office of the Securities and
Exchange Commission as provided in Article 1772?
ANS: (CNP)
1. The registration is.to -iet a Codditibnifor the i'suance of licenses to engage in
business or trOe.--IR tbiglway, the tax)jal3ilitiO ofikg partnerships cannot be
evaded ancptpeliybyc)arfarerbagfiline,mpre''a, Ccufately their membership
and capital -before' dealin ithrtherk14 -04rAN,40, Civil Code of the
Philipphl.ep,,.p. z6p aTti ed in DE LEON, Partne hie,,,,,stipT at 67);
2. To giv tiotic to third persqs (MOA, Pa ers spiserpra. at 35);
3. In ord r that Public may. knowtbejnames f the a . Rers‘ its capital and the
amouint-oVtock of each-partrieran-Sengu n & ,VC !lector of Internal
Rev yed G . No. L-331,9,p;..ge erpberA49, 1430).
/la' •
Q: Is an unre papngThip • Valiitn.-
._ ,'FF-P'A
ANS: Yes. Ev bit regist6
‘r et..the..pittrelship..bayi Vicaeital P3,000 or more is
still a valid one, erefo a legal rie sbn)lity C 1/./' CODE7M. 1768 in relation to
Art. 1772, par.1 •' .t: :•_4?
Q: Does an association hich js•\-)kil orga

nize as a partnership possess
legal personality tott..sue? 6
ANS: While a partnership ni dt,16ga
y 9h 6)a not sue in the partnership
name, yet, the individAgartriel aj fteverth gee, t err own (Lopez, et. al. v. Yu
Sefao, G.R. No. 9393, August 20, 915). m/
Q: Are the articles of partnerZiiiiirai itttrforistence of a partneiship.?
ANS: No. However, while the partnership relation may be informally created and its
existence proved by manifestations of the parties, it is customary to embody the terms
of the association in a written document known as "Articles of Partnership" (DE LEON,
Partnership, supra at 13).
Q: When does a partnership begin?

ANS: A partnership begins from the moment of the execution of the contract, unless it is
otherwise stipulated (CIVIL CODE, Art. 1784).
Q: Are contributions necessary before a contract of partnership may exist?

ANS: No. As a rule, even if contributions have not been made, the form already exists,
for partnership is a consensual contract (PINEDA, Partnership, supra at 48).
Q: What is a partnership at will?
ANS: A partnership at will is a continuation of the business by the partners or such of
them as habitually acted therein during the term, without any settlement or liquidation of
the partnership affairs, is prima facie evidence of a continuation of the partnership.
When a partnership for a fixed term or particular undertaking is continued after the
656
termination of such term or particular undertaking without any express agreement, the
rights and duties of the partners remain the same as they were at such termination, so
far as is consistent with partnership at will (CIVIL CODE, Art. 1785).
Q: Is the term of partnerships unlimited?

ANS: Yes. In a sense, a partnership is unlimited as to its duration, as the law fixes no
time limit. The term may be agreed upon expressly; as when there is a definite period,
or impliedly, as when a particular enterprise is undertaken - it being understood that the
firm ends as soon as its purpose is achieved (5 PARAS, Civil Code, supra at 584).
Q: Enumerate the different classifications of partnership.

ANS: The different classifications are the following:
1. According to manner of creation:
a. Orally constituted;
b. Constituted in a private instrument;
c. Constituted in a public irVument; or
d. Registered in the Office b ecurities and Exchange Commission.
2. According to object:
a. Universal with all3rel feoperty;
b. Universal with allTrofit. ord
c. Particular. • 4AY
3. According to liability: 1
a. Limited piVdrship;
b. Gener03trtnershipii
tfr •f
4. According to legally:
a. Lawfugegit r
b. ygliWItil/j0,ega
5. Accwling to duration`
&War a specific p‘riod;
bWUritirtWeArrposA ccom ished; orb
c.A pargiej:shp at
6. AccordirdWriggetntatiosr o others:
a. Ortlipaery pahership; or
b. Partnecship0 estoppel ivi/ Code, supra at 615-616).
Q: What is a universal partner

ANS: A universal partne ip —ay refer to all the present property or to all the profits
(CIVIL CODE, Art. 1777
Q: What is a universal partnership of all present property?
ANS: A universal partnership of all present property is that in which the partners
contribute all the property which actually belongs to them to a common fund, with the
intention of dividing the same among themselves, as well as all the profits which they
may acquire therewith (CIVIL CODE, Art. 1778).
Q: Can future properties be contributed?
ANS: Future properties cannot be contributed. Thus, property subsequently acquired by
inheritance, legacy or donation cannot be included by stipulation except the fruits
thereof (DE LEON, Partnership, supra at 77).
Q: What is a universal partnership of profits?

ANS: It comprises all that the partners may acquire by their industry or work during the
existence of the partnership. The movable or immovable property which each of the
partners may possess at the time of the celebration of the contract shall continue to
pertain exclusively to each, only the usufruct passing to the partnership (CIVIL CODE,
Art. 1780).
657
Q: In a universal partnership of profits, are profits acquired through chance
included?
ANS: No. Profits acquired by the partners through chance, such as lottery or by
lucrative title without employment of any physical or intellectual efforts are NOT included
Q: Will the fruits of the land acquired by a partner after entering into a universal
partnership of profits belong to the partnership?
ANS: No, the usufruct granted to the firm under Article 1780, par. 2 refers only to the
property possessed by the partner at the time of the celebration of the contract.
However, it would be valid to stipulate that the usufruct of after-acquired properties
would belong to the partnership (5 PARAS, Civil Code Annotated (2016), supra at 621-
622).
Q: Who cannot enter into a universal partnership?

ANS: Persons who are prohibited bra.giving4.pach other any donation or advantage
cannot enter into a universal RartarshiWCAVILCODE,Ort. 1782).
Q: Give examples ,of-<--e'r ons- prohibiLe, fcomf en e ing into a universal

partnership. .,.,
fi'' ibjtVaLeAs-folloirr
ANS: The persons ro 3- .: (HAG
1. Husban Wife (07VIL C9DE Artr.4.78Z.. ktiorr AM1LY CODE, Art
)'''' V 'k'N...
87); le \ A
2. Thos iguilty (it/Adultery or concubinage (C/V/ C0130)709); and
3. Those § LIilty f the Pine—Ciirc3fOMF,
rin --ifithe pampers.tilp was entered in
considertili of the • anrery/L1, .0 .g:3---A . 739).
f
Q: What is t e<11,e wh1, 9
wittptit speci c,alotAof its ax y re?.
. II II
e articWoi
ttiniversarilinership
g
,.. 'A.,..04
re entered into
ANS: Articles kuhiOacl ptk hi peciilb tion of its nature,

only constitute u iversa arts kghtp, rt.:178
/).
Rationale: There less inj f profit considering that the
properties owned r the naked ownership (PINEDA,
--..,,,._.j
Partnership, supra a 4546).
Q: What is a particular paqnecit7p?

ANS: A particular partnershiP'ha or its j ete rrl nate things, their use or fruits, or
a specific undertaking, or the exercis o ession or vocation (CIVIL CODE, Art.
1783).
Note: In a universal partnership, the object Is vague and indefinite, contemplating a
general business with some degree of continuity. In particular partnership, the object is
well defined and limited, being confined to an undertaking of a single, temporary or ad
hoc nature (DE LEON, Partnership, supra at 82).
Q: What is a general partnership?

ANS: A general partnership is one where all the partners are general partners, that is,
they are liable even with respect to their individual properties, after the assets of the
partnership have been exhausted (5 PARAS, Civil Code, supra at 616).
Q: What is a limited partnership?

ANS: A limited partnership is one formed by two or more persons under the provisions
of Article 1844 of the Civil Code (requirements to forma limited partnership), haiiing as
members one or more general partners and one or more limited partners. The limited
partners as such shall not be bound by the obligations of the partnership (CIVIL CODE,
Art. 1843).
658
Q: May a partnership exist when all are "limited partners"?
ANS: No. A partnership where all the partners are "limited partners" cannot exist as a
limited partnership; it will even be refused registration. If at all it continues, it will be a
general partnership, and all the partners will be general partners (5 PARAS, Civil Code,
supra at 616).
Q: Can a husband and wife enter into a contract of partnership?

ANS: It depends. If the partnership is a universal partnership, a husband and a wife
cannot enter into such contract. Under Article 1782, persons prohibited from making
donations to each other are prohibited from entering into universal partnerships.
However, the prohibition does not apply if the partnership is a particular partnership or a
limited partnership (JURADO, Civil Law Reviewer, supra at 1045).
Q. What does Article 1825 of the Civil Code cover?

ANS: The article covers "partners by estoppel" and "partnership by estoppel".
Where the representation of being a partner is committed by one person only, he is
referred to as "partner by estoppel". V/Pr8 the representation involves several persons
pretending to be a firm, the group Wireferati to as "partnership by estoppels."
tit
Q: What is a partnership by estiltpRei',7
ANS: When a person, by words spoaQ Itek‘pc by con act, represents himself, or
consents to another representighirfiVA, r" "a' an existing partnership
or with one or more persorif not actual ''artners, he irligAto any such persons to
whom such represeraffn, has beAdnade, and who y ail on the faith of such
representation, given ettclato the r apparent part e , and if he has made
such representationApcolwea to its t mg made in a ubaic anner he is liable to
such person, whetWthelgimentation s or has not lien ad ,,or communicated to
such person scitivinggpidit by or Witt t knowledge f th appa ent partner making
the represent %pang' nting tomts bei g ade: P.;
1. Whelta partners Haft remit , he is liabL.ms. e were an actual
member f ersaiiiff
2. When n p ti ers- ip liability roults, he is liable pro rata with the other
persons, if4any, soP onsenting rg4h%. ,_;csqntract or representation as to incur
liability, otherparately (00fftigLgiEMit. s 1825).
Note: Article 25 dqeatfifdtiaelteaVa—rtriersiiip as between the alleged
partners. Th aw ogriaonsiders them partners and the association as a
partnership ins',car af it is favorable to third persons. However, partnership
liability is crea e only in favor of persons who on the faith of such
representation given credit to the partnership (PINEDA, Partnership, supra at
144).
Q. What are the requisites to make a person a "partner by estoppel"?

ANS: The following are the requisites: (RTC)
1. The person must Represent himself as a partner of an existing partnership
when in fact, he is not a partner OR he consents to another representing him
to anyone as a partner in an existing partnership or with one or more persons
not actual partners;
2 A Third person relied on the said misrepresentation not being aware of the
deception;
3. On the faith of such representation, the third person has given Credit to the
actual or apparent partnership.
The alleged partner cannot disallow liability by claiming that he is not actually a partner.
He is estopped from making a disclaimer. He is bound as a partner although he is not
actually a partner.
659
Note: No real partnership is created by estoppel. Article 1825 does not create or
establish a real partnership as between the alleged partners (DE LEON, Partnership,
supra at 198).
Q: When can there be a partnership by estoppel which results to an act or

obligation of an existing partnership?
ANS: When all members of the existing partnership consent to the representation, a
partnership act or obligation results (CIVIL CODE, Art. 1825), in which case, a
partnership by estoppel arises.
Q: When can there be a partner by estoppel?
ANS: There can be a partner by estoppel when:
1. Represents himself as a partner or consents himself to be represented as a
partner of an existing partnership with or without the consent of the
partnership; or
2. Represents himself as a partner of non-existent partnership (5 PARAS, Civil
Code, supra at 696-65)r, "' 1. " ,`-4--...,,,,,,,
Note: Although it was nevrrega ly formed foAu'k oWnzeasons, this fact alone does
not preclude the liabili 'el,of\ttr thre% adOnt aitinglpik4s in representation of it.
Clearly, under the la pn 'b toRpelfrose actirVori bOhalf QN corporation and those
benefited by it, krywing• it ebe ithouttvalid,_ exike cerirb 'held liable as general
partners (Lim Ton 4g ,:)0,.;P ir pine GeaHndu,strie.r7Inc.,‘G.R No, 136448, November
1
3, 1999). IP) A /fit
.1 .,.t
Q: When is the, doctr n e of stoppethiatipicable. C )
ANS: The docfrinelides not apply.,whep jOhougt>therie is mi rppresentation, the third
party is not derive 5 PARR‘, Clif_Cddgi §i114. at 6 7).
Q: Give an example
lit f ari
t-aknecky_e
y x ¢,
. "fsail ,
1 ttu........4
ANS: By autho izin't e w dON.o the rga i . n girig partint i agespartnership property
(which a limit` aAner ct.ik:.N bg-talitWrik ittolo), i e oth 'r general partner
recognized her as a ge?ieral 1)aRrie , andlis Rork ' toppel to den her position as a
general partner, with luthoht ,o'àcirrtin.' t&? and alienatepartnership property
(Goquiolay v. Sycip, G.R. No. -1-1 .1,.406
if-1
Q: What is a joint yen e?,.w) i
ANS: A joint venture is an ssocrktion o ppls).,60>V6Ni cp any jointly undertaking some
commercial enterprise; Venture enera 1Ydohtaidutelssets
_ and share risks. It requires
a community of interest in the performtle subject matter, a right to direct and
govern the policy in connection therewith, and a duty which may be altered to share
both in profits and losses (Kilosbayan v. Guingona, G.R. No. 113375, May 5; 1994).
Q: Distinguish partnership from joint venture.

Partnership Joint Venture
As to existence of legal personality
Has a legal personality Considered as an informal partnership,

with no firm name and no legal
personality.
In a joint account, the participating
merchants can transact business under
their own name, and can be individually
liable therefore.
660
As to the transactions
Generally relates to a continuing Usually, but not necessarily, it is limited to
business of various transactions of a a single transaction, although the business
certain kind. of pursuing to a successful termination
may continue for a number of years.
(5 PARAS, Civil Code, supra at 591)

Q: Who shall manage the partnership?
ANS: The management of the partnership may be vested by agreement in one, or
some, or all of the partners, or even in a third person, either in the articles of partnership
or after the partnership had already been constituted (CIVIL CODE, Arts. 1800, 1801,
1802). If there is no agreement, it is vested in all of the partners (CIVIL CODE, Art.
1803; JURADO, Civil Law, supra at 1049).
Q: What are the two -(2) modes of awgiii:ting a manager?
ANS: Art. 1800 speaks of two mode?4:01 j
:1 ointment:
1. Appointment as manages icles of partnership; and. .
2. Appointment as manag:ellrit itAS an instrument, other than the articles of
partnership or made orally pg. Civil Code, supra at 645).
." C
'o
`
Q: How is a managing partnOtemidlid?' 44.
ANS: The power of thelpegger is irrayo ble without just a Q lawful cause. Therefore:
1. To remove ,hen fqr 'List cabse the vote of the ners representing the
controlling in aces' is necasTa •or such revocatil o power (CIVIL CODE,
Art. 1800 p,a f1); , R
2.
/
To remprehim Viiiffautscause, o for an uniust cause, the e must be unanimity -Rum
(inclehg his,oe vote) (5 PA Civil Code,Aup at 6 N.
Q: What is thasexteor
k.,-,.. Vra4.- 4All
powe ,o managing par -a ,' ipted in the articles
et
of partnership?t, g
k
lsr49—....
ANS: The partner - poi te y common •reement in the articles of partnership may
execute all acts of adIli inistration
, notwith ding the opposition of the other partners,
unless he should act in. 4,4faith. His po ervsjt_ectscable only upon just or lawful cause
and upon the vote ofrjhe partne' rep sefilikplhMoMrolling interest (DE LEON,
Partnership, supra at 1 '
Q: What is the effect of he appointment as manager if made after the constitution
of the partnership?
ANS: The power to act may be revoked at any time for any cause whatsoever (DE
Q: What is the extent of the power if the appointment is after the constitution of
partnership?
ANS: As long as he remains the manager, he can perform all acts of administration, but
if others oppose and he persists, he can be removed (5 PARAS, Civil Code, supra at
646) with or without just cause.
Q: May two or more managing partners be entrusted with the management of the
partnership?
ANS: Yes. The rules are:
1. When the appointment is without specification of their respective duties and
without stipulation that one of them shall not act without the consent of all the
others, each one may execute all acts of administration except if any such
partner should oppose:
a. Decision of the majority of the managing . shall prevail; and
661
." • 174,:t:4:::7:':
b. In case of a tie, decision of the partners having the controlling interest

shall prevail (CIVIL CODE, Art. 1801).
2. With stipulation requiring unanimity of action, unanimous consent of all the
managing partners shall be necessary for the validity of the acts and absence
or disability of any managing partner cannot be alleged, except when there is
an imminent danger of grave or irreparable injury to the partnership (CIVIL
CODE, Art. 1802); or
3. When manner of management has not been agreed upon, all partners shall be
considered as managers and agents and unanimous consent is required for
important alteration of immovable property (CIVIL CODE, Art. 1803).
Q: What is the effect when unanimity is required, but one of the managers is
absent or incapacitated?
ANS: Absence or incapacity is no excuse, except when there is imminent danger of
grave or irreparable injury to the partnership (CIVIL CODE, Art. 1802).
B. OBLIGATIONS OF PARTAIARe'
Q: Enumerate the obligdiron Pp f artne amongithelhOlvs
ANS: The obligations,,dtpailrrrynrola themservekre,,clas§ifi d as follows:
1. Obligatio s viitla•resspect to contrittion of property,}.
2. Obligati9 .,respect to contribution of ol ey an'd', oney converted to
personal tle IVIL CODERArt221 1Z8K
3. Oblig4on no toe gage in arpter busines CIVIL CODE, Art.
17891thd-A 1808); g \sf
4. Obligkio to contrib to icppitaye/V
i 791);
5. Obli4atioripithe aginTparrIL e6491colle
, ODE, Art. 1792);
6. Obliaatiow rtne who re cej s are in p7ers creilit (CIVIL CODE,
Art. l'f93);2,
7. Obligrp of art ip -(C/I/L:CO E, Art. 1794);
fcrici"eztn,erAS
8. Duty t rende true ft II irlo giolEjel , ODE, Art. 1 06); and
9. Obligation to accour0 benoi.tA f hol6 as trfistee unauthorized
persona rofits NVIL (4),E
Q: Enumerate the obligfi of4x.

I plaae ,,Kithespect to contribution of
property.
1. 1A":. A \
ANS: Under the Civil Code, m
obligatiornh'gtie s are:
1: To contribute at the begs ning..of.,ffie.paffership or at the stipulated time the
money, property, or industry he had promised (CIVIL CODE, Art. 1786);
2. To answer for eviction in case the partnership is deprived of the determinate
property contributed (CIVIL CODE, Art. 1786);
3. To answer to the partnership for the fruits of the property the contribution of
which he delayed, from the date they should have been contributed up to the
time of actual delivery (CIVIL CODE, Art. 1786);
4. When the contribution of the partner consists of goods, their appraisal must be
made in the manner prescribed in the contract of partnership, and in the
absence of stipulation, it shall be made by experts chosen by the partners, and
according to current prices, the subsequent changes thereof being for account
of the partnership (CIVIL CODE, Art. 1787);
5 To preserve said property with the diligence of a good father of a family
pending delivery to the partnership (CIVIL CODE, Art. 1163); and
6. To indemnify the partnership for any damage caused to it by the retention of
the same or by the delay in its contribution (CIVIL CODE, Ad. 1170).
662
Q: What are the three (3) important duties of every partner with regard to the
contribution of or property?
ANS: The important duties are:
1. Duty to contribute what had been promised;
2. Duty to deliver the fruits of what should have been delivered; and
3. Duty to be bound for warranty in case of eviction (CIVIL CODE, Art. 1786).
Q: If a partner fails to contribute what was promised within the stipulated time,
may the partnership contract be rescinded? .
ANS: No, rescission is not the proper remedy. The remedy should be to collect what is
owing as well as damages (5 PARAS, Civil Code, supra at 630).
Q: When is appraisal necessary?

ANS: When contribution consists of goods, appraisal of value is needed to determine
how much has been contributed (Id. at 630).
Q: Enumerate the obligations of par,ti*s with respect to contribution of money
and money converted to person4f104
ANS: The obligations of partners,#001,31.1
owing: (GRID) •
1. To Contribute on the daceidegtf, ount he has undertaken to contribute;
2. To Reimburse any amognt'IR:iIfn y have taken from the partnership coffers
and converted to his on uteli,
3. To pay the agreeclelegal Iritbre , if he fai Arolpay his contribution on time or
in case he talcestny announpfro the common fundpnd converts it to his own
use; and itt n•
•
4. To indemnifyike0artneyship for Damages cams IX it by the delay in the
contributiwilbr tor' conversion of any sum or is ersonal benefit (DE
LEOWPartnershlp, Ora ex- .
%
Q: Explain ttc obligepof at•xpartne of to engag-elrrgatio r business for
himself.
ANS: The obligitigre: Aro t
Indus /al P& ner and Capita rs Partner.
Industrial Partner Capitalist Partner
Cannot engageinar A sines Whims ft: ,-"an ngage for their own
unless the partnershaxpre permits him account in any operation which is of
to do so; and if he sholikao, the capitalist the KIND of business in which the
partners may either eiblrolehim from the partnership is engaged, unless there
firm, or avail themselves of the benefits which is a stipulation to the contrary (CIVIL
he may have obtained in violation of this CODE, Art. 1808).
provision, with a right to damages in either
case (CIVIL CODE, Art. 1789)
Q: What is the remedy when an industrial partner engages in a business for

himself?
ANS: If an industrial partner engages in business for himself, the remedies are:
1. The capitalist partners may either exclude him from the firm with damages; or
2. Avail themselves of the benefits which he may have obtained in violation of
this provision with damages (CIVIL CODE, Art. 1789).
Q: What is the remedy when a capitalist partner engages in business for his own
account?
ANS: Any capitalist partner violating this prohibition shall bring to the common funds any
profits accruing to him from his transactions, and shall personally bear all the losses
663
Q: When does the obligation to contribute additional capital arise?
ANS: If there is no agreement to the contrary, in case of an imminent loss of the
business of the partnership, any partner who refuses to contribute an additional share to
the capital, except an industrial partner, to save the venture, shall be obliged to sell his
interest to the other partners (CIVIL CODE, Art. 1791).
Q: What is the obligation of a partner who collects a debt in favor of the

partnership?
ANS: The rules are:
1. If a partner authorized to manage collects a demandable sum which was owed
to him in his own name, from a person who owed the partnership another sum
also demandable, the sum thus collected shall be applied to the two credits in
proportion to their amounts, even though he may have given a receipt for his
own credit only; but should he have given it for the account of the partnership
credit, the amount shall be fully applied to the latter (CIVIL CODE, Art. 1792).
2. If a partner who has received,in.whoje or in part, his share of a partnership
credit, when the otherepfanersp got ollected theirs, shall be obliged, if the
debtor should tit, becomeinagiv n9to)ri g to the partnership capital
what he receives eke ..t tigh.he.rn haVegye eceipt for his share only
(CIVIL COD (Art. ,i-t,9-37.'''' ''
./7-
Note: Art. 1792 isiun e stipfft9,,beVitfitilarrirejud.tetKtQe• rig granted to the other
debtor by Art. 135210 .pfplicationitS paymepp, if tine p No credit of the partner
should be more aner6ti do him (CIVIL CqI2E, Alt. 1792 par. ). t
.....,k ,i,,,
Q: Is there an tlitra1 iononiffie part of f e partner o pay fovlowages suffered by
n
the partnersh prifiJe o the pprtrieasla !?P's'iV".
1
ANS: Yes. Ev q00 ner is rbsponW pOtipartn ae-t ship fo damp, es suffered by it
through his fa t7and e cgri at compel* te1hem wit}47̀1 -4:pro is anti enefits which he
may have earripdtorlt • e tia0 er hip byi,44 Oustryi piei,e'ver #th .c6 rts may equitably
lessen this respAkidibfli if th otig ‘ theLp4rtql -g0xtr qftiary ffort other activities of
the partnership, nusua • rofi fe.‘bb eake.°43 IL C DE, Art: 1794).
Q: Explain the rules on ris of loft-ttflivpr )st

ANS: The rules are:\ 7
1. The risk of sN016.9,d t rminatedh4 not fungible, contributed
to the partnerstii so(th onlyfir ir 1g4nd its may be for the common
benefit, shall be born the p trine ,- .o s them;
2. If the things contributed are-Miffgiblercannot
- be kept without deteriorating,
the risk shall be borne by the partnership;
3. If the thing contributed is to be sold, the risk shall be borne by the partnership;
and
4. If the thing is brought and appraised in the inventory, the risk shall be borne by
the partnership (CIVIL CODE, Art. 1795).
Q: What are the responsibilities of the partnership to the partners?

ANS: The responsibilities of the partnership are:
1. To refund amounts disbursed on behalf of the firm plus interest (legal) from the
time expenses were made (and not from demand, since after all, a partner is
an agent and the rule on agency applies to him);
2. To answer to each partner for obligations he may have entered into in good
faith in the interest of the partnership; and
3. To answer for risks in consequence of its management (CIVIL CODE, Art.
1796).
664
•
J'
Q: How are profits and losses distributed?

ANS: The rules are:
1. Profits are distributed according to agreement; if none, according to amount of
contribution;
2. Losses are distributed according to agreement;
a. if there is no agreement as to losses, but profit sharing has been
agreed upon, loses shall be distributed according to the same
proportion;
b. if there is no agreement, then losses shall be distributed proportionately
according to amount contribution;
3. Industrial partner's profit is such share as may be just and equitable under the
circumstances; and
4. While an industrial partner may be held liable by third persons, he can recover
whatever he has paid from the partners for he is exempted from losses with or
without stipulation to this effect (CIVIL CODE, Art. 1797; PARAS, Civil Code
(2013), supra at 638-639).
. • r
.
Q: Is a stipulation excluding a pert:601w profits or losses valid?
ANS: No..A stipulation which eX0044g;f66:0 or more partners from any share in the
profits or losses is void (CIVIL CODOiltrq 99). The exception is in case of industrial
partners whom the law itself excligfeftaliossegi C VIL CODE, Art. 1797).
Q: May a partner assockatetinother R-erpn with him in iq hare?

ANS: Yes, every part 'Wm' ay assogiee,,ajlother person witt m in his share, but the
associate shall not be'gslrriftted in theldanership without he consent of all the other
partners fCIV1L CODEX0804):
Q: What is mOirbylk„principle f "delectusff perso ae" in partnership
relations? gr
ANS: The prialtife,:stgr,the le Ittihid[r s inheren eve rtnership that no one
can become Wmember'bflihe ersh, associaif L113 tonsent of all the
.
partners. Consequently eve7 if '13 ne II associate arahe person in his share in
mas -V* •
the partnership, thgyASsocia4 she not e admitted into the partnership without the
consent of all the partners, etsn if the pa avi g an associate should be‘a manager
(CIVIL CODE, Art. 180 URADO, Civil L - .er7,i supra at 1050).
A0-1R4 11110,
Q: To whom does the artneprittave the duty to render true and full information of
all things affecting the'IrtnAship?
ANS: Partners shall renderTMemand true.end full information of all things affecting the
partnership to any partner or the legal representative of any deceased partner or of any
partner under legal disability (CIVIL CODE, Art. 1806).
Q: What is the obligation of a partner who derives profits from any transaction
connected with the formation, conduct or liquidation of the partnership without
the consent of the other partners?
ANS: Every partner must account to the partnership for any benefit, and hold as trustee
for it any profits derived by him without the consent of the other partners from any
transaction connected with the formation, conduct, or liquidation of the partnership or
from any use by him of its property (CIVIL CODE, Art. 1807).
Q: Suppose the firm name is changed in good faith but the members remain the
same, will the partnership under the new name retain all the rights it had under
the old name?
ANS: Yes. The change of name is not important, not having been done to defraud the
insurance company. Moreover, the membership of the partnership remained unchanged
(Sharruf and Co. v. Baloise Fire Insurance, G.R. No. 44119, March 30, 1937).
665
•
•„
Q: What is the liability of strangers whose names are included in the firm name?
ANS: Strangers (those who are not members of the partnership) who allowed their
name to be included in the firm name are liable as partners because of estoppel (CIVIL
CODE, Art 1815, par. 2) but do not have the rights of partners for after all, they had not
entered into any partnership contract (5 PARAS, Civil Code, supra at 674).
Q: What is the liability of partners for contractual obligations?
ANS: All partners, including industrial ones, shall be liable pro rata with all their property
and after all the partnership assets have been exhausted, for the contracts which may
be entered into in the name and for the account of the partnership, under its signature
and by a person authorized to act for the partnership. However, any partner may enter
into a separate obligation to perform a partnership contract (CIVIL CODE, Art. 1816).
Note: While the Code Commission says that pro rata in Art. 1816 means "in proportion
to their contribution, still the Supreme Court ruled, in Island Sales v. United Pioneers
Gen. Construction Co., July 31, 1975, that pro rata here means joint.
Q: Is an industrial partner exemptddror7fRbility,Z

ANS: No. An industrial partfiertils exeptedille;fn ,lo§se (CIVIL CODE, Art. 1797),
however, he is not exeTpisedlipeli iabilt4a4LeicerOtit 9140e industrial partner to pay
losses refers exclusiyeiy leiltigettement of thr'parfne shipAffes among the partners
themselves and hag nothipg,oto do with-fir-lialqjkeNtyre, pfters to third persons
(PINEDA, PartnetiOpra jar 120). Neither on bencipleppilbi authority can the
industrial partnef `64elievepi froniimlialfiltty .;t4, third peirlorirforkthe debts of the
partnership (Co pan/akar/tithe v. Mufiot,.=pR-No. L-3 04, be'cerMer 12, 1907), but he
can recover th )arnotrnt he ihas-paid-fid,fpithe-capita ist pa hers &less there is an
agreement tot i f eAttary (DE LEON,Partliership,-,sup ' at 17 11.70
it ,..., \ ..A.
. A.-‹ .2„4..
Q: May a pa Re,r4 II bp-tleld hablkjo-TfArab'ilitres o era i d the partnership
after he has w thdii n frolilcpartnirfilp?
.,, I /......4
ANS: No. A p ho vwn ws ip, tog*
for4i 'tie? conk]. cted after he has
withdrawn, for t s no`tolim a 10:4t. COX-Wes! as not et been paid him,
his right to the sa t of a ne di or (5' S, Ct d Code supra at 675).
Q: In the articles of a geh,er I...._
t4_, rcli0-.-one 9.f. the partners is expressly-
-49Ele_j
exempted from personaliiiibi 1V i -.Zzr:21,Vpsees-S of-4 e• partnership. Is this
agreement valid? _Iv 7 Nd•
s .
ANS: If the exempted pa net-. i ..@ri ind isN elk • - greement is valid as among
themselves, but not insofar aetredi or ar co ed. If the exempted partner is a
capitalist, the agreement is void as agains he firm. As among themselves, it is valid as
to the contributions in excess of the capital (CIVIL CODE, Art. 1817); but void as to the
original contribution (CIVIL CODE, Art. 1799).
Q: When is the partnership liable for acts of partners?

ANS: The liabilities of the partnership are subject to the following rules:
Acts Liability
Apparently carrying on in the usual way Every partner is an agent and may
of business of the partnership execute such acts with binding effect
even if he has no authority unless the
third person has knowledge of such lack
of authority
Strict dominion or ownership Partnership is not bound, unless

authorized by all the other partners or
unless they have abandoned the
business
666
In contravention of a restriction on Partnership is not liable to third persons
authority having actual or presumptive knowledge
of the restrictions, whether or not for
carrying on in the usual way the
business of the partnership
(DE LEON, Partnership, supra at 177-179; CIVIL CODE, Art. 1818).

Q: What acts are covered by "acts for apparently carrying on in the usual way of
business"?
ANS: It refers only to acts of administration (CIVIL CODE, Art. 1800).
Q: What is the liability of a partner who enters into a contract without authority?
ANS: The particular partner who undertakes to bind his co-partners by a contract
without authority is himself personally liable on such contract (DE LEON, Partnership,
supra at 182).
Q: May an admission of a pprjper .e considered as • admission •against the

partnership? ,,rg4 ..4,-.
.. •,. , ••
ANS: Generally, an admission by, is an admission against the partnership
under the following conditions: .1, , ....
1. The admission must concertil
e'
pa
,, ba, erstlip, f-L ,. ,
2. Within the scopeRfohis autho ity CIVIL CODE, Ad: X0).
dr
A v.
Q: What is the effect uponlhe partbers ip of giving notipe toe partner?
ANS: Notice to a IS is, notice to Re partnership. A partpership cannot claim
ignorance if a paller ne kwever, no 'c to a partner givlin Ale already a partner,
is notice to the,Ariners •, ipYprovided •Itirl s to partner ip affairs' ARAS Civil Code,
supra a( 691)
Q: Is knowledge of gogart e r, w fie otice has bden

TAiirenralso considered as
knowledge of thIlisarOrs ip?
ANS: Knowledge ate part er is also kno. Iedge of the firm provided:
1. The partner 4ting the particu We .:evolved acquires the knowledge;
and
Note: It may i,,,eve be‘cquired while already a partner or even prior to that
time, provided; esstil 'igemembers the same.
2. Although not a In An the particular matter involved, the partner having
knowledge had reason to believe that the fact related to a matter which had
some possibility of being the subject of the partnership business and only if he
was so situated that he could communicate it to the partner acting in the
particular matter before such partner gives binding effect to his act (5 PARAS,
Q: What is the liability of the partnership with regard to the partner's tort or
breach of trust?
ANS: The rules on liability are as follows:
1. Where, by any wrongful act or omission of any partner acting in the ordinary
course of the business of the partnership or with the authority of his co-
partners, loss or injury is caused to any person, not being a partner in the
partnership, or any penalty is incurred, the partnership is liable therefore to the
same extent as the partner so acting or omitting to act (CIVIL CODE, Art.
1822);
2. The partnership is bound to make good the loss:
a. Where one partner acting within the scope of his apparent authority
receives money or property of a third person and misapplies it; and
667
b. Where the partnership in the course of its business receives money or
property of a third person and the money or property so received is
misapplied by any partner while it is in the custody of the partnership
3. An partners are liable solidarily with the partnership for everything chargeable
to the partnership under Articles 1822 and 1823(C/VIL CODE, Art. 1824); and
4. The rule of respondeat superior (rule on vicarious liability) applies to the law of
partnership in the same manner as other rules governing the agency
relationship.
Q: Who can be held liable for a partner's misappropriation of money belonging to

a customer who was already in the custody of the partnership?
ANS: Either the firm or the partners can be held liable. The liability is for the whole
amount because it is solidary. However, if an innocent partner is made to pay the full
amount, he can recover the whole amount, plus the interest from the guilty partner (5
)1,
Q: Will a new partner, wh en ed in n Vptiftgpartnership; be held liable for
partnership obligati° ecirif a ted:prior.to. igadmipsjon'Atc:itthe partnership?
ANS'. Yes, but his lia )ity, iterhl only to his s al-e,itrth0a pership property, not to
his own individual •Iff-olite:esIC .1,11L-'00r1E77Crb-M6P;6•PA4A,5, Civil Code, supra at
699).
t ‘''a_
Q: Enumeratefhe rig is of J partner !n`-iilartnershi
(.1)
ANS: The rights rtner i cue e:
1. Prop rt rig is of a
2. Righ imburse the-hrtnership and to
inde nifi ton ent -1-/V/L CODE, Art.
1796
3. Right o s ciat m in
e his NS*11
4 re (CIVIL CODE,
Art 18 4);\ \S -
4. Right o ccesnd kind orhq..,pa___,eNit bo ks (CIVIL CODE, Art. 1805);
5. Right to ti:.tie and I Irffofta lom of allilbings ecting tKe partnership (CIVIL
CODE, ArtV06); in -.."'' -=.- -I-__
ti-\ /J------
6. Right to a forkefIrn f-partnersh'i er certain circumstances
(CIVIL CODE, A" 869j1 1A
7. Right to have Disso tie —end witielin§ 0 yodecree of court (CIVIL CODE, Art.
1830).
Q: What are the property rights of a partner?

ANS: The property rights of a partner are the following (SIM):
1. His rights in Specific partnership property;
2. His Interest in the partnership; and
• 3. His right to participate in the Management (CIVIL CODE, Art. 1810).
Q: What is the nature of a partner's right in specific partnership property?

ANS: A partner does not actually own any part of partnership property or property
owned by the partnership as a separate business entity, although he has equal rights
with his partners to possess specific partnership property (CIVIL CODE, Art. 1811), the
law contemplates tangible property (DE LEON, Partnership, supra at 153).
Q: What is the nature of partner's interest in the partnership?

ANS: A partner's interest in the partnership is his share of the profits and surplus (CIVIL
CODE, Art. 1812).
668
•
Q: Is a partner's interest considered a debt due from the partnership?

ANS: No. A partner is not a creditor of the partnership for the amount of his share (DE
Q: May a partner assign his whole interest in partnership?

ANS: Yes. He may assign his interest (his share in the profits and surplus) in the
partnership to any of his co-partners or to third persons without the consent of the other
partners, in the absence of agreement to the contrary (DE LEON, Partnership, supra at
160).
Q: What are the effects of assignment of partner's whole interest in partnership?

ANS: The assignment of partner's whole interest in partnership will result in:
1. Rights withheld from assignee: (IRI)
a. To Interfere in the management;
b. To Require any information or account; and
c. To Inspect any of the partnership books.
2. Rights of assignee of partnees4ifiterest: (PRIA)
a. To receive in accOr,dericgrith his contract the Profits accruing to the
assigning partnetift;.40'
b. To avail himself of thpq ,.. 11 Remedies provided by law in the event of
fraud in the manape,W,P'' -,$ , ,,,. P%
c. To receive the eeighgrl§ etestiiikCaveaR4ssolution; and
d. To require an AccoUffi 'of partnershiOgffeq, but only in case the
partngspiti is dissolybd d such accountsi II cover the period from
the ate only of thWigs account agreed' fo y all partners (CIVIL
CODEP41 OR. 1
tvl,ke
1 484t.,,,,,
Q: If a partnerotsigned ffis'ilfterestlo tit• child, and onsOuently his child wants
to join the miagelitent of the cbrri ation, will the Iother partners' refusal
necessarily itsolireltercgrpoPation? , gb
- -. : ,,-' -1-;;;4..,.
.>1.--;-• -v.
ANS: No, the Mere assig1 pnt ditilbot (Is olve the rm ..1 s s-so even if the other
partners did norlisoffie child to participate in the firm's business conduct. The
partner's child did triot beco e
.., a partner — e was a mere assignee (entitled to collect
only whatever profits hkfather could hav ed),,(5 PARAS, Civil Code Annotated,
supra at 670). Zel
Q: What is the remed $ke claitor after securing judgment on his credit?
ANS: Application for a cffedg order after securing judgment on his credit to subject
the interest of the debtor par ner with payment of the judgment debt (CIVIL CODE, Art.
1814). • • . . .
Q: What is meant by a "charging order"?

ANS: A "charging order" upon a partner's interest in the partnership refers to the
remedy available to a judgment creditor of a debtor partner to charge the interest of the
latter in the partnership by means of a court order for the purpose of satisfying the
amount of judgment. A receiver of the debtor partner's share of the profits may even be
appointed. However, the charging order is always subject to the preferred rights or
partnership creditors (CIVIL CODE; Art. 1814; JURADO, Civil Law, supra at 1053).
Q: In case of a debtor-partner who Is insolvent, what is the remedy of a creditor

after obtaining a final judgment in his favor?
ANS: Creditor may go to the same court (or any other court possessed of jurisdiction)
and ask that debtor-partner's interest in the partnership be "charged" (attached or levied
upon) for the payment to him (creditor) of whatever has not yet been paid him with
interest thereon (5 PARAS, Civil Code Annotated, supra at 671).
669
• ;7, ..;•;gq,i';:.:;?i:.-^",Ti.
C. DISSOLUTION AND WINDING UP

Q: Define dissolution of a partnership.
ANS: It is the change in the relation of the partners caused by any partner ceasing to be
associated in the carrying on as distinguished from the winding up of the business
Q: Is a partnership terminated upon dissolution?

ANS: On dissolution, the partnership is not terminated, but continues until the winding
up of partnership affairs is completed (CIVIL CODE, Art. 1829).
Q: Explain the concepts of dissolution, winding up and termination of a

partnership.
ANS: The definition are as follows:
Dissolution Winding Up Termination

The change in the relatio ep The point in time after all
of the partners caused- sines a 411e partnership affairs
any partner ceasing. 4)e' ) ,Aolptir511-' hap been wound up (5
associated in the c f 15f/ S, Civil Code, supra
the business (C/ 02-703).
Art. 1828). It is 11)
time • when
cease to
business tog
—6.4./LIIIIIL;
Q: When doe for-ye prescript a iod of t htldilner to demand
an accountin of e artne hip-butm ss-start-t 1
ANS: As long sbe, 40,5f:10 rn y darn nd an accounting
of the partnership busin 11at nigh tarts t,run only upon the
dissolution of th partne al ting i done ( mnace v. CA, G.R.
No. 126334, Nove ber 23,
Q: What are the kin

ANS: There are two kin
1. Extrajudicial (CIV
2. Judicial dissolution (C/
Q: Enumerate the causes for extrajudicial dissolution

ANS: The causes for extrajudicial dissolution are: (WovCET-DICiD)
1. Without violation of the agreement between the partners: (TE3)
a. By the Termination of the definite term or particular undertaking
specified in the agreement;
b. By the Express will of any partner, who must act in good faith, when no
definite term or particular undertaking is specified;
c. By the Express will of all the partners who have not assigned their
interests or suffered them to be charged for their separate debts, either
before or after the termination of any specified term or particular
undertaking; or
d. By the Expulsion of any partner from the business bona fide In
accordance with such a power conferred by the agreement between
the partners;
2. In Contravention of the agreement between the partners, where the
circumstances do not permit a dissolution under any other provision of this
article, by the express will of any partner at any time;
670
-1417 • •••
•
3. By any Event which makes it unlawful for the business of the partnership to be
carried on or for the members to carry it on in partnership;
4. When a specific Thing which a partner had promised to contribute to the
partnership, perishes before the delivery; in any case by the loss of the thing,
when the partner who contributed it having reserved the ownership thereof,
has only transferred to the partnership the use or enjoyment of the same; but
the partnership shall not be dissolved by the loss of the thing when it occurs
after the partnership has acquired the ownership thereof;
5. By the Death of any partner;
6. By the Insolvency of any partner or of the partnership;
7. By the Civil interdiction of any partner; or
8. By Decree of court under the following article (CIVIL CODE, Art. 1830).
Q: What are the grounds for judicial dissolution?

ANS: On application by or for a partner the court shall decree a dissolution whenever:
(BIG-LIPO)
1. A partner has been declaredqnsane in any judicial proceeding or is shown to
be of unsound mind; '
2. A partner becomes in ay Incapable. of performing his part of the
partnership contract; A
3. A partner has been Guilty of1 sufco duct as tendk to affect prejudicially the
carrying on of the business;,
4. A partner willftilly,tor persT ep ly commits a Breach of the partnership
agreement, sin otherwise ,sonducts
---4 himself TA1 afters relating to the
partnership bl§jress that Jt'is of reasonably _practicable to carry on the
business in,gartniOhipiviCh him
5. The bigyjess ofiDel'partnership only be carped oon at Loss;
6. Other;dircum52nces rendeNsso tion equitable; and
7. On lagpircOpiO7Ae 1314chaserC a partnvs interes ender Article 1813
or 1814, after ttie.ferminaft of specifie arts.0 lar undertaking; or
at any rtime,ifilpi,artnerstr warmsa partnership rill the interest was
assigned rAVhen tV,e, charging ci oerwas issued (CIVIL CODE, Art. 1831).
Q: When a firm is dikseolye' , does tb41 :; 17#14t:kti

. m,contracts and obligations
previously entered 41{to, whebeiVthel4Was4r4iliFacreditor or the debtor,
automatically cease?
ANS: No. The firm is stillllov4fed to collect previously acquired credits; it is also bound
to pay off its debts. A diallvAd partnership still has personality for the purpose of
winding up of its affairs, or of completing transactions begun but unfinished (PARRS,
Q: What are the effects of dissolution as to partner's authority to act for the
partnership?
ANS: The general rule is dissolution terminates all authority of any partner to act for the
partnership (CIVIL CODE, Art. 1832).
Q: Is the rule on termination of all authority of a partner as an effect of dissolution

absolute?
ANS: No. A partner can still act for the partnership in the following instances:
1. Acts necessary to wind up partnership affairs; and
2. Acts necessary to complete transactions begun but unfinished (CIVIL CODE,
Art. 1832).
671
Q: Insofar as the partners are concerned, what are the qualifications to the
general rule regarding the effect of dissolution?
ANS: The qualifications are:
1. When dissolution is not by act, insolvency or death of a partner, dissolution
terminates the actual authority of a partner to undertake new business for the
partnership (CIVIL CODE, Art. 1832); or
2. When dissolution is by act, insolvency or death of a partner, authority of
partners inter se to act for the partnership is not deemed terminated. Thus,
each partner is liable to his co-partners for his share of any liability created by
any partner acting for the partnership as if the partnership has not been
dissolved. This rule is subject to the following exceptions:
a. The cause of dissolution is the act of a partner and the acting partner
had knowledge of such dissolution; and
b. The cause of dissolution is the death or insolvency of a partner and the
acting partner had knowledge or notice of such dissolution (CIVIL
...,,,,,...---,,,,........,. „
CODE, Art. 1833).
4"1,
fications io,the gene ral rrpith
k to7'.,,twect
,, to third persons?
Q: What are the quali
ANS: With respect to pirkFiVias2lbe.qualifiCalions are: „,- N.
1. When partnerspip.isbbund to third persons (WCuN)
a. Adai3OspArialejor-Wititlifi'0"Wpartwsh,Kgffairk
b. 0.tioramplfting uofinfSilted-tcansacons.k, \ d
c. hCorlplesfely New tansa4on:s1which woul bind\he partnership if
Idissolation had not taken0ape provided theloq. epa is in good faith,
I riardrig: 1 11'91 ......01
4---#. 1 Previous ad:sditor i(padlikeViouly exte ded . cedit) and he had
no kn6wledgelirioticeribf
,,,,D. , , a4, the cjissolutio .or 1
Ndfi( revious:pe -ditor and tleaet of issol ton had not been
r) pl.lVi d'd in a newspaper of.ge ea circuil fig.
2. WhenipaltneEshipl No,t borTh Splt)Ird4oirons after issolution: (N2IU2)
a. Where partnetsIiip, '-s.id seollfausefit was Unlawful to carry on
the businkss, ek,9e the",crs-teor wjnding upf
b. 1,A ere the acting he crar ion has blcome Insolvent;
c. Whd e the partnei-rs-Una drized,0-wirgoi ,except if the transaction
is wit third rssih'S4in,.;griod'IalihkIsarbesicircumstances as defined
above); I / Nif A,"-\\..::',"
d. Where act ig'%.Not appr pnT19for` winding up or for completing
unfinished transactions;
e. Completely New transaction which would bind the partnership if
dissolution had not taken place with third persons in bad faith (CIVIL
CODE, Art. 1834).
Q: What is the general rule as to partner's existing liability in case of dissolution?
ANS: Dissolution does not of itself discharge the existing liability of any partner (CIVIL
CODE, Art. 1835, par. V.
Q: What is the exception to the general rule that dissolution does not discharge
the existing liability of any partner?
ANS: A partner may be discharged from all existing liabilities upon dissolution ONLY by
an agreement between himself, the partnership creditor and the persons or partnership
continuing the business; and such agreement may be inferred from knowledge of the
dissolution and the person or partnership continuing the business (CIVIL CODE, Art.
1835, par 2).
672
Q: What are the kinds of winding-up?
ANS: Winding up may be done extra-judicially or judicially:
1. Extrajudicial winding-up:
a. By the partners who have not wrongfully dissolved the partnership; or
b. By the legal representative of the last surviving partner (when all the
partners are already dead), provided the last survivor was not
insolvent.
2. Judicial winding-up - under the control and direction of the court, upon proper
cause that is shown to the court (CIVIL CODE, Art. 1836).
D. LIMITED PARTNERSHIP
Q: What is a limited partnership?
ANS: A limited partnership is one formed by two or more persons under the provisions
of Article 1844 of the Civil Code, having as members one or more general partners and
one or more limited partners. The limited partners as such shall not be bound by the
obligations of the partnership (CIVIL CODD Art. 1843).
Q: May a limited partner contribute: !eisame things that a general partner may
contribute. mot
1r! ,
ANS: No. A limited partner in a limifd - rs p cannot contribute mere industry or
services (CIVIL CODE, A rt.,g1
t 845),IfrR.
,
la• -vefty:6'..
Q: What are the requtefiVents for tht fo oration of a limite artnership?
ANS: In forming a 11 deed ,partnershipP1 e following requi nts must be complied
with:
A; t§Apmw ''?
1. The certificate ork9rticles of stating the matters
enumerated
,,,,,- in Xlicie41844,of th e signed and sworn
to; airlso N,
2. SuO,ttertifica‘Vst betfiled fOrrecord :El Securities and
Exchange Cgrnrni§ sion pt DE, Art. 184
Q: Is the execution f a certificate' of limed partnership required?

ANS: Yes. A prime requisite: formate X ited partnership, under Article 1844,
is the execution of the, °r' rti as a rule, must contain the
matters enumerated in1gaid ar lc Thus, a mite. partnership cannot be constituted
orally. The statements kluired'iligthe certificate must be true at the time the certificate
and other required papers, ed with the SEC (DE LEON, Partnership, supra at 285).
Q: Is strict compliance with the requirements necessary?

ANS: No, a strict compliance with the legal requirements is not necessary. It is sufficient
that there is substantial compliance in good faith. However, a firm which fails to
substantially comply with the formal requirements of a limited partnership is a general
partnership only as to its relations to third persons (DE LEON, Partnership, supra at
286).
Q: How is a Certificate of Limited Partnership amended?

ANS: The procedure on amending a limited partnership are as follows:
1. In the following cases, a certificate shall be amended: (NASA-RIDIC-DCET2)
a. There is a change in the Name of the partnership or in the amount or
character of the contribution of any limited partner;
b. A person is Substituted as a limited partner;
c. An Additional limited partner is admitted;
d. A person is Admitted as a general partner;
673
( „ •',...'- ,i...;.:-L7,-•.F.,4,-;:c.,, A.„::,-•,:••• .... • - - i.,
-4;:•.”-
.......kvio„%-..=-`'.B ED N
'14 . • . ' :',;e•P,' : •
RE• D BOOK
e. A general partner Retires, Dies, becomes insolvent or insane, or is
sentenced to civil interdiction and the business is continued under
Article 1860;
f.
There is a change in the Character of the business of the partnership;
g.
There is a false or Erroneous statement in the certificate;
h.
There is a change in the Time as stated in the certificate for the
dissolution of the partnership or for the return of a contribution;
i. A Time is fixed for the dissolution of the partnership, or the return of a
contribution, no time having been specified in the certificate, or
j. The members Desire to make a change in any other statement in the
certificate in order that it shall accurately represent the agreement
among them (CIVIL CODE, Art. 1864, par.2).
2. The certificate must be signed and sworn to by all the members, and an
amendment substituting a limited partner or adding a limited or general partner
shall be signed also by the member to be substituted or added, and when a
limited partner is to be sub%ituted,,the amendment shall also be signed by the
—,,,,,.
assigning limited parinen and
, a I I 1, —"' ,, %,t,,,,
.40
3. The cancellatiolpgLantexidment putill?e recopied in the SEC (CIVIL CODE,
Art. 1865). 4, < v? 1:,,,,,......''.....r4 -1 I ,e'
4, ,k Ni,..V..- ..,,,.
Q: Can a limited pdrth4b0eld.liableTorgartnerifilp4idatitkns?
ANS: A limited pfiker\c"Knotbe hog liable fp.r partèrilliptoitgalions (CIVIL CODE
Art. 1843). Howfiver,lf,'his sarname!'appWars4n. the pprtnetship oryirm name or if he
participates in tjie managemdnt or contrOlAthe business, h (alMheld liable (CIVIL
CODE, Arts. 111408
ri8).
: r. :1•2:• ,'
1i
Q: May a limited pa' ner be eld !lab e,as:aigeneral artne ft.loa
ANS: A limite plrinersh o becorielialre as a ge "gApariner Less, in addition to

the exercise o Is FR
• s
is a .
`-`''' ers aso [mite p er) he takesii rt in the control of
the business ( VIL CODE .A,..,848)1 5) ,..f7:-.• j
:\.: '
Q: May addition I limited,partneftcpt i.ti/ ' partners
dt:phe i I p?
‘ ---, a*
ANS: Yes. After the formafro of aStrntte -parknership,eadditiong, limited partners may
be admitted upon filihg an asnend?iientlt lelorigi arcerateln accordance with the
requirements of Article4.865WVitODE
Liz vArt-
Q: Enumerate the rights of Na limLzi paMeil .\-

ANS: The rights of a limited partner arethe'ffillowing: (KIP-RAID)
1. To require that the partnership books be Kept at the principal place of
business of the partnership (CIVIL CODE, Art. 1851);
2. To Inspect and copy at a reasonable hour partnership books or any of them
3. To demand true and full Information of all things affecting the partnership
4. To demand a formal Account of partnership affairs whenever circumstances
render it just and reasonable (CIVIL CODE, Art. 1851);
5. To ask for Dissolution and winding up by decree of court (CIVIL CODE, Art.
1851);
6. To receive a share of the Profits or other compensation by way of income
7. To receive the Return of his contribution provided the partnership assets are in
excess of all its liabilities (CIVIL CODE, Art. 1857).
674
Q: May a person be a general and limited partner at the same time?
ANS: Yes, provided the same is stated in the certificate. His rights are those of a
general partner. However, regarding his contribution, he would be considered a limited
partner, with the rights of a limited partner insofar as the other partners are concerned
(CIVIL CODE, Art. 1853; 5 PARAS, Civil Code, supra at 751-752).
Q: Enumerate the liabilities of a limited partner.

ANS: The liabilities of a limited partner are subject to the following:
1. A limited partner's liability for unpaid contribution are the following:
a. For the difference between his contribution as actually made and that
stated in the certificate as actually made; and
b. For any unpaid contribution which he agreed in the certificate to make
in the future at the time and on the conditions stated in the certificate.
2. A limited partner is considered as trustee for the partnership for:
a. Specific property stated in the certificate as contributed by him but
which he had not contributed;
b. Specific property of tti:eVaTtnership which had been wrongfully returned
to him;
c. Money wrongfully par
contribution; ands"! r •". .
tr, conveyed to him. on account of his
d. Other property wrbMK, POrgr.convey,to him on account of his

contribution ROL. dq9OPArr :4-858,,
fig
;
Q: Who is a substitute- invited partner?
ANS: He is a person admitted to all fire-rightsof a limited a near who has died or has
assigned his interestini.therprtndrSgip (CIVIL CODE, Art
450- lebt9w.
Q: What is the effect of death, i'e,tirffient, insol enc civ interdiction of a
general partipricot,paFt nekbip?4t.,
ANS: _The parkiership is dissolved, less e remainiff ners continue the
business: . „ Yy
4,A. 4
1. Under a rignao do5, o statcd in the' certificate, or
2. With the anspnt otal members .CI, . ODE, Art. 1860).
_ tA
A NATURE, FORM AND KI DS OF AGENCY
Q: What is a contract.of agency?
ANS: By the contract of agency a person binds himself to render some service or to do
something in representation or on behalf of another, with the consent or authority of the
latter (CIVIL CODE, Art. 1868).
Q: What are the essential elements of agency?

ANS: The essential elements of agency are: (COW)
1. Consent of the parties, express or implied
2. Object: which is the execution of a juridical act in relation to third persons
3. The agent must act Within the scope of his authority
Q: Distinguish agency from partnership.

ANS: An agent acts not for himself, but for his principal; a partner acts for himself,,for
his firm, and for his partners. It may even be said that partnership is a branch of the law
on agency (5 PARAS, Civil Code, supra at p. 774).
675
Q: Distinguish between a contract of agency and a contract of lease of services.
ANS: The two contracts may be distinguished in the following ways:
Contract of Agency I Contract of Lease of Services

As to basis contract
The basis of contract in the contract In a contract of lease of services, the basis
of agency is representation. is employment.
As to mode.of extinguishment
The contract of agency may be Concurrence of both parties is necessary
extinguished at will by the principal. in the case of contract of lease of services.
As to exercise of discretionary powers
The agent exercises discretionary The employee exercises ministerial
powers in order to attain the endlor 'TuTeirdhsxo ly.
which he was appointed.
J T
As to kind of contract
<0: Atv ' .4,-
The contract /or 'agency is. — 71-r.e of "services is a
preparatory confrAtrN ipj• ,;.Onncipal co: tracL‘er)
r
(DE LEON, Pa ershif sup at 350) , •
. .
Q: Who are theparties in a ontrat:t cf;gencr,
ANS: The two arresfin a con ract oimper.cyjxel,
1. Princli kn the agenbre'presenis Ari d fr m wlfo n he derives his
autholi 0 et-an o &act ofagepcy
2. Agent ne Arloper, isrtf person acting in
representativezapac(s,y LICthba .768).
\/``
Q: What are the\equisites in order:sthk rincipal ay be iound by the act of
the agent?
ANS: The requisites are: 0
1. The agent mus twepi lt "A
bt o)1- /
*ty; and
2. The agent must act4i behalf o PARAS, Civil Code, supra at
810).
Q: May an agent be held principally liable?
ANS: Yes. If an agent acts in his own name, he is the one directly bound in favor of the
person with whom he has contracted, as if the transaction were his own. The principal
has no right of action against the persons with whom the agent has contracted; neither
have such persons against the principal (CIVIL CODE, Art. 1883, par.2).
Q: Is the aforementioned rule absolute?
ANS: No. The rule does not apply when the contract involves things belonging to the
principal (CIVIL CODE, Art. 1.883).
Note: The provisions of this article shall be understood to be without prejudice to the
actions between the principal and agent (CIVIL CODE, Art. 1883, par. 3).
Q: An agent, acting in his own name, sold a thing belonging to the principal to a
third person. Can the third party sue the principal in case the thing has hidden
defects?
ANS: Yes. Although the agent acted in his own name, still the sale involved a thing
belonging to the principal. Here we apply the exception stated in the second paragraph
of Article 1883. The sale is valid (5 PARAS, Civil Code, supra at p. 823).
676
.-:,-0.,:;:••,:,..::-3,wg...iti.-.7•2•;;:,
i 77 -, :' • i--- '' •- ' .'•••'" •
.4.,•;11.
1,..'.
• :!;•.:".o<,;:4•:5,......,51-.....P`.,..;f1:-: f.,•.'., '-;.:'.4..,./...;_;;;..4;',..pi•;,.1,i,,A,115,,;,R.ii.v.,,,,,,;,:v
14t:
;
Q: May an agency be presumed?

ANS: Agency is generally NOT presumed. The relation between principal and agent
must exist as a fact. However, a presumption of agency may arise in cases where an
agency may arise by operation of law or to prevent unjust enrichment (DE LEON,
Partnership, supra at 378-379).
Q: Is there a required form for agency?

ANS: None: The usual method by which an agency is created is by contract which may
be oral, written or implied (DE LEON, Partnership, supra at 375).
Q: What is the form required when the sale through an agent involves a piece of
land or any interest therein?
ANS: The authority of the agent shall be in writing; otherwise, the sale shall be void
Q: Is compensation, under the contract of agency, presumed?
ANS: Yes. Agency is presumed to be fofq compensation, unless there is proof to the
contrary (CIVIL CODE, Art. 1875).
Q: What are the kinds of •4xr$
ANS: Kinds of agency may be clatsike:Wfallows:
1. As to manner of its creatibrij: .:A
a. It may either,44 expf6k be'r
b. ImpliestiO''
2. As to its charfebter.
a. It mayofe gratuitous;
Onsrptss/CcItl
ip a ed
3. As to extent of bu:iihess cotered:
a.CR,may,ibp,general; •
ob38 • [elm,
4. As tcleuthorityct erred:,,,t
a. Three.9.0:0(icheid iften ral terms; or
b. Cacipfied inlpecific7terms
5. As to its nature andilff
ects:
a. It may,fieIdgfensibleome Itsen,e1L'rpt.
b. SimpletommissiKbEeE00,AFraPit, supra at 374-375).
Q: May an agency be irtipitA
ANS: Yes. As indicated iabkit1869, the principal must know "that another person is
acting on his behalf without authority" for an agency to be implied (DE LEON,
Partnership, supra at 374). Agency may be implied from words and conduct of the
parties and the circumstances of the particular case as established in Arts. 1869 -1872
Q: Enumerate the'different kinds of implied agency.

ANS: The kinds of implied agency are as follows: (ASAR)
1. From Acts of principal;
2. From his Silence;
3. Lack of Action; or
4. His failure to Repudiate the agency knowing that another person is acting on
his behalf without authority (CIVIL CODE, Art. 1869).
Q: Is there a required form for the acceptance of agency by the agent? •
ANS: None. Acceptance by the agent maybe express, or implied from his acts which
carry out the agency, or from his silence or inaction according to the circumstances
677
•„•‘;
A7Z:fr
( -fittgp ,
,•• w....-- , ,--,g,.2-,,,, v.,- , k,=e ,*1 -, ,c .,,,t.. :::,.....::.:
Q: May the acceptance of the agency be implied between persons who are
present?
ANS: Yes. Between persons who are present, the acceptance of the agency may also
be implied if the principal delivers his power of attorney to the agent and the latter
receives it without any objection (CIVIL CODE, Art. 1871).
Q: When is the acceptance of the agency implied between persons who are
absent?
ANS: Between persons who are absent, the acceptance of the agency cannot be
implied from the silence of the agent except:
1. When the principal transmits his power of attorney to the agent, who receives
it without any objection; or
2. When the principal entrusts to him by letter or telegram a power of attorney
with respect to the business in which he is habitually engaged as an agent,
and he did not reply to the letter or telegram (CIVIL CODE, Art. 1872).
Q: Explain the doctrine of agencylinFeTVt,,,,
ANS: Strictly speaking, an.eagencycan qev9r Oekqealeakby, necessity. What is meant by
the phrase "agency by Decessitylthatpy virtue;'ofithelexice of an emergency, the
authority of an agent .s;c4esi:Ionditi'diy enlarged 'in...order-6 4e with the exigencies or
the necessities of tD 41143r9e trrhe five,(5):condig2zgleid,doWrifpr authority of agency
by necessity are: (gRI.QA) "1,
1. The rest dki46; ce of an Enlarg9pcy;
2. Inabilil t,i of the gen to communicate with the Princikl;
3. Exercrs-o addi ional-AuthWfor-theprin'ciparepwn protection;
4. The 4dort? of fait Reazenabmeauivpreinises 4lytbilAidered; and
5. The Cease of the uthorityitielthiEumnt the emerg rr,yAci longer demands
the sTairr (PiNEDA, artners*Wa at 301)T7.:71 I
Q: When is there Qagen .testopgl?
ANS: If a persoV)eci4y in °ON:War d.;ttaAby;publid'advertisement that he has
given a power of i ttorneNto a*k the.14pe4ferebli
becorri,e's a duly authorized
agent, in the forgier ca k, wittickelapc41.4eYersoif who ieceived the special
Information, and in e latter case, ? rfypetson. The power shall continue
to be in full force unti C;184kqscit-f thelameànner in which it was given
CPA nki .
Note: One who clothes another app) ef. iltho • oas his agent, and holds him out
to the public as such, cannot Ce'rerrnitted o den -t e authority of such person to act as
his agent to the prejudice of innocent third parties dealing with such person in good faith
and in the honest belief that he is what he appears to be (Cuison v. Court of Appeals,
G.R. No. 88539, October 26, 1993).
Q: What is the liability in agency by estoppel?

ANS: There is really no agency at all, but the alleged agent seemed to have apparent or
ostensible, although no real authority to represent another. The liabilities are as follows:
1. Estoppel of Agent — One professing to act as agent for another may be
estopped to deny his agency both as against his asserted principal and the
third persons interested in the transaction in which he is engaged.
2. Estoppel of Principal:
a. As to agent — one who knows that another is acting as his agent and
fails to repudiate his acts, or accept the benefits of them, will be
estopped to deny the agency as against such other;
b. As to sub-agent — to estop the principal from denying his liability to a
third person, he must have known or be charged with knowledge of the
fact of the transmission and the terms of the agreement between the
agent and sub-agent; and
678
c. As to third persons — One who knows that another is acting as his
agent or permitted another to appear as his agent, to the injury of third
persons who have dealt with the apparent agent as such in good faith
and in the exercise of reasonable prudence, is estopped to deny the
agency.
3. Estoppel of Third Persons — A third person, having dealt with one as an
agent may be estopped to deny the agency as against the principal, agent or
third persons in interest.
4. Estoppel of the government — The government is neither estopped by the
mistake or error on the part of its agents (Pineda v. CFI of Tayabas, G.R. No.
L-30921, February 16, 1929). But it may be estopped through affirmative acts
of its officers acting within the scope of their authority (Bachrach v. Unson,
G.R. No. 25853, December 31, 1926).
Q: Distinguish agency by estoppel from implied agency.
ANS: The differences are:
Agency by Estoppel Implied Agency
As to The Existence of An,Actual. Agency
A
There is no agency at all, butAhVg.ki4 , Sh-INs an Rteal agency, as much as
assuming to act as agentpTappat$1 illierettee'cliby express words. The
or . ostensible, alipaygh'' not pal principal albnAis liable (DE LEON,
authority to represe 1 bolther. It is.j01 Partnership, supra at p.390).
real agency as is one 'der exprets dra
implied authority.
' As Between the Principal and The Agent
In an agerery Vgraibthe'llagent" i In an.. e agent is a
not a true adb, t; heipce, ie has6nclights,' true agerif- is and duties of
as such. -.s an agent (5 PARAS, Civil Code, supra
• at 786).
As to Third Persons.
If the estoppel i cause by the In an implied agency, the principal is
principal, he is liable, A,9n ir the third' always liable
person acted on the migMtentation
In an implied agency, the agent is
If the estoppel is caused by the agent, it never personally liable
is only the agent who is liable, never the (5 PARAS, Civil Code, supra at 786).
alleged principal.
Q: Distinguish a general agency from a special agency.

ANS: General and special agencies are distinguished as follows:
General Agent Special Agent

I •
Scope of Authority
Usually 'authorized to do all acts Authorized to do only one or more

connected with the business in which specific acts in pursuance of particular
he is engaged. instructions or with restrictions
necessarily implied from the act to be
done.
679
??-;14',k.iSrt--:!.!;:7-. .-P'.11,
.ti V:$-;;I:** ".';'•
Continuity
Conducts a series of transactions Usually involves a single transaction or a
involving a continuity of service. series of transactions not involving
continuity of service.
Extent to which Agent may Bind Principal
Binds his principal by an act within the Cannot bind his principal in a manner
scope of his authority although it may beyond or outside the specific acts which
be contrary to his special instructions. he is authorized to perform.
Termination of authority
Apparent authority does not terminate Termination effective as to eparty
by mere revocation of authority without unless agency was for the purpose of
notice to 3rd parties. contracting with that 3rd party.
Construction of instructions of principal
Statement of principd ith erspet*to'' Aut • agent must be strictly
the agent's auth9fitgo I t drdinarily const
be regarded as advisorylo ..„..--- 77, 7"-----„ k
(DE LEON, Part ii, ip prat p. 4r)9) A X 1 \Cell
dt ; \ f ( _pt.)
Q: Is a genera the dame-with.alibency-colhed to v...eral terms?
ANS: No. A g gency tiuskaptif !t onft.9pcl•witti one apichi • in general terms
which is a sp ncy wh re it rcilv§pjfigleme or more pecif c transactions (DE
LEON, Partne pra t )i3). 'ill i
Note: An age neral-t s-r2ornpris9g ac dninistration, even
if the principal I.S.IAP,P thdt th pent may execute
such acts as he or t ageng should authorize
a general and un L 7). i
Q: When is a special power tktriItt NrctO
ANS: A special pow'kof ffo ks:trar-gm„
ssag„,in ants of strict dominion or
ownership as distinguae fr6 ets o in st ,EON, Partnership, supra at
418). 1\
Q: Enumerate the cases where specie owers of attorney are necessary.
ANS: A Special Power of Attorney is required in the following cases: (Pallo-DoRa-
GuaPa-GICo3W-ProMSe)
1. To make such Eyments as are not usually considered as acts of
administration;
2. To effect Novations which put an end to obligations already in existence at the
time the agency was constituted;
3. To Compromise, to submit questions to arbitration, to renounce the right to
appeal from a judgment, to waive objections to the venue of an action or to
abandon a prescription already acquired;
4. To Waive any obligation gratuitously;
5. To enter into any Contract by which the ownership of an immovable is
transmitted or acquired either gratuitously or for a valuable consideration;
6. To make Gifts, except customary ones for charity or those made to employees
in the business managed by the agent;
7. To loan or borrow Money, unless the latter act be urgent and indispensable for
the preservation of the things which are under administration;
8. To lease any real Property to another person for more than one year;
680
tED .,BOOK
9. To bind the principal to render some Service without compensation;
10. To bind the principal in a contract of Partnership;
11. To obligate the principal as a Guarantor or surety;
12. To create or Convey real rights over immovable property;
13. To accept/repudiate an Inheritance;
14. To Ratify or recognize obligations contracted before the agency; and
15. Any other act of strict Dominion (CIVIL CODE, Art. 1878).
Q: Is the intervention of a notary public necessary for the validity of a special
power of attorney?
ANS: No. A special power of attorney is valid although no notary public intervened in its
execution (Barretto v. Tuason, G.R. No. L-36811, March 31, 1934). But a notarized
power of attorney carries the evidentiary weight conferred upon it with respect to its due
execution (Veloso v. Court of Appeals, G.R. No. 102737, August 21, 1996).
Q: Suppose that an agent holds a special power to sell a certain property, is he
also empowered by implication to mostgage said property?
ANS: No. Art. 1879 of the CIVIL...00'B Aclares that a special power to sell excludes
the power to mortgage; and a spdaial. poAkto mortgage does not include the power to
sell (JURADO, Civil Law, supra at.70.5) 1"
:01tx121.0
Q: Suppose that an agent holds a sppciallpowr to enter into compromise, is he
also empowered by impli.atjob to ttibmit to ariii ation-VI
ANS: No. A special powat comprorbis does not authoriz .submission to arbitration
Q: Suppose the sv„iktipidi• to sell does not spec the manner nor terms of
payment, maygragentAelittM prepe on credit?
fg Hip agent payment in
ANS: No. Wlakthe saleios valid, the prin opal may derjand Eom
cash, in whiciVecahe'lleer, once. he haselivere4etc,7sItto-ittesirmer, would then
be liable to any interest 43enefAilich ay result froadkailu(CIV/L CODE, Art.
1905). 7 4,
Q: Is the contrac valid inj a case wherein.-an agent with general powers of
administration, leaser09Affother a pv-Kthfitqonging, to his principal for a
period of 10 years attbv000 aye'&013Srible nnbally
ANS: No, the contractynot v. hand binding, because according to the Civil Code, to
lease any real property ozArtpttpr for more than one year, a special power of attorney is
necessary (CIVIL CODE, APT878).
Q: What if in the case above, it was leased to another without a fixed term and at
P100 a month payable monthly?
ANS: Yes, it is valid and binding because it involves merely a simple act of
administration (JURADO, Civil Law Reviewer, supra at 1076-1077).
Q: What is an agency by operation of law?

ANS: An agency by necessity is created, or the ordinary powers of an agent may be
enlarged, when an emergency occurs and an employee or an agent is unable to get in
touch with his employer (DE LEON, Partnership, supra at 560).
B. OBLIGATIONS OF THE AGENT

Q: Enumerate the obligations of an Agent to Principal.
ANS: The following are the obligations of the agent: (CAR2DO-BANICoL)
1. To Cany out the agency which he has accepted (CIVIL CODE, Art. 1884).
2. To be liable for Damages which, through his non-performance, the principal
may suffer (CIVIL CODE, Art. 1884).
681
3. To finish the Business already begun on the death of the principal, should
delay entail any danger (CIVIL CODE, Art. 1884).
4. In case he declines an agency, to Observe the diligence of a good father of a
family in the custody and preservation of the goods forwarded to him by the
owner until the latter should appoint an agent (CIVIL CODE, Art. 1885).
5. To Advance the necessary funds should there be a stipulation to do so, except
when the principal is insolvent (CIVIL CODE, Art. 1886).
6. To act in accordance with the Instructions of the principal in the execution of
the agency. In default thereof, to do all that a good father of a family would do,
as required by the nature of the business (CIVIL CODE, Art. 1887). •
7. Not carry out an agency if its execution would manifestly result in loss or
damage to the principal (CIVIL CODE, Art. 1888).
8. To be liable for damages if, there being a Conflict between his interests and
those of the principal, he should prefer his own (CIVIL CODE, Art. 1889).
9. If he has been authorized to Lend money at interest, he cannot borrow it
without the consent of thejacipal..(QLle.... .CODE, Art. 1890).
10. To render an Acc t nsactiohsond to deliver to the principal
whatever he ma av ceived y 4kgie f agency, even though it may
not be owing t epi ipal,GML-4Q /
11. To be Res 4)1 rftgest on the sum as p ied to his own use from
the day ne • id-strrod-on-4 os ieh \s 4 till owes after the
extingui t th agency, T 7,7
12. To be lesp ible of onlifforlfraud(but al o fore gligence, which shall be
judged with ore o less rigorgii;the courts, ccorc ether the agency
was c r t for a, compensa i9n 171L—C-0- E, A 1)09
,
Q: Who is as b-agp t? far-
ANS: A sub a per emplo appoin a Zi as his agent, to
assist him in rr1.1 •f-am he p n ip w agent has been
empowered to m Pa A41 Aatp 84- 5
titA
'
Q: May an agen lappoinka
ANS: The agent thay appdi gb - 0
u
tor~
sti to if he princ al has not prohibited
him from doing so, t he sh e- ...ig13 e of the bstitute:
1. When he wa not a t.- r o a 000 t.
2. When he was itw ating the person, and the
person appointed n orioui e Viir insolvent (CIVIL CODE, Art.
1892).
Q: What do you mean by joint agents?
ANS: Agents appointed by one or more principals under such circumstances as to
induce the inference that it was the principal's intent that all should act in conjunction in
consummating the transaction for which they were appointed (DE LEON, Partnership,
supra at 485-486)
Q: What Is the liability of joint agents?
ANS: The responsibility of joint agents, even though they have been appointed
simultaneously, is not solidary, if solidarity has not been expressly stipulated. If solidarity
has been agreed upon, each of the agents is responsible for the non-fulfillment of the
agency, and for the fault or negligence of his fellow agents, except in the latter case
when the fellow agents acted beyond the scope of their authority (CIVIL CODE, Arts.
1894-1895).
Q: Is an agent personally liable to the party with whom he contracts?
ANS: No. The agent who acts as such is not personally liable to the party with whom he
contracts, unless he expressly binds himself or exceeds the limits of his authority
without giving such party sufficient notice of his powers (CIVIL CODE, Art. 1897).
682
Q: What is the effect if the agent contracting in the name of the principal exceeds
his authority?
ANS: If the agent contracts in the name of the principal, exceeding the scope of his
authority, and the principal does not ratify the contract, it shall be void if the party with
whom the agent contracted is aware of the limits of the powers granted by the principal.
In this case, however, the agent is liable if he undertook to secure the principal's
ratification (CIVIL CODE, Art. 1898).
Q: May the principal set up the defense of ignorance of the agent?

ANS: No. If the duly authorized agent acts in accordance with the orders of the
principal, the latter cannot set up the ignorance of the agent as to circumstances
whereof he himself was, or ought to have been, aware (CIVIL CODE, Art. 1899).
Q: What is the effect of an act of an agent as to third persons?

ANS: So far as third persons are concerned, an act is deemed to have been performed
within the scope of the agent's authority4such act is within the terms of the power of
attorney, as written, even if the ar gi:as in fact exceeded the limits of his authority
according to an understanding beWepil lt,ile principal and the agent (CIVIL•CODE, Art.
1900).
;h.
Q: What is a commission agent30
ANS: A person whose busiwels tbdte' eiVe flaa5.022,15 egskentrusted to him by the
principal for a commissimiicr is usua ly s Ding in.his own near (PINEDA, Partnership,
supra at 351).
Ali
Q: What is a broker/0,ga
ANS: Is one wtivirengagedgor others .f4i a commis on; a negotiator between the
parties, neverObng in his bwn narndibtit Tithe name of hosewho%mployed him. He is
merely an inte ediaw,,,be een tie purc lamer and the endo,,,DEEON, Partnership,
supra at 360).1 fin
Q: What are the differ-nces betvyeen eCommission Agent, Ordinary Agent and
Broker?
ANS: The differences alvslollows:
Commission Agent I Ordinary Agent Broker

As to Possession of Goods
Needs to have No need to have No need to have possession

possession of the possession (DE LEON, because he maintains no
goods (DE LEON, Partnership, supra at relation with the thing he
Partnership, supra at 519). purchases or sells. He is
519). supposed to be merely a go-
between, • an intermediary
between the seller and the
buyer. As such, he does not
have either the custody or
the possession of the thing
that he disposes of. His only
function is, therefore, to bring
the parties to the transaction
(Pacific Commercial Co. v.
Yatco, GR No. L-45976, July
20, 1939).
683
•••7' .1. ,
:RED BOO
As to Representation
He may act in his own Transacts in the name No relation whatsoever with
name or in the name of the principal the thing he sells or
of the principal (DE purchases
LEON, Partnership,
supra at 519).
Q: What are the obligations of a commission agent?

ANS: The obligations of a commission agent are the following: (CRIB-ND)
1. To be Responsible for the goods received by him in the terms and conditions
and as described in the consignment, unless upon receiving them he should
make a written statement of the damage and deterioration suffered by the
same (CIVIL CODE, Art. 1903);
2. If he handles goods oft ,samTkinthandmark belonging to different owners,
to distinguish • th9,m° y CoNe-nacks; bicl, designate the merchandise
respectively belotigiqg o- ach °Or cirfailk(C(OiL)CbDE, Art. 1904);
3. To Not sell 9ecfedi9 'ffrourtffedkprest_torpili‘kponsent of the principal.
Should he 'o/th ghee in5!:.u1D3gy_st4LnanNrcm,jii,, eqyment in case, but the
commissi g ,a qr-itf alkbe entitOd to arirint ieSLor
le bepefit, which may result
from sup-csge Kivi CODp) Arfil 90/5); \
4. If he islauttied ed t sell oil' crali, t6Inform the prip 14,, 'ith a statement of .
the n riles o • he b ors_s5to: 4 kiiilicz dolso, thet leistall be deemed to
have 9c?' ade fo castmnspf ilas theArinc pal is copcerhed. (CIVIL CODE,
Art. 1,906r 4,1.,,A 6 1--,, n?
o .d
5. To Beqr.the risk IlectiokoicWige pri i,p_ql th; procp,ds of the sale on
1
the strne te ed_upc e-purcha eP/if h should receive on sale,
in aditic t,ohe coniti sipf tree commis ton.(CIVIL
1
CODE,
Art. 1 ,07 ; ca-
-Y
r,!•:Si .:,,,,,
6. To be lipble fONDa Res e oe§ e -co,Ilect 5,redits o;his principal at the
time whOp they Ikcom hles§31 -ProCies that he exdercised due diligence
for that parpose (CV L IVIEINV06
Q: What is the purpOlaa9 n e o issiky

ANS: To compensate thAgez os the Nin p:i:_ehsv,,eand risks he has to undergo In
the collection of the purchase pnte.p.axeLjie,principal (PINEDA, Partnership, supra
at 357).
C OBLIGATIONS OF THE PRINCIPAL

Q: Enumerate the obligations of a principal.
ANS: The primary obligations of the principal to the agent in the absence of such
agreement are: (CARIP)
1. To Comply with all the obligations which the agent may have contracted in his
name and within the scope of his authority (CIVIL CODE, Art. 1910);
2. To Advance, should the agent so request, sums necessary for the execution of
the agency (CIVIL CODE, Art. 1912, par 1);
3. To Reimburse the agent for all advances made by him, provided the agent is
free from fault (CIVIL CODE, Art. 1912, par 2);
4. To Indemnify the agent for all the damages which the execution of the agency
may have caused the latter without fault or negligence on his part (CIVIL
5. To Pay the agent the compensation agreed upon or the reasonable value of
the latter's services (CIVIL CODE, Art. 1913; DE LEON, Partnership, supra at
530).
684
Q: What is the rule when both the principal and agent contract with respect to the
same thing?
ANS: When two persons contract with regard to the same thing, one of them with the
agent and the other with the principal, and the two contracts are incompatible with each
other, that of prior date shall be preferred, without prejudice to the provisions of Article
1544 (CIVIL CODE, Art. 1916).
Q: What is the liability of principal if agent acted in good faith or bad faith?
ANS: In the case referred to in Article 1916, if the agent has acted in good faith, the
principal shall be liable in damages to the third person whose contract must be rejected.
If the agent acted in bad faith, he alone shall be responsible (CIVIL CODE, Art. 1917).
Q: When is the principal not liable for expenses incurred by the agent?
ANS: The principal is. not liable for the expenses incurred by the agent in the following
cases: (CF-SK)
1. If the agent acted in Contraveqpn of the principal's instructions, unless the
latter should wish to avail hirrisOltbf the benefits derived from the contract;
2. When the expenses were 0461011qe Fault of the agent;
3. When the agent incurred.',thefninth •Knowledge that an unfavorable result
would ensue, if the prinC106(.#6.101 aware thereof; and
4. When it was Stipulated that:thpleiiepsfts, would beabprne by the agent, or that
the latter would be allowed•ook ''41ePlardtirn.(9101CODE, Art. 1918).
• • -
D. MODES OF EXTINGUISHMENT
1•P
Q: Enumerate the mocle.p.y.f extingUish ent of a contra9 Of agency.
ANS: The modes of ektingilfsnment are afollows: (EDWARD)
ice• ahAl
1. By its ROcationim,
2. By thOlNithdrayriql of the agent;
A 13. • .
By eigireathiVil,interdiction, ife0ity or ins° encytrofMe principal or of the
agent! • 4'
113%.4
ko
- ;'•x • •
L•qg
Nil'
4. By theZssolutiwpf the )ism or corporation witch- nt sted or accepted the

agency; Tili4sdi''
5. By the AcconplishRent of the object o urpose of the agency; and
6. By the Expirallgg46Pthe period. the agency was constituted (CIVIL
CODE, Art. 1979). .40a.91T iiant
Note: The list is NOT EXCLUSIVE:
Q: May the principal revokel he agency at will?

Q:
ANS: The principal may revoke the agency at will, with or without reason since an
agency relationship is voluntary, except as provided in Article 1927 (CIVIL CODE, Art..
1920).
Q: When is an agency irrevocable?

ANS: An agency is irrevocable when: (BAF)
1. A Bilateral contract depends upon it;
2. It is the means of Fulfilling an obligation already contracted; or
3. A partner is Appointed manager of a partnership in the contract of partnership
and his removal from the management is unjustifiable (CIVIL CODE, Art.
1927).
Q: Enumerate the instances when agency cannot be revoked at the principal's

will.
ANS: The agency cannot be revoked at principal's will in the following instances: (C-
BAF-ROW)
1. When .it is "Coupled with an interest" (interest possessed by the agent in the
subject matter of the power);
685
•:i
2. In the cases mentioned in Article 1927:

a. When a Bilateral contract depends on the agency;
b. When the agency is the means of Fulfilling an obligation already
contracted; or
c. In the case of a partner Appointed manager in the contract of
partnership and his removal from the management is unjustifiable;
3. When there has been a Waiver by the principal (New Manila Lumber Co. v.
Republic, G.R. No. L-14248, April 28, 1960);
4. When the principal is Obliged not to revoke; or
. 5. When the Revocation is done in bad faith (Here, the principal can still revoke,
but innocent third parties should not be prejudiced; moreover, the innocent
agent can be entitled to damages from him) (Infante v. Cunanan, 93 Phil. 691;
Danon v. Antonio Brimo & Co., 42 Phil. 133; Reyes v. Mosqueda, 53 O.G.
2158 as cited in 5 PARAS, Civil Code, Supra at 866-867).
Q: What is meant by an agency comigsLwith an interest?
ANS: An agency coupled with.,„arilnierstr itt fqrs rtO.a. agency wherein the agent has
acquired some interestp o ts o in t e 3xecli.titifI n pf e authority granted to him, in
addition to his mere iptertrs' tfie,op.0 rac t employmentwith the resulting gains
(JURADO, Civil Law eview pia at 1086).
...,a7,..
.1 ir;;;;;=
.1i, 1
Q: In an agency le" i agent terminate
the agency? ip; 4' X
li. •
ANS: Generall the a?ent's, eath enftitiq agency f r it s gluten be continued by
one upon whot 4hfi,„ nncipal-has-repOsOsno-confide.nce. Hodeven under American
Law, it has be qe,r0
, hat th4ageOsscdnigu tcloe
,- .p-not
— ..r., tdrminat tht --4 1
agency; such power
. 4 i
may be subs queSt1 exercised Mils. pertopl representa Ice,,.. gofar as may be
essential to prgteekti
be in ere ts of these fa( en
the a
)..-r)
5 PP RA ,tivil Code, supra
at 877). 1..4 .. -
I )
Q: Is notice o revocatio irikga e __I ufficie t when the third
persons have not been
/
ANS: Yes. If the agent ha eneAve,_...ev a ion otot e agecrticyg does not prejudice
third persons who aced in g oL
i ai tada-Afigali r?owte e of t revocation. Notice of
the revocation in a gesrp:Derbk,g2z:alcirculatit\i e fficient warning to third
persons (CIVIL CODE, Arti.OZ,61 1 4\ ..,
Q: What are the effects of atipOintmelQwdagent?

1. Appointment of a new agent revokes the first agency only in case of
incompatibility; •
2. A special power revokes a general one (CIVIL CODE, Art. 1926); and
3. If the first agent is not notified of the appointment of the second agent, it is
understood that the first agency still exists (5 PARAS, Civil Code, supra at
868).
Q: What is the effect if the principal directly manages the business?
ANS: The agency is revoked if the principal directly manages the business entrusted to
the agent, dealing directly with third persons (CIVIL CODE, Art. 1924).
Note: The rule applies only in case of incompatibility (5 PARAS, Civil Code, supra at
869).
Q: May an agent withdraw from the agency?

ANS: Yes. The agent may withdraw from the agency by giving due notice to the
principal. If the latter should suffer any damage by reason of the withdrawal, the agent
must indemnify him therefore, unless the agent should base his withdrawal upon the
686
•
impossibility of continuing the performance of the agency without grave detriment to

himself (CIVIL CODE, Art. 1928).
Note: The agent, even if he should withdraw from the agency for a valid reason, must
continue to act until the principal has had reasonable opportunity to take the necessary
steps to meet the situation (CIVIL CODE, Art. 1929).
Q: What is the effect on the contract of agency in case of death of the principal?
ANS: The agency shall remain in full force and effect even after the death of the
principal, if it has been constituted in the common interest of the latter and of the agent,
or in the interest of a third person who has accepted the stipulation in his favor (CIVIL
CODE, Art. 1930).
Q: What is the effect of agent's act without knowledge of the termination of
agency?
ANS: Anything done by the agent, without knowledge of the death of the principal or of
any other cause which extinguishes the agency, is valid and shall be fully effective with
respect to third persons who may have co tracted with him in good faith (CIVIL CODE,
Art 1931).
X. cRgif( TT NS~TIONS.
A. LOAN
1-o7i.'
411
Q: What is a contracLoploan? 4
ANS: It is a contract fkkere,by one (lane, arties delivers ,other,
i, either something
not consumable so tharthime; may use the same for aitii time and return it, in
which case the coatttLi is'ralled commodatum; or money o other
upon the condition' that the,same amo.untAthe same kid 9d quality shall be paid, in
which case the calleda gan or mutuum CIVIL CODE Art 1933).
t . r ..,,v;v=,- 4.4, kt axN'
•1 , ••• 'JP 'tt"'?
— Q: Is a loan thg same:as aYc red i VI?- .
,_„,. a- Al q--34.
ANS: No. The credit.ottantdividua me r s his ability to borrow money or things (or
Y.:FAH:4v
purchase things).bywirtue orte coritdence or trust reposed by a lender that he will pay
what he may promise kithidp specified o (;= E LEON, Comments and Cases on
Credit Transactions ( 07)!fp. 1011hereMageriDEl:
A.p.,.....,..Ft izz,.
..,, • redit Transactions].
24
if . "
, nR 1
Q: Distinguish commOoatumfrom mutuum or loan.
ANS: The differences ardo t
Commodatum Mutuum or Loan

As to object
Ordinarily involves something not consumable The subject matter is money or
except when the purpose of consumable other consumable thing.
goods is merely for exhibition (CIVIL CODE, Correlate with Article 418 of the
Art. 1936). • Civil Code:. •
As to cause
Essentially gratuitous (CIVIL CODE, Art. May be gratuitotis or with a
1933). Otherwise, it ceases to be stipulation to pay interest (CIVIL
commodatum. CODE, Art. 1933).
As to. purpose
Use or temporary possession (CIVIL CODE, Consumption
Art. 1935)
687
As to subject matter
Real or personal property (CIVIL CODE, Art. Personal property
1937)
As to ownership of the thing
Retained by the bailor Passes to the debtor
As to thing to be returned
Same thing loaned Pay the same amount of the
same kind and quality
As to Who bears the risk of loss
Bailor Debtor/Bailee
As to when to return •
I 1%,
Bailor may demand ,thy...ketUrrh,pf tnaithings Atip71;Nt e lapse of the term
loaned' before theAPirati4nIst,ethen'afr'in,, ited .5. on.
case of urgent neace/eL'ODDE,.2.11.194.6), ag44.-
or when the cOlcac ,,,,,,. --4.•
case, the bailor rilaZde atfd the itQurnfof the 1.,1\
thing at will (0 VIL CODE, Art. 1947). • '1\. .. \
I A" (P i
l''di IV; ,. -.'7••%1?
Q: What are the kin s of co13modltunilli
.ert -...,..'.
ANS: Commohtu 11 classiri d into: ‘giLIII., --7747;
. )
-:'i' 1
1. Ordiry c mcici* . -Art-i, 3)');) n
2. Preca \ iqglf) ne\ .cr:•eby to. 061),InaiA14 and tlielrg loaned at will
(CIVIL CODEVrt.` .914p . ••,, •,
., tf.i)
•
' 4
k... I
Q: What is the nature of cpem
ANS: Commodatumjs essentlly,_ tr :1--
-4ENT4). eil,,,. i 2 ce; the cop ract ceases to be a
commodatum if any dbopsptabonA tc -rb-e-pai , Nettie bif-rodr who acquires the use.
some service, an innomiate nfract InfiVreetib - •

Credit Transactions, supra at 14 .
"
In such a case, there gliies.,t/y*e cop rack IUNorl'Sideration is the rendering of
CODE, Art. 1935; DE LEON,
Q: What are the principal obligations of a bailee in a commodatum?

ANS: The principal obligations of a bailee are:
1. Take good care of the thing with the diligence of a good father of the family
(CIVIL CODE, Art 1163; see also Arts. 1169, 1170 and 1173);
2. Use thing loan loaned only for the purpose for which it was loaned and for no
other purpose (CIVIL CODE, Art. 1935 in relation to Arts. 1939(41946);
3. Payment for the ordinary experises for the use and preservation of the thing
loaned (CIVIL CODE, Art. 1941);
4. Payment for extraordinary expenses arising from the actual use of the thing,
which shall be borne by both the bailor and the bailee, even though the bailee
acted without fault, unless there is a stipulation to the contrary (CIVIL CODE,
Art. 1949, par. 2);
Return and to not retain the thing loaned except for damages mentioned in
Article 1951. (CIVIL CODE, Arts. 1933, 1944, 1946).
688
Q: What are the obligations of a bailor in a commodatum?
ANS: The obligations of a bailor are the following:
1. Respect the duration of the loan because the bailor is bound by the terms of
the contract of commodatum which is for a certain time or accomplishment of a
purpose (CIVIL CODE, Art. 1946);
2. Refund to the bailee extraordinary expenses incurred for the preservation of
the thing, provided the bailee brings the same to the knowledge of the bailor
before incurring them, except when the reply to the notification cannot be
awaited without danger (CIVIL CODE, Art. 1949, par. 1). However, if the
extraordinary expenses arise on the occasion of the actual use by the bailee,
even though he acted without fault, they shall be borne equally by both the
bailor and the bailee, unless there is a stipulation to the contrary (CIVIL CODE,
Art. 1949, par. 2); and
3. Be liable for damages which the bailee may suffer for failure of the bailor to
advise the former of flaws (hidden defects) of the thing loaned which are
known to him (CIVIL CODE, Art4951).
Q: May interest be orally imposep."•;
ANS: No. No interest shall be di:16'0 ets it has been expressly stipulated in writing
Q: Is the usury law still in effect/ ,
ANS: No. The Monetary Bo,,arsrof C6eiira Bank iss drela. Circular No. 905, effective
January 1, 1983, rernweIl'ihe ceilings n interest rate op !pans or forbearance of
money, goods, or cre t?'The Circulattlid of repeal nor inf 9i way amend the Usury
Law but simply suspended the le,ttert effe -tivity. Interest can ow be charged as lender
and borrower may aped yarilMede/ Clurt of Appeals/G.R lk 131622 November
27, 1998). ,4[10
(, ;y 4c041-
Q: Explain the,Tules,on„gAcipulqtion to ay interest.

ANS: The follaing are,,tjf,f9les tire usNte followed
d."
1. If a pafticp:r.,041 intere,p.t has/pen expressly s ated by the parties, the
interest egged upbb shall be 4 plied (Casa Filipina Development Corp. v.
Deputy Executive Secretary, G. No95,494, May 28, 1992).
2. If the exact retepHriter,,t is nptAme o egal rate of 6% per annum
shall be payag4 and co Ai ed`froin die o ea t (Central Bank Circular No.
799, Section T)1
Note: Central Ban circular No. 799, effective on July 1, 2013, repealed
Central Bank Circ No. 416 which fixed the rate of interest at 12% per
annum for loans, forbearance of money, goods, or credits and judgments
involving loans, forbearance of money, goods, or credits. Its applicability is
prospective in nature.
3. No increase in interest shall be due unless such increase has also been
expressly stipulated (Philippine National Bank v. Court of Appeals, G.R. No. kb'
107569, November 8, 1994).
Q: Can there be a liability for interest even in the absence of stipulation to pay
interest?
ANS: Yes. Art. 1956 of the Civil Code is subject to two exceptions:
1. If the obligation consists in the payment of a sum of money, and the debtor
incurs in delay, the indemnity for damages, there being no stipulation to the
contrary, shall be the payment of the interest agreed upon, and in the absence
of stipulation, the legal interest, which is six percent per annum (CIVIL CODE,
Art. 2209);
2. Interest due shall earn legal interest from the time it is judicially demanded,
although the obligation may be silent upon this point (CIVIL CODE, Art. 2212).
689
Q: In case of breach of obligation and the award of interest is in the concept of
actual and compensatory damages, what rate shall be used?
ANS: With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is imposed,
as follows:
1. When an obligation is breached, and it consists in the payment of sum of
money, i.e., a loan or forbearance of money, the interest due should be that
which may have been stipulated in writing. Furthermore, the interest due shall
itself earn legal interest from the time it is judicially demanded. In the absence
of stipulation, the rate of interest shall be six (6%) per annum to be computed
from default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be imposed at
the discretion of the court at the rate of six (6%) percent per annum. No
interest, however, shall 12,e_adjudged ...cn unliquidated claims or damages,
except when or until thelremaild can'perstab fished with reasonable certainty.
3. When the judgrhi of h,,,e court lw_pilingisuo‘l money becomes final and
executory, the, ra 'el I 921;,interestp.-.4etkbr t e,.c.Rsc falls under paragraph 1
or paragrayp,.ab _medial! be six percelit46%) perNnum from such finality
until its patisf&tigri;lbis—iritdfiT15-eriod4hg,e ecl to be by then an
equivalefitOolfbeirancedof te '.0;edikv(Naca v. Gla/ g_, \Frames, G.R. No.
189871 Atigds 13, 013). 1tr l e &L t
R
Q: What is tpe—dff
e...., 0\
cot wh n con rac ,i; are used s a disguise to circumvent
usurious tran "a is 's? Na..—;:'4 Illi t:;:14V' I r•-•
ANS: Contra s .And stipulations, uncle„ sr rVrdoak 9r devicS kwhqt ver, intended to
circumvent th 'Wm§ ag usury, Mall be void/ pi_ bcirrower may recover in
accordance wi lhe-la piyiL C06E,Wil t. 9'5 ) t--. 1
,.1 4•A"?‘,. / ti's,
oti„” SI
Q: Is a usuriou ,contract co g e(ed vo d?.‘=.7 i
ANS: No. A usurious corikact siall13t pon)de rin its e tirety but only as to
`c .tr
the interest involv\ d (Act No. 26WBec1 , , -‘11(4 no interest rate can now be
considered "usuriou becaus Tr-Ctird0 es! removed
removed the interest
ceilings prescribed by suCaloievertheles has the power to temper the
interest rates if they Ire WO unto, ionab e iniquitous considering the
circumstances of each case 010E410N, e rill' sadirons, supra at 85).
Q: May surcharges and penalties be reduced?

ANS: Yes. Surcharges and penalties partake the nature of liquidated damages and shall
be reduced if iniquitous and unconscionable (CIVIL CODE, Art. 2227).
Q: What is the effect if the interest rate in a contract of loan is unconscionable?

ANS: The Supreme Court said that nothing in said circular suspending the Usury Law
grants lenders authority to raise interest rates to levels which will either enslave their
borrowers or lead to a hemorrhaging of their assets (Almeda v. CA, G.R. No. 113412,
April 17, 1996).
Note: In Medel v. CA (G.R. No. 131622, November 27, 1998), it was ruled that while the
stipulated interest of 5.5% per month on a loan is not usurious pursuant to Central Bank
Circular No. 905, however, the same must be equitably reduced for being iniquitous,
unconscionable and exorbitant. It is contrary to morals. It was reduced to 1?% per
annum in consonance with justice and fair play.
690
„.. ,:t0.' .,:c7f.i.,.j '%'• . '....
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..,,e
7.-,"'",c
....e..A...;,
RED
......,...-eiz, :,..... -:-.3.:::, r.4'....,!:::::.=.!.11.15!.':.,.:11, ,J,-,:ri.,47' '...• - . .'BO
.; .. , .1 ' ...':
Q: What may the court do when the agreed rate is iniquitous and
unconscionable?
ANS: When the agreed rate is iniquitous and unconscionable, the courts may reduce
the same as reason and equity demand. The interest may also be reduced if the
principal obligation has been partially performed (Imperial v. Jaucian, G.R. No. 149004,
April 14, 2004).
Q: If an unstipulated interest is paid, may it still be recovered?
ANS: It depends. If it is paid by mistake, the debtor may recover as in the case of solutio
indebiti or undue payment. If it is voluntarily paid, there can be no recovery as in the
case of natural obligations (CIVIL CODE, Art. 1960).
Q: Does any modification on the rate of interest require mutual agreement

between the parties?
ANS: Yes. In loan agreements, it cannot be denied that the rate of interest is a principal
condition, if not the most important component. Thus, any modification thereof must be
mutually agreed upon; otherwise, it ha,e2ho' binding effect (Spouses Silos v. PNB, G.R.
No. 181045, July 2, 2014). 2 O'' rt
`r . 'v4
B. DEPOSIT
Q: What is a contract of deposit
ANS: It is a contract constitute„dlom Ives a thing belonging to
another, with the obligation.cnafely keep ,the same (CIVIL CODE,
Art. 1962).
Q: What is the effect e afekeepins only an accgss ,ry' bligation?

ANS: If safekeepX s onlyA dpcessorg secondary opligthion f the recipient of the
thing, deposit *sinot constifilted ut sage q, er contractsow COO , Art. 1962).
-spi °
Q: When is alclintta s
Apo herfec b'd?
ANS: An agratnent4t astitutdo de opt is bindi g; eposit itself is not
perfected until th,deLyp ore thip (C/ 1 CODE, Art. 1963).
Q: What are the kindsr deposit?
ANS: The kinds of depSislt4e the, o tapg
1. Judicial or and ihich taes'place w ment or seizure of property in
litigation is or ( W CODE, Arts. 2005-2009); and
2. Extrajudicial (C/ h•CODE, Art. 1967) which may be:
a. Voluntary or one wherein the delivery is made by the will of the
depositor or by two or more persons each of whom believes himself
entitled to the thing deposited (CIVIL CODE, Arts. 1968-1995); or
b. Necessary or one made in compliance with a legal obligation or on the
occasion of any calamity, or by travelers in hotels and inns (CIVIL
CODE, Arts. 1996-2004) or by travelers with common carriers (CIVIL
CODE, Arts. 1734-1735).
Q: What is the nature of deposit?
ANS: Generally, a deposit is a gratuitous contract, except:
1. When there is an agreement to•the contrary; or
2. The depositary is engaged in the business of storing goods (CIVIL CODE, Art.
1965).
Q: What is the subject matter of deposit?

ANS: Only movable or personal property may be the object of extrajudicial deposit
(CIVIL CODE, Art. 1966). Judicial deposit, however, may cover movable as well as
immovable property, its purpose being to protect the rights of parties to a suit (CIVIL
CODE, Art. 2006).
691
Q: What is a voluntary deposit?
ANS: A voluntary deposit is one wherein delivery is made by the will of the depositor. A
deposit may also be made by two or more persons each of whom believes himself
entitled to the thing deposited with a third person, who shall deliver it in a proper case to
the one to whom it belongs (CIVIL CODE, Art. 1968).
Q: To whom deposit must be made where there are several depositors?

ANS: Two or more persons each claiming to be entitled to a thing may deposit the same
with a third person. In such case, the third person assumes the obligation to deliver the
one to whom it belongs (DE LEON, Credit Transactions, supra at 14).
Q: Is there a particular form by which a contract of deposit should be entered

into?
ANS: No. A contract of deposit may be entered into orally or in writing (CIVIL CODE,
Art. 1969).
Q: What is the effect if one 9,f the partffito a contract of deposit is incapacitated?
ANS: It depends: PI •
11‹,, E'1',,.. 1,--) /. V 1 A 4. .
1. If a person having cap cily,,to,contract‘accepts") eRosit made by one who is
incapacitat,ekthetorlperihall be subjealo,arrtheoMpgations of a depositary,
and may e ccrOPelres1,,to-retarnhie-thing.12Ne(9)rardibn, or administrator of
the pe ON o age the depoqt; or;tly the atte h4erfifi he should acquire
capaci (C11.4/ COT, Att.* 976)YorA ; „
2. If the gposit as been made t*kRapacitate pers (9M another who is not,
the d paitO shall only have an pan to reco er theihip,D41 posited while it is
still il tKe-possessid ci oflhFilepipisitgIVArr tolcompel t6 Ig er to pay him the
amount by4ihich he may befep4cp#1-ar ben fited hipbelf-gth the thing or its
pricePateer,icalaird perg:'dibkhilacquir , thipg acted in bad faith, the
depo .1 or r5ay bntt,.., 'n actiorojeinst hi forsit re ktegri CIVIL CODE, Art.
1971). E-2 ,1.,. ,A.
k V- . •,5. n
11 /4 ei: 9 'qs—
.
Q: What are the opligaboo o Ife l
t 0 .y
,%`‘
osita /
ANS: The obligation\ s are ttib4211**, aleGrt-LDRTS4R5D)
1. To Keep th thing,clepositd: ' turirli dieting fired, to the depositor, or . .
to his heirs a d sufc*OP,,-opto.the erscOpo ay have been designated
in the contract ?NAL",GTE, ATI. p/s),
2. To collect Interest oThce4Licatds bonds eelies, or instruments deposited,
and to take such steps as maybe' ecessary in order that the securities may
preserve their value and the rights corresponding to them (CIVIL CODE, Art.
1975);
3. Not to Transfer the deposit with a third person;
Note: If deposit with a third person is allowed, the depositary is liable for the
loss if he deposited the thing with a person who is manifestly careless or unfit.
The depositary is responsible for the negligence of his employees (CIVIL
CODE, Art. 1973).
4. Not to Change the way of deposit if under the circumstances he cannot
reasonably presume that the depositor would consent to the change if he knew
of the facts of the situation. However, before the depositary may make such
change, he shall notify the depositor' thereof and wait for his decision, unless
delay would cause danger (CIVIL CODE, Art. 1974);
5. Not to Commingle the things of the same kind and quality deposited if so
stipulated (CIVIL CODE, Art. 1976);
6. To Advise the true owner, should he discover that the thing has been stolen
and who the true owner is (CIVIL CODE, Art. 1984);
692
I 6if.7.7;~
1
.,:il,vaig
rA-,.A
4wk1:1:4u.c:4
i- .-..,, ..,:t'kf•:?‘.1, ' .
, egNt.tlz:w::11.YgiliA,.4-
7. Not to Make use of the thing deposited unless expressly authorized, otherwise,
he shall be liable for damages;
Note: However, when the preservation of the thing deposited requires its use,
it must be used but only for that purpose (CIVIL CODE, Art. 1977);
8. To be Liable for loss through fortuitous event in the following cases:
a. If it is so stipulated;
b. If he uses the thing without the depositor's permission;
c. If he delays its return; or
d. If he allows others to use it, even though he himself may have been
authorized to use the same (CIVIL CODE, Art. 1979).
9. To pay for Damages should the seal or lock be broken through his fault which
is presumed unless proved otherwise (CIVIL CODE, Art. 1981, par. 2);
10. To Return the thing deposited in the same condition when such was delivered
closed and sealed (CIVIL CODE, Art. 1981, par. 1);
11. To keep the Secret of the deposit when the seal or lock is broken, with or
without his fault (CIVIL CODE, Art 1981, par. 4);
12. To Return with the thingXeosited , all its products, accessories, and
accessions (CIVIL CODe;V:4 83). Should the deposit consist of money and
the depositary should belikdat r has used the money without permission,
he shall be liable for intetekalln emnity (CIVIL CODE Art 1896);
13. To Return the thing de ' lengmson desigOted in the contract (CIVIL
CODE Art 1985, pep-2 ;
14. To return the t4ifigttolhe legal r esentative ort e 4epositor, should the latter
lose his capOitylo, contract491 CODE, Art. 1986A
15. To Return thabigg at the place in thicontlact, or in the absence
thereof, it,shgli.be,trriede Where t e thing deposited rfia9ibe (CIVIL CODE, Art
1987); .p r' Ott41-0.
16. To Rettirn the.thing to thedepolor upon desnandleve%hough a specified
timi-NO.uch return mar ave bee fine rzr
a. When thefthing,,,:l.is judicially attacitY oni tti114400the depositary's
poseatfor
b. Vagi-T -3 thrg gpositapy wa otified of the opposition of a third person to
th&ieturn otmoval of t e thi g eposited.
Note: tinjh'46 e cases, aladtep: sitqx must immediately inform the
depostc(Of thegtattifritiWai'pot itiorilbV/L CODE, Art. 1988); and
17. To Deliver tho um ailther thing to the depositor should the depositary by
force majeureo goTernment order loses the thing and receives money or
another thing in itSlpike (CIVIL CODE, Art. 1990).
Q: What are the obligations of the depositor?

ANS: The obligations are the following: (PL-AENA)
1. Reimburse the depositary for the expenses he may have incurred for the
Preservation of the thing deposited should the deposit be gratuitous (CIVIL
2. ReiMburse the depositary for any Loss arising from•the character of the thing
deposited, unless at the time of the constitution of the deposit:
a. The depositor was not Aware of such character;
b. He was not Expected to know the dangerous character of the thing;
c. He Notifies the depositary of the same; or
d. The depositary was Aware of it without advice from the depositor
693
" • • •,,f?4:101.003...g.A.44
•:••,;ix. -"
Q: Is the rent of safety deposit boxes governed by rules on deposit?

ANS: No. A contract for rent of safety deposit boxes is not an ordinary contract of lease
of things but a special kind of deposit; hence, it is not to be strictly governed by the
provisions on deposit. It cannot be characterized as an ordinary contract of lease under
Article 1643 because the full and absolute possession and control of the safety deposit
box was not given to the joint renters. The guard key of the box remained with the Bank;
without this key, neither of the renters could open the box. On the other hand, the Bank
could not likewise open the box without the renter's key (CA Agro-Industrial
Development Corp v. CA, G.R. No. 90027, March 3, 1993).
Q: What is the nature of deposits of money in banks?

ANS: Deposits of money in banks are really loans to a bank because the bank can use
the same for its ordinary transactions and for the banking business in which it is
engaged. Bank deposits are in the nature of irregular deposits; they are really loans
because they earn interest (DE LEON, Credit Transactions, supra at 138).
Q: What are the instances whet in there Is Itnedeskary deposit?

ANS: A necessary deposit/it;nel5ychich 10 jaVO'cuelnplianRe:
1. With a legal o '16169 (C/N/...GODE,;40.4.096 >whicli includes the following:
a. The,,,i dlFia tdepoilt of a thing the pbsOSsi9rkikvhich is being disputed
ini,liti Zii306%,,two,ortribTrOrsons (C/3,(4.cocE, Art. 538);
b. Depose Cyrfh ? bank,or peublicsinstitution Of4:Pubh lipnds or instruments
'r fCledifs payable lit oilserisar bearer gitn in 'usufruct when the
sufruituarytdoes not giv&proper sectlrity fo ttili:Anservation (CIVIL
,ODE, Art. 1, „
fDepoofisit of a thin4!....ple;dg00,erilhe creditor% Ese; e same without
mthPrity of t e owrlet-pAir4us-Ob it in ny othe hArali CIVIL CODE, Art.
"VOA
Tiloq re 6je ,cli n C')
t in surts,-asiprew e il kRulesAokeb rt; and
Thoge conVilt4d toMuargee, fiii'abts with tif government (DE
LEON, •redit`Tra'n1 dtidn ..t,P7).
2. On oc ion o ny alatni l: GODS, AO 1996ind 2168), which is
also callell involuntary
,•,,,, aillnet-poliihtay
---,, 4 ,....-- deposit or deposit° miserable (11
Manresa, 12 ); ty/
3. By travelers tk, ot3Is r\ -ZgicHnns—(61V DE, AEI . 1998) which has the
following elements4refortehotel- responsible:
a. They or thee loyedfidve- eer previously informed about the
effects brought by guesthrafirf
b. The guests have taken the precautions prescribed regarding their
safekeeping (DE LEON, Credit Transactions, supra at 157).
Note: The liability of hotel-keeper extends to loss or damage to vehicles,
animals and articles which have been introduced or placed in annexes of the
hotel (CIVIL CODE, Art. 1999).
4. By travelers with common carriers (CIVIL CODE, Art. 1754).
Q: Distinguish voluntary deposits from necessary deposits.

ANS: The main difference between a voluntary deposit and a necessary deposit is that
in the former, the depositor has complete freedom in choosing the depositary, whereas
in the latter, there is lack of free choice in the depositor (DE LEON, Credit Transactions,
supra at 158).
694
Q: What is the effect if permission to use the thing deposited is given?
ANS: In deposit, the permission to use is not presumed except when such use is
necessary for the preservation of the thing deposited.
1. If the thing deposited is non-consumable and the depositary has permission to
use the thing, the contract loses the character of deposit and acquires that of a
commodatum despite the fact that the parties have denominated it as a
deposit, unless safekeeping is still the principal purpose of the contract.
2. If thing deposited is money or other consumable thing, the permission to use it
will result in consumption and converts the contract into a simple loan or
mutuum, But if safekeeping it still the principal purpose of the contract, it is an
irregular deposit (DE LEON, Credit Transactions, supra at 180).
Q: When is a hotel-keeper liable for losses suffered by its guests?
ANS: The hotel-keeper is liable in the following cases:
1. The loss or injury is caused by his servants or employees as well as by
strangers (CIVIL CODE, Art. 2000; or
2. The loss is caused by the actCf a thief or robber done without the use of arms
and irresistible force (CIVIL CODE Art. 2001).
•
Q: When is a hotel-keeper not Ira
.
ANS: The hotel-keeper is not liable irqueko lbagtses:
1. The loss or injury is cpirted:114folue rifajeukraptd, fire (CIVIL CODE, Art.
2000);
2. The robber Lipid arms or irreft§le force (CIVIL C Art. 2001);
3. The loss is dtbstolhe acts of his famil see ants, or visitors (CIVIL
CODE, Art4g02)And/
4. The lossOises frpkthe characof the thingp brotgh into the hotel (CIVIL
CODErArt. 20021
Q: Can the Ink: el-keeper ihr

om liability o untrigh his liability by
stipulation? c
ANS: No. The hotelpepercannot free hr elf from responsibility by posting notices to
the effect that he is, of liarke for the rci, b ought by the guest. Any stipulation
between the hotel-keerr uritilthe guest 4 e7 es onsibility of the former as set
forth in Articles 1998 t 2001 is spraw hall be void (CIVIL CODE,
An'. 2003).
Q: What is the remedy granted to a hotel-keeper in case the guest failed to pay for
the lodging and supplies furnished to the latter?
ANS: The remedy is to exercise the right of retention. The hotel-keeper has a right to
retain the things brought into the hotel by the guest as a security for credits on account
of lodging and supplies usually furnished to hotel guests (CIVIL CODE, Art. 2004).
Q: What is a judicial deposit?

ANS: One which takes place when an attachment or seizure of property in litigation is
ordered (CIVIL CODE, Art. 2005).
Q: What is the nature and purpose of judicial deposit?

ANS: The deposit is judicial because it is auxiliary to a case pending in court. The
purpose is to maintain the status quo during the pendency of the litigation or to insure
the right of the parties to the property in case of favorable judgment (DE LEON, Credit
Transactions, supra at 217).
695
:,••• .t .15.j.,7 jfi4.
- :.1,1;-`kit'S,;.:A•••:;,,,I; F: %:1:;EK ' : '44 iieir5101t1:Pi eg*:.V.
( ..4.7:::a?,:',:•: ,
•.45,
,,,, •N-C••••:..
.:.:0
t:::?,,757;•••
Q: What are the differences between judicial and extrajudicial deposits?

ANS: The differences are the following:
Judicial Deposit I Extrajudicial Deposit

As to cause or origin
By the will of the court By the will of the parties hence there is a
contract
. As to what it guarantees
Guarantees the solvency of the Guarantees the fulfillment of the
principal obligation, regardless of the solvency of
the principal
As to purpose
To secure the right of a party.tocover 1'

7FI§tody
Or a and safekeeping of the thing
in case of a favorable judenen
As to subject matter'
NjQ~able,roe1t
N. ,
As to remuneration
As to in whose behalf the thing is held
As to termination
N 1 "
When the controversy w,hic;a've se leer; kpgsitOs claims back the
to the deposit has co 3r1 end, ICh'''s*" then returned to the
unless the court so orders /Aekds or
(DE LEON, Credit Transactions, supra at 165)
Q: What is the obligation of the depositary in a judicial deposit?

ANS: He has the obligation to take care of the property with the diligence of a good
father of a family (CIVIL CODE, Art. 2008) and he may not be relieved of his
responsibility until the litigation is ended or the court so orders (CIVIL CODE, Art. 2007).
Q: When does the liability of the depositary terminate?

ANS: It terminates only when the controversy which gave rise thereto has come to an
end, or when the court so orders (CIVIL CODE, Art. 2007).
C GUARANTY AND SURETYSHIP

Q: What is a contract of guaranty?
ANS: It is a contract whereby a guarantor binds himself to the creditor to fulfill the
obligation of the principa+l debtor in case the latter should fail to do so (CIVIL CODE,
Art. 2047, par.1).
696
Q: What is a contract of suretyship?
ANS: It is a contract whereby a person binds himself solidarily with the principal debtor
(CIVIL CODE, Art. 2047, par. 2).A contract of suretyship is an agreement whereby a
party, called the surety, guarantees the performance by another party, called the
principal or obligor, of an obligation or undertaking in favor of another party, called the
oblige (Lim v. Security Bank Corporation, G.R. No. 188539, March 12, 2014).
Q: Distinguish guaranty from suretyship.

Guaranty Suretyship
As to liability
A guarantor's liability depends upon an A surety assumes the liability as a
independent agreement to pay the regular party to the undertaking
obligation if the primary debtor fails to ria
do so.
As to assumption of undertaking •
•• Zig' 0
A guarantor assumes only a collatera surety is ap,priginal promissor and
undertaking .0kMAr
-- tu aLAW r ginning.
As to extent of liability
Primarily liable/ I\
As to knowledge of.non -performance of the principal
v. "maw
A guarantoraphot bo.grOto take notice A surety isl
ordinarily field to know every
of the non-pa principal default
&Iv-. 'r;
As to discharg e for lack of notice
A guarantor is n1Pifeulitess riolfied "A surety will not be discharged either by
of the default of the p sincip0.0 ere indulgence of the creditor of the
Parr ai of notice of the
. want
e .the-Orincip
As to release from obligation

—
The guarantors are released from their Cannot claim release under Art. 2080 of
obligation whenever by some act of the Civil Code (DE LEON, Credit
the creditor they cannot be subrogated Transactions, supra at 394, citing Bicol
to the rights, mortgages, and Savings vs Guinhawa, G.R. No. L-62415,
preference of the latter (CIVIL CODE, August 20, 1990).
Art. 2080).
(DE LEON, Credit Transactions, supra at 296-297)
Q: What are the characteristics of a contract of guaranty?

ANS: The follOwing are the characteristics of a contract of guaranty: (CANS-FUD)
1. It is Consensual because it is perfected by mere consent, subject to the
Statute of Frauds (CIVIL CODE, Art. 1315);
2. It is Accessory because it is dependent for its existence upon the principal
obligation guaranteed by it;
3. It is Nominate because it has been given a specific name by the Civil Code
697
p :BC
4. It is Subsidiary and conditional because it takes effect only when the principal
debtor fails in his obligation subject to limitations;
5. It is Formal because it is governed by the Statute of Frauds and must be in
writing (CIVIL CODE, Arts. 1403 121114, & 2055);
6. It is Unilateral because:
a. It gives rise only to a duty on the part of the guarantor in relation to the
creditor and not vice versa although after its fulfillment, the principal
debtor becomes liable to indemnify the guarantor (CIVIL CODE, Art.
2066);
b. It may be entered into even without the intervention of the principal
debtor; and
7. The guarantor must be a person Distinct from the debtor because a person
cannot be the personal guarantor of himself (DE LEON, Credit Transactions,
supra at 283).
Q: What are the classifications oLggaranty2

ANS: The classifications arelteloilowin :
1. Guaranty in the road se:
a. Perso o pa5aty.in.the.sks.tlen .5) hkreby it is the credit given
by /per 9 hS guarantees th-64411merlho the principal obligation
X04 ----..,,,
b. Re ere e guajan ', s pkrpperty,*N a r movable:
irn ovableirfhe Oaratity is in the of r I mortgage (CIVIL
COD Art. 2/24)Vtl, ntichresis (C/V Art. 2132); and
If mo e, in qdjorm o p e • (C/ C DE, Art. 2093) or
chattiimageae=(.e/V .....,0gDE, Art. 21
2. As to on iri: f---
a. nti n one cobs t d- by ag nt f the parties;
b. 0 •ose • y v upf) a p is n 0, rah
d — o fu ire :byart 6 u antab the ntual right of one
f the rties a- ,Art 051, par. 1).
3. As to co sidera
a. GiVuitoue•— ire ig a to oes no receive any price or
remITeratiop id's CODE, rt. 2048); or
b. Onero1s —(0 he.guarthTo
• tceSte"' aluable consideration for
his gtrarN COD,E,
4. As to person guaran
a. Single — one consti u o guarantee or secure performance by
the debtor of the principal obligation; or
b. Double/sub-guaranty — one constituted to secure the fulfillment by the
guarantor of a prior guaranty (CIVIL CODE, Art. 2051, par. 2).
5. As to whether it covers future debts:
a. Continuing — one where it is given as security for future debts, the
amount of which is not yet known; or
b. Not continuing — one where the contract does not stipulate that the
security covers future debts (CIVIL CODE, Art. 2053).
6. As to its scope and extent:
a. Definite — one where the guaranty is limited to the principal obligation
only, or to a specific portion thereof; or
b. Indefinite/simple — one where the guaranty includes not only the
principal obligation but also all its accessories including judicial costs
(CIVIL CODE, Art. 2055, par. 2).
698
' •••• • - • •••• •
Q: What is the nature of surety's undertaking?

ANS: The nature of a surety's undertaking is the following: (CT-LEUN-DN)
1. Liability is Contractual and accessory but direct;
2. Liability is limited by Terms of contract;
3. Liability arises only if principal debtor is held Liable;
4. Surety is not Entitled to exhaustion (CIVIL CODE, Art. 2059, par. 2);
5. Undertaking is to creditor, not to debtor;
6. Surety is not entitled to Notice of principal's default;
7. Prior Demand by the creditor upon principal not required; and
8. Surety is not exonerated by Neglect of creditor to sue principal (DE LEON,
Credit Transactions, supra at 237).
Q: What provisions of the Civil Code on guaranty are applicable to the surety?
ANS: The following provisions on guaranty are applicable to a suretyship: (ISE)
1. Right to Indemnification (CIVIL CODE, Art. 2066; Escano v. Ortigas, G.R. No.
151953, June 29, 2007); :fo
2. Right to Subrogation (CIVIL,CODE, Art. 2067; Escano v. Ortigas, G.R. No.
151953, June 29, 2007); hi.
3. An Extension of time grantIA.., emreditor to the debtor without the consent of
the surety will release the ;sLit,e, "/L CODE Ad 2079; Trade Devt Corp. of
the Philippines v. Asia Paces 0 RAtlo,,,18740311-seb. 1Z2014).
-a)" -0
Q: What provisions of,..40.1-eivil Scide' on guaranty are NOT applicable to the
surety? . .-49'
v,v,,, . 4
ANS: The following promgps on gu,aran do not apply to s'ship:
1. Benefit of exesio`rp.C/V/L COD Art. 2058; A ocorplGroup v. Infra Strata
AssurancelGorp. G11:0 166662. une 27, 2008j; 41
o 1.F 'Jo. , . k
2. Compromise between the creditor artt1 the principfil debtor be efits the guarantor
but dpPrIgt,:prej0.4:lice t,him (C COD Ong v. Philippine
Comm8kial BankrGIR. No` 36 arch 14,V10U8
, • CA t
4,. llt!.
1,..
Q: If a contract ofViletan "I'Ovas epteretnto without the knowledge or consent, or
against the will oflhe princral debtor, Iap‘%the remedies of the guarantor?
A Y
ANS: He can recover Vilyiel sofar as tixit. en as been beneficial to the debtor
_ (CIVIL CODE, Art. 1233 and D‘e, bdfritRbmpe e arator to subrogate him in the
creditor's rights, such* thosel icing frorii a mortgage,-guaranty or penalty (CIVIL
CODE, Arts. 1237 and 2050
Q: Can a contract of guaranty exist without a valid obligation?

ANS: No. A guaranty cannot exist without a valid obligation. Nevertheless, a guaranty
may be constituted to guarantee the performance of a voidable, or an unenforceable
contract. It may also guarantee a natural obligation (CIVIL CODE, Art. 2052).
Q: Can a guaranty secure future debts?

ANS: Yes. A guaranty may be given as a security for future debts, the amount of which
is not yet known (CIVIL CODE, Art. 2053). Such guaranty is denominated as a
continuing guaranty or suretyship. It is one which is not limited to a single transaction
but which contemplates a future course of dealings, covering a series of transactions
generally for an indefinite time until revoked (Dino v. Court of Appeals, G.R. No. 89775,
November 26, 1992).
Q: Can there be a claim against the guarantor?

ANS: No. There can be no claim against the guarantor until the debt is liquidated. A
conditional obligation may also be secured (CIVIL CODE, Art. 2053).
699
Q: Can the guarantor bind himself for less or more than the principal debt?
ANS: It depends. A guarantor may bind himself for less, but not for more than the
principal debt, both as regards the amount and the onerous nature of the conditions.
Should he have bound himself for more, his obligations shall be reduced to the limits of
that of the debtor (CIVIL CODE, Art. 2054).
Q: What is the form required in a contract of guaranty?

ANS: Under Article 1403 of the Civil Code, a contract of guaranty must be in writing;
otherwise it is unenforceable, unless ratified (5 TOLENTINO, Civil Code, supra at 507).
A guaranty cannot be presumed and cannot extend to more than what is stipulated
Q: Is an accommodation party governed by the rules on suretyship?

ANS: Yes. An accommodation party is liable on the instrument to a holder for value
since the relation between them is, in effect, that of principal and surety, the
27, 1987).
-o p.
accommodation party being the surety,(Reople,,v, Maniego, G.R. No. L-30910, February
0•0"- TT
„00 \ t i iJ 7.%: '..<,
Q: Is the rule on stristisstatjuris Asoluteiji.ajopficaPlg•Kfll kinds of contracts of
suretyship? it Npi ,A*-4°. v.t X.• . i,nk ,
."kk.
ANS: No. Stnctisymi pri8As,sgpplicabl6roillyle.,?9, cbtrtri da tSkitln surety and not to
compensate surefipeW'ra onalel ffik'doOrine 1st rearp b e. An accommodation
surety acts wit But motiVe o pecunfaryOniSnd hen e, st q Id be protected against
unjust pecunia impotrish ent by imposihg on the plincipat 'Makin to those of a
fiduciary (Erme7pu, tries nc. v;,,
,Securi ty
Bank- 13orporation OtR. No. 191274,
December 6, 01'7 kiting Pakfic`ToW.ccAire.gal(zanh, G.R. -8086, October 31,
1957).
1;11. \ r:
;1 ji
ri
-f::
:: , k
l *?
i II...,
C ..('
Q: What are tifiquapticatio f a gy tq ?
ANS: The qualicaliorn‘are oliewrl
\ 1 p4 ege,,k7
1. Posse es integrity; kIp\!.- 7- ,..\
2. Capaci to bin imser d :9\ .7 _ii /
3. Sufficien rope rr c-tioblibatiori which he guarantees (CIVIL
CODE, Art. 2056).i ...;-=.: .., t
— N'"‘,..........
-r .....4 A\,
Q: What is the effect oks 4.quentMotsikci '64- re 6 [red qualifications of the
guarantor? NI L IA . '
ANS: The qualifications need orlirbviireffrTat the time of the perfection of the
contract. So, the subsequent loss of integrity or property or supervening incapacity of
the guarantor would not operate to exonerate the guarantor of the eventual liability he
has contracted, and the contract of guaranty continues (DE LEON, Credit Transactions,
supra at 339).
Q: Can the creditor demand another guarantor in place of the original guarantor?
ANS: Yes. The creditor may demand another person in place of the original guarantor if
the latter should be convicted in the first instance of a crime involving dishonesty or
should become insolvent except when the creditor has required and stipulated that a
specified person should be the guarantor (CIVIL CODE, Art. 2057).
Q: What is meant by the benefit of excussion?

ANS: It is the right in which the guarantor cannot be compelled to pay the preditor
unless the latter has exhausted all the properties of the principal debtor and has
resorted to all the legal remedies against such debtor (CIVIL CODE, Art. 2058).
Note: Article 2058 or the benefit of excussion is not applicable to a contract of
suretyship (CIVIL CODE, Arts. 2047, par. 2 and 2059, par. 2).
700
Q: When is the guarantor not entitled to the benefit of excussion?
ANS: He is not entitled to the right in the following circumstances: (I2-SEA-BEDS)
1. In case of Insolvency of the debtor;
2. If he fails to Interpose it as a defense before judgment is rendered against him
(Saavedra v. W.S. Price, G.R. No. L-46702, October 6, 1939);
3. If he has bound himself Solidarily with the debtor;
4. The guarantor has Expressly renounced it;
Note: Must be actual and proven by unsatisfied writ of execution.
5. When he has Absconded, or cannot be sued within the Philippines unless he
has left a manager or representative;
6. If he is a judicial Bondsman or sub-surety (CIVIL CODE, Art. 2084);
7. If it may be presumed that an Execution on the property of the principal debtor
would not result in the satisfaction of the obligation (CIVIL CODE, Art. 2059);
Note: It is not necessary that the debtor be judicially declared insolvent or
bankrupt.
8. If the guarantor does not set Lip the benefit against the creditor upon the
latter's Demand for payment frbehim (see CIVIL CODE, Art. 2060);
Note: Demand for payment by tbg creditor upon the guarantor can be made
only after judgment on the 'clept:(Df, LEON, Credit Transactions, supra at 283).
The demand must be actual; thOZfa',Ct that the guarantor was joined in such suit
does not necessarily mearrthgetteQVV. has already been made upon him
(Viuda de Syquia v. 4acinto,.G RiEFNo.lt41.8:294;:pjnber 9, 1934); and
9. Where the pledge dr mortgObel:has been given bythim as Special security
(Prudential Bank v. IAC, G R 4\18 74886, Decembfit8, 1992, citing Southern
Motors v. Barbosa, G.R. No.1-9306, May 25, 1956). gf
Q: What is the40ty of,:itie.,guarantokbefore he ay ,p%erpise the benefit of

excussion?
ANS: In order lliat tbe.gti4itantor may makemse of the-b efitztexcdssion:
v'ot t.“14,4
-Atebirgt4o,
1. He Must set it *againsf jhe c editor uponlrt - afters*mand for payment
from him;.and'r,i •
2. Point outt&the creditor a\Vailab elproperty of the debtor within the Philippine
49
territory, sufficient tOover the a outf. he debt (CIVIL CODE, Art. 2060).
K.4
Q: What is the effectAhould thf,cfeir- ilat'
lito ill,tolex ar slthe property pointed out
by the guarantor? Pt
ANS: The creditor shall "6,4_fforite loss, to the extent of said property, for the insolvency
of the debtor resulting froestah negligence (CIVIL CODE, Art. 2061).
Q: In the action of the creditor against the principal debtor, is it necessary that the
guarantor be impleaded?
ANS: Yes. The creditor should ask the court to notify the guarantor of the action so that
the guarantor may appear and that he may, if he so desires, set up such defenses as
are granted to him by law (CIVIL CODE, Art. 2062). A guarantor (or surety) is entitled to
be heard before an execution can be issued against him where he is not a party in the
case involving his principal. Notice and hearing constitutes the essence of procedural
due process (Towers Assurance v. Ororama Supermart, G.R. No. L-45848, November
9, 1977).
Note: The benefit of excussion shall always be unimpaired, even if judgment should be
rendered against the principal debtor and the guarantor in case of appearance by the
latter (CIVIL CODE, Art. 2062).
701
Q: What is the effect of compromise between the creditor and principal debtor or
the guarantor as the case may be?
ANS: It depends whether the compromise is beneficial or prejudicial. A compromise
between the creditor and the principal debtor benefits the guarantor but does not
prejudice him. A compromise entered into between the guarantor and the creditor
benefits, but does not prejudice the principal debtor (CIVIL CODE, Art. 2063).
Q: Does the sub-guarantor enjoy the benefit of excussion?

ANS: Yes. The guarantor of a guarantor shall enjoy the benefit of excussion, both with
respect to the guarantor and to the principal debtor (CIVIL CODE, Art. 2064).
Q: What is the principle of the benefit of division?

ANS: The principle states that the obligation to answer for the same is divided among all
should there be several guarantors of only one debtor and for the same debt (CIVIL
CODE, Art. 2065).
,,,
Q: What are the instances Kbeinhe txpnfit f diVisicr cannot be raised?
ANS: The benefit of divisiorrdoeNtarkly) / I
1. When solidaeWbebn • xpressly.stip, Jaed;i9p.
lcuffiltances wherethe,lbenefit,t)f excussion cannot be
2. Under anyAf's he\ci,,,,
exercisecif(Cill abf.,..Artsr2F9. -and-2Q65Y. . .-'tt.,
4,
Q: What right 0,47:R? intor aoAys:trie creditor a -e' aNinst the principal
debtor? ii .tiil.s, (f)
ANS: The righ a)3tf) folio ing. 15) ii b......k
1. Right fteandemni ed byli's:pri NcipfiCadbto dem4, includes:
a. Thd?otal amount o e. 4014•0' A --,-,
b. '7fiej liege est fronilfigaiiiie the pfir'e
p nt as rnpde known to the
debt, e ugh itiqd tipt,,m i : t re's( for lie creditor,
c. Thee eV„rretoY14649P Ldr/afte eying .s.,otified
. the debtor
pat pa etryd man51„4„§. , i'm; d
d. 14mage t,if theyde au ptt/I6,0()DE, 4 2066).
2. -Right to gubrogatro • aRc_ISZ1„,-/..6?...) ioe
Note: If thNguaragto ai-corrWamisetwith t es r Oftor, he cannot demand
of the debtorlvert the=has.ralfyoal C,, /VIL CODE, Art. 2067).
3. Right to Sue eitner. th son 17,eolaeOlgim tuarantee the debt of a third
person or the latter COD. Art. 200
Q: What is the effect if the guarantor pays without notifying the debtor? '
ANS: If the guarantor should pay without notifying the debtor, the latter may enforce
against him all the defenses which he could have set up against the creditor at the time
the payment was made (CIVIL CODE, Art. 2068).
• Q: What does the right of subrogation transfer to the person subrogated?

ANS: Subrogation transfers to the person subrogated, the credit with all the rights
thereto appertaining either against the debtor or against third persons, be they
guarantors or possessors of mortgages, subject to stipulation in conventional
subrogation (CIVIL CODE, Art. 1303).
Q: What are the exceptions to the right of indemnity?

ANS: The exceptions are the following: (PW2)
1. Where the guaranty is constituted Without the knowledge or against the will of
the principal debtor, the guarantor can recover only insofar as the payment
had been beneficial to the debtor;
702
,;,; : ..it•--.....:.:* .7.Fiti tg,i'..1.,:,:.
( .'.17
. ,, ,:7
", , .4
''''e.;.i k::-*
'4V, . 1,V—Ir
ri ,',.,.,-x:.;.,,,...7% ::-':".1%,....ii,i,: • !: r,:i.
2. When there is Payment by a third person who does not intend to be

reimbursed, which is deemed as a donation (CIVIL CODE, Art. 1238); and
3. Where there is Waiver on the part of the guarantor (DE LEON, Credit
Transactions, supra at 293-294).
Q: Can the guarantor demand indemnity from the principal debtor if he has paid
the creditor before the amount is due?
ANS: No. He cannot demand reimbursement of the debtor until the expiration of the
period unless the payment has been ratified by the debtor (CIVIL CODE, Art. 2069).
Q: What is the remedy if the guarantor pays without notifying the principal debtor,
and the latter repeats payment?
ANS: The guarantor has no remedy whatsoever against the debtor but only against the
creditor, except when:
1. The guaranty is gratuitous;
2. The guarantor was prevented by fortuitous event to advise the debtor of the
payment; and 01/
3. The creditor becomes inSOLYent4 n, which case, the debtor shall reimburse the
guarantor for the amounfik, IL CODE, Art. 2070).
Q: Are there instances when tWgkiatawiseven beforeltlaving paid, may proceed

against the principal debtor?, Oy. tr_eamiefin
us
ANS: Yes. The instancesAref:(PAID-14IT)
1. When he is sgaloy Paymete
2 When there afe,r4sonable grounds to fear that the. n cipal debtor intends to
Abscond; ogN2,1-
3. When th,j5eincipeehtor is Ins4lt ent;
4. WheChe debt as become De andable, by. expiration of the
4 4 0".411
per or,wment;
vv.„.vroliv
5. Wheiirthe Bilypg hi -If to relieve •ie guaranty within a
specifieUrtraild thilptriod s expired;
6. When therfoirmItsbtor is in 1, y inent danger of becoming insolvent; and
7. After the laps1 of Ten years, whl. *ncipal obligation has no fixed period
for its maturi winless it be fo g to that it cannot be extinguished,
except withintperiodltege-kitn.endyeg
Note: In all these cases, theAde.iion of the guarantor is to obtain release from the
guaranty, or to demanciVsedarity that shall protect him from any proceedings by the
creditor and from the danger of of the debtor (CIVIL CODE, Art. 2071). This
provision is also applicable and available to a surety (Manila Surety & Fidelity Co., Inc.
v. Batu Construction & Co., G.R. No. L-9353, May 21, 1957).
Q: When there are two or more guarantors of the same debtor and for the same
debt, what is the right of the co-guarantor who paid the debt?
ANS: He has the right to demand of each of the others the share which is proportionally
owing to him. However, this is applicable only when the payment has been made by
virtue of a judicial demand or if the principal debtor is insolvent (CIVIL CODE, Art. 2073,
pars. 1 and 3).
Q: Who shall bear the share of any of the insolvent guarantors?

ANS: If any of the guarantors should be insolvent, his share shall be borne by the
others, including the payor, in the same proportion (CIVIL CODE, Art. 2073, par. 2),
except when such insolvent guarantor has a sub-guarantor, in which case, the latter
shall be responsible to the co-guarantors in the same terms as the guarantor (CIVIL
CODE, Art. 2075).
703
4
( •
<1'; ' • 1' • •
Q: May the co-guarantors set up defenses pertaining to the principal debtor?

ANS: Yes. The co-guarantors may set up against the one who paid the same defenses
which would have pertained to the principal debtor against the creditor, and which are
not purely personal to the debtor (CIVIL CODE, Art. 2074).
Q: What are the causes of extinguishment of guaranty?

ANS: The contract is extinguished in the following circumstances: (CVREA)
1. For the same Causes as all other obligations under Art. 1231 (CIVIL CODE,
Art. 2076);
2. If the creditor Voluntarily accepts immovable or other properties in payment of
the debt, even if he should afterwards lose the same through eviction or
conveyance of property (CIVIL CODE, Art. 2077);
3. Release in favor of one of the guarantors, without the consent of the others,
benefits all to the extent of the share of the guarantor to whom it has been
granted (CIVIL CODE, Art. 2078);
4. Extension granted to the cloac,by, the creditor without the consent of the
guarantor (CIVIL COPE; Art. 29757 it. " .-;*-..„ .
Note: However, the mere failure tper,par(of the, creditor to demand payment
after the debtea(Beicgmejuedoe.§ not; of itse„It c9nstitute any extension of
time referredd herpig,(CML CODE, iii620.78): t.
5. WheneverCbS4VActof-the-Cte-ditorrthe Ùuarghtdrileven though they are
solidarilMblg cann "f be subroqated to the fighth., moregiges and preferences
of the prmecr4V/L ODEjArt.480)L \
Note: The guacantor niSy alsoset up agatiitt the creditor all }he dgfe9ses which pertain
to the principl freljbtoy and re-intrentithhe-debti but dorihose that are purely
personal to theidgbtorYC/V/L ObeOrtk
‘-f
eat t TILL
Q: What is a Ijonlil c-11
4
ANS: A bond . dertan atis-syfimrttly-secprej'and•riokcasp or currency (DE
LEON, Credit Wit a tikns,(0:4
'- at 3M. AVAI,.//.... 1
1,4
Q: Who is a bondsman?
ANS: He is a sure offere in viA,o,f_a p ovisirri4 lawireir a judicial order (DE LEON,
Credit Transactions, supra a W:131_,..1E1\11A,..:
'
Q: What is the remedy
7 0 •Ylt
th e-legalror juarcialDonlismp
not be able to pay?
ANS: A pledge or mortg gmodSider ;ItiliEriteti;v5bver
overhis obligation shall be
admitted in lieu thereof (CIVIL CODE.L.,.
Q: Is the bondsman entitled to the benefit of excussion?

ANS: A judicial bondsman and the sub-surety are not entitled to the benefit of excussion
because they are sureties whose liability is primary-and -solidary (CIVIL CODE, Art.
2084).
D. ANTICHRESIS
Q: What is a contract of antichresis?
ANS: It is a contract whereby the creditor acquires the right to receive the fruits of an
immovable of the debtor, with the obligation to apply them to the payment of the interest,
if owing, and thereafter to the principal of his credit (CIVIL CODE, Art. 2132).
Q: What are the requisites of antichresis?

ANS: The following are the special requisites of antichresis: (FDAE)
1. It can cover only the Fruits of an immovable property (CIVIL CODE, Art. 2132);
2. Delivery of the immovable is necessary for the creditor to receive the fruits and
not that the contract shall be binding (DE LEON, Credit Transactions, supra at
600);
704
3. Amount of principal and interest must be specified in writing (CIVIL CODE, Art.
2134); and
4. There must be an Express agreement that the debtor will give possession of
the property to creditor and that the latter will apply the fruits to the interest, if
any, then to the principal of his credit. In the absence of this requisite, the
contract shall be deemed to be one of mortgage (DE LEON, Credit
Q: What are the characteristics of antichresis?

ANS: It is an accessory and a formal contract. As an accessory contract, it secures the
performance of a principal obligation. As a formal contract, the amount of principal and
of the interest shall be specified in writing; otherwise, the contract of antichresis shall be
void (CIVIL CODE, Art. 2134).
Q: What are the obligations of an antichretic creditor?

ANS: The obligations are as follows: (PF45)
1. To Pay taxes and charges,„On'tbe estate, unless there is a stipulation to the
contrary (CIVIL CODE,
Note: Creditor may avOktiajC.Ojgation by compelling debtor to reacquire
enjoyment of the property, .Cinie0(there is a stipulation to the contrary (CIVIL
CODE, Art 2136). •
2. To apply all the Fruits; attet:7veiiiiii0tneato4e payment of interest, if
owing, and thereajigko the Orval (CIVIL CODE, A. 2132);
3. To AppraiseetVactual mary6tflue ,n,dkLN • - of the fruits atfthe time of the application
thereof (CIVIWOpE, Art. 2133) nd 4
4. To bear the,,Epe.es;:necessarit4or its preservatiorIand repair (CIVIL CODE,
Art 2135)r- :j ir
40.1'
Q: What are rfemetilg'ilof the creditotm case of, onpalment of debt?
ANS: If the debt is not , d; the'eAditoffooes not
uti:V.W 40117
oership of the real
estate since whatzasitTdfOrredig'Dot thgAmnership bu iii%re yghe right to receive its
fruits (CIVIL CODEX:Main. The r,emedy4 f the creditor is:
1. To bring atla9tion spedific pe ottiocie;
2. To petition for sate of real pip rtain,a foreclosure of mortgages under
_. Rule 68 of the4t-tiles of pourti,(0/2/LogellEM.- 137).
E. REAL ESTATE MORTG,..

Q: May the property given in mortgage be appropriated?
ANS: No. The creditor cannot appropriate the thing by way of pledge or mortgage, or
dispose of them. Any stipulation to the contrary is null and void (CIVIL CODE, Art.
2088).
Q: Discuss the concept of pactum commissorium.

ANS: Pactum commissorium is a stipulation whereby the thing mortgaged shall
automatically become the property of the creditor in the event of nonpayment of the debt
within the fixed term (CIVIL CODE, Art. 2088; DE LEON, Credit Transactions, supra at
424).
Q: Can the debtor's heir who has paid a part of the debt ask for the proportionate
extinguishment of the mortgage? ..
ANS: No. The debtor's heir who has paid a part of the debt cannot ask for the
proportionate extinguishment of the mortgage as long as the debt is not completely
satisfied. Neither can the creditor's heir who received the share of the debt cancel the
mortgage, to the prejudice of the other heirs who have not been paid (CIVIL CODE, Art.
2089 par. 2 and 3).
705
Q: What is a contract of real mortgage?
ANS: A real mortgage is a contract whereby the debtor secures to the creditor the
fulfillment of a principal obligation, specially subjecting to such security immovable
property or real rights over immovable property in case the principal obligation is not
complied with at the time stipulated (DE LEON, Credit Transactions, supra at 473).
Q: Enumerate the characteristics of a real mortgage:

ANS: The following are the characteristics of a real mortgage:
1. Real
2. Accessory — it has no independent existence of its own and needs the
existence of a principal obligation;
3. Subsidiary — the obligation incurred does not arise until the fulfillment of the
principal obligation which is secured; and
4. Unilateral — it creates only an obligation on the part of the creditor who must
free the property from the encumbrance once the obligation is fulfilled (DE
LEON, Credit Transaction 476).
_,,,,,0 1 -..,„,
Q: Enumerate the essentjarfe;uisitei of a dbtgraprbkreal mortgage.
ANS: The essential reqpitsyr is fcAx_;At5 tp-R1 '',t,,..
1. That the rgoltga ,?_,c6Paituted-tiSicu eihefulfillment of a principal
rs '1,,
obligation fakt..),C9BiE kt...20pi—,,,N. .e ). - k
2. Thatti th ina,rtagg6r -6- the absolute Ov.ab df thething mortgaged (CIVIL
CODE, Aft-SOO); P 4. X-
\ y\-.}.# ,,,
3. That e per§lins . nstituting .0kmortgage have t6e iteDisposal of their
propat97-anci in thq-absenceit 'Ordofrthat-thpy be egalllybuthorized for the
purpciser4 PIL CODE, 106 f -^',3Z,V
4. It cal cover only Imcriova 610:1
4 r- t 1
' e , -And alienable eplADts imposed upon
imm Ivp.-qpDE, Ark41 4fr
5. It must 97 r 1618 tic-instil en, tz.
and , 'S-)
6. Regis th ze ry o r p:e ,,,is
r), Fees ary• o bind / hird persons, but
. not fors valictity off , v tact, CIV/ C ",E2` Att 125).
Note: Order of eirfflosuqcan Ireku6ed that tye mortgage was not
registered provide no innacent t ir pa r InvIv
lvede,
(-YEN-VV'„,e,
Q: What are the kin s,of ..m ,, rt age,, •
ANS: A mortgage may litL`
1. Voluntary — one witioLsigree b!b n parties;
2. Legal — one required Mamtalg,ezte.cutetriri favor of certain persons; or
3. Equitable — one which, although it lacks the proper formalities or other
requisites of a mortgage required by law, nevertheless reveals the intention of
the parties to burden real property as a security for a debt (DE LEON, Credit
Q: Explain the doctrine of mortgagee in good faith.

ANS: A mortgagee has a right to rely in good faith on the certificate of title of the
mortgagor of the property given as security in the absence of any sign that may arouse
suspicion and has no obligation to undertake further investigation (Bank of Commerce v.
Sps. San Pablo, Jr., G.R. No. 167848, April 27, 2007).
Q: Is a mortgage with a dragnet clause allowed?

ANS: Yes. Generally, an action to foreclose a mortgage must be limited to the amount
mentioned in the mortgage. But the amounts named as consideration in a contract for
mortgage do not limit the amount for which the mortgage may stand as security, if from
the four corners of the instrument the intent to secure future loans or advancements and
other indebtedness can be gathered (Republic Planters Bank v. Sarmiento, G.R. No.
170785, October 19, 2007).
706
Q: What is foreclosure in real estate mortgage?
ANS: Foreclosure is a remedy available to the mortgagee by which he subjects the
mortgaged property to the satisfaction of the obligation for which the mortgage was
constituted (DE LEON, Credit Transactions, supra at 509).
Q: When is the remedy of foreclosure available?

ANS: When the principal obligation is not paid when due, the mortgagee has the right to
foreclose the mortgage and to have the property seized and sold, and to apply the
proceeds thereof to the payment of principal obligation (Sps. Landrito v. CA, G.R. No.
133079, August 9, 2005).
Q: To whom does the power to foreclose reside?

ANS: The power to foreclose a mortgage or not resides on the mortgagee (DE LEON,
Credit Transactions, supra at 511, citing Valmonte v. CA, G.R. No. L-41621, February
18, 1999).
.... s.'11
Q: Is the debtor required to pay t4e4510fTuency even after foreclosure?
ANS: Yes. Once the proceeds IA00646 ; plied to the payment of the obligation, the
debtor cannot anymore be requife4gVoy; unless, there is a deficiency between the
amount of the ' loan and the fore404(0;te price, because the obligation has already
been extinguished (DE LEONdiCTA 40p,'q,.19,tions, stika at 511, citing State
Investment House, Inc. v. CA,.,9,1R. fibi R06:41-Notkrwperi,4992).
Note: The rule goveming,pAlic notice of o f reclosure musrb7„istrictly complied with and
t idte the ox,-0- render it voiday qtfambunting v. Court of
slight deviations will iglarl
Appeals, G.R. No. L-481481.12\lovemlp8,
.40 tk-7,
Q: What are thmtifferentingsof foreclosure?
ANS: The king0.44 foreclosure
sre are airfoilo Sr.
1. Judicia1?aa6r,
wth,
2. Extra] dicial 1
N44,
Q: What is judicia qiiieclosire?
i p
ANS: Judicial foreclosure is an ordinary actin.9,..pr foreclosure under Rule 68 of the

it ALI
Rules of Court. A mortgwInay be foreclese:011, 0ialVy bringing an action for that
purpose, in the propei rpourt vittilfligkjasElictioffftrer2the area wherein the real
property involved or a paftion tpftof, is situated (RULES OF COURT, RULE 4, Sec. 1).
Q: What is equity of redempti. n?

ANS: Equity of Redemption is the right of a mortgagor to redeem the mortgaged
property after his default in the performance of the conditions of the mortgage within the
90-120 day period from the date of the service of the order of foreclosure or even
thereafter but before the confirmation of the sale (Top-Rate International Services, Inc.
v. IAC, G.R. No. L-67496, July 7, 1986).
Q: What is extrajudicial foreclosure?

ANS: Extrajudicial foreclosure is when the mortgagee is given a special power of
attorney to sell the mortgaged property by public auction, under Act No. 3135. It must be
stipulated in the contract (Act No. 3135, Secs. 1 and 6).
Q: What is right of redemption?

ANS: Right of Redemption is the right of mortgagor to redeem the mortgaged property
within one year from the date of registration of the certificate of sale (Act No.3135, Sec.
6).
707
'
Q: What are the distinctions between judicial and extrajudicial foreclosure?

ANS: Judicial and Extrajudicial Foreclosure are distinguished as follows:
Judicial Foreclosure • Extrajudicial Foreclosure

, As to court intervention
There is court intervention. No court intervention
1 As to decision appealable
Decisions are appealable. Not appealable, it is immediately
executory.
As to effect of foreclosure on parties' rights

Order of court cuts off all rights of. the Foreclosure does not cut off right of all
parties impleaded. . ,parties involved.
_.....----f..-
As to availability of equity/right of redemption
........,.... —......_ ." . ....).-‘,
There is equity ofiedemption" excep i nereds
,, n t•of ropqemption.
on banks which proldes F91. a ri bLof,`'''.,, ..i.,:,-,.0 , ''t1, ,
r r
redemption. 4. L.: •...., ..e. „1,,,, •1,,,
Vit ..l.l TT i ,mtiOT .4 I
• • .
As to period of redemption ,
„
Period of recf m ti4 sta —fraff-th6 .T-Peiddt redee Ustart\
" from date of
finality of the I- dgTent un it Ord'6r '9f : regiltratio? of certi ieaVo sale.
confirmationl .001,04 6'1,.,.,,...
:----,_;„.......
1----)--e itsgwasi
1 ...---17 V4. 71 /n-...
/Ms.-,
‘ As to necessity of a'special power of attorney
'I ',.., .t.- g
No need fo\CVsleciN 1„ /4 oA er !hi
14
--,„, ._ , ...-,„. cA,.._ er of
ttspe_cor ,atterVey in favor of
attorney in the kontract%,?f orfgage L'.--: hidrtg ge is needed in the contract
—NZ's,.
As to govern ng rules lorney •
,00- W at-
Governed by Rule‘65‹:
t Rules
„ of— ZG.9.xernedkyict No. 3135
Court ' — A- A, \ ,
1
\.-
(DE LEON, Credit Transactionb‘mata...79
at
9LIM Min "MAD ta-
"Zr
A. TORRENS SYSTEM (GENERAL PRINCIPLES)
Q: What is the Torrens System of Registration? •
ANS: Torrens system is system for registration of land under which, upon the
landowner's application, th
thee court may, after appropriate proceedings, direct the register
of deeds for the issuance of a certificate of title (Grey Alba vs De la Cruz, G.R No. 5247,
September 16, 1910).
Q: What is the purpose of the Torrens System?

ANS: The real purpose of the Torrens System of registration is to quiet title to land; to
put a stop forever to any question of the legality of the registration, in the certificate, or
which may arise subsequent thereto. The system of registration relieves the land of
unknown liens or claims, just or unjust, against it (PENA, Registration of Land Titles and
Deeds (2008), p. 47) [hereinafter PENA, Land Titles and Deeds].
708
r
ct :r.":141;r.,A
Q: What is the concept of jura regalia?

ANS: Jura Regalia simply means that the State is the original proprietor of all lands and,
as such, is the general source of all private titles. All claims of private title to land, save
those acquired from native title, must be traced from some grant, whether express or
implied, from the State (Republic of the Philippines v. Santos, G.R. No. 180027, July 18,
2012).
Q: What is the Regalian Doctrine?

ANS: The Regalian Doctrine dictates that all lands not otherwise appearing to be clearly
within private ownership are presumed to belong to the State. Thus, all lands that have
not been acquired from the government belong to the State as part of the inalienable
public domain (Secretary of DENR v. Yap, G.R. No. 167707, October 8, 2008).
Q: What is the constitutional basis for the Regalian Doctrine?

ANS: All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energyi kfisheries,
e forests or timber, wildlife, flora and -
fauna, and other natural resources. e' caned by the State. With the exception of
agricultural lands, all other naturOscp, - s shall not be alienated. The exploration,
development, and utilization of 4:014baurces shall be under the full control and
supervision of the State. The SOteVig itectly undertake such activities, or it may
enter into co-production, joint velituta d:roducpg-sharagreements with Filipino
citizens, or corporations or associations igatt--/af,.qter 0;ntum of whose capital is
owned by such citizens agre9ten may be for a'peEj: iid not exceeding twenty-
five years, renewable4y9t more ttrit enty-five years,' under such terms and
conditions as may be'll?roitded by Javir: 1cases of water rights for irrigation, water
supply fisheries, or .i2trttri:afttsei other than the develop enttof ater power, beneficial
use may be the rileasure ai3 ilimit of the g t.
A49" ,,,
,. 'i $.-.444 i.
The State shtiL lotectAnatio.O
.....-.- marl a wealth. 'n *waters, territorial
sea, and exclusive econom t ic zoriptindreserve its s
,4, Wt1"ment exclusively to
Filipino citizens (CONSTV .1 XII, Sqc. 2)
lta..0 ''.i. , !,It
Q: Is there an exceptign tolge Regaliar~ ?
ANS: Yes. The existeneeerigtive title toACBEF6 ,pr,shir$of land by Filipinos by virtue
,,,
of possession under aZ5 aim of,,,tspeeslirMice. meditri-f,emorial and independent of
any grant from the Spanish kyr4,Dwn is an exception to the theory of jura regalia
(AGCAOILI, Property Ree(raaion Decree and Related Laws, (2018), p. 6-8) (hereinafter
AGCAOILI, Property Regiatiln].
Q: What is a native title?

ANS: Native title refers to pre-conquest rights to lands and domains which, as far as
memory reaches, have been held under a claim of private ownership by Indigenous
Cultural Communities or Indigenous Peoples (ICCs/lPs), have never been public lands
and are thus indisputably presumed to have been held that way since before the
Spanish Conquest (R.A. No. 8371, otherwise known as The Indigenous Peoples Rights
Act, Sec.3, par. L)(hereinafter IPRA].
Q: What does "time immemorial" refer to?

ANS: "Time immemorial" refers to a period of time when as far back as memory can go,
certain ICCs/lPs are known to have occupied, possessed in the concept of owner, and
utilized a defined territory devolved to them, by operation of customary law or inherited
from their ancestors, in accordance with their customs and traditions (IPRA, Sec. 3, par.
(p))•
709
.er •
-? 'n
t•Wat
Q: Who are disqualified to own agricultural lands?

ANS: Aliens may not acquire private or public agricultural lands (Krivenko v. Register of
Deeds, G.R No. L-630, November 15, 1947).
Q: Is the prohibition absolute?
ANS: No. Aliens may own lands in the Philippines: (1) in cases of hereditary
succession, aliens may be a transferee of private lands (CONST., Art. XII, Sec. 7); and
(2) a natural-citizen of the Philippines who has lost his Philippine citizenship may be a
transferee of private lands, subject to limitations provided by law (CONST., Art. XII, Sec.
8).
Q: What are the limitations for natural-born citizens who have lost their
citizenship, with respect to acquiring lands?
ANS: The following are the limitations for natural-born citizens who have lost their
citizenship:
1. Must have the legal capacity to enter into a contract under the Philippine laws;
2. Land to be transferrelmarbrurrare.rmum of 1,000 square meters in
case of urban lan,c1r6r ectari in cars fpf rpral-klvd;
3. In case of rura etAirrd4h same t-Oe l/ seed a'p tusktRsidence;
4. For married, up qs,./ojae261 them may avallotthelpul privilege. If both opt to
avail of tl2,6". r'ne,f he to Larea-should notkkxceea the maximum provided;
and
sti) \ wiel
5. In easel' ta44ia sfe 1ee alrqadyAwn rural it urbkaglan s, he shall still be
entitles to ad itiona lands provided that wheyadd'esirtoft ,, .,11 se already owned
by hi 'shall ot ex teed-the-ma ' "rm-areas- erein bbtfiori d (B P 185 Sec.
>, 1----
Q: Are aliens t I eh to)ese praaii:dard..."'
ANS: Yes. While a ids alle.es ualifiedrtrcqui9g ii? s a asg)uclic domain, they
/
may however lea's Avat4,. . A Igs 16'0'n a 19(4 r a asoila6le period is valid
(AGCAOILI, Pro erty Re ist udiarffe cs
Q: Who may acq c, t 111 _

ANS: The following ay acgih prt 4fi 0.0
rg....34 .,1
1. Filipino citiz
Note: Mayeq° aeq~ re V more an -tee,) hectares by purchase,
homestead or grAt. aytlease 5,6).ttAkfi e hundred (500) hectares.
2. Domestic corporation"EtiidAassmg_tgos.
a defined in, Article XII, Sec. 2 of the
Constitution;Art XII, Sec. 2 of the Constitution mandates that corporations or
associations at least 60% of whose capital is owned by Filipino citizens.
Note: Private corporations or associations may not hold such alienable lands
of public domain except by lease, for a period not exceeding twenty-five (25)
years, renewable for not more than twenty five (25) years, and not to exceed
one thousand (1000) hectares (Id. Sec. 2); A foreign corporation is disqualified
to own lands in the Philippines (Strategic Alliance Development Corp. v.
Radstock Securities Limited, G.R. No. 178158, December 4, 2009).
3. Aliens, but only by hereditary succession (CONST., Art. XII, Sec. 7); and
Note: May be a transferee of private lands
4. A natural-born citizen of the Philippines who has lost his citizenship may be a
transferee of private lands, subject to limitations provided by law (CONST., Art
XII, Sec. 8)
Note: The following are the limitations:
a. A natural-born under Art. XII, Sec. 8, may acquire private land not more
than five thousand (5000) square meters in the case of urban land, or
three (3) hectares in .the case of rural land to be used for business or
other purposes.
710
•- • • tri 1'1:4'.
'• ?. 1 H° .,4; t- .
b. In the case of married couples, one of them may avail of the privilege
granted. But if both shall avail of the same, the total area acquired shall
not exceed the maximum fixed.
c. In the case the transferee already owns urban or rural land, he shall
still be entitled to be a transferee of additional urban or rural land which
when added to those already owned by him shall not exceed the
maximum areas authorized (R.A. No. 7042, Sec. 10 as amended by
R.A. No. 8179 implementing CONST., Art. XII, Sec. 8).
Q: Is registration of instruments affecting titled lands under Act No. 3344

ineffective against third persons?
ANS: Yes. Well-settled is the rule that registration of instruments must be done in the
proper registry in order to effect and bind the land. Prior to the Property Registration
Decree of 1978, Act No. 496 (or the Land Registration Act) governed the recording of
transactions involving registered land, i.e., land with a Torrens title. On the other hand,
Act No. 3344, as amended, provided for the system of recording of transactions
over unregistered real estate withRftt. #ejudice to a third party with a better
right. Accordingly, if a parcel of land,lcomad by a Torrens title is sold, but the sale is
registered under Act No. 3344 and "not
.;cerUn
the Land Registration Act, the sale is not
considered registered and the regiOtiAtidiffethe deed does not operate as constructive
notice to the whole world (Mactan Cebr lntem floral Airo'Ort Authority v. Tirol, G.R.
171535, June 5 2009). trant"'
B. ORIGINAL REGISTROION
e
Q: What is the concep :01Ordipary'lleg
( stration of Lanus/
ANS: Original 'registriatiOna"aoceedingfiO determine tilje loWilership of land on the
basis of an application for Tegrafation
- or ewer/opposition by a claimant in a cadastral
registration.41 IV>
A •
Q: Which couftf!as tyeziesdictio ,ove regis proceedings?
ANS: The Court'dfaissOnsr&nce (r ow the RTC, as land registration court) shall have
the exclusive jurisdiction ciVA all applica `tins for original registration of title to lands,
including improVeme'n% anjanterest the ,1r over all petitions filed after original
registration of title, withObwer- to ear a iTtÌillqyArglaboestions arising upon such
applications or petitiont P.D. 14.
Q: What are the laws go ,g land registration?

ANS: The following are the laws governing land registration:
1. PD No. 1529 or the Property Registration Act;
2. CA No. 141 or the Public Land Act;
3. Act No. 2259 or the Cadastral Act;
4. RA No. 8371 or the Indigenous Peoples Rights Act (IPRA).
Q: What are the requirements for registration under PD 1529?

ANS: The following sums up the requirements for registration under Sec. 14(1) of PD
No. 1529: (PO-OCEN-Bo12-PuDo)
1. The applicant, by himself or through his predecessors-in-interest, has been in
Possession and Occupation of the property subject of the application;
2. The possession and occupation must be Open, Continuous, Exclusive and
Notorious;
3. The possession and occupation must be under bona fide claim of acquisition-
of ownership;
4. The possession and occupation must have taken place since June 12, 1945 or
earlier; and
711
5. The property subject of the application must be alienable and disposable land
of the Public Domain (Malabanan v. Republic, G.R. No. 179987, Sept. 3,
2013).
Q: Who may apply for original registration under P.D. No. 1529?
ANS: The following may apply for original registration: (OPAO)
1. Those who, by themselves or through their predecessors-in-interest, have
been in Open, continuous, exclusive and notorious possession and occupation
of alienable and disposable lands of the public domain under a bona fide claim
of ownership since June 12, 1945, or earlier;
2. Those who have acquired ownership of private lands by Prescription under the
provisions of existing laws;
3. Those who have acquired ownership of private lands or abandoned river beds
by right of Accession or accretion; and
4. Those who have acquired ownership of land in any Other manner provided for
by law (P.D. No. 1529, Se941.4).....,
T
Who has the powerio classify oqreb lysify blanvetto be included or excluded
from the public dom1,104avy ragtone?-...,Z4. I )7\
ANS: The Presideryythraigtroe-presidential prOblarriraliorONekexecutive order. The
Secretary of the Depalt ritrajEnvircifffilTrirand.N041keg.oatces is the only other
public official em Wrq Ipw to atorci0 a-land classifivtiopiarfl declare such land
as alienable and disposOle (AGCAdiLl, Regiltratioldsupra at 203).
(
Q: How can lah:74 !loan prov!,thaOlithTland— ubjec of a application for
registration ildherka le anddislitaapliip ki‘,11
.
ANS: To prov e land ubjeoiAa‘i)i.pp'plicatio for registratign, is alienable and
disposable, t e—app St est4141:7-1.6 exis of) a positive act of the
A ,
government su 11,g resi kal,proclarnat0Dpr aVe tivF orderlan administrative
action; investigltiofi ekorts frptAeatof "of v atorp; a4 a legislative act or
statute. The applicant trial, al 4641 kai KA\ r m ti e government that the land
claimed to have een posses ed or isB uirdde,number of yeers is alienable and
disposable (Secret of Environl Okt-a d rat, esources v. Yap, G.R. No. 167707,
Oct. 8, 2008). LIN
Q: Is it necessary tha ljectlia ligNA irst. assified as alienable and

disposable before an applica tr ' osses cupation could even start?
ANS: No. Sec.14 (1) merely requires erty sought to be registered as already
alienable and disposable at the time the application for registration of the title is filed. If
the State, at the time the application is made, has not yet deemed it proper to release
the property for alienation or disposition, the presumption is that the government is still
reserving the right to utilize the property; hence, the need to preserve its ownership in
the State irrespective of the length of adverse possession even if in good faith.
However, if the property has already been classified as alienable and disposable, as it is
in this case, then there is already an intention on the part of the State to abdicate its
exclusive prerogative over the property (Republic v. Court of Appeals and Naguit, G.R.
No. 144057, Jan. 17, 2005).
Q: Are all government lands, public lands?

ANS: No. "Government land" and "Public land" are not synonymous terms; the first
includes not only the second, but also other lands of the government already resqrved
or devoted to public use or subject to private right In other words, the government owns
real estate which is part of the "public land" and other real estate which is not a part
thereof (Montano v. Insular Government, G.R. No. 3714, Jan. 26, 1909).
712
..........
itl0 .
„.„1,L-
-iCf.q.OgN.,r...W4P;s.'gOTgtigt•#-':.: ,'.P''rV.rokg 42.7*,0:1F01:-",:,
:if
Q: What is the effect if predecessor-in-interest of the applicant is denied

registration of the land?
ANS: A judicial declaration that a parcel of land is public, does not preclude even the
same applicant from subsequently seeking a judicial confirmation of his title to the same
land. It is only required that he complies with the provision of CA No. 141, and as along
as said public land remains alienable and disposable. The decision in a cadastral case
declaring the land as public is not the final decree contemplated in the Land Registration
Act (Director of Lands v. Pastor, G.R No..L-47847, July 31, 1981).
Q: Who may apply for original registration under C.A. No. 141?
ANS: The following may apply for original registration under C.A. No. 141: (OCP)
1. Any natural-born citizen of the Philippines who is not the Owner of more than
twelve (12) hectares;
2. For at least thirty (30) years prior to the effectivity of this amendatory Act, has
Continuously occupied and cultivated, either by himself or through his
predecessors-in-interest a tract or tracts of agricultural public lands subject to
!k
disposition; and 1:'
3. Shall have Paid the real estatedax thereon while the same has not been
occupied by any person,(QAPO.0, Sec. 48(b)).
Note: Upon satisfaction of the above-mentioned requisites, he. shall be entitled to have a
free patent issued to him for such tractoriLfrdctstof such land/pot to exceed twelve (12)
hectares. :40,101434tum,— ,
'-- -44,8r: k
Q: What is required tilib:e•submitted;by, tile applicant? • I
ANS: The applicantust subrriit-Mear and convi it d1/4 proof and well-nigh
incontrovertible evider0 A;oFortdingly, he- ust show that. eila' dav,is already classified
as A & D at thedifiie"ofiitt‘ppplicatio
l present proof of dove: acts of possession
consisting of jr,ktroduction Of V6luable,,imp svements or);the! rop rty like fruit-bearing
trees, resideeakhouspad other striktits, among Others. TT( eclarations, though
not conclusiVe.$Viddffa6 OrkwneFthjp, arel 'everthetes4vgoo cid ci@.4.' f the possession
in the concept oicnpri(A 0G,Oltd,`Propg Registratio , sup lat4-11, 27Z 277).
Ir
Q: May a privata piltraln file a pe ion for judicial declaration of imperfect
title? P, , $, .4,41,
ANS: Yes. If the land afe're-already priv a Atmlffto ve ed to the corporation, then
the constitutional prohiMon ag9irist-acquisition y private corporations or associations
do not apply (Directorl.LangA: Intermediate Appellate Court and ACME Plywood
Veneer, G.R. No.73002, p4.:Vrtiber 29, 1986).
Q: Who may apply for original registration under IPRA?
ANS: Individual members of cultural communities who by themselves or through their
predecessors-in-interest, have been in:
1. Continuous possession and occupation of the same in the concept of owner
since time immemorial; or
2. For a period of not less than thirty (30) years immediately preceding the
approval of this Act and uncontested by the members of the same ICCs/lPs
shall have the option to secure title to their ancestral lands under the
provisions of Commonwealth Act 141, as amended, or the Land Registration
Act of 496 (R.A. 8371, Sec. 12).
Q: Who are members of Indigenous Cultural Communities/Indigenous Peoples?
ANS: It refers to a group of people or homogeneous societies identified by self-
ascription and ascription by other, who have continuously lived as organized community
on communally bounded and defined territory, and who have, since time immemorial,
occupied, possessed and utilized such territories, sharing common bonds of language,
customs and traditions, and other distinctive cultural traits (R.A. No. 8511, Sec. 3(h)).
713
,2:;71',1. iVi:''''1
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,.......%1 , -...,
V;t1;!: .f...il:?tit'';;;(Vtlie;n:"1.,1:. .'
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c:`;'.
-'`'/I.;7,("s/'e
-'4I, Vir-_,'(
Q: What are the requisites in ordinary land registration proceedings under
Presidential Decree 1529?
ANS: The following requisites must also be complied with in the confirmation of
imperfect or incomplete title under Section 48 (b) of the Public Land Act: (SAHT-
PNAHP-DERT)
1. Survey of the land by the Land Management Bureau or a duly licensed private
surveyor;
2. Filing of Application for Registration by the applicant at the RTC of the
province, city or municipality where the property is situated;
3. Setting of date for initial Hearing by the court;
4. Transmittal of Application and date of initial hearing together with all
documents or other pieces of evidence attached thereto by the Clerk of Court
to the Land Registration Authority;
5. Publication of Notice of Filing of Application and date and place of hearing
once in the Official Gazette and once in a newspaper of general circulation in
the Philippines;
6. Service of Notice uporf' contiguous ow ersk occupants and those known to
have interest in SieproP‘ty b?4,thd sh erif
7. Filing of Ans 3 !cos tion4o-Apple_ t' an 43erson whether named in
the notice q 111;
8. Hearing ofifiacA7 e-cutift7.
9. Promul judg
.41
gent bly),thekburi;7
10. Issuan •e of acre or order bxJthecourt ecla the decision final and
instru ing the Lan Registratio" Authority to issue e of Confirmation
and on; •
11. Ent ofDe ee in t e rqP• uth rity;
12. Send'n$fi ti py of DecreeSto* ups ondi Regi ter- oil eeds; and
Iran of ee in I gistratio ogjc a d issu nce of Owner's
Dupaleifd Ind 8 icateiq emf the aliant register of Deeds
upon /1 yffi oft cribee Ax'
Q: What is cadXtral re istral5 ti
ANS: It is a prockling insreo,Itt h An of petition or registration by the
government, not by1ke pers -Rs ' hgpnd ubject thereof, and the
latter are, on the pain s to is Ir.claitO,Atiere e,f..feVr mpelled to go to court to
make known their claiml thereinriani s1,1.b eriate such claim or interest
(AQUINO, Land Registratro gs, (2007) p. 99) (hereinafter
AQUINO, Land Registration].
Q: What is the nature and purpose of cadastral proceedings?
ANS: Under the cadastral system, pursuant to the initiative on the part of the
government, titles for all the land within a stated area are adjudicated whether or not the
people living within the area desire to have titles issued (AGCAOILI, Property
Registration, supra at 390).
Q: What Is the procedure for cadastral registration?
ANS: Section 35 of PD No.1529 provides for procedure for the settlement and
adjudication of unregistered lands through cadastral proceedings as follows:
1. Notice of Cadastral survey published once in the Official Gazette and posted in
conspicuous place; copy furnished mayor and barangay captain;
2. Notice of Date of survey by the Land Management Bureau and posting in
bulletin board of the municipal building of the municipality or barrio, and shall
mark the boundaries of the lands by monuments set up in proper places
thereon;
3. Cadastral Survey;
4. Filing of petition;
714
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I
...,,,P....•
tiC4p.... 1..
Fv.p„ • ... 2 •,..- • .1E":̀'4 1Y'n.., i'' e.',:?k 4, 1,117),:t7tPi 44,
C.5---
.. ItVli i:' •
Vc.-At,'tie4)1:4•1:141t;;PA-'•'ITV:&' ,..-"5-40-Vq..t,:i.V:edS:7):4;4y-cit
5. Publication, mailing, and posting.

Note: Publication of Notice of Initial Hearing to be published twice in
successive issues of the Official Gazette (P.D No. 1529, Sec. 35, par. b).
6. Filing of Answer;
7. Hearing of the case;
8. Decision; and
9. Issuance of Decree and Certificate of Title.
Q: What is the effect of the finality of the decree?

ANS: By the issuance of a decree, the land is bound and title thereto quieted, subject
only to exceptions stated in Sec. 44 of P.D. 1529. It is conclusive upon and against all
persons including the government and its branches. One year after the date of such
issuance, the decree becomes incontrovertible and amendments or corrections of the
same will not be allowed except for clerical errors (NOBLEJAS, Registration of Land
Titles and Deeds (2007), p. 196) (hereinafter NOBLEJAS, Land Titles and Deeds].
Q: What are.the remedies available to &aggrieved party to question the validity

of the judgment in a registration case?'t k
ANS: The remedies are the following:;(0A iPRAD-CAQS)
1. New Trial;
:314 '
2. Appeal;
3. Relief from judgment; ,n.,,
4. Petition for Revi9Np', '
5. Action for RefgOveyance; :',I. .,. A
6. Action for Ccirriperration frorifii§burance Fund;
vp,11. r,
7. Action for Damages;
8. Cancel!aph —.%u itkVP Ipa,,,-, -
9. Annupient of Judgment;
10. Qui4tiwof Tift*an
11. Crihrl S-ditr ...P."1: .) -.'•..r, t,
Note: RemediessufficientitoveredVndep emedial LaW:
Ipo .
Q: What happens, hen theAproperty is transferred to an innocent purchaser for
value? ' $ A Nl
ANS: If the property haren tragifegg ,.a.mgent purchaser for value, the
crW4.11
petition for review sh of lie lies consi ered an innocent purchaser who acquired
the property for a valuable cqp'slderation not knowing that the title of the vendor or
grantor was defective okiidlor
...:4,-, one who buys the property of another without notice
that some other person has a right to, or interest in such property and pays a full and
fair price for the same, at the time of such purchase, or before he has notice of the claim
or interest of some other person in the property. The phrase "innocent purchaser for
value" includes according to Section 32 of P.D. 1529, an innocent lessee, mortgagee or
other encumbrances for value (NOBLEJAS, Land Titles and Deeds, supra at 196).
C CEATIFICATE OF TITLE
Q: What is a certificate of title?
ANS: A certificate of title is a mere evidence .of ownership. It is not the title to the land
itself. The mere possession thereof does not make one the true owner of the property
(AGCAOILI, Property Registration, supra at 11). A certificate of title serves as evidence
of an indefeasible and incontrovertible title to the property in favor of the person whose
name appears therein. Such indefeasibility commences after the lapse or expiration of
one year from the date of entry of the decree of registration when all persons are
considered to have a constructive notice of the title to the property. After the lapse of
one year, therefore, title to the property can no longer be contested (Esguerra v.
Trinidad, G.R. No. 169890, March 12, 2007).
715
Q: What is Torrens title?003
ANS: It is a certificate of ownership issued by the Register of Deeds, naming and
declaring the owner of the real property described therein, free from all liens and
encumbrances EXCEPT such as may be expressly noted thereon or otherwise reserved
by law (PNB v. IAC, G.R. No. 71753, August 26, 1989). It is conclusive against the
whole world. It is guaranteed to be indefeasible, unassailable, and imprescriptible.
Q: What is "Mirror Doctrine"?

ANS: It is a concept where every person dealing with registered land may safely rely on
the correctness of the certificate of title issued therefor and is no way obliged to go
beyond the certificate to determine the condition of the property (Locsin v. Hizon, G.R.
No. 204369, Sept. 17, 2014).
Q: Is there an exception to the "Mirror Doctrine"?
ANS: A person dealing with registered land has a right to rely on the Torrens certificate
of title and to dispense with the need of inquiring further except when the party has
actual knowledge of facts and.pircUrigins,triattArpuld impel a reasonably cautious
man to make such inquiry,pr4h Q the Rurc a,knovyledge of a defect or the lack
of title in his vendor or cr,suffici littfacia d'ree-sofiably prudent man to inquire
into the 'status of theotitle '61t1i,
e,proVerty in lib tiatz. The Rsfs rice of anything which
excites or arouse stistil 16p's11910-thepromprthe ,yepdee to look beyond the
certificate and inve4tiq e 'tleo the v',' dor gpria-aOriOin jtk arii of said certificate.
One who fallsi wtii-Mt xcelotion qiii ng, heip.e derifimiA t5d an innocent purchaser
for value nor a urchai r in 400d faith allak.,hence, does no eritlhe protection of the
law (Locsin v. : ikon .R. Nor204869T-Sertember 17, p014).
P
One who purchasesal prorirty wiiictlisjiRthe,actualiposses ion o another should, at
least make so m uiry-c9cerngig thelriare of tho,sel in oss Alan. The actual
g
possession by pe n okilekrI an-thelve dor-shoulcfea
i ,..... , Jeas pWhe purchaser upon
inquiry. He ca fscpe y, 1 bseffee pipch q c , be regard d as a bona fide
. .i,..
purchaser as a ainst s lCh s °cell ekta7 - G.R No. 106042 February 28,
1994). i
Being a corporatiorkengagedk 4 atis,TEspl yi and seilieg real estate, it was
gross negligence onltq b.pa9Nrter,v ly -orfts
- 7 ,,s r's&s rance that the occupants
of the property were re9p-Dattelrtilff§1 e inli\! b • ad the means and the
opportunity to investigate or iseighe acM •c ormation (Rosaroso v. Soria,
G.R. No. 194846, June 19, 20 I
Q: What is Transfer Certificate of Title?

ANS: The subsequent certificate of title that may be issued by the Register of Deeds
pursuant to any voluntary or involuntary instrument relating to the same land shall be in
like form, entitled "Transfer Certificate of Title", and likewise issued in duplicate. The
certificate shall show the number of the next previous certificate covering the same land
and also the fact that it was originally registered, giving the record number, the number
of the original certificate of title, and the volume and page of the registration book in
which the latter is found (P.D. 1529, Sec. 43).
Q: How is splitting and consolidation of title done?

ANS: Splitting is done upon petition by registered owner of two or more parcels of land
distinctly described In a certificate of title. The Register of Deeds may cancel the
certificate and issue in lieu thereof several new certificates each covering one pr such
number of parcels as the owner may desire, without necessity of obtaining prior
authority from the court. Meanwhile, consolidation of title is done upon petition of a
registered owner of several distinct parcels of land described in separate certificates of
title. He may cause the prior certificates of title to be cancelled and in lieu thereof, a
716
single certificate be issued for the different portion thereof, by direct application to the
Register of Deeds (PENA, Land Titles and Deeds, supra at 206).
Q: May title be impugned?
ANS: It depends. Registration of land under the Torrens System, aside from perfecting
the title and rendering it indefeasible, after the lapse of the period allowed by law, also
renders the title immune from collateral attack, but not from direct attack against a
judgment granting the title (Casimiro Development Corporation v. Mateo, G.R. No.
175485, July 27, 2011).
D. SUBSEQUENT REGISTRATION
Q: What are the matters addressed in subsequent registration proceedings?
ANS: Incidental matters after original registration may be brought before the land
registration court by way of motion or petition filed by the registered owner or a party in
interest. An owner of registered land may convey, mortgage, lease, charge or otherwise
deal with the same in accordance wit,h4fating laws. He may use such forms of deeds,
mortgages, leases or other voluntaggifftpments as are sufficient in law. But no deed,
mortgage, lease, or other voluntqylfriarent, except a will purporting to convey or
affect registered land shall takePfkat gv conveyance or bind the land, but shall
operate only as a contract betwAie4ftig,' arties and as evidence of authority to the
Register of Deeds to make registrAticW(Ps0
=0 5frSec. 51)
savea,
00'
Q: What are the purposes, the exe.jut On of volunWaluments?
e is serves only (1" a contract between the
ANS: The execution ofniusitary docdirL
parties thereto; and (22asNevidence0 thority to the Registe of Deeds to register
such dealings (AQUAP)LiinthRegistratioisupra at 185).
4- pko,
Q: What are the indsRf oluntaryiligalip s?
ANS: ConveWA% s‘le ansfazt mortga s, leases - • trust with power
of sale pa -t&gs, ,454
,
94
Q: How is cOnVeNfice.orepputribpirce on the land effected?
ANS: It is only the act if regitsaring the ins e in the Register of Deeds which is the
operative act that conveymynership or 4p f, ' eland insofar as third persons are
concerned (Campillo v pA, G.R o liu156,4.8.77447 meg; Viacrusis CA G.R. No.
L-29831, March 29, 19 2
Q: What is the effect of egls: ring the instrument in the Register of Deeds?
ANS: The act of registration creates a constructive notice to all persons from the time of
such registering, filling or entering (P.D. No. 1529, Sec. 52).
Q: What are the requirements in the process of registration in voluntary dealings?
ANS: The requirements are as follows: (DOP)
1. Deeds, conveyances, encumbrances, discharges, powers of attorney and
other voluntary instruments, whether affecting registered or unregistered land,
which shall be:
a. executed in accordance with law in the form of public instruments;
b. signed by the person or persons executing the same in the presence of
at least two witnesses;
c. two witnesses' signature; and
d. acknowledgment of the free act and deed of the person or persons
executing the same before a notary public or other public officer
authorized by law to take acknowledgment (Sec. 112, P.D. No. 1529);
2. Presentation of Owner's duplicate certificate (P.D. No. 1529, Sec. 53); and
3. Full Payment of required registration fees (P.D No. 1529, Sec. 111).
717
Q: Distinguish Voluntary from Involuntary Dealings.
ANS: The differences are: (AQUINO, Land Registration, supra at 184).
Voluntary Dealings • • Involuntary Dealings

As to Concept
Refer to deeds, instruments, or Refer to such writ, order or process issued

documents which are results of the by a court of record affecting registered land
free and voluntary acts of the parties which by law should be registered to be
thereto effective, and also to such instruments which
are not the willful acts of the registered
owner and which may have been executed
even without his knowledge or against his
consent
1. Sale; k.1. Altkitienit,

2. Real property myga ''27`Mand c e
"r iut.> -4)
.,),'N
3. Lease; ,fr° ...,,.;„ ..,3„Sale on zecuuon :of judgment or sales
4. Pacto de retrg,sale; ,P, fOriakes..)-
5. Extra-judici p If; Aifferse claims:1
6. Free paten horn ' 15 ( 1t lidtice of is peiiiE
7. Powers of Lfto :2 ExPlOpria on;
8. Trusts. F_osfOure• and
'•,i_ P__§ 'AuCtion s le on fo e of mortgage.
- tai
An innocent a rlhaser V:4) Ne\

fo ,J 5." o
e offi nWc:the s'sstog the Register of
ook
registered lkd blcomSSS' Dieet34,64-Oicien otice tef all persons even
registered owne$ the iktriomi,tike. l'A.trY6 err's dsi licate rtificate of title is
presents and files a dul otarifee t-prv,ke.p o the Re ister of Deeds.
and valid deed of eke an44b,
is entered in the briortia:17h"e`
same time he surrenders o. MA.
the owner's duplicate certificat of
title covering the land sold.
Q: What is attachment?
ANS: Attachment is the legal process of seizing another's property in accordance with a
writ or judicial order for the purpose of securing satisfaction of a judgment yet to be
rendered (AGCAOILI, Property Registration, supra at 571).
Q: What is adverse claim?

ANS: An adverse claim is a notice to third persons that someone is claiming an interest
on the property or has a better right than the registered owner thereof, and that any
transaction regarding the disputed land is subject to the outcome of the dispute
(Sajonas v. CA, G.R. No. 102377, July 5, 1996).
Q: When is a claim or interest adverse?

ANS: A claim or interest is adverse when:
1. Claimant's right or interest in registered land is adverse to the registered owner;
2. Such right arose subsequent to the date of original registration; and
718
3. No other provision is made in the Decree for the registration of such right or
claim (P.D. 1529, Sec. 7, Par. 1).
Q: What are the formal requisites of an adverse claim for purposes of

registration?
ANS: The requisites are: (WSR)
1. Adverse'claimant must state the following in Writing:
a. His alleged right or interest;
b. How and under whom such alleged right or interest is acquired;
c. The description of the land in which the right or interest is claimed; and
d. The certificate of title number.
2. Such statement must be Signed and sworn to before a notary public; and
3. Claimant shall state his Residence or place to which all notices maybe served
upon him.
Note: Non-compliance with the formal requisites renders such adverse claim
non-registrable and ineffective.4.
Q: What is the purpose of notica:ofitgAndens?

ANS: Notice of pendens is interided4tinstructively advise or warn all people who
deal with the property that they so deg;..: It •i it at their own risk. Whatever rights they
may acquire in the property in anyjvoitaktpanction are object to the results of the
action, and may well be inferior spbordinetrzedsse which may be finally
• determined and laid dovillOrein (Hell's Maria Marasrgan IAC, G.R. No. L-69303,
July 23, 1987). kw' • . p
1*a
;•.-u.
, . ,?,} ..;• i O•
.„•,. g, tY
Q: When is notice o.yis ptyleris prope i
ANS: Notice of fis;fie'hdentliihrnper in th ollowing insta4nces - CAP)
1. To ReSverpossession of reej.e te;
2. To Ciritel tifielltleld; .4 i %.
'Tr
3. To RiovaionVirpponitliktitle tilreof; e
4. Any otikepFderldlog orinj kin ?ih court direc y%ffec trig the title to the land
or the useti!lf166culi:apon thOreof r the building thereon; and
.t.4
5. For Partition (6Gap. ILI, P rope Registration, supra at 593-594).
PEP=te-
Q: When is notice of /fp pendenefriapOlic
ANS: Notice of lis pendgls is irldj5licable in the following instances: (RAWELF)
1. Proceedings foVe Recovery of money judgments;
2. Attachments; '41P1.'
3. Proceedings on the probate of Wills;
4. Administration of the Estate of deceased persons;
5. Levies on execution; and
6. Foreclosure (AGCAOILI, Property Registration, supra at 594).
Q: When may notice of Its pendens be cancelled before final judgment upon order
of the court?
ANS: Notice of lis pendens may be cancelled before final judgment upon order the court
in the following instances: (MAN-DVC)
1. When it is shown that the notice is for the purpose of Molesting the adverse
party;
2. Where the evidence so far presented by the plaintiff does not bear out the main
Allegations of the complaint;
3. When it is shown that it is not Necessary to protect the right of the party who
caused the registration thereof;
4. Where the continuances of the trial are unnecessarily Delaying the determination
of the case to the prejudice of the defendant;
719
5. Upon Verified petition of the party who caused the registration thereof; or
6. It is deemed Cancelled after final judgment in favor of the defendant, or other
disposition of the action such as to terminate all rights of the plaintiff to property
involved (NOBLEJAS, Land Titles and Deeds, supra at 438-439).
E. ASSURANCE FUND
Q: What are the requisites in instituting an action for compensation from
assurance fund?
ANS: The following are the requisites in instituting an action for compensation from
assurance fund: (ALD-NBP)
1. The Aggrieved party sustained loss or damage, or is deprived of land or any
estate or interest therein;
2. Such Loss, damage or deprivation:
• a. Was occasioned by the bringing of the land under the operation of the
Torrens system; or
b. Arose after oljgin'dlegiptrariorlOnd,
3. The loss, damage qr-bleprAtion vyasi D 1
a. Fraud, - ilf:CM I.
b. AnyArror,bp-Ositt, mistake or filsdpsdriptiont
i any certificate of title
or ih anye e try ovnemoraltdlim-inIte,regidiTatiort book;
4. There wa % Meat' ence on his pat
5. lie is B rreci4k9 precluded lindeildhe)roviskins A1529 or under the
provisiofof any aw fr m bringing`,411 action for .the re VA), Of such land or the
estate o trliprest therekand
6. The ac onfiasinot Pres scribed AGO6QICkPiop rty Regtstrat o , supra at 619).
tip
Q: Against MI=1 acti-dipr compe _a ion ro tis rance
f
f d Is filed?
p
ANS: If the act o is. o6vr,
1. Brought to co erifor darnhas (ion /f Ian f r of any estate or
interest the ein arTsing thi9ciubhs::fritiffiet o fission, mistake or
misfeasance of the qd,„Re.s."y, - " of Deeds, 1,i§ deputy, or other
employees o tie Regis y it tie .1cfqa Cg f thepilrespestive duties - the action
shall be broughgainst the Regisat•`p ob:f the roOince or city where the
land is situated aftthelfaIro al--Treasurer--a d'6'n ser.
2. But if such action is Broug t recovpr ioriAs diage or for deprivation of land
or of any interest therern`-ar *ng thlbeigliiraud egligence, omission, mistake or
misfeasance of person other n-courrreconnel, the Register of Deeds, his
deputy or other employees of the Registry - such action shall be brought against
the Register of Deeds, the National Treasurer and other person or persons, as co-
defendants.
Note: It shall be the duty of the Solicitor General in person or by representative to
appear and to defend all such suits with the aid of the fiscal of the province or city where
the land lies: Provided, however, that nothing in this Decree shall be construed to
deprive the plaintiff of any right of action which he may have against any person for such
loss or damage or deprivation without joining the National Treasurer as party defendant.
In every action filed against the Assurance Fund, the court shall consider the report of
the Commissioner of Land Registration. (P.D. 1529, Sec. 96).
Q: When must the action for compensation from assurance fund be instituted?
ANS: The action for compensation from assurance fund must be instituted within a
period of 6 years from the time the right to bring such action first occurred, which is the
date of issue of the certificate of title.
720 .
Note: The action may be instituted at any time within 2 years after such disability has
been removed, notwithstanding the expiration of the original period of six years if the
person entitled to bring such right of action was a minor or insane or imprisoned or
otherwise under legal disability. The right of action herein provided shall pertain to the
legal repreentative of the person sustaining loss or damage unless barred in his
lifetime (P.D. 1529, Sec. 102).
XII. TORTS AND DAMAGES

A. TORTS
Q: What is a tort?
ANS: A tort is a wrong, a tortious act which has been defined as the commission or
omission of,an.act by one, without right, whereby another receives some injury, directly
or indirectly, in person, property, or repAtation (Vinzons-Chato v. Fortune Tobacco
Corporation; G.R. No. 141309, June 19; 2007).
• • .;:i.,.
Q: What are the elements of tort?
ANS: The elements are: (ROW)
- -'•, :!i,
1. A legal Right in favor of a payOrp whatever means meansand under whatever law
it arises or is createdse. .-i., " -Al r‘ ' "ii Ilk
gev
2. A correlative legalAligation bribe part.of and her tb respect or not to violate
such right; atlid;if: - ,,' -
,,,iiipl....,s
3. A Wrong in e,,,fo:fm
ffi of ari.,act-c4 omission in violation of said legal right and
duty with corgaq[AntinjurY or damage (DE LEON ments and Cases on
Tprts anditinagek(2012), p.29khereinafter £3 L p Torts].
AO' .
Q—: What is C9R0•AqqiitaR? ,i,
ANS: It is an ;act or orris which,
W ca soy darna Rp. an being fault or
negligence ancrqiere heill hp preaiistin''Ocontractual re gicialiirbetween the parties
(CIVIL CODE, Aii, .4240
.4"
4,.t-4.
hgr lA
if
-'.
Q: Difference.amo ng Cidpa. quiliana, Olreo tractual, and Culpa Criminal
ANS: The differences a.long Culpa dtqatit';Cu a.Gpagctual, and Culpa Criminal
are the following:
CULPA AQUILIANA • CULPA CONTRACTUAL CULPA CRIMINAL

As to the Basis of Liability
Fault or negligence Obligation arises from the Existence of a law

resulting in damage or breach of the contract because clearly punishing the
injury to another (CIVIL of defendant's failure to act (Nullum crimen
CODE, Art. 2176). exercise due care in its sine lege).
performance (CIVIL CODE, Art.
1173).
• As to the Natuie of Negligence
Direct, substantive, and Negligence is merely incidental Direct, substantive,

independent. to the performance of an and independent.
existing obligation.
.::As to CriMinal Intent

Not necessary Not necessary Necessary
721
As to Quantum of Proof
Preponderance of Preponderance of evidence Proof beyond
evidence (RULES OF (RULES OF COURT, RULE reasonable doubt
COURT, RULE 133, 133, Section 1). (Barredo v. Garcia,
Section 1). G.R. No. L-48006, July
8, 1942).
As to the Existence of Pre-Contractual Obligation
None Exists None
As to Defense of "Good Father of a Family"
A complete and proper Not a complete and proper

defense as regards defense in the selection and
vicarious liability (CIVIL siipervitTcrnTor r er1)01yeAs but
CODE, Ad. 2180, Par. scan mitigate) :ii?Oility --f9r
8). -d9mages,,,,(Cgageo
.i.,I.3.aifroaer Co., G7R.,,Z
'12191 _Octobpr-1.4„1918k-.
-;.;-- \
As to Presumption of Negligence
k
None.' Inj4d>pirty P,resumptio'rrr:atHd--negligence . NOnef Innocence of the
must prove=-..f !the immediately 0:attaaries' by a ccused is presumed
negligence of„,4 the failure of-a .90enapfor its tenor RtiLjottrary is proven.
defendant (Falk4 yr ITU InsittinA0Cotp. Op.
Manila Raikoad Co.,\ alv)1670btf
supra). 6\t‘tis, 140,64to2. "/
A
As Nature of Right Violated
Private Right Rublic Right
As to Governing Law
Art. 2176; Arts. 1172- lai:+41.Z.

021,YAl
q2411Kivil Art. 365 of the Revised
1174 of the Civil Code Code. Penal Code.
Q: What is vicarious liability?

ANS: There is vicarious liability, or the doctrine of "imputed negligence", where a
person is not only liable for torts committed by himself, but also for torts committed by
others with whom he has a certain relationship and for whom he is responsible (CIVIL
CODE, Art. 2180; Tamargo v. CA, G.R. No. 85044, June 3, 1992).
Q: Who are those persons who may be liable for the acts of another?
ANS: The obligation imposed by Article 2176 of the Civil Code is demandable not only
for one's own acts or omissions, but also for those of persons for whom one is
responsible. (FOG-SET)
1. The Father and, in case of his death or incapacity, the mother, are responsible
for the damages caused by the minor children who live in their company;
2. Guardians are liable for damages caused by the minors or incapacitated
persons who are under their authority and live in their company;
722
3. The Owners and managers of an establishment or enterprise are likewise
responsible for damages caused by their employees in the service of the
branches in which the latter are employed or on the occasion of their functions;
4. Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even though
the former are not engaged in any business or industry;
5. The State is responsible in like manner when it acts through a special agent;
but not when the damage has been caused by the official to whom the task
done properly pertains, in which case what is provided in Article 2176 shall be
applicable; and
6. Teachers or heads of establishments of arts and trades shall be liable for
damages caused by their pupils and students or apprentices, so long as they
remain in their custody (CIVIL CODE, Art. 2180).
Q: What is an available defense of persons cited in Arts. 2176 and 2180 in order to
free themselves from vicarious liability
ANS: The responsibility treated off,OVicle 2180 shall cease when the persons
mentioned proved that they obselfrORIPittle diligence of a good father of a family to
prevent damage (CIVIL CODE, Ait.:R1 8).
'r
t. t. ..,
Q: What is the nature of respoilsOility o em loyeOfbr the negligence of his
employeW „§"OIS .43
ANS: The responsibility4Wari emplo'er :for the negligence,f his employees in the
performance of his dqfp is primary, is, the injured Ra , may recover from the
employer directly , regtEdOss of tye, so vency of his e lqyaes (Philtranco Service
Enterprises, Inc. CAO.R.INW120553, une 17, /997 1 .Nee eless, this vicarious
liability is applic910-onlripttigte is an e loyer-emplo ee This nship (Metro Manila
Transit Corp.4e-
. • ,gir....,,CA' i;Nk$1,
G R. No. 144408 une 21, 11 993). This employer-employee
relationship cippotturegnedte mus fficiently ytedalp,iptiff. The plaintiff
must also sticiiiy that thg'employdaluias ling within- f s eVffis assigned task
when the tort colpplattlecOo was c mmgd (Reyes', v. ro, G.R. No. 185579,
August 2, 2017).
9: May schools, teac epfiand administ eld liable for damages caused
by their pupils and st ,,, ents or,a13_ re ice's
ANS: Under the Fam If Code- the school, its administrators and teachers, or the
individual, entity or insti aged in child care shall have special parental authority
and responsibility over the minor child while under their supervision, instruction or
custody. Authority and responsibility shall apply to all authorized activities whether
inside or outside the premises of the school, entity or institution(FAM/LY CODE, Art.
218).The school, administrators, teachers, or those individual, entity, or institution
engaged in child care shall be principally and solidarily liable for damages caused by the
acts or omissions of the unemancipated minor while tfie-parenti, judicial guardians or
the persons exercising substitute parental authority over said minor shall be subsidiarily
liable.
Note that Article 218 of the Family Code does not make any distinction as to the kind of
school that has substitute parental authority over minor children (ALBANO, Civil Law
Reviewer, supra, at 904- 905). .
On the other hand, Art. 2180 of the Civil Code provides that teachers or heads of
establishments of arts and trades shall be liable for damages caused by their pupils and
students or apprentices, so long as they remain in their custody (CIVIL CODE, Art.
2180, Par. 7). Note that this provision shall apply to all schools, academic as well as
non-academic. Where the school is academic rather than technical or vocational in
nature, responsibility for the tort committed by the student will attach to the teacher in
723
charge of such student, following the first part of the provision. This is the general rule.
In the case of establishments of arts and trades, it is the head thereof, and only he, who
shall be held liable as an exception to the general rule. In other words, teachers in
general shall be liable for the acts of their students except where the school is technical
in nature, in which case it is the head thereof who shall be answerable. Also, the law
does not require that the offending student be of minority age. Unlike the parent, who
will be liable only if his child is still a minor, the teacher is held answerable by the law for
the act of the student under him regardless of the student's age. The nature of the
responsibility imposed on teachers and heads of establishment in this case is primary
and direct (Amadora v. CA, G.R. No. L-47745, April 15, 1988).
Q: What is the liability of the servant if the master is injured by the negligence of a
third person and by the concurring contributory negligence of his own servant or
agent?
ANS: If the master is injured by the negligence of a third person and by the concurring
contributory negligence of his own.seryant-or,agent, the latter's negligence is imputed to
his superior and will defeat the.,Stirierior,'s action iaainst the third person, assuming, of
course that the contributory negljgence 09,i tiie:prOimale„pause of the injury of which
complaint is made (FordDifillitiness y..-C/VG;IR...No.(12147,9,'Ilanuary 29, 2001).
,../.„ '1„, , ,,.."
r ,,s.,, • -,,,„ „.,.., i\X
Q: What is the doCtriiiKpf .res ipsa latitiltirr?---,..''''rs,"'-, <'? - A 4,
\
ANS: Res ipsa lotioltur0 eraller means "thIthing or tne traysackon, speaks for itself." It
provideS that 0,3'6 flot<661 the occu'rFencgloflan injthy, taken Ali the surrounding
circumstances, ay pefmit an inference:.Orpise a preiumptikr(cfli ,gligence, or make
out a piaintiffsyrrabcie cgge,-afiglireritkqiiellton of fapl:f9siclefendant to meet
with an explandon i(BJDCICoii§frfsbtiork v.:"Igii6zo,f G.R. VEi. 1:p, 151, March 24,
2014). Hence, tt isprebuttabl presuffip,ti/mithaVdeferitlant wail negligent, which arises
upon proof that The,' stru c e iality cathlitIinjury was ,R....,-:te fe , dandpxclusive control,
and that the acjicten wa ;onpi,which.,ordinarlly-T91.,S,nt.ft h Opel-1'11p the absence of
negligence(AL4 NO; Givil L 1,4)' evietfigr,0131Ap0g"91,/ Ne
Note: The doctrine is n6 mentjtO:041.1:ioes'itt.'pispOlise Inig h the rk quirement of proof
of culpable neglige nce gainst,411eV'eniptearbdti/rath,er, it merely determines and
regulates what shat be prasjadie(.0.vigepFq:gfre,of, and helps the plaintiff in proving a
breach of the duty (Sq(dum p'Peqj31-"artit:Pio:-192,125, Macch /0, 2014).
NI,.'
Q: What are the requisitest2My applipabigtrIppheVloctrine?
ANS: The following are the 76- qt,ksites fa/the dic6bliity of the doctrine of res ipsa
loquitur: (ACE)
1. The Accident was of a kind that does not ordinarily occur in the absence of
someone's negligence;
2. It is caused by an instrumentality within the exclusive Control of the defendant
or defendants; and
3. The possibility of contributing conduct which would make plaintiff responsible
is Eliminated (Centre v. Spouses Go, G.R. No. 10889, April 27, 2007).
Q: What is the Doctrine of Last Clear Chance?

ANS: It is the principle which states that where both parties are guilty of negligence, but
the negligent act of one succeeds that of the other by an appreciable interval of time, the
one who has the last reasonable opportunity to avoid the impending harm and fails to do
so, is chargeable with the consequences without reference to the prior negligence of the
other party (Picart v. Smith, G. R. No. L - 12219, March 15, 1918). Stated differently,
the antecedent negligence of plaintiff does not preclude him from recovering damages
caused by the supervening negligence of defendant, who had the last fair chance to
prevent the impending harm by the exercise of due diligence (PNR v. Vizcara, G.R. No.
190022, February 15, 2012).
724
:
The doctrine necessarily assumes negligence on the part of the defendant and
contributory negligence on the part of the plaintiff, and does not apply except upon that
assumption. In situations where the doctrine has been applied, it was defendant's failure
to exercise such ordinary care, having the last clear chance to avoid loss or injury, which
was the proximate cause of the occurrence of such loss or injury (1 SANGCO,
Philippine Law on Torts and Damages, (1993) p.76-77) (hereinafter SANGCO, Torts].
Q: May the defendant raise the defense of last clear chance?

ANS: No. Strictly considered, the last clear chance doctrine may be invoked only in
favor of the person injured, since it implies contributory negligence on his part. However,
it does not preclude the defendant from proving that the plaintiff had the last clear
opportunity to avert the injury complained of and thus establish that the plaintiff was
guilty of contributory negligence which proximately caused the accident and
consequently bars plaintiff's recovery (Id at 77.).
Q: What are the cases when the Doctrine of Last Clear Chance was held
inapplicable?
ANS: In most cases, the SC opted- not :toga the Doctrine of Last Clear Chance for
the following reasons: -; • 4
1. The negligence of the plaint0i0p.gricurrent with that of the defendant (Picart v.
SMith, G. R No. L — 12219iy0'1154,943). t11-%
2. There is absence of,,precedltdegligFne,drp part of the respondents
(Philippine Natignal Railway's corporation v. adara, G.R. No. 190022,
February 15,4034. i • •
,,:x.; • ..•*mg . II
3. The doctrinew;s0,•; never ply where the partyjcharged is required to act
instantaneously, 4fid?iif The injury annot be avoided by the application of all
pr
means atljhand afgAthe peril is should have tee discovered (Achevara v. -"Num
Rains, G.R. f.p.'17517Z Septe - er 29, 2009-:
4. It dcfg)tiotads'&„tereRpasserl r demarK1 e obsibilty0m the carrier to
enforce its contt'actual 8.0getiotis (Philippin4 # tisiVines v. IAC, G.R.
"-Ust 36:1990)!
NO. 66.1.02-a*g
5. As;betweeleefen4hts: the doctrine cannot be extended into the field of joint
tortfeasoreas,a to of whether of them should be held liable to the
. isp,W afftlatter's peril, and it cannot be
injured persoOtx,rdason of his,„_
invoked as between deferkfifitOebneurrelitliaggligent (Bustamante v. CA,
G.R. No. 89880 Febnia 6, 1991).
6. As against thikperans, a negligent actor cannot defend by pleading that
another had negliTeiit y. failed to take action which could have avoided the
injury (Bustamante v. CA, G.R. No. 89880, February 6, 1991).
7. A suit brought by the heirs of the deceased passengers against both owners
and drivers of the colliding vehicles (Bustamante v. CA, G.R. No. 89880,
February 6, 1991). .
8. In a case of culpa contractual, where neither the contributory negligence of the
plaintiff nor his last clear chance to avoid the loss, would exonerate the
defendant from liability. Such contributory negligence or last clear chance by
thd plaintiff merely serves to reduce the recovery of damages by the plaintiff
but does not exculpate the defendant from his breach of contract (The
Consolidated Bank v. CA, G.R. No. 138569, September 11, 2003).
Q: What is the Doctrine of Damnum Absque Injuria?

ANS: The, principle of damnum absque injuria means damage without injury. It simply
means that although there was physical damage, there was no legal injury as there was
no violation of a legal right (ALBANO, Civil Law Reviewer, supra at 892). In such cases,
the consequences must be borne by the injured person alone.
725
In order that a plaintiff may maintain an action for the injuries of which he complains, he
must establish that such injuries resulted from a breach of duty which the defendant
owed to the plaintiff- a concurrence of injury to the plaintiff and legal responsibility by the
person causing it. The underlying basis for the award of tort damages is the premise
that an individual was injured in contemplation of law. Thus, there must first be a breach
of some duty and the imposition of liability for that breach before damages may be
awarded; and the breach of such duty should be the proximate cause of the injury (BPI
Express Card Corporation v. CA, G. R. No. 120639, September 25, 1998).
Q: What is an injury?
A: An injury is the illegal invasion of a legal right (DE LEON, Torts, supra at 606).
Q: What is damage?
ANS: Damage is the loss, hurt or harm which results from the injury (Id at 606).
Q: What is damages?
ANS: Damages is defined avhe:Pecuniary coRp— Frisation, recompense, or satisfaction
for an injury sustained, oka$ oftrwise Y.xpressqd, •Itre pecuniary consequences which
the law imposes for tile•kreacil of,,some duryyor ;ViolOtion'ot some rights (People v.
Ballesteros, G.R. Nod, ,20924. 1998). ,
,..c(2
Q: When is there.'dainage wt out ipjungdamnum 6bsqqeeitiMip)?
ANS: There carifbe'ta ilp
'large ivithoutinjurtin those instances in which
, the loss or harm
was not the resat of a tolatiob.f a legal duty. (DE LEON, Toy itiptv at 606).
_
• .. - i ,,,,-. 1 JI I'
• -- :, . .1 ,---i
Q: What are tie instances Aheit.tliO:psmcipfe..:a"Daiymum . bsque3lnjuria does not
apply? (ACD) ,..04 )4 6.a04-4,,-.....:*T- / .....,1 '
I
ANS: The.prin • illid-cjes of . ply wheiitlf,.?' :;')
1. Whe , ttge‘s a 71hase of ; pOrsph's rig (Monoynve'Spouses Gutierrez,
G.R. omdovo, \e4h1 ,0, 1/4 15 2001);::•.' i:
-iry :::/ •-r
2.: When he exelcise 'Of q 'is, Mit ;is ‘SOSp..„,risd d or xtinguished pursuant to a
Court olyer (Arbonoliel ust,.GUedirgz, G.R. No. 70420, February 15,
2001); \ \,... cSr, ri,.1--‘1\
3. When the plaintiff suffeced-Dafrigea a/ sultWeyciciant's act or omission
or breach (PAJIstru i ctiort.4.Delio i-Corp. v. Saulog, G.R. No.
200759, March l5 0'45)1 MA>
B. PROXIMATE CAUSE
Q: What is proximate cause?
ANS: ProXimate cause is defined as that cause, which, in natural and continuous
sequence, unbroken by any efficient intervening cause, produces the injury, and without
which the result would not have occurred (AQUINO, Torts and Damages, (2016), p.300)
[hereinafter AQUINO, Torts].
Q: Is proximate cause the cause nearest in time to the injury?

ANS: No. ••The requirement is• that the act was the proximate cause, "not implying
however, as might be inferred from the word itself, the nearest in point of time or
relation, but rather the efficient cause, which may be the most remote of an operative
chain (AQUINO, Torts, supra at p. 303).
726
Q: Distinguish Proximate Cause, Remote Cause, and Concurrent Cause.
ANS: The distinctions among the proximate cause, remote cause, and concurrent cause
are the following:
Proximate Cause Remote Cause Concurrent Cause

_
As to its Nature
Proximate' cause is any ReMote cause is Where several causes

cause that produces defined as that cause producing an injury are
injury in a natural and which some concurrent and each is an
continuous sequence, independent force efficient cause without which
unbroken by any merely took advantage the injury would not have
efficient intervening of to accomplish happened, the injury may be
cause, such that the something not the attributed to all or any of the
result would not have natural effect thereof causes and recovery may be
occurred otherwise (AQUINO, forts, supra had against any or all of the
(Quezon City at p. 302). responsible persons (Far
Government v. Dacara, : Q;. Shipping Eastern Company
G.R. No. 150304, June
% v. CA, G.R. No.
15, 2005). . . f130068. October 1, 1998).
•*OA -ffli4.
,
• As to the Effect in Liabi ity
il .. ri
Proximate cause . A remotel .`calise cannot Wh,, re
caUse several causes
Ad, ,i be condderetl
produces the injury ,43, eil
the legal pr6dtl'cin2 an injury • are
#
without which the4estilt 4g ,cause ,icause of t11- 2 damage 57onc; rreilt and each is an
would !nr4,05'haverrtiffebap ' ding v. pffici nt c use without which
occurred grataplan ette,, ,,, Ching, '''s g No. /the jury would not have
Medina, Or No ,° .-1 t-1618123, m Febiu ' ary 4Z itk ea- injury may be
101126, Odlober .,2Z 1l' 2008./ 4 '‹ ..411100
. all or any of the
1957). - ..,,, . causes and recovery may be
hs; ..,sir
had against any or all of the
1th responsible persons although
A34
1— .7,,-:,a_oi
,.
A
. eva,li
.-:-l $rt- • _, A4ltiac
1 aler the circumstances of
p: i,
. -the case, it may appear that
4 AV one of them was more
ila culpable, and that the duty
owed by them to the injured
person was not the same
(DyTeban Trading v. Ching,
G.R. No. 161803, February 4,
- - 2008).
Q: What are;the tests of proximate cause?

ANS: There is no statutory provision that fixes the applicable test. However, the
following tests are being applied in the Philippines:
1. Cause-in-fact Test — First, determine if defendant's negligence was the
cause-in-fact of the damage to the plaintiff. If it is not, the inquiry stops.
2. Policy Tests - If defendant's negligence was the cause-in-fact, the inquiry
shifts to the question of limit of liability of the defendant. The law may limit ttie
liability of the defendant to certain consequences of his action (AQUINO,
Torts, supra at 307).
727
Q: What tests are of Proximate cause applied in the Philippines?
ANS: The tests applied in the Philippines are:
1. "But for" Test -Defendant's conduct is the cause in fact of the injury if the
damage would not have resulted had there been no negligence on the part of
the defendant.
Example: If the plaintiff was injured because a portion of a negligently
constructed wall that collapsed hit him, the negligence in the construction of
the wall is the cause in fact of the injury because the injury to the plaintiff
would not have resulted had there been no negligence on the part of the
defendant (AQUINO, Torts, supra at 315).
2. Substantial Factor Test - Makes the negligent conduct the cause in fact of
the damage if it was a substantial factor in producing the injuries.to be a
substantial factor, the cause set in motion by the defendant must continue until
the moment of the damage or at least down the setting in motion of the final
active injurious force which immediately produced or proceeded the darrage.
Example: The plaintiff wa§,injuredADRn he fell from a horse, which was
frightened by two approachingveiiclps ifft, e drivers of both vehicles, A and
B, were negligep : and ttlilher vejjcl 4 kr s Officiqt to frighten the horse, the
application nt o eb,uttft1 - est%swill,:rktyle toela_paNurd conclusion that the
negligence 1/eithey, iVer cannot be conside e'd t e.cause in fact of the injury
because t 611 veil1(MgYesultecliNu D ne. river was negligent. it
cannot 9-1@aiciltat e dargagq-c*ouls:1 norA tia krTs ehad there been no
neglig ce'bThe p:rt of eitherA\or23, However:tin the substantial factor
test, e con urren causes vy,ilf4 :II be condidere' 'th se in fact of the
injury e the neg igence :,1 •o Aid B embitantial factors in
br:ing t the i ury-Wtil ores; supra at 31. ., i
3. Nec lemen of Stifft It-Set:Test
.iw jibL4, 'The ne ligera 6ct or omission is
I1
a ca damag, - fit Ise a nee element
t.,
ofa sufficient set.
II
This eq,viiig s,p,ro gar ingcconcurrent causes
(AQU ,-4--
31 --=:-,t. 1 .',/
The tes is that hether iarfc I roc agidn qualifies asfa casually relevant
factor wi epen a w eSi as ec,e4sagitti complele a set of conditions
jointly su &riocCurmceiFLEMING, The Law of
Torts, 1988,
7
;7"
Q: What,is the effect if the eg ige nce [Uhl:plaintiff and the defendant is the
concurrent proximate causes Ohhe.injucy2.-..''
ANS: According to the great weight of authority, where the concurrent or successive
negligent acts or omission of two or more persons, although acting independently of
each other, are, in combination, the direct and proximate cause of a single injury to a
third person and it is impossible to determine in what proportion each contributed to the
injury, either is responsible for the whole Injury, even though his act alone might not
have caused the entire injury, or the same damage might have resulted from the acts of
the other tortfeasor (Sabido v. Custodio, G.R. No. L- 21512, August 31, 1966; PNR v.
CA, G.R. No. 159270, August 22, 2005).
Q: What is an efficient intervening cause?
ANS: An'intervening cause, to be considered efficient, must be "one not produced by a
wrongful act or omission, but independent of it, and adequate to bring the injurious
results. Any cause intervening between the first wrongful cause and the final injury
which might reasonably have been foreseen or anticipated by the original wrongdoer is
not such an efficient intervening cause as will relieve the original wrong of its character
as the proximate cause of the final injury (Abrogar v. Cosmos Bottling Company, G.R.
No. 164749, March 15, 2017).
728
•
BOO K
Q: When is intervening cause regarded as proximate cause?

ANS: An intervening cause will be regarded as the proximate cause and the first cause
as too remote, where the chain of events is so broken that they become independent
and the result cannot be said to be. the consequence of the primary cause (AQUINO,
Torts, supra at 334).
C NEGL/GENCE
Q: What is the standard of care required?
ANS: If the law or contract does not state the diligence which is to be observed in the
performance, that which is expected of a good father of a family shall be required (CIVIL
CODE, Art. 1173).
Q: Who is a good father of a family?

ANS: A reasonable man, man of ordinary intelligence and prudence, or ordinary
reasonable prudent man (AQUINO, Torts, supra at 70).
Q: What is negligence?
ANS: Negligence is the failure tq:Optrylpr the prOtection of the interest of another
person that'degree of care, preOti(igh`f,4a1 vigilance which the circumstances justly
demand, whereby such other peikAprs injury (Cagayan II Electric Cooperative,
Inc, v. Rapanan, G.R. No. 1998§6', 941 trAPA
Q: What is the test of negligence?

ANS: Did the defendegin4,doing thdtal eged negligent actO hat person would have
used in the same situiteile, not, thgn h is guilty of negl- egoe Picea v. Smith, G. R.
No. L — 12219, Mated 10194_18; Abro ar v. Cosmos (Ain Company, G.R. No.
164749, March 2017). "L"'
Q: What areihe indS o i(iligen e7

ANS: The follaing arAe nds ofitgliger6 as provid
1. DiiigeriNpUt father of a fa ily or that degree of diligence required of a
man of ordinary. inte ligence and rethought in accordance with the standards
of the law (AquiNo orts, sup gar. 41, .
2. Extraordinary'', ilidence or ,tileti -driiimrifersof care required (AQUINO,
Torts, supra 25). .t
Q: What are the degree 010gligence?

ANS: The following are the degrees of negligence:
1. Simple Negligence — the omission to do something which a reasonable man,
guided by those considerations which ordinarily regulate the conduct of human
affairs, would do, or the doing of something which a prudent and reasonable
man would not do. It is the failure to observe for the protection of the interest of
another person that degree of care, precaution, and vigilance which the
circumstances justly demand, whereby such ,other person suffers injury (Ruks.
Konsult& Construction v. Adworid Sign & Advertising Corp., G.R. No. 204866,
January 21, 2015).
2. Gross Negligence - negligence characterized by the want of even slight care,
acting, or omitting to act in a situation where there is duty to act, not
inadvertently but willfully and intentionally, with a conscious indifference to
consequences insofar as other persons may be affected (Macalinao v. Ong,
G.R. No. 146635, December 14, 2005).
729
Q: What constitutes fault or negligence?
ANS: The fault or negligence of the obligor consists in the omission of that diligenc
which is required by the nature of the obligation and corresponds with the circumstance
of the persons, of the time and of the place. If the law or contract does not state th
diligence which is to be observed in the performance, that which is expected of a good \
father of a family shall be required (CIVIL CODE, Art. 1173).
Q: When is fault or negligence presumed as provided by law?
ANS: Fault of negligence is presumed in the following cases:
1. In motor vehicle mishaps, it is disputably presumed that a driver was negligent,
if he had been found guilty or reckless driving or violating traffic regulations at
least twice within the next preceding two (2) months (CIVIL CODE, Art. 2184,
par 1);
2.Unless there is proof to the contrary, it is presumed that a person driving a
motor vehicle has been negligent if at the time of the mishap, he was violating
any traffic regulation (CIVIL COJMArL2185);
3. There is prima faciumpt reslipn- f riegligerkT on the part of the defendant if
the death or irfurf rekrys fr • m his"tpftspsToq, of dangerous weapons or
substances, suca fir:gems a Oisan„kbxcepliktr the possession or use
thereof is idoispen,,s ble in his occujiltior4:er bripe,ss (CIVIL CODE, Art.
2188); IN1') ' • 'k
In case f,:y1 injurie toikpasengers, coin ft'parriers are presumed
to havdbee or to Wave1,4cteftegligqntly, rigss They prove that they
obse ed ex ary diligendg'..as prescribed in Ar cle 1733 and 1755
(C/V/ b 56). ll
Q: What are fLin nces o presg, ealigsnce asedonjtArpprudence?
ANS: In all thf qa_ neglige.e ,Jythe pa p8rsonk lating the law or
ordinance is p • (AQ prTorts-srpT•a-a
1. Violaty o0 ech rrA 7 ‘ \of OptdAct . ended, otherwise
knowni s the and "rbts ortafidn •afid ratr requiri g motorist to drive
on the ht si ek,of t rpa. end pro les overta ing (Marikina Auto
Line Tra port Corpora oR, 52040, arch 31, 2006);
2. Speeding itIviolatip piton o speed (Marikina Auto
Line TranspartCopea iino4p4221 1'52 0, March 31, 2006);
3. Speeding in aril*rszstqn (He'rs pleto v. Albayda, G.R. No.
-4
172200, July 6, 2070),,...
4. Vehicle's failure to sigarwhile.mikin e U-turn (Guillang v. Bedania, G.R.
No. 162987, May 21, 2009);
5. The driver escaped and abandoned the victims and his truck (Guillang v.
Bedania, G.R. No. 162987, May 21, 2009);
6., Driving without the license or driving alone with only a student's license (Cang
v. Cullen, G.R. No. 163078, November25, 2009);
7. A motorcycle driver was not wearing his protective headgear at the time of the •
accident (Cang v. Cullen, G.R. No. 163078, November25, 2009);
8.' Overtaking in a "no-overtaking zone" particularly the places where there are
two continuous yellow lines at the center of the highway which is part of
internationally recognized pavement regulation known as the "double yellow
center lines" regulation (Cang v. Cullen, G.R. No. 163078, November 25,
2009);
9. Overtaking in an intersection (Tan v. Jam Transit Inc, G.R. No. 183198,
November 25, 2009; R.A. No. 4136 Land Transportation and Traffic Code);
10. Violation of the MMDA ordinance prohibiting a vehicle coming from a particular
street from crossing another specified street or avenue (Ramos v COL Realty,
G.R. No. 184905, August 28, 2009).
730
Q: What is contributory negligence?
ANS: Contributory negligence is conduct on the part of the injured party, contributing as
a legal cause to the harm he has suffered, which falls below the standard to which he is
required to conform for his own protection (Allied Banking Corporation v. BPI, G.R. No.
188363, February 27, 2013).
Q: If the plaintiff's negligence was merely contributory, can he recover damages?
ANS: Yes. If the plaintiff's negligence was only contributory, the immediate and
proximate cause of the injury being the defendant's lack of due care, the plaintiff may
recover damages, but the courts shall mitigate the damages to be awarded (CIVIL
CODE, Art. 2179).
Q: Does the plaintiff's contributory negligence exculpate the defendant?
ANS: No. When the plaintiff's own negligence was the immediate and proximate cause
of his injury, he cannot recover damages. But if his negligence was only contributory,
the immediate and proximate cause of the injury being the defendant's lack of due care,
the plaintiff may recover damages, pt,t.P, e courts shall mitigate the damages to be
awarded (CIVIL CODE, Art. 2179)4.1 e '
Q: What is the emergency rule7irlItr SI
_,., ir,::vz
ANS: One who suddenly finds hilftl2fisio ...,
T.e
.„,.. of danger, and is 'required to act
without time to consider the beemKannitatmayAradopted to avoid the impending
,---.
danger, is not guilty of npAgghce,IAlfails to a opt subsequently and upon
reflection may. appearViave been a b her method, unle the danger in which he
finds himself is broug figabqut by hisio. egligence (Delsa fri nsport Lines, Ina v. C
& A Construction, Inc. 01tRipio. 156034, tober 1, 2003).
4 Afp• ret.=
.ACIP'' • , ‘4, it
Q. May the E ,prgency ,illuiel,•be ,invo -d by the pa so who found himself in
danger whic f, himpelf,created tabu is own nefilige ce?
.
ANS: No. The: .emergengrrule c:annot.b Voked by0e ends himself . in an

emergency broughtaab )* pl hiWn ..*, egligence b:R. No. L-44264,
September 19, 1.9.88)r " '‘.), if
D. DAMAGES
A:.
Q: May the parents o ;an unborlyfetus regbx c kistainages for the death of the
fetus, in case of an acbident we the mother had a miscarriage?
ANS: No; because tharto,pld e''-a speculation, as the parents cannot yet expect help,
support or service from :Manti m child (ALBANO, Civil Law Reviewer, supra at 940).
Although the bereaved parents may be entitled to damages, all such damages must be
those inflicted directly upon them as distinguished from the injury or violation of the
rights of the unborn child, his right to life and physical integrity (Geluz v. CA, G.R. No. L-
16439, July 20, 1961).
Q: If the mother went to an abortionist without the husband's consent, will the
action against the abortionist for damages pertaining to the unborn child
prosper?
ANS: No, the action filed by the husband will not prosper. An action for pecuniary
damages on account of personal injury or death pertains primarily to the one injured. If
no action for such damages could be instituted on behalf of the unborn child on account
of the injuries it received, no such right of action could derivatively accrue to its parents
or heirs. In fact, even if a cause of action did accrue on behalf of the unborn child, the
same was extinguished by its pre-natal death, since no transmission to anyone can take
place from on that lacked juridical personality (Geluz v. CA, G.R. No. L-16439, July 20,
1961).
731
Q: What are the different kinds of damages?
ANS: Damages may be: (MENTAL)
1. Actual or compensatory;
2. Moral;
3. Nominal;
4. Temperate or moderate;
5. Liquidated; or
6. Exemplary or corrective (CIVIL CODE, Art. 2197).
Q: What are actual damages?

ANS: Actual damages are compensation for an injury that will put the injured party in the
position where it was before the injury. They pertain to such injuries or losses that are
actually sustained and susceptible of measurement. To recover actual damages, not
only must the amount of loss be capable of proof; it must also be actually proven with a
reasonable degree of certainty, premised upon competent proof or the best evidence
obtainable (International Container Te al Services, Inc. v. Celeste M. Chua, G.R. No.
195031, March 26, 2014).
Q: What is the proof re ired t w r Itual tirorrte story damages?

ANS: The claimant 9? t p v
i•
1. The dam u t ed 's..th atura and irobeble onsequences of the
negligerfa \...
+
2. The della st equat 1 p ve e amo nt sb h mage (Mendoza v.
Spou z, G . No. 1601' 0,• June 18, '014).
,- ws\
Q: What is in
ANS: Indemni es co pens then o or belonging to
the perdon, a sfoi bodil cove to the result of the
accident (SAN t-9
Pr,
"
'
Q: What are th 'tes
ANS: The followsQ g are e re
1. There st be PI ges_su Bred for the same to
be recoverQd;
2. The AmourThof lossJ
Amount of los '4 nable degree of Certainty,
premised upon co ej obtainable; and
4. Courts are required kses of the award (Oceaneering
Contractors v. Barretto, G.R. No. 4215, February/ 9, 2011).
Q: Who has the burden of proving the toss and the proofs required?
ANS: The party claiming the same who should adduce the best evidence available in
support thereof (Oceaneering Contractors v. Barretto, G.R. No. 184215, February/ 9,
2011).
Q: How is loss of earning capacity compUted?
ANS: The formula for the computation of loss of earning capacity is as follows: _
Net earning capacity= Life expectancy x (Gross Annual Income-Necessary Living Expense)
Life expectancy = 2/3 (80 - the age of the deceased)
(Smith Bell Dodwell Shipping Agency Corporation v. Borja, G.R. No. 143008, June 10,
2002).
As to the. necessary living expenses, the Supreme Court has consistently ruled'that the
amount thereof is fixed at 50% of the gross income in 'the absence of proof of the
amount of living expenses to be deducted from the gross income (Tamayo, et aL v.
Senora, et al., G.R. No. 176946, November 15, 2010).
732
A sample illustration is provided in Ochoa v. G&S Transport Corporation (G.R. No.
170071, March 9, 2011):
2 (80-36)
Net Earning Capacity - x 450,844.49 - 50%
3
88
_ x 225,422.25
3
= 29.33 x 225,422.25
= P6,611,634.59
Q: How is loss of earning capacity proven?.

ANS: There must be documentary proof to support indemnity for loss of earning
capacity (People v. Rayos, G.R. No. 200942, June 16, 2015).
Q: What are the exceptions in awarding actual damages despite absence of

documentary evidence?
ANS: By way of exception, damages; be awarded despite the absence of
documentary evidence provided that Jileitis testimony that the victim was either:
1. Self-employed, earning le*401 e minimum wage under current labor laws,
and' judicial notice may be the fact that in the victim's' line of work no
documentary evidence isav:alikoor
2. Employed as a daily-wa eeertetrl gjess thaPjhe minimum wage under
current labor laws (1? oplkietom
,,P -Oate, ---a.411
&RAP ,,,,t, 189301, December 15,
2010). f.fr 1,
Q: When are moral cW1,e(es properly a arded?
ANS: An award of mor,grdirriagel calls fo e presentatio, o(RAID)
1. Evideggjegf bet itched Repuglion or phys'cal, !mental or psychological
suffeag sustalby the ciairnanfi i
2. A ciapaYie,ACtco mission factu establis, ei ..„ „„
3. ProofThat the wrongful alIt
,, r o ion of the ' n proximate cause
of the Damee „. stained` b, the,. aimant; and
4. Proof tli'rtfig-
l ac is predicateson any of the Instances expressed or
envisions by, Artid 2219 and rticl 20 of the Civil Code (Mendoza v.
Gomez, G.R.W .60110, June
Q: When are moral d . ages Acoverable in an action predicated on a breach of

contract?
ANS: Generally, moral dariiages are not recoverable in an action predicated on a
breach of contract because such action is not included in Article 2219 of the Civil
Code as one of the actions in which moral damages may be recovered. By way of
exception, Mool damages are recoverable in an action predicated on a breach of
contract:
1. Where the mishap results in the death of a passenger, as provided in Article
1764, in relation to Article 2206, Par. 3, of the Civil Code; and
2. Where the common carrier has been guilty of fraud or bad faith, as provided in
Article 2220 of the Civil Code (Philtranco Service Enterprises, Inc. v. Paras,
G.R. No. 161909, April 25, 2012).
Q: Can a corporation claim moral damages?

ANS: No, as a general rule. A corporation, being an artificial person and having
existence only in legal contemplation, has no feelings, no emotions, no senses;
therefore, it cannot experience physical suffering and mental anguish. Mental suffering
can be experienced only by one having a nervous system and it flows from real ills,
sorrows, and griefs of life all of which cannot be suffered by respondent bank as an
733
( ., .. ;:q..46'ikY747x,
,
'',-;1:i'f';':`,1t,";';';''
.0 a'',.... f
vr"
Oz.
artificial person (National Power Corporation v. Philipp Brothers Oceanic, Inc., G.R. No.
126204, November 20, 2001).
Exception: However, Art. 2219 (7) of the Civil Code expressly authorizes the recovery
of moral damages in cases of libel, slander or any other form of defamation and does
not qualify whether the plaintiff is a natural or juridical person. Therefore, a juridical
person such as a corporation can validly complain for libel or any other form of
defamation and claim for moral damages (Filipinas Broadcasting Network, Inc. v. Ago
Medical and Educational Center, G.R. No. 141994, January 17, 2005).
Q: When is nominal damages awarded?

ANS: Nominal damages may be awarded to a plaintiff whose right has been violated or
invaded by the defendant, for the purpose of vindicating or recognizing that right, and
not for indemnifying the plaintiff for any loss suffered by him. Its award is thus not for the
purpose of indemnification for a loss but for the recognition and vindication of a right
(Libcap Marketing Corp., JohannaA.Oeliz,,,a1.4.,Ma. Lucia G. Mondragon v. Baquial,
G.R. No. 192011, June 30, 2014r T •:""•-•,.
Q: What are temperateidatilagk?-• .

.)
.1*
ANS: These are dapages~whi [litre more tharrnoRnartu Ie,ss than compensatory,
and may be recovye be;t e c.ourt4inclrthat.sor,ne pece,Inia loss has been suffered
but its amount ca roveerdvithcertapty.(c/Vite0bE Arts, A2 24).
I".
Q: What is the urpos of t e award of;teRperate o mode. damages?
ANS: It is awarded, en th -court-is-COn3priced-that-t e agd le ed party has suffered
1
some pecuniarpossitlut its atpount,cannR, froVbe nature o the case, be proved with
certainty in terrsprney (DLEV/;:talits: .'supra at 16). )„,..,_1
qup-2,0
Q: Can ternper-ale'arld .damageg:bi:awarde, Attie same ti e?
ANS: No. Tern rata1814:lama"' AlmuyatOxcl bi74 hat both may not
be awarded at The sa e ti q:fN Peop .'011tigrre4G. R.. No. 1 602, February 4,
2010).
• ~ere and actual damages are

Q: Are there exceptions t
mutually exclusive?
ANS: Yes.
h
rt
1. In cases where he,„e. ling ontinuing and possible future
complications directIlitrisinati jjniu , while certain to occur are difficult
to predict, temperate damages can and should be awarded on top of actual or
compensatory damages; in such cases there is no incompatibility between
actual and temperate damages (Ramos v. CA, G.R. No. 124354, April 11,
2002).
2. In cases of additional damages to cover estimated future cost of proper care
where it would not be equitable for the victim to constantly come to court and
invoke their' aid in seeking adjustments to the compensatory damages
previously awarded, temperate damages are appropriate (Ramos v. CA, G.R.
No. 124354, April 11, 2002).
Q: What are liquidated damages?

ANS: Liquidated damages are those agreed upon by the parties to a contract, to be paid
in case of breach thereof (CIVIL CODE, Art. 2226).
Q: May liquidated damages be reduced?

ANS: As a rule, liquidated damages cannot be changed by the court. However,
liquidated damages, whether intended as an indemnity or a penalty, shall be equitably
reduced if they are iniquitous or unconscionable (CIVIL CODE, Art. 2227).
734
Q: What is the purpose in permitting a stipulation for damages as compensation?
ANS: The purpose is so as to render certain and definite that which appears to be
uncertain and not easily susceptible of proof of money (DE LEON, Torts, supra at 821).
Q: Which shall determine the measure of damages when the breach of contract
committed is not the one contemplated by the parties?
ANS: When the breach of the contract committed by the defendant is not the one
contemplated by the parties in agreeing upon the liquidated damages, the law shall
determine the measure of damages, and not the stipulation (CIVIL CODE, Art. 2228).
Q: What are exemplary damages?

ANS: Also known as punitive or vindictive damages, exemplary or corrective damages
are intended to serve as a deterrent to serious wrong doings, and as a vindication of
undue sufferings and wanton invasion of the rights of an injured or a punishment for
those guilty of outrageous conduct (People v. Combate, G.R. No. 189301, December
15, 2010).
Q: What are the instances wher0fOrg;pay be a claim for exemplary. damages?

ANS:•The follOwing are the instanepbbaxemplary damages may be claimed:
1. In criminal offenses, exeryiWcytd;mages as a part of the civil liability may be
imposed when the critilearA smitt9d with9.41e or more aggravating
circumstances (CIVILCODE; 230j.
2. In qUasi-delicts l
eignplary (la ges may be grantSd if the defendant acted
with gross net igerice (C/V149 E, Art. 2231). ill
3. In contracts and sAliasi-contra the court may a • Aexemplary damages if
the defend* acted 'in a w, ton, frauduldt, iirec less, oppressive or
malevoNianann'Kc(.L COD rt. 2232).
PZ,14
.44:„ fito.
Q: What are AfIdopq01901,for the awar, rof exemewlamages,
ANS: Jurispance sets:Ag Lainacrnitiontryhen e?.(ernplear
os may be awarded:
• 1; "-They mgy, ber5iilased by Wayexample or correction only in addition to
compensaififamoes, and cal of be recovered as a matter of right, their
determinalibnA depOrlding upon unt of compensatory damages that
may, be. award:Ogoltie claimaq
2. The claimant List first4a551ishifii n tErmVal, temperate, liquidated or
compensatorrlfamagO!
3. The wrongful gq,pliAbe accompanied by bad faith; and
4. The award woulclUbi allowed only if the guilty party acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner (Lim v. Spouses
Gomez, G.R. No. 160110, June 18, 2014).
Q: What are the instances where attorney's fees and expenses of litigation may be
recovered?
ANS: In the absence of stipulation, attorney's fees and expenses of litigation, other than
judicial costs, cannot be recovered, except:- •
1. When exemplary damages are awarded;
•2. When the defendant's act or omission has compelled the plaintiff to litigate
with third persons or to incur expenses to protect his interest;
3. In criminal cases of malicious prosecution against the plaintiff;
4. In case of a clearly unfounded civil action or proceeding against.the plaintiff;
5. Where the defendant acted in gross and evident bad faith in refusing to satisfy
•the plaintiff's plainly valid, just and demandable claim;
6. In actions for legal support;
7. In actions for the recovery of wages of household helpers, laborers and skilled
workers;
735
DAN RED BOOK
8. In actions for indemnity under workmen's compensation and employer's
liability laws;
9. In a separate civil action to recover civil liability arising from a crime;
10. When at least double judicial costs are awarded; or
11. In any other case where the court deems it just and equitable that attorney's
fees and expenses of litigation should be recovered (CIVIL CODE, Art. 2208).
Q: When may the court mitigate damages claimed?

ANS: In the following cases, the court may mitigate the award of damages:
1. In crimes, the damages to be adjudicated may be respectively increased or
lessened according to the aggravating or mitigating circumstances (CIVIL
CODE, Art. 2204);
2. In quasi-delicts, the contributory negligence of the plaintiff shall reduce the
damages that he may recover (CIVIL CODE, Art. 2214);
3. In contracts, quasi-contracts, and quasi-delicts, the court may equitably
mitigate the damages unde circumslances other than the case referred to in
the preceding articI9,„ae n thelollowiriv iligtances:
a. That theyldinti 1,1,imself03.9h coilfavpne,ClktOks:terms of the contract;
b. Thatiperp gra9 ,,.113j‘derived:gbytle.b,engfkasia result of the contract;
c. In. cases here exemplary damagesk'areito be awarded, that the
dferia tt ereckuporrtreWite•of„pabrd).
d. I )thpssPuld Over . sult?d in .1'y evot )
ce t b filing_ 010-action, the deferldpnt has done his best to
e pl intiff's loss16Cligjury (CIVIL COD 15).
.- f,- IIU . . . e . ^ , ,f
Q: What dam es-may be r colkr9d)vbilmde.Oth occurs d he to mrime?
ANS: When d at Curs due to a ceitfqhpfilldwing ay be tbbovdr d: (IM — FACE)
.1
1. , Civil pkty. dye?. for t eLdeàffl of the Ur; ;
2. Actual 9rpo ,pentory amage ; :rt
3. Kioraltfarhab 6; . 4, .*...., >
-
4: Exemrilary da ageskp --17' --).
5. Attome's Fees nd exRdh eshof Iligabofii< nd
6. Interest, i Jproper easekftk ri>„ bate, ,6:R. No. 89301 December 15,
• .2010).
41
:647747,--
736
TAXATION LAW
MARIA CARISSA C. GUINTO
Subject Chair
SHENA GLADDYS P. BAYLON

ANGELICA MARIE C. MANUEL

SUBJECT HEADS
General Principles REINA G. FABREGAS

Income Tax CARLOTA N. VILLAROMAN
Transfer Tax APOLLO JULIUS S. STA MARIA
Value-Added Tax JELLYN C. CLEMENTE
Tax Administration, Enforcement; MIGUIEL A. DE ALVA
and Remedies
Real Property and Local Tax ATHENAI FRANCES R. QUINTON
SUBJECT MEMBERS
LIANNE MAE D. ENRIQUEZ JEWEL JOICE G. DAYTIA

ANISHA M. HADJI HASSAN •MLKICAELA S. MONES
- MARY EVIELYN N. MATEO ANDREA PATRICIA D. DAQUIAL
MARIE SHERRYDANE C. REYES ALFRED-FRANCIS P. GALLEGOS
ALYSSA R. ZARRAGA JOY CRISTEL G. GAYONA
TAGMA ESTER V. GARABILES MARIONE NICOLE P. BUGARIN
MAREANE MABEL A. CHAVEZ KATRINA ANN S. PRADO
ADVISERS
Atty. NICASIO C. CABANEIRO, CPA

Atty. DANTE 0. DELA CRUZ, CPA
:•7"
AN REDSBOOK
TAXATION LAW
I. GENERAL PRINCIPLES OF TAXATION
A. POWER OF TAXATION AS DISTINGUISHED FROM POLICE POWER AND
EMINENTDOMAIN
Q: Define Taxation.
ANS: Taxation is a mode by which governments make exactions for revenue in order to
support their existence and carry out their legitimate objectives. The term may refer to
either or both the power to tax or the act or process by which the taxing power is
exercised (VITUG & ACOSTA, Tax Law and Jurisprudence (2014), p. 1) [hereinafter
VITUG & ACOSTA, Tax Law].
Q: What is the rationale flax tion? / I

ANS: It is said that]eRes, ary Jipt,,wempy.tcic.diviliz,d'sbciety. Without taxes, the
government would b rapzedlar lack of the moRre,tow hONactivate and operate it. '
The gwernment, or i s4afLis-'6345;Ct41 , TO-ltspond IL the N9rm of tangible and
intangible benefi lierge'd tclimpror th \live,srof th pedplp nd'enhance their moral
and material va es, lt116 sy biotic relaticrry iPis the le Vexation and should
dispel the erro pus ndtion at it is an erbitra metho dtionlblt those in the seat
of power (com to 8er of Internal Roved e vAlgue, pc., G. OloA--28896, February
17, 1988). 1a. 111
:4
Q: What are t oses ta ' t:
ANS: The pu qeroktax
1. ReverVeZtk ram .,) ,ftR. P, e St5te to promote the
generalrelfarevand kites' its attz (AB , Law of Basic Taxation in
the Philippines, (2001), .1 ira76 AN, w of B sic Taxation]; and
Non-revenue/speCta o OTepry,
a. Prom tion Ofen‘a-welfbk--...-6cati ay)iused as an implement
of poll oh taerlo ote neral welfare of the people
(Id.);
Regulation - ermay be used in the rehabilitation
and stabilization of threa ened industry, which is affected with public
interest, like the oil industry (Caltex PHL v. Commission on Audit, G.R.
No. 92585, May 8, 1992);
Reduction of social inequality - this is made possible through the
progressive system of taxation where the objective is to prevent the
undue concentration of wealth in the hands of a few individuals.
Progressivity is based on the principle that those who are able to pay
should shoulder bigger portion of the tax burden. This is also known as
the compensatory purpose. (ABAN, Law of Basic Taxation, supra at 6);
d. Encourage economic growth - in the realm of tax exemptions and tax
reliefs, the purpose is to grant incentives or exemptions in order to
encourage investments and thereby promote the country's economic
growth (Id.);
e. Protectionism - in case of foreign importations, protective tariffs and
customs are imposed for the benefit of local industries (ABAN, Law of
Basic Taxation, supra at 6-7).
738
le‘N RED BO
Q: What is the nature of the power of taxation?
ANS: Taxation may be described as follows:
1. It is an inherent attribute of sovereignty —The moment the State exists, the
power to tax automatically exists. It does not need constitutional conferment.
This power is inherent in the National Government but not in the Local
Government Units (LGUs) since they are merely an agency of the State for the
purpose of carrying out in detail the objects of the government. They can only
impose taxes when expressly granted to them by the Constitution or by laws
enacted by Congress (SABABAN, Taxation Law Review, (2008), p. 1)
thereinafter SABABAN, Reviewer]. Nevertheless, effective limitations thereon
may be imposed by the people through their Constitutions (Mactan Cebu Int'l.
Airport Authority v. Marcos, G.R. No. 120082, September 11, 1996);
2. It is legislative in character Taxes are a grant of the people who are taxed,
and the grant must be made by the immediate representatives of the people.
(Commissioner of Internal Revenue v. Fortune Tobacco Corp., G.R. Nos.
167274, July 21, 2008). This, pagans that in the legislature primarily lies the
discretion to determine tly04119 ure (kind), object (purpose), extent (rate),
coverage (subjects) andaW,(p pe) of taxation (Chamber of Real Estate and
Builders' Associations, G.R No. 160756, March 9, 2010);
3. It is subject to constitittiona, nd inherent limitations (1 DE LEON, The
National Internal Reveria4 Q 69" patated (20 f p. 3) [hereinafter 1 DE
LEON, NIRC Annotated].
Q: What are the chard'aristics of ti4 ing power?

ANS: The characterisievp i z.i the follain" (CUPS)
1. Comprehenkr‘Ve 1 Itosbaiers rsons, businesse activities, professions,
rights,Angfiiivil dat,
2. Unlinilted — ./tgx does nkc e to be vagd. meelycause it regulates,
disottiliges,„pMen de finitely ers the a .i.'" power to tax is
onelc,5 unlimiteforce._%
ril , d s earching '''we •"e courts scarcely
,to dellabat it'l
venture,,, 4to any restrioroW,Mtever, except such as
rest in tRAIrstrett of litre a hority which exercises it (Tio v. Videogram
RegulatotPBr G:4. No. 75697 9, 1987);
3. Plenary — It 1^.3.5.salp ete. Unde anal Internal Revenue Code (NIRC),
the BIR may Oil of ce Ittreme id °TensWM collection of taxes; and
4. Supreme — 4+,1thoug keferred to as the strongest of all the powers of the
government, iikets be interpreted to mean that it is superior to other
• -inherent powers nly hat it is supreme insofar as the selection of thesubject
of taxation is concerned (To v. Videogram Regulatory Board, supra).
Q: Why is the power of taxation essential?

ANS: The power of taxation is essential because the government can neither exist nor
endure without taxation. Taxes are the lifeblood of the government and their prompt and
certain availability is an imperious need (Bull v. United States, 295 U.S. 247, 15 APTR
1069,1073). •
739
Q: Distinguish power of taxation from police power and power of eminent domain.
Distinctions
Power of Eminent
Power of Taxation Police Power
Domain
• As to purpose
To raise revenue. To promote public welfare To facilitate the taking of
through regulations. private property for
public use.
As to amount of exaction
It is unlimited in amount. It is limited only to the There is no exaction, but

cost of regulation, private property is taken
issuance,--of—,license or by the State for public
,osKrveillahce. ,744%,„, purpose.
As to benefits received
No special ov direct-benefi eceiVel4 • ust, compensation is
benefit is receivisili
. r p, hekilhy ',con is\ r egiv„ed by the property
taxpayer, but 'Trie}:e y standkii'd c2flogikty kno n 'elAt
general b
bgnefit / of as " daRtilr absq e
protection is e681yeaL —injuria-1is4I .aihed. )
#
As to non-impairment of contracts
1 il
No ggnrment
i of
contracts rule does not
API* /
As to transfer of property rights
Taxes paid becom Thare s—n

04w-
a sf er o T e transfer 'of property
of public funds. r ria”ighT§ r ut' I s effected in favor of the
straint s. State.
As to scope
Covers all persons, Covers all persons, Covers only a particular

property, and excises. property, rights and property.
privileges.
As to who may exercise the power
Exercised only by the Exercised only by the May be exercised by

government or its political 'government or its political. private entities.
subdivision. subdivision.
(ABAN, Law of Basic Taxation, supra at 13-14).

Note:
1. Where a permit collected from alien job applicants is in excess of the cost of
regulation, the exaction is a tax (Villegas v. Hiu Chiong Tsai Pao Ho, G.R. No.
L-29646, November 10, 1978).
740
2.A charge of a fixed sum which bears no relation at all to the cost of inspection
and regulation may be held to be a tax rather than an exercise of the police
power (Progressive Development Corporation v. Quezon City, G.R. No.
36081, April 24, 1989). •
3. Police power may not be exercised by itself alone for the purpose of raising
taxes. However, police power may be exercised jointly with the power of
taxation for the purpose of raising revenues (Lutz v. Araneta, G.R. No. L-7859,
December 22, 1955).
4. The 20% senior citizen discount is an exercise of police power. The discount
may be properly viewed as belonging to the category of price regulatory
measures which affect the profitability of establishments subjected thereto. On
this face, therefore, the subject regulation is a police power measure (Manila
Memorial Park v. Secretary of DSWD, G.R. No. 175356, December 3, 2013).
Q: What is the determining factor in distinguishing tax and regulation as a form of

police power?
ANS: In distinguishing tax and regulAtion'as a form of police power, the determining
factor is the Orpose of the implerOritextrasure. If the purpose is primarily to raise
revenue, then it will be deemed a4p$Z9nai-lough the measure Jesuits in some form of
regulation. On the other hand, if tfiWpi,;ti1p45s,3p primarily to regulate, then it is deemed a
regulation and an exercise of the liolIOR§ ripkqe stategnven though incidentally,
revenue is. generated (Angelw•tlnidOt045EaktdrimaGity of Angeles, G.R. No.
189999, June 27, 2012. ) V' v:im4,
Q: What does the ph_.:̀
.t.
use Ithe poW01clax involves the v to destroy" mean?
ANS: The, pOwer to Mit 1,451e;les'the C p` er to destroy if it is used validly as an
implement of the Ode' pq:wp,r4 discoura ing and in effect, ul malo prohibiting certain
things or enteggises inimical to fhe ptiplic4Ifare (Cruz Conititutional Law, as cited in
DIMAAMPAO471px Principles and Remedies (2015), 20) ereirl'after DIMAAMPAO,
Tax PrinciPlesrd Reliedits). "`ft-tt, , ,.,-,
Note: Instead 8( beingireg*ded .6'§â bl ket authorizttib unrestrained use of
taxing power'repagyAiitiell purpose `t is more reasonable to say that the maxim
"the power to tax istlpe powotto destroy"*, jiLdescribe not the purposes for which the
taxing power may be used the degregr a which the taxing power may be
employed in order to rq7revenge,l,,p0.0LEatthtionzittpL /, 4th Ed., p.179-181).
,,,,,
B. INHERENT AND CONSTITUTIONAL NAL LIMITATIONS OF TAXATION
Q: What is the scope of1 h-er egislative
'1/4 4q 111 taxing power?
ANS: Legislative taxing power or discretion extends to the following:(PAPKASiM)
1. Person, property, or occupation to be taxed;
2. Amount or rate of the tax;
3. Purposes for which taxes shall be levied provided they are public purposes;
4. Kind of tax to be collected
5. Apportionment of the tax, i.e., whether the tax shall be general or limited to a
particular locality or partly general and partly local;
6. SituS of taxation; and
7. Method of collection (ABAN, Law of Basic Taxation, supra at 8).
Inherent Limitations
Q: What are the inherent limitations of taxation?
ANS: The inherent limitations of taxation are: (PINES)
1. Taxes must be exacted for a Public Purpose;
2. International Comity;
3. The power to tax is Inherently Legislative in nature/ Non-delegability of the
taxing power;
741
Government entities, agencies and instrumentalities are generally Exempt
from taxation;
5. Territoriality or Situs.
Note: A violation of these inherent limitations can amount to the taking of property
without due process of law (Pepsi-Cola v. Municipality of Tanauan, Leyte, G.R. No. L-
31156, February 27, 1976); hence, in this sense, it can be said that any tax law
contravening any limitation of taxation, in effect, will likewise be unconstitutional (V/TUG
& ACOSTA Tax Law, supra at 4-5).
Public Purpose
Q: When is tax considered for public purpose?
ANS: Jurisprudence states that 'public purpose" should be given a broad interpretation.
It does not :only pertain to those purposes which are traditionally viewed as essentially
. government functions, such as building roads and delivery of basic services, but also
includes thOse purposes designed to promote social justice Planters Products, Inc. v.
Fertiphil Coip., G.R. No. 166006,Afarch'14,'2008),,,,..
Note: It is the purpose wh' rdetermirips The pU liccharacter of the tax law, not the
number of .persons buff d4//v/MIIVAO, TErX Prin' ale,f and Remedies, supra at
42).
I fr
International Coirkt
9
Q: What is the' Pr pie of Inte national• omi iasanrinhent limitation of
taxation?
l
ANS: Under t iple, kstate-m Iln ize- e gen Icepted tenets of
international , aryl ng which arep9.4 9rrciple'syof overer fir equatyamong states
and of their reedpr from suit wrt.4.1 Illeirrconse t, that 11411%4 hoe authority of a
governmentlto -Ase taxesì -k§:*ereig
ely irni le a d its instrumentalities, as
well as on lits HOT ‘TI'd emin hatlacity (VITUG &
ACOSTA, Tax ra • NV
Note: A state th nt 6 rnatib ns is bound to make in its
legislations thoselmodifi tion nsure e fulfillment of the
obligations tindertken. la nsure t at the reliefs granted
under tax treaties e acco ergt (Duetsche Bank AG
Manila. Branch v. CorTr isv *Inte.caaLR No. 188550, August 28,
2013).
Q: What are the bases of the rule o nternab al comity?

ANS: The bases of the rule of International Comity are as follows:
1. The Philippines adopts the generally accepted principles of international law
as 'part of the law of the land (CONST., Art. II, Sec. 2); and
2. Ddotrine of Sovereign Equality among the states (par in parem non habeat
imperium) (DIMAAMPAO, Tax Principles and Remedies, supra at 46).
Inherently Jegislative/Non-delegabayof the Taxing Power

Q: What is the rule on non-delegability of the taxing power?
ANS: As a general rule, the power to tax is exclusively vested in the legislative body
(DIMAAMPAO, Tax Principles and Remedies, supra at 52). This is embodied in the
Latin maxim "Potestas Delegata Non Delegari Potest" which means, what has been
delegated may not be delegated. This is based on the ethical principle that a delegated
power is not only a right but a duty that the delegate must perform through the
instrumentality of his own judgment and not through the intervening mind of
another (Quezon City PTCA Federation, Inc. v. Department of Education, G.R. No.
188720, February 23, 2016).
742
AIVOL 1.
2019
Q: What are the exceptions to the rule on non-delegability?

ANS: The following are the exceptions: (LPAP)
1. Delegation to Local Governments;
2. Delegation to the President;
a. Tariff powers by Congress under the Flexible Tariff Clause (CONST.,
Art. VI, Sec. 28, par. (2)); and
b. Emergency powers (CONST., Art. VI., Sec. 23, par. (2)).
3. Delegation to Administrative Agencies (Power of Subordinate Legislation); and
4. Delegation to the People at large (Abakada Guro Party List v. Ermita, G.R. No.
168056, September 1, 2005).
Note: In every case of permissible delegation, there must be a showing that the
delegation itself is valid (Id.).
Q: What are the tests in determining if there is a valid delegation?
ANS: It is valid only if the law:
1. Is complete in itself, setting fortb,therein the policy to be executed, carried out,
or implemented by the deleggOompleteness test); and
2 Fixes a standard — theiiiiriiitWkof
-.. nw4-i4p, which are sufficiently determinate and
determinable — to whichine,m egate must conform in the performance of his
functions (sufficient star-000), sufficient standard is one which defines
legislative policy, marks itekiiriilfg mapsexit its bozdaries and specifies the
public agency to apply itl:7.,,,,0 , ,faiesetkateircuttances
:rd., -, under which the
legislative commaeis
..4i1,g to bp e ected (Aga ada uro Party List v. Errnita,
supra).
Exemption of GovernmentEntities: Agencies and instrumentalities
4.e!' twe-- W. 1 I, lk ent entities from
Q: What is the.v Aationale-0.05,the exemption of the go ern
taxation? 41- .4lw 0.1 : "`"'
,• 'sr'
e
ANS: ProPerlte;bi,Vol,41**Nelional,9ovem ent as Vtimiktbil.
i
subject 0. texlibtherwiqatit„& ill reAilt in t absurd sitatitklb
a LGUs are not
ovemment taking
money from °rated% nsl putti4 it inanother (BeiVefroP sessment Appeals of
Laguna v. ,Court olra'Apilkals, CIR. L-18125, May 31, 1963). It is a matter of
public policy (51 An?. ir. 5024 The State nnotbe taxed without its consent and such
consent, being in derogatioof its soveimig bybe strictly construed (Gomez v.
Palomar, supra). O ai
.,,,tor -,1:- gsgsa
:1
6
Q: Discuse the taxabili ;otAtivernment agencies.
ANS: Agencies performingnbvernmental functions are exempt from tax unless
expressly taxed, while proprietary functions are subject to tax unless expressly
exempted (DIMAAMPAO, Tax Principles and Remedies, supra at 59).
Q: Discuss the taxability of Government-owned or controlled corporation (GOCC).
ANS: Government-owned or controlled corporations perform proprietary functions;
hence, they are subject to taxation (DIMAAMPAO, Tax Principles and Remedies, supra -mail
at 59). 1 VPt
Q: What GOCCs have been granted tax exemption?
ANS: The following GOCCs are considered tax exempt:
1. Govemment Service Insurance System (GSIS);
2. Social Security System (SSS);
3. Philippine Health Insurance Corporation (PHIC); and
4. Local Water Districts (LWDs) (NIRC as amended by TRAIN Law, Sec. 27, par.
(c)).
Note: Before the TRAIN Law, PCSO was included among the tax-exempt entities under
Sec. 27, par. C. Pursuant to the amendment, the income of PCSO is now subject to tax
(NIRC, as amended by TRAIN Law, Sec. 27, par. (c)).
743
DAN •
Q: Is an instrumentality of the government subject to real property tax?
ANS: No. The Supreme Court held that the real properties of Manila International
Airport Authority (MIAA) are owned by the national government and thus exempt from
real estate tax. It considered MIAA as a government instrumentality under Sec. 133 (0)
of the Local Government Code (LGC) which provides that "exercise of the taxing
powers...stiall not extend to the levy of taxes, fees or charges of any kind on the
National ggvemment, its agencies and instrumentalities and local government units"
(Manila Intl. Airport Authority v. Court of Appeals, G.R. No. 155650, July 20, 2006).
Note:
In the MIAA case, the Supreme Court considered MIAA as a government instrumentality
because MI'AA:
1. Islnot organized as a stock corporation because it has no capital stock divided
into shares; and
2. Is neither a non-stock corporation because it has no members.
The last paragraph of Section 230‘of.the.,„1,QC. unequivocally withdrew, upon the

effectivity of the LGC, exemptions train pa ecit'oLreal property taxes granted to
natural or juridical perso eirAuding tg2)er nhowped or controlled corporations
.--4t,l.1,. r
x 1?..-
„• -•
,„ ,--....,„, ,4: , 4,„4t..
(LGC, Sea 234).
\-1
,‘
Q: When a goverrfinattigsiiilmenteliFfe'vestecl tith,cop - et at powers, does it
become a corpo.4 r s'ubje t to taper? 1,- ) 1, ,
ANS: No. Whe the ves s in aiffovemmefit instr corporate powers, the
4- •
instrumentality beco e a corpora tion. Unless e go e nn'at instrumentality is
t
organized as 97 tgp non- tock corpora ion, iffemai s a g verwent instrumentality
,- .rip,
exercising not ft- 1w overnrcentaloal0so, corporate pow rs ( ila Intl. Airport
Authority v. T
I peals, upra).:11;;-- ,1114.1- , .?-xit I 1....,
17;
Q: May
May the go inn 1 x4 f? r I i , t`...,,,4
,
le
ANS: The Co titutron, is ,, t\ n riliptherr;go gra,. is piohibire from taxing the
properties of the‘ gencibs of l 6-K9
MM nil-- eitroje", nqjfiing ca prevent Congress
from decre9ing t t eveN2st 'otal_iti Fies ofrthe go ernment performing
governmental func ons may diect#crt x\(Ma"giOebu Intl. Airport Authority v.
Marcos, supra). ‘--,I tiN
I
Territoriality or Situs
1
Q: Define sffus of taxation.
'.1 1 ,.....,:...„,,,,,,
\10i-
ANS: It is !the place or authority that has the right to impose and collect taxes
(Commissioner of Internal Revenue v. Marubeni Corp., G.R. No. 137377, December 18,
2001). It is also called "place of taxation" (ABAN, Law of Basic Taxation, supra at 57).
Q: State th9 rule on sifus of income tax.

ANS: On income derived:
1. Fr?m sources within the Philippines - all kinds of taxpayers are subject to
income tax on income derived from sources within the Philippines. Income is
derived from the Philippines if it is derived from activity within the Philippines
(NIRC, Sec. 23);
2. From sources without the Philippines - only resident citizens and domestic
corporations are liable to income tax on income derived from sources without
the Philippines (NIRC, Sec. 23 (A) & (E));
3. Partly within and partly without the Philippines - taxable income
attributable to sources within the Philippines may be determined by processes
or formulas of general apportionment prescribed by the Secretary of Finance.
Gains, profits, and Income from the sale of personal property produced (in
whOle or in part) by the taxpayer within and sold without the Philippines or
744
C
kV; • 1"
produced (in whole or in part) by the taxpayer without and sold within the
Philippines, shall be treated as derived partly from sources within and partly
from sources without the Philippines (R.R. No. 02-40, Sec. 162).
Q: State the rule on situs of property taxes.

ANS: Taxes on:
1. Real Property - where the property is located, regardless of whether the
owner s a resident or a non-resident (Lex rei sitae,or lex situs) (First National
Bank v. Maine, 284 U. S. 312.77 ALR 401 as cited in DIMAAMPAO, Tax
Principfes and Remedies, supra at 47);
2. Personal Property - if the personal property is:
a. Tangible Personal Property - where the property is physically located
although the owner resides in another jurisdiction (51 Am. Jur. 467 as
cited in DIMAAMPAO, Tax Principles and Remedies, supra at 47);.
b Intangible Personal Property - as a general rule, the situs is the
domicile of the owner,4pplying the principle of mobilia sequuntur
personam (movableigilloit the person). The exceptions are:
i. When the,,Fjpe has acquired a business situs in another
jurisdiction; :pry^;4
ii. When thefakzi$ es for the situs of the subject of tax (NIRC,
Sec. 104),. i gge
Q: State the rule on situs to
ANS: The situs of:
1. Estate tax: .;.k .4s' .a,0-.
tot._pis
a. For ittpiikInt:ethei resident or not, and or es'dent aliens - they are
taxp:An plo, Perties wher&ter situated; art
4For nop; r4skIeht aliQqs - nly taxed op properties situated within the
ilihilipilitfes (R. A. No. 84 Secs. 85, 104. . I,
2. Dongis MIA ?' ,,,,, No. 8424, Se 98, 1 . -- -'71ePlerrs' in the case of
Estatei tax. the meatus alit lOca on are dete itt .:_iat,• „--r
he •time of donation
(DIMAZIVIP . A07
i 0,4„,,, e"
a -Principles a Remedies, supra at 51).
-
Q: State the rule o situs of usiness taxi
ANS: The rule on situys t follows: -ntgaga, 21 .4
1. On the sale ott it
a. Real Pr pqrty where the real property is located; and
b. Personalkagurty - where the sale is perfected and consummated.
(Sec. 104,NIRC)
2. VAT - the place where the transaction was made, i.e., where the property is
sold and consumed or where the service is performed or to be performed
(Cro9-border Doctrine/Destination Principle) (Commissioner on Internal
Revere v. American Express International, Inc., June 29, 2005).
Q: What are the criteria observed in fixing the situs?

ANS: The criteria observed in fixing the situs of taxation are as follows:
1. For p9ll taxes, the tax situs is the residence of the taxpayer;
2. For property.axes, the tax situs is the place where the property is situated;
3. For excise taxes, the tax situs can be the place:
a. I where the privilege is exercised;
b. where the taxpayer is a national of, or
c. ; where he has his residence (VITUG & ACOSTA, Tax Law, supra at 10).
4. In double taxation - In determining situs, it is of no importance that the
property has already been taxed or is subject to tax in another state. There are
two situses of taxation. Both the Philippines and the other imposing state have
the right to tax the same taxpayer (ABAN, Law of Basic Taxation, supra at 58).
745
Q: What is1 the Maxim of Mobilia Sequuntur Personam?
ANS: This, maxim means "movables follow the person". According to this maxim, the
situs of personal property is the domicile of the owner. This is intended for convenience
and not to; be controlling where justice does not demand it. The maxim applies to
taxation of personal property (ABAN, Law of Basic Taxation, supra at 59).
Constitutional Limitations
Q: What are the Constitutional Limitations of the taxing power?
ANS: Constitutional Limitations may either be:
1. Provisions directly affecting taxation: (P2UTO SERV JAIL)
, a. Prohibition against imprisonment for non-payment of poll tax;
b. Progressive system of taxation;
c. Uniformity and equality of taxation;
d. Delegated authority of the President to impose Tariff rates, import and
export quotas, tonnage and wharfage dues (Flexible Tariff Clause);
e. Origin of revenue an appropriations;
f. Prohibition_grolse of toif lOied-lorigiieci0 purpose;
' g. Votes re.,qgke,V togrant taxigherfticitiszt N.\
;h. Tax e,xerrilltion fif ifeligidarcharake,firld e ucational entities;
i. Pre..,416 t's'Vte • N44 a 1''',.
.
j. N,drn-impay4tporStIrelir atIrt,s,,Juris.811dfion,N
e
3c. IficiAppropr -tion opuset ptiblia m3. ey‘kreligiouspurposes;
;I. Mon- i bill of norlistA non-profit E duck•nalArstitutions;
.m. i• LGU' powe to create its 'isivn sources .f revq&e.)
I and
2. PiovisigTai irectl affeeting_ta tiors.R FPJ) 11,,.01

la. g Zig Process .41. e4 1 4\ '
b. N protecton; kil .4
,,,,,,
,c. Ri5 on'-rtinp • Os of_co
cl. RECOIOLIS '4".<
.c - .711.,
e. feed prefisio
f., reside tial wert rp,~ra rep ev mr utatiow, and pardons, and
il,rnit finesnd o e ur by final Lodgement; and
g. Nol-V> fe ol‘p.pZ/at
king blic se withoUt Just compensation.
...1.
Provisions DirectlyA ctinvo) . --0'' 'cikkki
4",- isi1
Prohibition against Imprisahmen r for An€L .'.- e ?i,fPoll Tax
--..„,„,.........".L.c...;3.„,,,0.-
Q: What is a Poll Tax?
ANS: Poll Tax (also known as "community tax") is a tax of a fixed amount on individuals
residing within a specified territory, whether citizens bi. not, without regard to their
property or ,the occupation in which they may be engaged (51 Am. Jur. 660 cited in
Villanueva v. City of Iloilo, No.
• •
L-26521, December 28, 1968).
-•' I
Q: Can a taxpayer be imprisoned for non-payment of poll tax?
ANS: No. The Constitution states that "ndpeison shall be imprisoned for a debt or non-
payment of a poll tax" (CONST., Art. III, Sec. 20). One cannot be imprisoned for non-
payment of poll tax because payment. thefeof is not mandatory (SABABAN, Reviewer,
supra at 14). While a person may not be imprisoned for non-payment of a cedula or poll
tax, he may be imprisoned for non-payment of other kinds of taxes where the law so
expressly provides (D!MAAMPAO, Tax Principles and Remedies, supra at 51).
Progressive System of Taxation
Q: What kind of tax system does the Philippines follow?
ANS: The Constitution provides that the Congress shall evolve a progressive system of
taxation (CONST., Art. VI, Sec. 28). '
746
i
ri
, r. ••
.-•
Ze
•
Q: Do indirect taxes, like VAT, comply with the constitutional requirement of

progressive system of taxation? If not, should the same be declared
unconstitutional?
ANS: No. Indirect taxes, like VAT, are admittedly regressive because they are imposed
regardless of income (INGLES, Tax Made Less Taxing: A Reviewer with Codals and
Cases (2015), p. 13) [hereinafter INGLES, Reviewer]. However, they are still valid as
the Constitution does not entirely prohibit a regressive system but merely directs the
Congress to evolve a progressive system of taxation. Further, the constitutional
provision on progressive system of taxation has been interpreted to mean simply that
direct taxes are to be preferred and as much as possible indirect taxes should be
minimized (Abakada Guro Party List v. Ermita, supra).
Uniformity and Equality of Taxation
Q: What does uniformity of taxation mean?
ANS: Uniformity in Taxation means that persons or things belonging to the same class
shall be taxed at the same rate (Constittitional Law, (2007), p. 90) [hereinafter CRUZ,
Constitutional Law].
Q: What does equality of taxation M0i*
ANS: Equality in taxation simply rneofi4:Alp. the tax shall be strictly proportional to the
relative value of the property. It ccinnON,Nati Vce.q,,shoulcyilp apportioned among the
people according to their capacity to 'pesi.''f(50.YzFediRgitettorf t Law, supra at 91).
• 4
Q: Distinguish uniformity from equitab 43..1
i kty. ji 1
ANS: Equality in, taxation simply means twat the tax shall be it ctly proportional to the
relative value of; the ,p?opelty.j.(1 COOLqyi, supra). In c9fitrOst, uniformity in taxation
means that persOns•or tnill'AARplonging i tp, the same class s all be taxed at the same
rate pmAAnip.A,o, Tax,pfinciples arIti.R47 dies, supraeat 9 .
AR!' . ,,Aik,, 1.. f
4
F.,
Grant by Conress of Authonty .to the President to TposeTbriffRates
Q: What is the FlObis'.Y4ff Claid4?
.-
ANS: The COngreOliig9, klaw, ailhoric the President to fix, within specified limits,
and subject to'. sOchilmitatiorAand restrictfgisA*A may impose, tariff rates, import and
export quotas, tonnag4and4harfage d_, .•ear ,,. file duties and imposts, within the
li,
framework of the natica deve(oLlyetTfOgrafirotilt -e Go ernment (CONST., Art. VI,
Sec. 28(2)). ' 141
, 16
tab•,41
017:9,117 of Revenue or Tariffalle
Q: Which body of Congress should initiate the filing of revenue or tariff bills?
ANS: All appropriation, revenue or tariff bills, bills authorizing the increase of the public
debt, bills of loCal application and private bills shall originate exclusively in the House of
RepresentatiVes but the Senate may propose or concur with amendments (CONST. Art
VI, Sec. 24).
Note: It is not the law, but the bill which is required to originate exclusively from the
House of RepreSentatives. A bill origination in the House may undergo such extensive
changes in the Senate that the' result may be a rewriting of the whole (Tolentino v.
Secretary of Finance, G.R. No. 115455, August 25, 1994).
Prohibition on Use of Tax Levied for Special Purpose
Q: What is the nature of the money collected on tax levied for a special purpose?
ANS: All money collected on any tax levied for a special purpose shall be treated asua
special fund and paid out for such purpose only. If the purpose for which a special fund
was created has been fulfilled or abandoned, the balance, if any, shall be transferred to
the general funds of the Government (CONST., Art. VI, Sec. 29, par. (3)).
747
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A •
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2019
Majority Vote of Congress for Grant of Tax Exemption
Q: What is the required vote of Congress for the granting of tax exemptions?
ANS: No law granting any tax exemption shall be passed without the concurrence of a
majority Of all the Members of the Congress (CONST. Art. VI, Sec. 28, par. (4)). The
phrase "majority of all the members of the Congress" means at least 1/2 plus one (1) of
all the members voting separately.
Note: In granting tax exemptions, an absolute majority of the members of Congress is
required, while in cases of withdrawal of such tax exemption, a relative majority is
sufficient (DIMAAMPAO, Tax Principles and Remedies, supra at 125).
Prohibition against Taxation of Religious Charitable, ono 'Educational Entities

Q: Discuss the rule on exemption of religious, charitable, and educational
institutions from taxation.
ANS:: Charitable institutions, churches and parsonages or convents appurtenant thereto,
mosques; non-profit cemeteries, and,,adaiida, buildings, and improvements, actually,
directly, end exclusively used,jorrairgioys,lhaMl)le,,or educational purposes shall be
exempt frOm taxation (CO, S7, ,kt. VI, Sec 28,par (8)P,,,
„, f•
:‘,„
.......,........./a,, i
Q: What kind of taxi s,,coverecWihe exemption?‘.P. ,,,,,,
V 4, N. .r e
ANS: The exempt'on a phase o ..to-Real-Properta. T x<ada4c v. Commissioner of
Internal Revenue oot- 201,,June!6,..1,965).- ..) \
4,
1” .f. '
Q: What is the est offrexem bon?
ANS: It is theike)of the ptoperty-atht of--owrrersrj (Ab (kle College, Inc. v.
Aquino,G.R.G llo:49066, Jun 15mp-p8), ;1 ,, 1ko......
• 1:::,.:-.)
Mr Lii •
4•4
Q: What. Is th I natur of efelt se of dieoto,Perty todb1grce-35empt?
ANS:, The propvtgstrnu R aclUely,p0Iy,--90,:le)cclusiveJyAU ed for religious,
charitable, or kdutationales ipatob- ,:Vf.CArifssio; er ow fnternal Revenue,
supra). :y
:-1."1 • :1/ '4,
\
Q: What is meantty actual cgiftqd-exicl sly6usef i
ANS: What is meant actuBt, irebtAd\ac)usteArsa, ,of the/ProPertjr for charitable
institutions is direct apre4io foNhe—pxopertylis If,. tcf,tVpurposes for which the
charitable! institution is orgarilze&II t is no4 t e ugekcIf I
d:dome from the real property
that is determinative of whethe-Ap•propaq u islslo ax-exempt purposes." Thus, the
Supreme Court held that only ge'portionveff real property actually, directly, and
exclusively used for charitable purposes are exempt from real property taxes, while
those portions leased to private entities and individuals are not exempt from real
property taxes (Lung Center of the Philippines v. Quezon City, G.R. No. 144104, June
29, 2004)1
President's Veto. Power on Appropriation. Revenue, and Tarif f Bills

Q: What is the extent of the veto power of the President in relation to taxation?
ANS: The President shall have the power to veto any particular item or items in an
appropriation, revenue, or tariff bill, but the veto shall not affect the item or items to
which he does not object (CONST., Art. VI, Sec. 27, par. (2)).
Note: The item or items vetoed shall be returned to the Lower House of Congress
together with the objections of the President. If after a reconsideration of two-thirds (2/3)
of all the members of such House shall agree to pass the bill, it shall be sente.together
with the objection, to the other House by which it shall likewise be reconsidered, and if
approved by two-thirds (2/3) of all the Members of that House, it shall become a law
(DIMAAMPAO, Tax Principles and Remedies, supra at 107).
748
O
„„ .
• •
Non-impairment of Jurisdiction of the Supreme Court

Q: What is the jurisdiction of the Supreme Court on tax cases?
ANS: The Supreme Court shall have 'the power to review, revise, reverse, modify, or
affirm on appeal Or certiorari judgments or orders of lower courts in all cases involving:
1. The legality of any tax, impost, assessment, or toll; and
2. The legality of any penalty imposed in relation thereto (CONST., Art. VIII, Sec.
5, par. (b)).
Q: What is the Principle of Judicial Non-Interference?

ANS: Under the Principle of Judicial Non-Interference, the courts cannot inquire into the
wisdom of a taxing act unless there is a violation of constitutional limitations or
restrictions (CIRV. Lingayen Gulf Electronic Power Co., Inc., G.R. No. L-23771, August
4, 1968). The courts cannot inquire into the wisdom, morality or expediency of policies
adopted by the political departments of government in areas which fall within their
authority, except only when such policies pose a clear and present danger to the life,
liberty or property of the individual (Bascot". Philippine Amusements and Gaming Corp.,
63+-
G.R. No. 91649, May 14, 1991).
Non-Appropriation or Use of Pci.:P":.'igo,

it cvm
e. Pfor Religious Purposes
Q: May public money be appropilaWAIWtelialpus purposes?
ANS: No. There'Shall be no approprigetOrittgerAIWO 6N, for religious purposes,
except if the prieSt, preachWiiiinister, or ignitary is ass@ o:
1. The Armed fqrpes;
2. Any penal institution; 4k
,,,,
3. Government.44nage• , . , or
4. Leprosarlum
• •' • -.4 • (CONST,.Art
- 7 ''''-, • ea 28, par. (3)) /
VI, S''
ek,4
ael. 1 . ik
Prohibition aszi:il t7"..,F:x4idt
1 :1 torth of vNrpozstokion-Profi , EducattonatInstitutions
) 17 .
• Q:--Discuss-thVtaxabilArenon: stpk, w-profit e uckNAststitutions.
- — ANS: All reVenefe,c,idiatets of qon-spibk, non-profit educational institutions used
• actually, directly,allinkclu4fly for' educational purposes shall be exempt from taxes
and duties. Subject to pnditiii ,Yis prescribaiwijacy; all grants, endowments, donations,
or contributions,',used acetuelljt directly apagartayaooducational purposes shall be
exempt from: tax !(COWSt., Art. Sec: 4; gr3rHara
r
Note: Non-stock, NonAolit Rdfida'tional Institutions are exempt from income tax, real
property tax, . donor's
-I tat=fanAcustoms
41,1. duties because the provision speaks of "all
revenues and assets" (INGLES, Reviewer, supra at 15). Revenues derived from assets
used in the operation of cafeterias, canteens and bookstores are also exempt if they are
owned and Op4lated by the educational institution as ancillary activities and the same
are located within the school premises (R.M.C. No. 76-2003).
Q: What is the :'effect in Real Property Tax (RPT) and Income Tax when a property
of a "Non-StOCI Non-Profit Educational Institution" is devoted to non-educational
related activity but the resulting income is use for educational purposes?
ANS: The treatments
, are as follows:
1. Real Property Tax - The property is subject to RPT. It is not the use of the
income from the real property that is determinative of whether the property is
used for tax-exempt purposes (Lung Center of the Philippines v. Quezon City,
SuPra). The test of exemption from taxation is the use of the property for
purposes mentioned in the Constitution (Abra Valley College, Inc. v. Aquino,
G.R.'No. L-39086, June 15, 1988).
2. Income Tax - The income is still exempt. However, for the constitutional
exemption to be enjoyed, jurisprudence and tax rulings affirm the doctrinal rule
that there are two requisites: (1) The school must be non-stock and non-profit;
749
4...
.r
• :..•;;,%,,ii'ZA‘
and (2) The income is actually, directly and exclusively used for educational
purposes. There are no other conditions and limitations (Jacinto-Henares v. St.
Paul College of Makati, G.R. No. 215383 (Resolution), March 8, 2017).
Q: Can a non-profit, non-stock educational institution refuse to settle the

assessment of a local government for its "building permit"?
ANS: No. The imposition of building permit fee is an exercise of police power to ensure
compliance with the standards under the National Building Code to protect the public
from any danger. Building permit fees are not impositions on property but on the activity
subject of government regulation. While it may be argued that the fees relate to
properties, i.e., buildings and structures, they are actually imposed on certain activities
the owner may conduct either to build such structures or to repair, alter, renovate or
demolish the same (Angeles University Foundation v. City of Angeles, supra).
Q: Differentiate the tax exemption of non-stock, non-profit educational institutions

from that of proprietary educationalAstituffqns.
ANS: The privilege grantectoTrno stock;kriph'pr9fit educational institutions is
conditioned only on the aorta-, tot and eiclkIsLve useftheir revenues and assets for
educational purposes.„Iri•lar ontrastrpropri45,educational institutions, including
those cooperatively Ancd:4-mayliawise be entitledstoYs:UcWeicemptions, but subject to
the limitations proyrded‘V Jarw includifiglii..b"Strictionp‘bn,:trVicietitcls and provisions for
reinvestment (CONST . XIV, Sear2t1(34 "7 \ Ncos‘c.
11. e
A proprietary edtcatio al inution is e9titlk only to th redticad. ate of 10% corporate
income tax. The r d rates applica510- nly
1. The proprietary edurtiolialitistitijtiori iarribn- rofit an .2
2. Its gross "ii4ome fro unralgadiragai: business or activity does not exceed
50% to NeotalOs incomV.(Cd4imissio dry Internal Revenue v. De La
Salle cr nApilsp No etnli r 9,1016)1
VAN :4 1
Consistent with rt. XI SectiV) Yof t e Cdriatp, tibn, flj,ese limitations do not apply
to non-stock, nonprofit ucatio alArittittactotilq0cemisiloner ofjntemal Revenue v.
De La Salle UniveNtjt, &Ciays...„. "\ j5,-)coo#ts,
Grant of Power to LOeal Governittinitstta-Creareitko n Sources of Revenue
114 tt
Q: Discuss the principle of4o.... I. utonppiji.t, 00ei•"9- 1)Y
ANS: Each local government urlit.shajj:lapjfieltrOwer to create its own sources of
revenues and to levy taxes, fees and charges subject to such guidelines and limitations
as the Congress may provide, consistent with the basic policy of local autonomy. Such
taxes, fees, and charges shall accrue exclusively to the local governments (CONST.,
Art X, Sec. 5).
Provisions IndirectlyAffecting Taxation

Due Process
Q: What is the principle of due process in relation to taxation?
ANS: Tax laws and their enforcement must comply with substantive and procedural due
process (INGLES, Reviewer, supra at 10).
Q: What is substantive due process?

ANS: Substantive due process requires that the tax statute must be within the
constitutional authority of Congress and that it must be fair, just, and reasonable
(SABABAN, Reviewer, supra at 8).
750
• • 4'1' sl:"#-'s
Q: What is procedural due process?

' ANS: Procedural due process requires notice and hearing, or at least an opportunity to
be heard (Id.). There must be no arbitrariness in the assessment and collection; the
prescribed rules must be followed before assessment and collection (INGLES,
Q: Are the requirements of notice and hearing always required before the
enactment of tax laws?
ANS: No. While the Sanggunians are required to conduct public hearings prior to the
enactment of tax ordinances and revenue measures (LGC, Secs. 186 and 187), the
National Legislature, on the other hand, has the discretion, whether or not they would
conduct public hearings before the enactment of tax laws (SABABAN, Reviewer, supra
at 9).
Equal Protection
Q: Discuss the:principle of equal protection of the laws in relation to taxation.
ANS: Equal protection neither reqyirgVual rates of taxation on different classes of
property, nor prohibits unequal t#atiqr,iiiss. long as the inequality is not based upon
arbitrary classification. It merely regirtslat all persons or property of the same class
subjected to such legislation sti011jtAlltmted alike, under like circumstances and
conditions, bOth in the privileges cd'IrrelfpcjilahLltabilitiLgimposed (COOLEY, cited
in Sison, Jr. v. Ancheta, G.R. klp:'5941,Juin5'
11 ,q910M-0
1,1
Q: How is the Equal Pitp
—t'ection Claute, 'olated?
ANS: The Equal'Protetootlause mlne,violated in two ays:
1. When clasaffica!riehzig made here there sjkuld Op none, i.e., where
doeS4fibtsest upon bstantial diff4fen+s; or
t
2. Whe6Wassificaticin is
.
called'for,
.
when subgtantial distvctions exist, but no
corregonclirspastfice
w on ade on ,th re49f (Villegas Hiu
Chiang Tsai P b suP*1.4)
Q: What are the reqiligifeetr a valid classification?

ANS: The requisites the following: (SueIGE)-3...
rc
1. It must be bakperSubstantial — etRaLs;,_
2. It must applptiboth pres'efit.IfiTtt reErebiditiliffs;
3. It must be Geuane to purposes of the law; and
4. It must applyEgyOly to all members of the same class (Onnoc Sugar
Company v. TreggiWrsof Ormoc, G.R. No. 23794, February 17, 1968).
Non-impairment of Obligations of Contracts

Q: Discuss'the principle of non-impairment of obligations of contracts.
ANS: No law impairing the obligations of contracts shall be passed (CONST., Art III,
Sec. 10). The non-impairment clause applies to the power of taxation but not to police
power and eminent domain. Further, it applies only where one party is the Government
and the other party, a private individual (SABABAN, Reviewer, supra at 13).
Q: Does the non-impairment clause apply to franchise grantees or licensees?

ANS: No. The tax exemptions protected by the non-impairment clause are contractual
tax exemptions,` not those granted by franchises or licenses.
1. Non-impairment may not be invoked in the case of a public utility franchises
because under Sec. 11, Art. XII of the Constitution, the legislature can impair a
grantee's franchise since a franchise or right is subject to amendment,
alteration or repeal by the Congress when public interest so requires (Cagayan
Electric Power & Light Co., Inc., v. Commissioner of Internal Revenue, G.R.
No. 60126, September 25, 1985).
751
2. The rights granted under the Certificates of Registration and Tax Exemption
are not absolute and unconditional as to constitute rights in esse. These
certificates, granting permit to operate, which are in the nature of licenses is
neither a property nor a property right. The licensee takes his license subject
to such conditions as the grantor sees fit to impose, including its revocation at
pleasure. A license can thus be revoked at any time since it does not confer an
absolute right (Republic v. Caguioa, G.R. No. 168584, October 15, 2007).
Religious Freedom
Q: Discuss the constitutional limitation on Religious Freedom.
ANS: The constitutional limitation on Religious Freedom are as follows:
1. Non-establishment Clause - "No law shall be made respecting an
establishment of religion or prohibiting the free exercise thereof (CONST., Art.
III, Sec. 5)." It covers the prohibition to establish a national or official religion
since in that case, there would be an appropriation from taxes paid by the
,,,„?........7„,....
people; and
2. Free Exercise glaare,,,- "Tile Ifrep„,. xe-E,'Clse., and enjoyment of religious
profession anViiirspiprvjthout-discrihnationyorRreference, shall forever be
allowed (CCOVSNA9.4f/0-Ser.r. 'This:isihepagisbf tax exemptions granted
to religiousoineituto C. ,,,,,,.___, '‘" "•• *e
Note: A municipa fiCense orrsiTeof bibles 'arid•relidrofis articles by non-stock, non-
.-..4-•• i
profit missionary orgpnizatio at tijiihimit profit cori?tittitedle curtailment
,e of religious
freedom and wo hip wpich is guaranteed: th'esConstitutioii'dA glean Bible Society v.
City of Manila, G..EN,o. L-9 37.,April...300957_ cited_ n DO PAO, Tax Principles
and Remedie su re at 116). Hetrygrifhp income f sucll prga'nIxations from any
activity conducted folrofit o from'anytiith'eirprOpe , real d'r persolial, regardless of
t
the dispositionrn_adF - f such; comd,4 lOteXelit'd Old). --.1
1 , x,,,,i .4.--ez
Freedom of Speeilitind Com nicorkin s‘f
1," ' A . ` -.•".4 \\ 11."7*.n "1-* • ', i /c1-1
Q: Discuss thetonstitutionayjmitation •nSpeech,and Communication.
..
ANS: No law shall be avedXprOairig te,•fre,9do' , of speech, of expression, or the
press, or the right ol the peoWe peiC.-6alOopFe_Tble,,and petitipn the government for
redress of grievancel (CON 7-.4* - :-.1)f,-..k&.4)..,!-- .00' „ , ____
•
There is curtailment of pre s-Pecagm'and fcpelddNilt dud61 and expression if a tax is
levied in order to suppress liasiJghts gnaliKNippa or restraint thereto. A license
fee may not be imposed on the praftecauseirlays a prior restraint on the exercise of
its right (Tolentino v. Secretary of Finance, G.R. No. 115455, August 25, 1994).
C REQU/S/TES OFA VALID TAX

Q: What are the requisites of a valid tax?
ANS: The following are the requisites: (JAPUL)
1. That either the person or property taxed be within the Jurisdiction of the taxing
authority (Reagan v. C/R, G.R. No. L-26379, December 27, 1969);
2. That the Assessment and collection of certain "kinds' of taReE gbarantee
against injustice to individuals, especially by providing notice and opportunity
for hearing (VITUG & ACOSTA, Tax Law, supra at 12);
3. Should be for a Public purpose (Pascual v. Secretary of Public Works and
Communications, G.R. No. L-10405, December 29, 1960);
4. The rule of taxation shall be Uniform (CONST. Art. VI, Sec. 28, Par. (1)); and
5. The tax must not impinge on the inherent and Constitutional Limitations on the
power of taxation (Basco v. Philippine Amusements and Gaming Corp.,
supra).
752
D. TAX AS DISTINGUISHED FROM OTHER FORMS OF EXACTIONS
Q: Why is it important to distinguish taxes from other exactions?
ANS: It is important to differentiate taxes and other exactions, especially when it comes
to problems and issues on double taxation and tax exemptions. If an exaction is not a
tax, then the defense of the taxpayer of double taxation will necessarily fail. In the same
manner, a tax-exempt individual or corporation is generally only exempt from paying
taxes; hence, if the exaction is not a tax, then the individual or corporation must still pay
the exaction (INGLES, Reviewer, supra at 3).
Q: Distinguish Taxes from Customs duties and fees.
ANS: Customs duties and fees are charged upon commodities on their being imported
into or exported from a country. Customs duties are taxes, but a tax is a broader term to
include not only customs duties but other taxes as well (ABAN, Law of Basic Taxation,
supra at 23).
Q: Distinguish Taxes from Toll.
ANS: Taxes may be distinguished fro to[ as follows:
Taxes
As to purpose
,tk. •
r
Taxes are levied for the supportogth of
Government another s
As to determination of amount
Toll is deterfniifed y the cost of the
property ore the improvement
As to who may impose
‘:r sed4by th
Taxes may only btpAlm Toll ma' lis
jtredgi the government
State str\o
. or private individtil
(MAMAL4TE0,"PhiliPptev Inc,,ome„T:,,rffilg,71 . 16-17) (hereinafter MAMALATEO,

Income Tax].
Note: Fees paid!by thevyblic to ItillVOSeop ra bri4f6 e e of toll ways are not taxes.
These are exactions whikhencppplas
t earnings of toll way operators, not the government
(Diaz v. Secretary of Ping, d R. No. 193007, July 19, 2011).
Q: Distinguish Taxes from License Fee.

ANS: Taxes may be distinguished from license fee as follows:
Tax I License fee

As to basis
Levied in the exercise of the taxing power Emanates.from police power
As to purpose. .-
Purpose is revenue Purpose is regulation
As to liMitation on amount
Amount is unlimited Amount is limited to the cost of:
1.Issuance of license; and
2. Irispection and surveillance, except
for non-useful occupation (Physical
Thera. 0 anization of the
753
"VOL 1.
2019
31T.;Z•es'i
Philippines, Inc. v. Municipality

Board of the City of Manila, G.R.
No. L-10448, August 30, 1957).
As to when paid
Normally paid before the
commencement of business
As to nature
t
Taxes; being the lifeblood of the State, License fee may be with or without
cannot be surrendered except for lawful consideration
consideration
As to effect of non-payment
Non-payment does not make the Non-payment makes the business
business illegal but may be gronfitlr. Or.
criminal prosecution
t
ik "'"•-•
(MAMAL4TEO, Moo (44 sa raerir -.1iN., P`

Q: What is the to etermsnigcreirle7iiii-IMpoiltkon i f,,.atlx or a fee?
ANS: If the geir p1 rePenue thy.. prit.(fary ntirpo'sr and regulation is merely
incidental, the i posit' n is itax; bilt if it.Ulaf6n is the priNktypyi-fose, the fact that
incidental' re rentwe is " nad___.notlinake tednpopition a tax (Smart
Communicatio f 4 v. Municipalk.of efilvar,-B9tangas, G.q.,,,No! 204429, February
18,2014
Q: Distinguis froi
ri li cial Aggess-thent.
sS)
ANS: Taxes miry ittin61,01\ frorrgptgltsse j ieas ►low
Tax Special Assessments
As to definition
EnfOrced propoNnal d";re)aoition
p fal contributions from
from persons or propl er pklatigslaspecially or peculiarly
nqt cl.likublic improvements
fi
As to subject
Taxes ,are levied on land, persons, Levied only on land
property, income, business, etc.
As to liability
Personal liability of the taxpayer Cannot be made a personal liability of the
person assessed
As to basia
Based on necessity and partially on Based solely on benefits
benefits
As to application.'
General application Special application only as to a particular
time and place
(ABAN, Law of Basic Taxation, supia at 15).
754
BEDAN FRED BOOK
Note: Under, the Local Government Code, local government units may impose a special
levy on lands specially benefited by public works, projects, or improvements funded by
the local goverriment unit (LGC, Sec. 240).
Q: Distinguish!Taxes from Debt.
ANS: Taxes m9y be distinguished from debt as follows:
Tax I Debt
As to basis
Based on law . Based on contract or judgment
As to effect on non-payment
Failure to pay tax (other than poll tax) No imprisonment for non-payment of
may result in imprisonment debt
As to mode of payment
Generally payable in money .4151'q Payable in money, property, or service
As to assignability
Not assignable tAssignable
As to payment r
-fsr,
Not subject to compe abon or set-off May be subject4 compensation or set-
(Please refer to fliscussions off
compensation or set)-9, r exception)
As to interest
o6dralAinterest unless
-Tax does J 421- Debt dra in erest if stipulated or
delinquent delayed t&-Uit .
As to authority
Imposed by p
pubtnonty
u blics
. F Imposed by private individuals
As to prescription
Determined by NIRCI
firmr4 1.,1
1' 1ffr rniWd3 Civil Code
e el
e
(MAMAL4TE0, Income su ra at 16).
Q: Distinguish Taxes from Penalty.

ANS: Tax is a' civil liability. A person is criminally liable in taxation only when he fails to
satisfy his civil:obligation to pay taxes. (Republic of the Philippines v. Patanao, G.R. No.
L-22356, July21, 1967). Penalty is a punishment for commission of a crime (ABAN, Law
of Basic Taxation, supra at 14).
E. KINDS OF TAXES
Q: Define taxes.
ANS: Taxes are the enforced proportional contributions from persons and property
levied by the law-making body of the State by virtue of its sovereignty for the support of
the governmapt and for public needs (ABAN, Law of Basic Taxation, supra at 2).
Q: What are the characteristics of taxes?

ANS: The essential characteristics of taxes are: (SLEP6)
1. It is levied by the State which has jurisdiction over the person or property;
2. It is levied by the Law-making (legislative) body of the state;
755
DAN RED •_BOOK VOL 1.
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3. It is an Enforced contribution - not dependent on the will of the person taxed,

not a contract but a positive act of the government;
4. It is generally Payable in money;
5. It is Proportionate in character - taxes must be based on the taxpayer's ability
to pay in accordance with the constitutional mandate to Congress to evolve a
progressive system of taxation;
6. It is levied on Persons and property;
7. It is levied for Public purpose/s;
8. Paid at regular periods or intervals; and
9. Personal to the taxpayer (ABAN, Law of Basic Taxation, supra at 2-3).
Q: What are the kinds of taxes?

ANS: Taxes may be:
1. As to Subject Matter or Object (ABAN, Law of Basic Taxation, supra at 23-
24)
a. Personal, Capitatio,por.Roll-Zax - a tax of a fixed amount imposed
upon all per necif a cert in' Ir'gwis,hin the jurisdiction of the taxing
power w out gard t-...sof their property, or the
occupatiogs r b Inesses, e'rk may be engaged (e.g.
Co0o itytta
Prope arim —ArFeTtin-alt.pr U property of a certain
e jurilgctike okhe OOLEY 118) (e.g.
e t x) A • 1. .. . ..
Ta - a chargelhosed upo the rm 4nce of an act, the
ent o"E"giwi ege engaging in an copation, profession or
ss (e. D ). 1.5/
2.' AS t n or in idence J, ta
a. trAoCta tax which_ls'exacte ersons who are
the burden of its
l lY stoth
eXicit
ote e tax (incidence),
s the same person
g. Inco
In ?act to a re I (?4,0 ide ce or lia ility for the payment
falls non
anothe ktt. -f,T4
:2,..„,
149,,,,, burEl, rernr5gifted or passed on to
AS to Determinajphidf Art/pup eic4 4des (ABAN, Law of Basic

Taxation, supra at 27). IV
a. Specific tax - a tarorefiXe- amount imposed by the head or number
or by some standard of weight or measurement; it requires no valuation
other than a listing or classification of the objects to be taxed (e.g.
taxes on distilled spirits, wines, and fermented liquors).
Ad Valorem tax - a tax of a fixed portion of the value of the property
with respect to which the tax is assessed; it requires the intervention of
assessors or appraisers to estimate the value of such property before
isyr
the amount due from each taxpayer can be determined (e.g. real
property tax, customs duties).
c. Mixed tax- a tax having both the characteristics of specific tax and ad
valorem tax.
As to Purpose (ABAN, Law of Basic Taxation, supra at 26-27)
General or Fiscal - a tax imposed for the general or ordinary purposes
ra of the Government, to raise revenue for governmental needs (e.g.,
Income tax).
b. Special, Regulatory, or Sumptuary - a tax imposed for a special
purpose, to achieve some social or economic ends irrespective of
whether revenue is actually raised or not.
756
ZVOL
BJOO 2019
5. As to Scope or Authority Imposing the tax (ABAN, Law of Basic Taxation,

supra et 27)
a. ;National (Internal Revenue Taxes) — a tax levied by the National
Oovernment, through Congress, and administered by the Bureau of
Internal Revenue (BIR) or the Bureau of Customs (BOC).
b. Local (Real Property Tax, Municipal Tax) —a tax levied by the local
government, through their respective Sanggunians, and administered
by the local executive government through the local treasurer.
6. As to Graduation (ABAN, Law of Basic Taxation, supra at 27-28)
a. 1!Progressive tax — one where the tax rate increases as the tax base or
bracket increases.
b. Regressive tax — one where the tax rate decreases as the tax base
increases. (e.g. VAT)
c. Proportionate tax — one where tax rate is based on a fixed percentage
of the amount of the property, receipts or other bases to be taxed.
„AP
Q: Distinguish indirect taxes froMethAlding taxes.
ANS: Indirect taxes, like VAT anateXc'Sltax, are different from withholding taxes. To
distinguish, indirect taxes, the inckletA axation falls on one person but the burden
thereof can be shifted or passed On tigt rperson suchfas when the tax is imposed
upon goods before reaching the porippil g i. •ENxestifor it. On the other hand,
in case of withholding taxes he Ob and uttidt niVaaxation fall on the same
entity, the statutory tavoyer. The bulde • of taxation is no ifted to the withholding
agent who Merely collacts, y withholffigg e tax due from in e payments to entities
arising from certain trap ons andfiremits the same to the% e tpment (ING Bank N.V.
v. Commissioner of Inta ma Wnue, G. o. 167679, April 0, 2016).
A
F. DOCTRINESvocr 4'4
Constructiont7d IfirgrifforetatiortiaTax
Q: What are the espp Tax La
ANS: The sources failiaws re as•follo s.
1. 1907 onsiitution;
2. Legislation, tktrog bes and tax a
3. Admirtrative7egulatio Ilfird4thngs or opinions of tax_ officials, including
opinions of th if ecre of Justice;
4. judiAl.Decisio gd,/ E LEON, NIRC Annotated, supra at 8).
Q: What are the sources of internal revenue?
ANS: The foll*ing are the sources of internal revenue:
1. Income Tax;
2. Estate, Tax;
3. DOno'r's Tax;
4. Value:Added Tax;
5. Percentage Tax;
6. Excise Tax;
7. Docuirnentery-Stamp Tax; and
8. Such'other taxes as may be imposed or collected by the BIR (NIRC, Sec. 21).
Q: How are tax laws construed?
ANS: Tax lewd, are construed in accordance with the following:
1. Legislative intention must be considered — Tax statutes should receive' a
sensible construction, such as will give effect to the legislative intention and so
as to,' avoid an unjust or absurd conclusion (People v. Rivera, G.R. Nos. 3812
& 38216, December 22, 1933 cited in Commissioner of Internal Revenue v.
TMX Sales, G.R. No.83736, January 15, 1992);
757
-,-,-",.0:•?I'l.g-T,,.:,:•';,l'A.'.,.:-.• 3.!:.;•f vi ' z 12.:-.'
..Iii... . VOL 1.
2019
2. Where there is doubt - Tax laws must be construed strictly against the
government and in favor of the taxpayer. This is because taxes are burdens on
the taxpayer, and should not be unduly imposed or presumed beyond what the
statutes expressly and clearly import (Commissioner of Internal Revenue v.
Philippine American Accident Insurance Co., Inc., G.R. No. 141658, March 18,
2005);
3 Where language is plain - If the provision of the law is clear and speaks
categorically, the need for interpretation is obviated, no plausible pretense
being entertained to justify non-compliance. All that has to be done is to apply
it in every case that falls within its terms (Sea-Land Service, Inc. v. Court of
Appeals, et al., G.R. No. 122605, April 30, 2001).
Q: How are tax rules and regulations construed?

ANS: TeX rules and regulations are construed strictly against the government and
liberally in'Ifavor of the taxpayer (ABAN, Law of Basic Taxation, supra at 144).
Q: In Case of conflict between.th-thr .0- de, which will prevail?

ANS: The NIRC, being eci aw, ill reai kere is a conflict between a
special law and gen, law, it s Jule-that-4 e 51>mtV be exerted to avoid a
conflict between st tutes. 11kreeasonable constrtiatiog!is pfispible, the laws must be
reconciled' in that aVi'r)(1.fopekodr.rt- C
riVII-Se ice OthrniVon, G.R. No. 8711-9,
April 161991). 77
ID
Note: Special I m s rev it since it evinces-the le•isla intentmore clearly than
that of a denera statute and ust not b& ;keen as inte ded tuff e more particular
and specific pri43/1 fof the ier ac , ess us a • iolutelyv ry so to construe
it in order, to giVb-its words ny"if0-pin acgirr(Ciwa ay V zone hato v. Fortune
Tobacco Corp.! G o. 141)09, Jtirien491,4-2007)1
Q: State the getter! ule opstrugio Q. -tax e. miition

ti I
ANS: Tax exempti nd gionspr.e eitiefsie • seyrogafion o overeign authority
and to be 'constrbed stnctissr d:pri`ga ,p1 or efility clai ing the exemption
(Commissioner ckIntemkRe e 0 aS ecomIrTunicatians Philippines, Inc.,
G:R. No. 153835, July 7, 2d
•
Q: What are the exceptipnts tconstrutztVameei rf
n ptions?
ANS: Th4xceptions areihmo
1. When the statute grghti exe td • p WI
for liberal construction thereof;
2. In case of special taxes re special cases and affecting only special
classes of persons (DE LEON, The Fundamentals of Taxation (2004), p. 69)
(hereinafter DE LEON, Fundamentals];
3. exemptions refer to public property (DIMAAMPAO, Tax Principles and
Remedies, supra at 121);
4. In cases of exemptions granted to traditional persons who are exempt, such as
religious, charitable and educational institutions (ABAN, Law of Basic
Taxation, supra at 119);
5. In cases of exemptions in favor of the government, its political subdivisions or
instrumentalities (Maceda v. Macaraig, Jr., G.R. No. 88291, May 31, 1991); or
6 If the taxpayer falls within the purview of exemption by clear legislative intent
(Commissioner of Internal Revenue v. Amoldus Carpentry Shop, G.R. No.
71122, March 25, 1988).
Q: Distinguish tax exemptions from tax exclusions.

ANS: Indeed, both in their nature and in their effect, there is no difference between tax
exemptionOnd tax exclusion. Exemption is an immunity or privilege; it is freedom from a
charge or burden to which others are subjected. Exclusion, on the other hand, is the
758
VOL 1.
2 019
removal of otherwise taxable items from the reach of taxation, e.g., exclusions from
gross income and allowable deductions. Exclusion is also an immunity or privilege which
frees a taxpayerilrom a charge to which others are subjected (Philippine Long Distance
Telephone Company, Inc. v. City of Davao, G.R. No. 143867, March 25, 2003).
Q: State the rule on construction of tax exclusions.

ANS: The rule :that tax exemption should be applied in strictissimi juris against the
taxpayer and liberally in favor of the government applies equally to tax exclusions
(Philippine LOng1;,Distance Telephone Company, Inc. v. City of Davao, G.R. No. 143867,
March 25, 2003) •
Q: How are penal provisions of tax laws construed?

ANS: Penal proyisions are given strict construction so as not to extend the plain terms
thereof that might create offenses by mere implication not so intended by the legislative
body (People v. Martin, G.R. No. L-38019, May 16, 1980).
Prospectivity of Tax Laws

mioq
Q: What is the doctrine of prosggslyli of laws?
ANS: The geneial rule under the rgiViS1913041-1at laws shall have prospective application
applies to tax !laws. While it isInfitYkd edem a statute ay nevertheless operate
retroactively, prqvided it is expesslVd,qc a 'q ,l' e legislative intent (Cebu
Portland Cement Co. v. CORLOtssionettrof tema I Rev . No. L-18649, February
27, 1965). :BYa ATE
Note: Retroactive application of revgi Ud aws may be allow if it will not amount to
denial of due PrOcess .mpAof-
. Tax1P "nciples and Rem dies, supra at 146).
Q: Does the, exit ost fact ruirapply4o x laws?

$
ANS: Tax la re neiltwpolittcal nor Atal in natuLe, ano they're deemed laws of
the occupiediesritoffia enhan'Ott e occpying eri6a i7 paz Collector of Internal
Revenue, G.R.'W.o. L-9408;Octobe1 ik6); hence,WeTvo cto rule, except for
the penalty impoRlrte hatteres0; woad be inapplicable (Central Azucarera de Don
Pedro v. Court of fjic Appegg
„ G.R. NosL-23236 & L-23254, May 31, 1967). A harsh
retroactivity of the law ay e it inequit 'dative of the Constitution; similarly,
due process is violated, e tax is•wp,me e ry, 305 LAS. 134 (1938)).
Q: What is the ,principle a Non-Retroactivity of Tax Rulings?

ANS: Any revocation, modifiation, or reversal of any of the rules and regulations
promulgated in accordance with the preceding Sections or any of the rulings or circulars
promulgated by the Commissioner shall not be given retroactive application if the
revocation, modification or reversal will be prejudicial to the taxpayers (NIRC, Sec. 246).
Q: What are the exceptions to the non-retroactive application of tax rulings?

ANS: The exceptions are the following: (DeMB)
1. Where the taxpayer Deliberately misstates or omits material facts from his
return or any document required of him by the BIR;
2. Where the facts subsequently gathered by the BIR are Materially different from
the faCts on which the ruling is based; or
3. Where the taxpayer acted in Bad faith (NIRC, Sec. 246).
Imprescri,otibilityof Taxes
Q: Discuss the Doctrine of Imprescriptibility.

ANS: This doctrine means that the right to assess and collect taxes are imprescriptible
(Commissioner'. of Internal Revenue v. Ayala Securities Corp., G.R. No. L-29485,
November 21, 1980) as taxes are the lifeblood of the government (DIMAAMPAO, Tax
759
VOL 1.
2019
,
1'
Principiesi'And Remedies, supra at 153). The law of prescription being a remedial
measure should be interpreted in a way conducive to bringing about the beneficent
purpose of affording protection to the taxpayer (Republic v. Ablaze, G.R. No. L-14519,
July 26, 1960).
Note: However, tax statutes may provide for statute of limitations (DIMAAMPAO, Tax
Principiest and Remedies, supra at 153) and although the NIRC provides for the
limitation in the assessment and collection of taxes imposed, such prescriptive period
will only be applicable to those taxes that were returnable (Collector v. Bisaya Land
Transporta tion Co., G.R. No. L-12100, May 29, 1958).
Double Taxation
Q: Define clouble taxation.
ANS: It is Idefined as taxing the same subject or object twice by the same taxing power
within the 'same taxable period for the same purpose (Victorias Milling v. Municipality of
Victork Negros Occidental, G.R. No. L-21183, September 27, 1968).
li
Q: What are the kinds of 011E3 taxation i
N.„
ANS: Double taxation mi. -k
/ t ;N
1. ! Direct Dupli a e Tax lionlabraibirs4StrivpSen,k9) — is the objectionable
kind of doff e ta 9,t1Tri sinc • v,igl&slfte e9p4PNtection clause of the
COnstituttO aietegien s are ttfa,folloilirtg: (S e P2 Ak,_ J P K )
a. we Plibpertyreit sZjetrnatter is t twice when it should be
1'! fily orice; j 1 ,R '''
b. xes a emiedior II 'Ielsame.Pur i(d)
ed by e kagle_Tai,f pg_Auttiori 1--'"4
I Withi the 4n_e_'s. 1-falicVnf i
T.:i
Ducin the s" r rk. CArgiPeriod 1,,
ui C ate g-the-sa _ind-o illanueva v. City
of Ito V,...R. vgi, 8, 1 ).
2. lndire icatel&c ,atLorr Brit 5e arise • in the absence of
one f th ktatlece do of dirgct double taxation
(ABAN, aw of basic is is ildally allowed as long
, as there no vidlato nd un' ormity clauses of the
COnstitution c? ation (2016), p. 31)
[hereinafter, LEM2t . aRCIS7FipoIlVxagofij.
Note: There is no double tliakl the ft? ft ba
1. By taxing corporate iftee e n cichiiiders' dividends from the same
corporation;
2. j A tax imposed by the state and the local government upon the same
occupation, calling or activity;
3. Real estate tax and income tax collected on the same real estate property
leased for earning purposes; and
4. Taxes imposed on the taxpayers' final product and the storage of raw
materials used in the production of the final product (Id. at 32).
Q: Discuss,the constitutionality of double taxation.

ANS: There .1 is no constitutional prohibition against double taxation in the Philippines. It
is something not favored, but is nevertheless permissible. Double taxation becomes
obnoxious only where the taxpayer is taxed twice for the benefit of the same
governMental entity or by the same jurisdiction for the same purpose. However, despite
the lack of specific prohibition, double taxation will not be allowed if it results in a
violation of the equal protection clause. Hence, if certain properties are subjected to an
additional tax whereas others similarly situated are not similarly taxed, the owners of the
first properties would have a right to complain (CRUZ, Constitutional Law, supra at 92).
760
Q: What are :the modes of eliminating double taxation?
ANS: The measures that are normally adopted by sovereign taxing authorities in order
to avoid the resulting inequalities of double taxation include : (CREDT)
1. TaX Ctedits — an amount subtracted from an individual's or entity's tax liability
to arrive at the total tax liability; A tax credit reduces the tax due, including
whenever applicable, the income tax that is determined after applying the
corresponding tax rates to taxable income (Commissioner of Internal Revenue
v. Central Luzon Drug Corp., G.R. No. 159647, April 15, 2005);
2. Reduction , of the Philippine income tax rate by a non-resident foreign
corporiation (NRFC) within the Philippines is reduced by imposing a lower rate
of 15% (in lieu of the 30%), on the condition that the country to which the
NRFC is domiciled shall allow a credit against the tax due from the NRFC,
which Ilexes are deemed to have been paid in the Philippines (NIRC, Sec.
28(8)0(b); Commissioner of Internal Revenue v. Procter & Gamble PHL
Manufacturing Corp., G.R. No. 66838, December 2, 1991);
3. Tax Eiemptions — an immunitypr privilege; it is freedom from a charge or
burCe(r: to which others are sift5ted (Philippine Long Distance Telephone Co.
v. City of Bacolod, G.R. of''`'` "2 July 15, 2005);
4. TeX Deductions — the a4dun -x is written off or treated as deduction from
an , individual's or entity's gto ome on which resulting amount the tax
liabil6 is calculated; an 4 '61 M.
5. TeX Tteaties — agrge enze soeo tR s pecifying what items of
income will be taxlioi by th a orities of the cou try where the income is
earned. fev-
l Ak‘
Escape from Taxati on;
Q: What are thle,feffs of esca
' pe from taxation?
ANS: They aols
4li-
1. Stiiftjtirottaxvbxrden;
2. Tax Avoidance,
3. Tax Evasion,
4. Capit'alizaWfr
5. Transformation; an
6. EZemption.
i!1
Shifting of TthiEurde
Q: What is the`;concept ing the tax burden?
ANS: It is the,t,tansfer of tax burden to another, the imposition of tax is transferred from
the statutory taxpayer to another without violating the law. For instance, taxes paid by
the manufaCturer may be shifted to the consumer by adding the amount of the tax paid
to the price:of the product sold (VALENCIA & ROXAS, Income Taxation, supra at 34).
Q: What are the ways of shifting the tax burden?

ANS: The burden or incidence of taxation may be shifted through:
1. Forward Shifting — when the burden of tax is transferred from the
manufacturer, then to the distributor and finally to the ultimate consumer of the
ptoduct; best example of which Is VAT;
2. Backward Shifting — when the burden is transferred from the ultimate
consumer through the factors of distribution to the factors of production; or
3. Onward Shifting — when tax burden is shifted two or more times either
forward or backward (Id. at 34-35).
Q: To what kind of taxes does shifting apply?

ANS As a rule,' only indirect taxes may be shifted; direct taxes cannot be shifted (Id.).
761
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Bar F ;; 2019
Q: Distinguish impact of taxation from incidence of taxation.

ANS: Impact of taxation is the point on which tax is originally imposed or the one on
whom the tax is formally assessed. On the other hand, incidence of taxation is the point
on which the tax burden finally rests or settles down (DE LEON, Fundamentals, supra at
52).
Q: What is,;the relation among Impact, Shifting and Incidence of Taxation?

ANS: The impact is the initial phenomenon, the shifting is the intermediate process and
the inciden'Ce is the result (ABAN, Law of Basic Taxation, supra at 16).
:
Q: Why, is it important to know where the impact of taxation lies?
ANS: The impact of taxation generally determines the proper party to claim a refund of
erroneousimposed indirect taxes and whether the indirect taxes can be passed on to
an exempt buyer (INGLES, Reviewer, supra at 6).
jlf
Tax Aithivance
.. _ 4,,,,a/kftarAlskl".4...,,„,,
N, ',I
Q: What is tax avoidance?
J i ei k1 r
ANS: Also loaned tax Tilnimkzaic,"450, it 'islh . eplditations'-kby the taxpayer of legally
permissible :alternativePfaXratys,,,qpmelliMrass4
' sitig taxable property or income, in
order to,avoid or rediccOaxliabilityisa„estate_elanningl..104bletx saving device within
the means jancticeest*/(a4pnd'houldfile useirby.theslakpisfrin good faith and at
arm's length (Co ' kg9rrer of InterWal fte‘vefge v. Estate1 /46VBenigno Toda, Jr., G.R.
11 dal. e11_,
No. 147188, Se temba ' 4, 2b04). ^ - '.
Tax - at I
' 'l
kJ t:
1 'co\
•-i
Q: What is"ta evasion? Ani-Lin-r-,, ;)
,
ANS: SOrneti es-reNred,--tbIs tax do'001,1f is anjilgalmers o escaping taxation.
It connotes ra dAropgh ttle>se of ten eiAndlorhridden dpvicetp lessen or defeat
taxes (Yuqo hs Ha war "our ef ikApiffel?.R. LV203, January 28,
4961). It Ubjec ‘the\tkXpayektg ( 114:pr0 done') civil or criminal liabilities
(Commissioner o • ntemaltRet4 ue= ssE-st te,D3„eriT no T a Jr., ,epra).
Q: What are the ele ents ottax6r vcn? rf‘

r N
ANS: Tax evasion connoArterationgtf.thre 1) ac (ESC)
1. bids to be acrileeif391, paymerleAkthAn that what is known by the
taxpayer to be legafiSt 'Qv / nent ()Pt& when it is shown that the tax
is due;
2. An accompanying State of mind which is described as being evil, in bad faith,
willful, or deliberate and not coincidental; and
3. AI Course of action which is unlawful (Commissioner of Internal Revenue v.
Estate of Benign Toda Jr., supra).
Q: Explain the Willful blindness doctrine.

ANS: The taxpayer's deliberate refusal or avoidance to verify the contents of his or her
ITR and other documents constitutes "willful blindness” on his or her part. It is by reason
of this doctrine that taxpayers cannot simply invoke reliance on mere representations of
their accountants or authorized representatives in order to avoid liability for failure to pay
the correct itaxes. It is a rule that ignorance of the law excuses no one from compliance
therewith. In order to be liable, .it is enough that the taxpayer knows his or her obligation
to file the required return and he has failed to comply thereto in the manner required by
law (Peopld'of the PHL v. Kintanar, CTA EB Crim. No. 006, December 3, 2010).
762
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•
Capitalization
Q: Define Tax Capitalization.
ANS: This refers to the reduction in the price of taxed object equal to the capitalized
value of the future taxes which the purchaser expects to be call ed upon to pay. It is
made when the 'price of the property is lowered to accommodate the exclusion of tax
which is expdct61 to be paid by the seller as a result of sale transaction (VALENCIA &
ROXAS, IncoMelTaxation, supra at 35).
Transformation;
Q: When is there Tax Transformation.
ANS: There is 0fax transformation when the producer absorbs the payment of tax to
reduce prices and to maintain market share. The producer recovers his additional tax
expense by itnprIpving the process of production. The tax, therefore, is transformed into
a gain through the medium of production (Id.).
Exemption fromiTaxation
,i.4)
Q: What are thelkinds of tax exelitiofiel,
ANS: Tax exemppons may be ,04; `61
1. As to Basis
a. Constitutional Exerrpitt 'mulles fro taxation which originate
from the CoVetiori•
bi Statut9„Ly,emptions • ose which eman, s from Legislation.
2. As to Fprm fv
a. Expresg1-1When e3emphons are expresslyig an ed by the Constitution,
[PAA
StatgeS, treaties', ordinances, franchises or c ontracts;
Whenever pa6cular perso s, pperlies or excises are
Ileerneda empt as eley 11 outside el scope of he taxing provision
Aelt,(DEltiEON,if_unda talc, sups 2
. • ..[ContradtriaP— Exe— tractual agreement
orza4wzr • •
. r4thc.,.gpt.mmen
EN-4tpTeonfctual fax e ptions must not be confused with the tax
lexerhplionsianted and fi a cb'ses which are not contracts within the
Purvietafee non-impa* Lthe Constitution. A franchise is
is spea01 privilege confeTreArg Pinfdntal authority. Contractual
ax exr ' vering matters that are not essentially governmental
in natureq,u,c, as those contained in government bonds or debentures,
.. may not - • revoked without impairing the obligations of contracts,
• I Unlike in franchises (VITUG & ACOSTA, Tax Law, supra at 35).
3. As to Extent
a. = [Total Exemption — Connotes absolute immunity;
b. Partial Exemption — One where collection of a part of the tax is
dispensed with (ABAN, Law of Basic Taxation, supra at 17).
Q: May tax exemptions be revoked?

ANS: Yes. A grant of exemption is an act of liberality which could be taken back by the
govemment. Since taxation is the rule and exemption is the exception, the exemption
may thus be withdrawn at the pleasure of the taxing authority (Mactan Cebu Intl Airport
Authority v. MarCos, supra).
Equitable Recoupment
Q: Discuss the Doctrine of Equitable Recoupment
ANS: This doctrine states that a tax claim for refund, which is prevented by prescription,
may be allowed to be used as payment for unsettled tax liabilities if both taxes arise
763
[[[
AN
• RED
It
from the same transaction in which overpayment is made and underpayment is due
(VALENCIA & ROXAS, Income Taxation, supra at 38).
Note: This doctrine is not applicable in this jurisdiction. This is a common law principle
and is, not' binding on our courts and there is nothing in our laws, authorizing its
acceptance and application because if it will be allowed, both the collecting agency and
the taxpayer might be tempted to delay and neglect the pursuit of their respective claims
within the period prescribed by law (Collector of Internal Revenue v. University of Santo
Tomas, G•R. No. L-11274, November 28, 1958).
Prohibition on Compensation and Set-off

Q: When does compensation or set-off take place?
ANS: CoMpensation or set-off takes place when two persons, in their own right, are
creditors and debtors of each other (CIVIL CODE, Art. 1278).
Q: Are taxes subject to compensation and set-off?

ANS: As a general rule, no set-aisadriiiSS1b1Tagairist the demands for taxes levied for
general oil local governmentaltwposeisinirceiMax iabili,ty is a legal, not a contractual
obligation.! Taxes are 91116:tlif natyre cif,contrakes betvireN the parties but grow out of
duty toi and are positive eetts pf)peTbrerrirrielit.totheirndki ,and enforcing of which,
the persohal conseplotthelfidividual taxpayeris notls 1Republic of the PHL v.
Mambeilao G.R. NU-11125, February 24',1962P---,,,
Note: HoWever, dffeettihl s allowed:7 ,) A •7 '
1. When the Zetermi ation df tifpaki4ayer's liabitt. )srip‘ertwined with the
i,esoltition,offhe
. g • .,,-. cla tn_foLtax.teNtid_of_erroriaously" Killegkly collected taxes
Uncle Section
-.I 229 f thq4;1:11E2c YqqaitriVionAr
,, of In plaWevenue v. Toledo
Pow
r r Com any, G. . No,:k914,'-Dp.Igembe 02, 20 35 ; or
2. Whet.gbplh claipi f thei'g`tgermenr andl e....taxpa er jainst each other
have alie'a bepp e-due,a3'e- .indable,a, d"fully liqui.dated Aft.,wi
(Domingo v.
GarlitV(.4 kNoNt4 fli4e , 291 Ir , :19r-
.• ,,. • .1
1
j \i
; 11, ,. , ii
Q: Can ditaxplyer rAuse ci..1 ,pdlishi4x ks.e01-,,pn)imprding Id suit against the
government when tax Oexpect/Ot., &keggIcr td? ,
ANS: No.l'A person annot if AlLa .,_ e,6asis that thergovernment owes him
'a
•an amount: equal to-onoreat6',Az arbeingAdIrecter ilVcollection of tax cannot
await the,1 results of '5\6w again logrkutf(Philex Mining Corp. v.
Commissioner of Internal Rev tie( G.R. o 1 *A' ugust 28, 1998).
1.
Compromi
se and Tax Amnesty
Compiymise
Q: Whdt is meant by compromise?
ANS: A 1;Compromise is a contract whereby the parties, by making reciprocal
concessions, avoid litigation or put an end to one already commenced (CIVIL CODE,
Art. 2028)!ii
1
Q: Distinguish Compromise from Abatement.
ANS: Con'ipromise involves a reduction of the taxpayer's liability, while Abatement of tax
means, that the entire tax liability of the taxpayer is cancelled (ABAN, Law of Basic
TaxatiOn, supra at 235).
I!
Q: When's compromise allowed in taxation? ..
ANS: Conqpromises are allowed and enforceable when the subject matter thereof is not
prohibited` from being compromised and the person entering into it is duly authorized to
do so (VITUG & ACOSTA, Tax Law, supra at 48).
1
764
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2019
Q: Who are the persons allowed to enter into compromise?

ANS: The f011owing persons are allowed to enter into compromise in behalf of the
government:', 1,
1. Commissioner of Internal Revenue - may enter, under certain conditions, into
a compromise for both the civil and criminal liabilities of the taxpayer (NIRC,
Sea. 204);
2. Collector of Customs - with respect to customs duties limited to cases where
legitimate authority is specifically granted, such as in the remission of duties
(TARIFF k CODE, Sec. 709);
3. Customs Commissioner - subject to the approval of the Secretary of Finance,
in cases involving the imposition of fines, surcharges and forfeitures (TARIFF
CODE, Sec. 2316); and
4. Local Government Code •:-. no provision regarding compromise; however, civil
(not criminal).liability is ridt prohibited from being compromised (CIVIL CODE,
Arts. 2034 and 2035).
1 1.
Please refer to NIRC Remedies for furthAiscussion.
I;
'
TaxAmnestyIi
Q: What is taxipmnesty? ' ,„„,„
tlj'r.isApo, trIV.,... . .6r* .
ANS: Tax amnesty is a general !pollrgozitmal owdooking by the State of its
authority to ,impose penalti,e.t.tin pèrto 1 otherw6f aiiiiKlf violating a tax law. It
partakes an abSiplute waiver' the goyprrent of its right to Ilect what is due it and to
give tax evaders whfikwih to relttgfll chance to stet) a clean slate (Asia
IntemationalAdationeelggic., v;;Cothmitpner of Intemal'Rev ue, G.R. No. 179115,
September 26,12012)1 sThgrAVelit of tax apinesty, similar to i to exemption, must be
construed strictly against gibvtaxpaxer aid liberally i/favor of the taxing authority
pommissi0664,4r% Inte Revenue Ir. ftilippine Aluminurd Wh pls, Inc., G.R. No.
0 1,-,,E,
216161, Auggsgb, 2017tAlt. ie4,-
- < ;V.
Note: To avalitbf a ta?stpmp'Osty„aia to be: immune frorr4glit tg delinquencies, the
taxpayer must ii1y,511igliiitly discldsedt is previous untaxe income and must have
paid the corresix4ndtax on, suctepreviisly untaxed income (Belies, Jr. v. Court of
Appeals, G.R. No. *102967, gebruary 10,t22000)Sl•on compliance with the procedure
set forth under;, DepartI ent of FipawseDifia- 1eg,..„.. .0Eder
r No. 29-07, the taxpayer is
immediately entitled 61 .the e9,164ment "EifiR immunities and privileges of the tax
amnesty program (Co',. issid,b1; of Internal Revenue v. Covanta Energy Philippine
Holdings Inc., G.R. No. 20YWOJanuary
,
i4ale
24, 2018).
Q: What are thp purposes of tax amnesty?

ANS: The purposes of tax amnesty are as follows:
1. Tolgive tax evaders who wish to'relent a chance to start a clean state; and
2. To, give the government a chance to collect uncollected tax from tax evaders
without having to go through the tedious process of a tax case (Barbs, Jr. v.
Colurtof Appeals, supra).
I
Q: When shall i the immunities and privileges of a tax amnesty program cease?
t1
ANS: When: (a)the taxpayer fails to file a SALN and the Tax Amnesty Return; or (b) the
net worth of the taxpayer in the SALN as of December 31, 2005 is proven to be
understated : to 'the extent of 30% or more, the taxpayer shall cease to enjoy these
immunities ;and privileges (Commissioner of Internal Revenue v. Apo Cement
Corporation, G.R. No. 193381, February 8, 2017):
ir
765
. . t.• • .
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Qnn VOL 1.
2 019
Q: Distinguish tax amnesty from tax exemption.

ANS: Tax amnesty is immunity from all criminal, civil and administrative liabilities arising
from non-payment of taxes, and it applies only to past tax periods, hence, of retroactive
application. On the other hand, tax exemption is immunity from civil liability only, and
has prosPective application (DIMAAMPAO, Tax Principles and Remedies, supra at 122).
Other Relevant Doctrines, Theories and Principles in Taxation
Q: What are the theories of taxation?

ANS: The theories of taxation are the following:
1 Lifeblood Theory (Commissioner of Internal Revenue v. Algue G.R. No. L-
28896 February 17, 1988);
2.; Necessity Theory (Phil. Guaranty Co. v. CIR G.R. No. L-22074 April 30, 1965);
3. Benefits-Protection Theory (Doctrine of Symbiotic Relationship)
(Commissioner of Internal Revenue v. Algue, supra).
Lifeblood Theory ‘,,o,"' •-•?- * - ,

Q: What is the Lifeblood i fti,
;of Takabov ,d .1 ,,,,
ANS: ;Taxes are the lifebria. of t ei.nationmthr&Ligh wiich‘e government agencies
continue io operateAd.witI3- hieh the State effects,itYfu Ctiorts for the welfare of its
constituents (Compssegloro / temffReFfitre-v:, OD of pp 'fs, G.R. No. 106611,
July 21, 1994). i go i4x .•;„:
Note: Taices are the loo01 of th ' go*nment an so sp uld b7 collected without
unnecessary h ndran On! the otheepapd, such oiled' fns quid be made in
accordanCe wi iVvIr s any tarbitracives4Wll negate the ve pra_si for government
itself (Coihmistidieri fInternil ReVinil,e,tili;11,410-ii0c.,ilsupra). eing,t ' e lifeblood of the
rn
Govement, ei rompt anci certakaypiiafillity is an impe ibasneed (Collector of
is
Internal R6ven :-G od ,),, tematian1I-R:u:.wo •bz„e.„r Co!, 42265, December 22, 1967).
ll' %... A':-.)
/
Necessr The .,-;.>.
I 11 ',.....:v
Q: Whatlis the cessi The bop
ANS: TaZation is he poihr e a ra, neces
,. •m- it is a ecessary burden to
sity .. ..,
preserve'f:he State' overei))ty ark- clumpy an •armyrt'd'resist an
aggression, a navy to efeq its›Ores rom was oltrika ,,r•p,ibf civil servants to serve,
public im6rovement desi nettr tiè enjoy ent13,119,‘cifizenry and those which come
within the State's territory, antik acilities afici Etitget16 46 a government is supposed
to provide,(Philippine Guaranty Co., nc.v.,C.ommissioner of Internal Revenue, G.R. No.
L-22074; 'April 30, 1965). Therefore, it has a right.to compel all citizens and property
within its i.,limits to contribute. Taxes proceed upon the theory that the existence of
government is a necessity; that it cannot continue without the means to pay its
expensesk'and that for those means, it has the right to compel all citizens and property
within its limits to contribute (51 Am. Jur. 42).
Benefits Protection Theory

1 g.
Q: What is the Benefits-Protection Theory (Doctrine of Symbiotic Relationship) of
TaxatiOn?:
ANS: The!foundation of the obligation to pay taxes rests not upon the privileges enjoyed
by, or thekrprotection afforded to, a citizen by the government, but upon the necessity of
money foOhe support of the state. For this reason, no one is allowed to object to or
resist the payment of taxes solely because no personal benefit to him can be, pointed
out (Larer0 v. Posadas, 64 Phil. 353, G.R. No. 43082, June 18, 1937). In exchange for
the protection that the State gives to its citizens, taxes must be correspondingly paid to it
(Commissioner of Internal Revenue v. Algue, Inc., supra).
i
766
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,-;;-;:!.-!;;T-t.;• •
ir
Jurisdiction oversubjects and objects
•'
Q: Discuss the State's jurisdiction over the subjects and objects of taxation.
ANS: The poweQto tax can only be exercised within the territorial jurisdiction of a taxing
authority. The State may not tax property lying outside its borders or lay an excise or
privilege tax upon the exercise or enjoyment of a right or privilege derived from the laws
of another state and therein exercised or enjoyed (51 Am. Jur. 88).
I .11
Basic principles of a sound tax system
Q: Discuss the basic principles of a sound tax system.
ANS: The folloving principles have been suggested in order to make a sound tax
system, but not riecessarily to make the tax law valid: (FAT)
1. Fiscal 'Adequacy — sources of government revenue must be sufficient to meet
government expenditures and other public needs (Chavez v. Ongpin, G.R. No.
76778, June 6, 1990);
2. Adminiptrative Feasibility — twilaws must be capable of being effectively
enforced with the least inogftlience to the taxpayer (ABAN, Law of Basic
TaxatiOn, supra at 13); ands
3. Theoretical Justice — azsotircVtabsystem
, must be based on the taxpayers'
ability to pay. This suggesli svega axation must be progressive conformably
with,' the constitutional jnat(tdAtp 7C,pagress all evolve a progressive
system, of taxation (CCIVSTtrait /, eck$20pia lity to Pay Theory).
Note: A law Will' retain itellity even ifqt is not in conson ce with the principles of
ia
fiscal adequacyandft mipistrativegsjibility because t tConstitution does not
expressly require so. TbeseprincipleedreRmly designed to nake our tax system sound.
However, if a tax la gris, ,,Ontrgry to th In-maple of the4, reira kustice, such violation
will render the is ncongtifati9nal consi 'rig that under the Cogstitution, the rule of
taxation shou e unitoWand equitSbJe MAAMPAO Tax rindiples and Remedies,
(2015), sup 13b)„„eptES ,N111
Stages or aspects oftaxott n
N%
Q: What are the stages or aspects of T
ANS: The stages or isOcts,,,irtaxation area.. s• (LACPR)
1. LeVy or Impositier(Tax LegislAdn osition by the legislature of
tax:on persoidropeWLor excises. It includes the:
e. . !DiscretiVos Ely Orposes for which taxes shall be levied;
b. !!DiscreticinXsasubjects of taxation; .
O. !Discretion as to amount or rate of tax; and
d. !Discretion as to the manner, means and agencies of collection of taxes
r(DIMAAMPAO, Tax Principles and Remedies, supra at 16-19);
2. Assespment and Collection (Tax AdMinistration)— the act of administration and
imPlerrientation of the tax law by the executive through its administrative
agendes. The term "assessment" here means notice and demand for payment
of tax liability (VITUG & ACOSTA, Tax Law, supra at 26);
3. PaYment — the act of compliance by the taxpayer, including such options,
schemes or remedies as may be legally available to him (Id.); and
4. Refund — the recovery of any tax alleged to have been erroneously or illegally
assessed or collected, or of any penalty claimed to have been collected
without authority, or of any sum alleged to have been excessively, or in any
manner wrongfully collected.
1 !,
767
• ' •
Taxpayer's Suit
Q: What is the nature and concept of taxpayer's suit?
ANS: A taxpayer's suit may only be allowed when an act complained of, which may
include legislative enactment, directly involves the illegal disbursement of public funds
derived frOm taxation (ARAN, Law of Basic Taxation, supra at 28; Pascual v. Secretary
of Public Works, G.R. No. L-10405, December 29, 1960).
Q: What iS Locus Standi?

ANS: it is the ability of a party to demonstrate to the court sufficient connection to and
harm from the law or action challenged to support that party's participation in the case
(White Light v. City of Manila, G.R. No. 122846, January 20, 2009).
Q: What are the requisites for taxpayers, to have locus standi to sue?
ANS: To have a locus standi, the two requisites must be met, namely:
I
1. Public funds derived from taxation are disbursed by a political subdivision or
instrumentality and irkdoirfrRirrslaw*is violated, or some irregularity is
Committed; and •'''" T
i i r
2.1 The petitioner js:directl, "affectedly:the; alleged ‘4,,(Land Bank of the PHL v.
•Cacayuran, R.V1 ,166rAprin177204).V
4-
Q: Whiltare the irlstar'Sles"Tutielg*";Ciirr;ii*Yeen b ou by parties who have
not be'eniPersoicallyVjuced? i
”0..
ANS: Locus Sandi beidg mdrely a matter,:o procedu e, ha eebie waived in certain
instanCes!,1wher#a•Re who .not-persV-injured-mpy
ei4 be fovtiatl o bring suit:
1.1 .Taxpayers its to uestign,csIntiia9ts pEpreof into b the'ffa 'anal 'government
or gaiem nt-owned orsVOblfeeccii;porations alle erd contravention of
, = I
law;
2., A taxpayer,
ayer,
r, s a1. to -to-susfidre-therefis-- clatrojtat public funds are
disbsr.sediat
; deflecte. to any improper
Ppurpo e, or that theresi,htwasta elf,740.15.q*nds tArough he enforcement of
1 an invalid or Ak7onstittkiihal . raw,,O ray v. dane, G.R. No. 167919,
Februarys
3. • Coctrine o‘firanscell enta grra'AtOcer'
Q: Taxpayer's Suit diaslingths edifrom itizeVsltip./

ANS: Taxpayer's suit is one -ere one /14. 1 ,9A e where there is an assertion
that pablic funds are illegally dis Fsed.or.de sted o an illegal purpose, or that there is
a wastage of public funds through the 'enforcement of an invalid or unconstitutional law.
Citizen's suit, on the other hand, is when a person complaining must allege that he has
been or is about to be denied some right.or privilege to which he is lawfully entitled or
that he is labout to be subjected to some burdens or penalties by reason of statue or act
complained of (Province of North Cotabato v. Government of the PHL, G.R. No. 183591,
October 14, 2008).
Doctrine of Transcendentailmportance
Q: What is the Doctrine of Transcendental Importance?
ANS: It is a principle that the Court, in the exercise of its sound discretion, brushes
aside the 'procedural barrier and takes cognizance of a petition (Bayan v. Zamora, G.R.
No. 138570, October 10, 2000). It dispenses with the requirement that petitioner has
experienced or is in actual danger of suffering direct and personal injury (Southern
Hemisphere Engagement Network, Inc. v. Anti-Terrorism Council, G.R. No. 178552,
October 5, 2010).
768
2019
II. NATIONAL TAXATION

(National Internal
r Revenue Code of 1997, as amended
by RA 10963 or the Tax Reform for Acceleration and
J1
Inclusion Law)
11
A. TAXINGALIT ORITY
L JURISDICTION, POWER, AND FUNCTIONS OF THE COMMISSIONER OF
INTERNAL REVENUE
1 i,
Q: What are the general powers and duties of the Bureau of Internal Revenue
(BIR)? I HI
ANS: The powers and duties of the BIR in general are the following: (A-3E)
1. Assess and collect national internal revenue taxes, fees and charges;
2. Enforce all forfeitures, penaltiewnd fines connected with the assessment and
collection of taxes, fees, andAftges;
3. Execute judgment in all ceiOxleoided in its favor by the CTA and the ordinary
courts and (.4V,It
o:4- Wir
4. Effect and administer the, st,,.,:,egry and police powers conferred upon it by
I
the N RC and other lawsi(N/04r r
Q: What are the powerWitite Com oner of Internal avenue?

ANS: The CIR's poweEtlare to: (IDOWA -DAIS)
1. Inierpret tax Itys4 1V/RC, SO f4 il));
2. Decide tax ci..esf(NIEG, Sec. 4 0);
3. ObtaiUrfermatidp-zgi to summon, examine and take testimony of persons
(N113,15s amended by TRAlly Sec. 5);
‘ti
4. Matipannts ,and pr-scribe ddi eguyvents for tax
administration arillenfofceRent- otwithstan aWrequiring the prior
mithOriz.
1 74,tiorebfrirgoveitmen gency or inst e al (NIRC, as amended
by MAIM V Sec, 6 (AR?
Please se . discuss on on ass sstne nder E (Tax Remedies under the
NIRC) below. ,o,. -,;., .
5. Presaribe reartopertyadeerIVA , ,.cii-45VP.
6. Make arrests f,-9-A d seizures (NIRC, Sec. 15);
7. Delegate pow rtrIAC, Sec. 7);
8. Assign and reasgigtrinternal revenue officers involved in excise tax functions
to establishments where articles subject to excise tax are produced or kept
(NIRC, Sec. 16);
9. IMpOse duties on certain officers (NIRC, Secs. 95 & 97); and
10. Suspend business operations of taxpayers (NIRC, Sec. 115).
Please see discussion on suspension under E (Tax Remedies under the

NIRC).
Q: Are the pOwers of the Commissioner of Internal Revenue delegable?

ANS: As a general rule, the CIR may delegate the powers vested in him to any
subordinate official with the rank equivalent to a division chief or higher (NIRC, Sec. 7).
HOWEVER, the following powers cannot be delegated (RICA):
1. Power to Recommend the promulgation of rules and regulations by the
Secretary of Finance;
2. Power to Issue rulings of first impressions or to reverse, revoke, or modify any
existing ruling of the Bureau;
769
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"VOL 1.
2019
3.! Power to Compromise or abate any tax liability except matters which may be
compromised by the Regional Evaluation Board and National Evaluation
Board; and
4. Power to Assign or reassign internal revenue officers to establishments where
articles subject to excise tax are produced or kept (NIRC, Sec. 7).
1!
Interpreting tax laws and deciding tax cases
' 11
Q: DisCuss the Commissioner's power to interpret tax laws.
ANS: The power to interpret the provisions of the Code and other tax laws shall be
under thelexclusive and original jurisdiction of the Commissioner, subject to review by
the Secretary of Finance (NIRC, Sec. 4).
Q: What ire BIR rulings? What is required to make a BIR ruling or first impression
a valid on'e?
ANS: BIR" rulings are administrative opinions issued by the Commissioner of Internal
Revenue interpretative of a provisiorrifirrTqx-lak They are the best guess of the
moment and incidentally ojerr F,?ntainTsulh yvpljtconsigered and sound law, but the
courts haVe held that the0o.,nottevent.an &tile Aaligtpf front at any time and are
merelyladVisory — soXprap jfosmation seriCe.kOhttaxpl‘yer (ABAN, Law of Basic
Taxation, Supra at 1,9): ,',.,.,
...--------"'•-..,.,tNs >
k1
A BIR ruli9g of fi ti siod (rulin'oliNhy h'afno preced' titlet),,tp be valid must not
be against,I the I w and must be isstedr y by the Cillmmi
i figner,p1 Internal Revenue
(Philippine. Ban ,of.Co municationsit—CI .R...tio 1 202 , :Ianda 28, 1999; NIRC,
Sec. 7)i , 1 ,„,,,......_,
. . >: q
,....„.„7, . .
., , 4.,
,......4
I' 1 ' rItl
Q: Discuss the.p4r
B -7-4_, 5of th9,ComMis .tiAerito
._..,. deciTtax calses.
ANS: The Co missio er ko. powerldgecide:-(D .0
1., Disp e s ss t gyp`
2. , Refunds of in ma
R 11.0; ,c ,(', charges;
i`
up tajy
3. ' Penalth impo d in laIj Nherpto•
4. ; Other matters ar ing /Uri eL21§_go
11 e or plher law or portions thereof
administered by "- Eliqk Ike RevenuE is vested in the
Commissio1/2 /el
'N'if
Note: These are subjec lo2reexc usive '13 ]14.)3urViction of the Court of Tax
Appeals (NIRC, Sec. 4). *.„„li
Q: Whit is the power of the Commissioner to obtain information, and to summon,
examine and take testimony of persons?
ANS: In ascertaining the correctness of any return, or in making a return when none has
been made, or in determining the liability of any person for any internal revenue tax, or
in collecting any such liability, or in evaluating tax compliance, the Commissioner is
authorized: (EOSTC)
1. To i Examine any book, paper, record, or other data which may be relevant or
material to such inquiry;
2. To Obtain on a regular basis from any person other than the person whose
internal revenue tax liability is subiect to audit or investigation, or from any
office or officer of the national and local governments, government agencies
and instrumentalities, including the BSP and GOCCs, any information;
3. To Summon the person liable for tax or required to file a return, or any officer
or employee of such person, or any person having possession, custody, or
care of the books of accounts and other accounting records, or any other
person, to appear before the Commissioner or his duly authorized
representative and to produce such books, papers, records, or other data, and
to give testimony;
770
4. To i Take such testimony of the person concerned, under oath, as may be
relevaint or material to such inquiry; and
5. To Cuse revenue officers and employees to make a canvass from time to
time of any revenue district or region and inquire after and concerning all
persons therein who may be liable to pay any internal revenue tax, and all
persons owning or, having the care, management or possession of any object
with respect to which a tax is imposed.
Note: Nothing listed above shall be construed as granting the Commissioner the
authority to incitiire into bank deposits other than as provided for in Section 6(F) of the
Tax Code (NIRC, as amended by TRAIN Law, Sec. 5).
Q: How is the power of the Commissioner to obtain information, and to summon,

examine and take testimony of persons strengthened by the TRAIN Law?
ANS: TRAIN Law amended Sec. 5 of NIRC by providing that the Cooperative
Development Authority shall submit to the Bureau a tax incentive report, which shall
include information on the income tax, vgl -added tax, and other tax incentives availed
of by cooperatives registered an 4.46j mg incentives under R.A. No. 6938, as
amended: Prodded, That the inf 40 submitted by the Cooperative Development
Authority to the Bureau shall be Ail Aiitte o the Department of Finance and shall be
included in the (database createdUnkil No. 10708, otherwise known as The Tax
Incentives Management and Trangpreh OTIMTA) (NI 0, as amended by TRAIN
Law, Sec. 5 (B)). dr
." 4- . ..0
,47
, •2&•1>
.,›
II
Q: May the bank depoits — peso and n individual taxpayer
' eign currency
be disclosed j by a Ito fnerciar ban to the CIR i connection with a tax
investigation being Atted13y reVe e officials, IN' ho,. t violating the relevant
bank secrecy a,wg?'ExpIrtypur answeri.
ANS: No. Apiegeneg rule, bankNe fits of an i divid al to payer may not be
:rnoscitDpankAo the C missioner sex eptio -Section 6 of the
disclosed by Ptito
NIRC provides,that the Cbritlissie is a orized to irnitPt e ank deposits of:
1. a decedut to"'ditekine'his rosy. state;
2. any taxpekefahotas Medi an application for compromise of his tax liability by
reason of lifiaRcial ibtapacity to Ji *s,tax liability (NIRC, Sec. 6 (f)); and
Note His appliptia shall not fe. '7.oosTizire: s.. unless and until he waives in
writing his privilege unddt 10' Ba ' ecrecy Law) or under other
general or srgial la and such waiver shall constitute the authority of the
Commissioner 'o Ire into the bank deposits of the taxpayer (NIRC, Sec. 6
(I)).
3. A specific taxpayer or taxpayers subject of a request for the supply of tax
information from a foreign tax authority pursuant to an international convention
or, agreement on tax matters to which the Philippines is a signatory or a party
of: provided, that the information obtained from the banks and other financial
institutions may be used by the Bureau of Internal Revenue for tax
assessment, verification, audit and enforcement purposes (R.A. No. 10021,
Sec. 0.
,
Q: How is the authority of the Commissioner to Prescribe Real Property Values
exercised? il
ANS: In exercising this authority, the following shall be observed: (M-P3-A)
1. Mandatory consultation with both private and public competent appraisers
before division of the Philippines into zones.
2. Prior notice to affected taxpayers before the determination of fair market
values of the real properties.
3. Publication or posting of adjustments in zonal value in a newspaper of general
circulation in the province, city or municipality concerned.
771
BEDAN RED BOO VOL 1.
2019
The basis of valuation and records of consultation shall be Public records open
to the inquiry of any taxpayer.
5. Zonal valuations shall be automatically Adjusted once every three years
(NIRC, as amended by TRAIN Law, Sec. 6 (E)).
Q: Canilthe CIR delegate to the Chief of the Accounts Receivable and Billing
Division the issuance of a demand letter for tax deficiency assessment which
contains denial of the taxpayer's request for reconsideration?
ANS: Yes. The act of issuance of the demand letter by the Chief of the Accounts
Receivable and Billing Division does not fall under any of the exceptions that have been
mentioned as non-delegable above. Furthermore, Sec. 6 of the Tax Code provides that
the authority to make tax assessments may be delegated to subordinate officers
(Oceanid Wireless Network v. Commissioner of Internal Revenue, G.R. No. 148380;
Decembbr 9, 2005).
Non-retroactivity of rulings . ,,,,,,

.12.sro.. „,..,
1 -1 '.........
Pleaie see discussion underifF (Generll Pr

rindiplas ,PrOsRectivity of tax laws).
i —N, l'N- ..,,,''''' ,:,,,,
a RULE-MAKING AUfHCRITY-OPtHESECirETAI?Y OFFINANCE
Q: What's the rule-m iri pig horiViAhrSibreta„ 4iiiab.e?
ANS: The Secretary”rnan iff e, upqa theYecqmmen atiortd etommissioner, shall
promylgte all eedial rule and tegulationNor. th effh we el bforcement of the
proviSions of th Code NIRC Sec. 244 --' /'‘,
II..... ..
; i , — ,,,,,,.:2
Q: What are t ecific provisions ,to .,.,e•containe nd Regulations
‘ 1,;_ _ ..___I-„ja
of BIR? ..v:Iti ip.a.a
ANS: The foil byR% " ntainedln- in -e Rules eg latio of the BIR: (TF-
EOSA-CERP) % ri- cp r td-=
1. 'The _ ankman'Q.kl(1 Kebte,r, al!) al di ectors hall canvass their
respec 'ye revenue sforichviarp; e o discovering persons and
!grope
their lis liable t natioagl.V Aue ta)se , and e manner in which
ts bakea e,,per§Ans)antiltaxable bjects shall be made
and kept;
.
2. 'The Forms orHebbIs 7a9 arlts,tol)e e don goods subject to an
'excise tax, and ffie an' in Alai tteplaelli ebranding or marking shall be
effected;
3. 1The conditions under which ancrigrmanner in which goods intended for
,Export, which if not exported would be subject to an excise tax, shall be
,tabelled, branded or marked;
4. ',The conditions to be observed by revenue Officers respecting the institutions
l and conduct of legal actions and proceedings;
5. IIThe conditions under which goods intended for Storage in bonded warehouses
."shall be conveyed thither, their manner of storage and the method of keeping
the entries and records in connection therewith, also the books to be kept by
l'revenue inspectors and the reports to be made by them in connection with
their supervision of such houses;
6. iThe conditions under which denatured Alcohol may be Removed and dealt in,
the character and quantity of the denaturing material to be used, the manner in
which the process of denaturing shall be effected, so as to render the alcohol
';suitably denatured and unfit for oral intake, the bonds to be given, the books
,and records to be kept, the entries to be made therein, the reports to be made
to the commissioner, and the signs to be displayed in the business ort by the
person for whom such denaturing is done or by whom, such alcohol is dealt in;
772
VOL 1.
2019
1
7. 'The manner in which revenue shall be Collected and paid, the instrument,
,d4ument or object to which revenue stamps shall be affixed, the mode of
cancellation of the same, the manner in which the proper books, records,
invoices and other papers shall be kept and entries therein made by the
pei-son subject to the tax, as well as the manner in which licenses and stamps
,shall be gathered up and returned after serving their purposes;
8. The conditions to be observed by revenue officers respecting the Enforcement
of Title III imposing a tax on estate of a decedent, and other transfers mortis
causa, as well as on gifts and such other rules and regulations which the
commissioner may consider suitable for the enforcement of the said title iii;
9. The manner in which tax Returns, information and reports shall be prepared
and reported and the tax collected and paid, as well as the conditions under
Which evidence of payment shall be furnished the taxpayer, and the
preparation and publication of tax statistics; and
10. The manner in which internal revenue taxes, such as income tax, including
Withholding tax, estate and dono 's taxes, value-added tax, other percentage
taxes, excise taxes and dc," tary stamp taxes shall be Paid through the
collection officers of the Al.VCV f internal revenue or through duly authorized
agent banks which are Ike_putized to receive payments of such taxes
and the returns, papersiEncLtare 'gents that may be filed by the taxpayers in
connection with the pa men of,ae.,. tax: Mcvided, however, That
notwithstanding the qtjibr 06.1iik s' f“ ISL,VaT5Icribing the place of filing
of returns anggRernent oCia es, the Commiss'b i er may, by rules and
regOlations, cpirq that the, etums, papers a tatements that may be
filed by the taApa ers in.conne on with the pay e , f the tax (NIRC, Sec.
245)•,- •- r•
1 , ..4 ifr,
11 ...,,,, .ftw
Q: Is BIR's act of issui g Rules and gulationz,_ 4.t.,
:_;
..,0:17,e, of judicial or
exe
quasi-judici401)q,916R .1, '.,..
ANS: No. BlikVact of issuing rule-Sle d oulations is- T e se of any judicial
or quasi judicial q.apadi 1- „ s in ft! 4exe e of BIR's q as gative or rule-making
powers (Clark InveRW-and' ocators Ass ration Inc. v. Secretary of Finance, G.R. No.
200670, July 6, 208). 4,
Note: Thus, petition fofte orari under 5, RtteA2n Civil Procedure is not the
proper remedy agains ct of issyng rti s4 orife-gMeins of the Secretary (Clark
Investors and Locators,' sociari Inc. v. Secretary of Finance, supra).
B. INCOMEiTAX
J. DEP/NIT/0/V. NATURE. AND GENERAL PRINCIPLES
Q: Define income tax.
ANS: It is a tax on all yearly profits arising from property, professions, trades or offices,
or as a tax on a person's income, emoluments, profits and the like (LG Electronics
Philippines, Inc v. Commissioner of Internal Revenue, G.R. No. 165451, December 3,
2014).
Q: What is the nature of income tax?

ANS: Income tax is a kind of tax levied upon the privilege of receiving income or profit. It
is an excise tax and not a tax on property (2 DIMAAMPAO, Taxation, supra at 3).
773
of
Q: Discuss the general principles of income taxation under NIRC.
ANS: Under the Section 23 of NIRC, the following are the general principles of income
taxation:;
WHO TAXABLE ON
Citizen of the Philippines, All income derived from sources within and without
residing the Philippines
Therein
Non-resident citizen Only on income derived from sources within the

Philippines
Individual citizen of the Only on income from sources within the Philippines,
Philippines who is provided, that a seaman who is a citizen of the
working and deriving Philippines and receives compensation abroad as a
income from abroad as an member 91 the complement of a vessel engaged
Overseas Contract okegoltis \ay in Ihterutional trade shall be treated as
Worker ten ov rsdas t.oritract worker
../ I v t
Alien individual, whether soOfily on incomekOnved ,froni sources within the
a resident or not of the ;.c,
Philippines
Domestic corporation Alliincotri% (laved fijom sbucce..within and without

_th_e
Foreign corporation, Only orp..inconie.''denved from sop ces within the
whether engaged or not in Philippi es
trade or business in the
Philippines
Q: What are theancom •taxyse stin the P thylvies?

ANS: Thefollowinkare thavco\gntiqd I X%fsten) :
1.1 Global Tax System c , h•t'KeIste(61011 btevi vgs indifferently the tax base and
generally tratsini cr9rorull-categolis textle yleOme of the individual. It
taxes all catotred
g rincortre-eXeep ce alpyg-sive incomes and capital
gains; 1 1 k
2. Schedular Tax Systenis, y,Ar,wh re the income tax treatment varies
and is made to depend on the kind or category of taxable income of the
taxpayer. It itemizes the different income and provides for varied percentages
Of taxes, to be applied thereto; and
3., Semi-schedular or Semi-global Tax System:
,! a. Global, in the sense that:
i. All compensation income, business or professional income,
capital gain and passive income not subject to final withholding
income tax, and other income not subject to final tax are added
together to arrive at the gross income;
ii. After deducting the total allowable deductions from business or
professional income, capital gain and passive income and other
income not subject to capital gains tax and final tax, in the case
of corporations, as well as personal and additional exemptions,
in the case of individual taxpayers; and
Hi. The taxable income (i.e., gross income less allowable
deductions and exemptions) is subjected to one set of
graduated tax. rates (if individual) or regular corporate income
tax rate (if corporation).
774
b. Schedular, in the sense that, passive investment income subject to final
tax and capital gains from the sale or transfer of shares of stocks of a
domestic corporation and sale or transfer of real properties remain
subject to different sets of tax rates covered by different tax returns
(MAMALATEO, Income Tax, supra at 3-7).
Criteria inimposing Philippine income tax
I
Q: What are the criteria in imposing Philippine income tax?
ANS: The thre principles being used as criteria are the following:
1. Citizenship Principle — where a citizen taxpayer is subject to income tax on
his worldwide income (from sources within and without the Philippines) if he
resides in the Philippines, or only on his income from sources within the
Philippines if he qualifies as a non-resident citizen;
2. Resfdence Principle — where an alien is subject to Philippine income tax
beceuse of his residence in the Philippines but only on his income from
sources within the Philippines; 40
3. Sburce Principle — where eii'dlien is subject to Philippine income tax because
he
• derivesincome from sources within the Philippines (MAMALATEO, Income
Taxi supra at 89-90).
Types of hilippine income taxes
I "li
Q: Enumerate the types of ome
•
ANS: The types of Philippifie income tax e the following:
1. Graduated InOme:Tax on „pals (Sec. 24 (A)( NI/3C);
2. Regular/NormalCorporate Incoe Tax on CorpOraliorts (RCIT) (Sec 27(A),
NIRC);
3. Minirrom Corporateincome Tax o`4 Corporatiq (M IT) (fec. 27(E), NIRC);
4. Bp9ael Income Tax on Certain Corporations i.e. private educational
instiltionsv•fdkgri;hurrenpy dept units, Ferlee(iiirrairAfriers);
5. Gains..TipaCGT).V.salP, r exchangehlkilMNares of stock of a
• ,
DorriesibCorpdittiqn classified Ca capital asset (Sea 24(C), NIRC);
6. CGT on saleor exchange of reaVproperty located in the Philippines classified
as capital asset (sof 24(D), NlIt),,,
7. FinA WithholteTax •hinteiff,01, . Mae investment income (Sec.
28(8)(5)(b), NIRC);
8. Final WithhoOkig Ter(FWT) on income payments made to non-residents
(indiVidual or ccirptsaon);
9. Fringe Benefit Tax (FBT) (Sec. 33, NIRC);
10. Branch Profit Remittance Tax (BPRT) (Sec. 28, NIRC);
11. Improperly Accumulated Earnings Tax (IAET) (Sec. 29, NIRC); and
12. Gros Income Tax (GIT) (Sec. 27(A), NIRC).
Taxable period
Q: What are the different taxable periods under the NIRC?
ANS: The taxable periods are the following:
1. Calndar period — an accounting period which starts from January 1 to
Oecember 31. Taxable income shall be computed on the basis of the calendar
year4 the: (OPBI)
a Taxpayer's accounting period is Other than fiscal year;
b Taxpayer has no annual accounting Period;
• c Taxpayer does not keep Books; or
• d Taxpayer is an Individual (NIRC, Sec. 43);
2. Fiscal period — an accounting period of 12 months ending on the last day of
any month other than December (NIRC Sec. 22, par. (Q)), which is allowed
only for corporations; and
775
3. Short period — an accounting period where income is computed on the basis
of a period less than twelve (12) months when the:
a. Taxpayer, other than an individual, with the approval of the
Commissioner, changes his accounting period from fiscal year to
calendar year, or from calendar year to fiscal year, or from one fiscal
year to another (NIRC, Sec. 47);
b. Taxpayer dies (applicable to the decedent's final personal income tax
covering the beginning of the taxable year until his death, the income of
his. estate, and estate tax return) (NIRC. Sec. 90, par. (A));
c. Corporation is newly organized;
d. Corporation is dissolved; and
e. Tax period is terminated by the Commissioner by authority of law
(NIRC, Sec. 6, par. (D)).
Q: May a corporation change its taxable period?
ANS: ;Yes. A taxpayer, other than an jacljy*al with the approval of the Commissioner,
may change the basis of coutiffg it nett o om fiscal year to calendar year,
from caletndar year to fisc I ea \or fro o,ne IlyellAo,another fiscal year (NIRC,
Sec. 47)
Kinds of Tax e
Q: Enumerate t nds o taigyec.s;
ANS: The differ payer areftie following
Indivi -ft;•••
2. Corp „md
3 Pa (inclu ingtErt:Sjneisq'ariders )224:ral Professional
etc. _.11181
Part
4. Esta
bo-o
Q: What are th classi cat' a ers?

ANS: hid vidual t payers may
1. Citizens
a. Re !tent cite
b. Non-radef-
Aliens
a. Resident alie ( ); orMA
b. Non-resident aliens NFL.k .
i. Non-resident aliens engaged in trade or business in the
Philippines (NRAETB); or
ii. Non-resident aliens not engaged in trade or business in the
Philippines (NRANETB).
3.1 Special class of individual employees
a. Minimum wage earners (MWEs) (Sec. 22(HH), Sec. 24 NIRC);
b. Those aliens individuals employed by Regional or Area Headquarters
(RHQ) and Regional Operating Headquarters (ROHQ) of Multinational
Companies, by Offshore Banking Units (OBU), and by Petroleum
Service Contractor and Subcontractor (PSCS) (Sec. 22, Subsections
(C), (D) and (E), NIRC).
Citizens
Q: Who are the citizens of the Philippines?
ANS: The following are the citizens of the Philippines: (CFBNM)
1. Those who are citizens of the Philippines at the time of the adoption of the
1987 Constitution (i.e., February 2, 1987);
776
•••• ' .
If
DA RED B N
VOL 1.
2 019
2. Thoie whose Fathers or mothers are citizens of the Philippines;

3. ThoSe born Before January 17, 1973 (effectivity of 1973 Constitution), of
Filipino mothers, who elect Philippine citizenship upon reaching the age of
majCrity; and
4. Those who are Naturalized in accordance with law (CONST., Art. IV, Sec. 1).
5. Citizens of the Philippines who Marry aliens shall retain their citizenship,
unless by their act or omission, they are deemed, under the law to have
renounced it (CONST., Art. IV, Sec. 4).
Q: Who is a resident citizen?

ANS: A citizen of the Philippines who stayed in the Philippines or stayed outside the
Philippines' for less than 183 days during the taxable year (VALENCIA & ROXAS,
Income Taxation, supra at 583).
Q: What is meant by residence for taxation purposes?

ANS: This its the permanent home, the pl,. ce to which, whenever absent for business or
pleasure, one,ptends to return (Sa(40 v. American Express International, Inc., G.R.
No. 159507, April 19, 2006).
i
Q: Who is 'a non-resident citizen?
ANS: The follPwing are considered'Air4,
.4, •9:•.iii,.
d‘enAcitizens:4( /yELP)
1. A citizen of the PhilipyinesWip MitIV raki come from abroad and
Who'Se emploppoethereat rfciui es him to be Physt . Ily present abroad most
of the time dafierg the taxalAgar,
2. A citizen ofltlae1Philippip8s- who . Establishes e satisfaction of the
dornmissionith Oct•tif his phi cal presence a ro ith a definite intention
to retiVilerein;ftwi
3. A citizen of the.,P ' ilippines Oho ''eaves the Philff ppin s du Ong the taxable year
to ARO absaaWeither as an immigrant orr ept4, n a permanent
--- ,..0 . . Ii4,1,..
bass
basisig ,,,
,, •
4. A citizen..whchts):"een Pie. mu .-considered as ident citizen and who
arrives ratheRili pines.Y'at time during the taxable year to reside
permanently in theA vPhilippines yalWikjwise be treated as a non-resident
citizen for the`' ap.ble year in wpi.*- - ,......„. s,in the Philippines with respect to
his income dejived frorrfOrree iiiltie dite_ of his arrival in the
Philippines (00C, Sen2, par. (E)).
if...
. ..
Q: What doeS the phrasewtfiest of the time" means?
ANS: The phfase "most of the time" means at least 183 (365. 2) days (R.R. No. 1-79,
Sec. 2). His presence abroad, however, need not be continuous (INGLES, Reviewer,
supra at 39).
Note: CitiZens who work outside the Philippines for at least 183 days in a taxable year
due to a contract of employment with a Philippine employer are not considered non-
resident citizens because they are not considered employed abroad (Id.).
,
i•
Q: Who is ar overseas contract worker?
ANS: An overseas
E contract worker (OCW) refers to a Filipino citizen employed in
foreign.country, who is physically present in a foreign country as a consequence of his
employment thereat. His salaries and wages are paid by an employer abroad and not
borne by any entity or person in the Philippines.
Note: To be considered as an OCW:
1. He must be duly registered as such With the Philippine'Overseas Employment
Administration (POEA); and
2. He must have a valid working contract to work abroad (R.R. No. 01-2011, Sec.
2).
777
I
Q: When is a seaman considered as an OCW?

ANS: kseaman is considered as an OCW provided the following requirements are met
(CAIRO):
1. A Citizen of the Philippines;
2. f Receives compensation for services rendered Abroad as a member of the
complement of a vessel;
3. Such vessel is engaged exclusively in International trade (NIRC, Sec. 23, Par.
(C));
4. He must be duly Registered as such with the POEA; and
5. He has a valid Overseas Employment Certificate (OEC) and a Seafarers
Identification Record Book or Seaman's book issued by the Maritime Industry
Authority (MARINA) (R.R. No. 01-2011, Sec. 2).
Aliens
Q: Who is a resident alien?
ANS: A resident alien is an indiyjduaritiMnidengt ) is within the Philippines and who
is not a citizen thereof (N/RAtelq, 22 (R)). An ieh ni,4,1:econsidered a resident of the
Philippines for income tOurgo56rt>if: "--/
,....
1. • I He is not a mere)rtqsikntOr sojoumerr. o:"u2s,4CkSec. 5);
2. , ,: He has noder Re iptglit'swi as.to-j isslaun e. Rhil)cipines:. or
3. His purposestic • .aiature 1 at an eeendem dgtaskN be necessary for its
feccompfisih ran to tha ndep lien m 1kes 11 m temporarily in the
} Philip Ines ( DA ITAD I ulinq- (o. 63-06, er,.2006).
' ;,•-•
Q: When is re lost? '`C---1 illil e-,:-.1W
ANS: ,.An alie as acq fired ces:1,(lence..to e P ilippine FetaInS his status as a
resident alien aban s the SWA rid actuAin, epa s frd the Philippines.
Mere intention e 's•;" 'dence-i-S-nor-6noUgly R. No. 04-4,6, ec. 6).
i:;31/4 .i..77°..i ,_. \
ta
.' .
h.:,.(0` ..'
Q: Who is a no rtal -resid t a it?;\ ki-14 * 's:A/ „i.s\.,,,
ANS: 'A rion-resi ent alieVs a 19.‹iv , ikej.wpo e 1 enc s not "thin the Philippines
and who is not a c 'zen thereof q frt'..-_Set,, par.
l .,... non-resident-alien individual
maybe: LIEN1 vr-
1 ',Engaged in de.A5bsi 'ess,.(ETBIlmt Nilo i es— if the aggregate period
I 'of stay in the P11- 11Vik§Oceets VII9AyAlq.?) ach calendar year; or
Z 'Not engaged in trade.or-m 'rfrie aggregate period of stay in
the Philippines does nOrei'cceed480..d s for each calendar year (NIRC, Sec.
25, par. (A)(1)).
Special Class of Individual Employees

Q: Who is a minimum wage earner (MWE)?
ANS: A minimum wage earner refers to a worker in the private sector who is paid the
statutory minimum wage, or to an employee in the public sector with compensation
income of not more than the statutory minimum wage in the non-agricultural sector
where he is assigned (NIRC, Sec. 22, par. (HH)). He is exempt from income tax . The
exemption also covers the holiday pay, overtime pay, night shift differential pay, and
hazard pay earned by an MWE (R.R. No. 8-2018, Sec. 2 (0).
Note: HaZard pay shall mean the amount paid by the employer to MWEs who were
actually assigned to danger or strife-tom areas, disease-infested places, or in distressed
or isolated stations and camps, which expose them to great danger or contagion-or peril
to life. Any hazard paid to MWEs which does not satisfy the above criteria is deemed
subject to income tax and consequently, withholding tax on the said hazard pay (R.R.
No. 11-2018 dated January 31, 2018).
778
Q: What is ine'ent by statutory minimum wage (SMW)?
ANS: It shall refer to the rate fixed by the Regional Tripartite Wage and Productivity
Board, as defined by the Bureau of Labor and Employment Statistics (BLES) of the
Department, of Labor and Employment (DOLE) (R.R. No. 11-2018, Sec. 6).
Q: Who are the special class of individual aliens who enjoys preferential tax
treatment under the NIRC?
ANS: Those alien individuals employed by Regional or Area Headquarters (RHQ) and
Regional Operating Headquarters (ROHQ) of Multinational Companies, by Offshore
Banking Units (OBU), and by Petroleum Service Contractor and Subcontractor (PSCS)
shall enjoy a preferential 15% tax rate based on their gross income. Provided, that, the
same tax treatment shall apply to Filipinos employed and occupying the same positions
as those of aliens employed in RHQ, ROHQ, OBU, and PSCS (NIRC Sec. 25
(C)(D)(E)). • j;
Note: The preferential income tax rate under subsection (C), (D) and (E) of Section 25
of the Tax Code, as amended, shall no longer be applicable without prejudice to the
application of preferential tax rates urflOrldsting international tax treaties, if warranted.
Thus, all concerned employees of t*RfickROHQ, OBU, and PSCS shall be subject to
the regular incerne Tax rate under,c040)(2)(a) of the Tax Code, as amended (R.R.
No. 8-2018,;Seb. 4 (C)).
44*
Corporatiolij
-14p it
Q: Define corporation%forAnc ome tqx pruposes.
ANS: The term corpordbion shall incl*AN-JAI)
1. Partnershipso.Oatter hVefeA,ted or organized,
2. Joint stocks9rnpaes;
3. JOintle Vidlits (diatas en partiltion); and 4
4. Assdaationsasurance
s darnpaes.
It does not intro:19AV,
1. • Gene I profesgio Q al pa, shipr nd
2. A; JoinQe JgreA cons • diu formed fort e rpose of undertaking
constructcorprojec s or errgagine in petroleum, coal, geothermal, and other
energy operations, `pursuantto a aeration or consortium agreement under a
service contrAtvalhe governe%1,v airec. 22, par. (B)).
Q: What are the class( eljon'svf corporate- taxpayers?

ANS: Corporate taxpaya,".
)Abe:
1. Domestic corporiffeins (DC) (NIRC, Sec. 27) or
2. FOreign corporations (FC) (NIRC, Sec. 28), either
a. Resident foreign corporation (RFC) (NIRC, Sec. 28 (A)); or
b. Non-resident foreign corporation (NRFC) (NIRC, Sec. 28 (B)).
Q: What is'a domestic corporation?

ANS: The term domestic, when applied to a corporation, means created or organized in
the PhilippineS or under its laws (NIRC, Sec. 22 (C)).
Q: What Ise foreign corporation?

ANS: A foreign corporation is one which is not domestic (NIRC, Sec. 22 (D)).
Q: What is ia resident foreign corporation?

ANS: A resident foreign corporation is a foreign corporation engaged in trade or
business within the Philippines (NIRC, Sec. 22 (H)).
Note: In oncld, that a foreign corporation may be regarded as doing business within a
State, there must be continuity of conduct and intention to establish a continuous
business, such as the appointment of local agent, and not one of a temporary character
779
DAN RED:BOOK i rVOL
2019
it
if
(Commissioner of Internal Revenue v. British Overseas Airways Corp., G.R. Nos. L-
65773-74, April 30, 1987). It involves 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 the
progressive prosecution of commercial gain or of the purpose and object of the business
organization (R.A. No. 7042, Foreign Investment Act of 1991, Sec. 3 (d)).
Q: Is an offline international air carrier selling passage tickets in the Philippines,

through a general sales agent, considered as a resident foreign corporation?
ANS: Yes. Doing business includes appointing representatives or distributors operating
under full, control of the foreign corporation, domiciled in the Philippines or who in any
calendar 'year stay in the country for a period totaling one hundred eighty (180) days or
more. Hence, an offline carrier has appointed in the Philippines, through whom, it sells
or offers for sale any air transportation is undoubtedly "doing business" or "engaged in
trade or business in the Philippines", therefore considered resident foreign corporation
(Air Canada v. Commissioner of IntemeLl3eyepaq‹,No. 169507, January 11, 2016).
Q: What is a non-reside t4rei n cor o ti • pci i•

ANS: Anon-resident fo h r oratio o elgotcorp91,ation not engaged in trade or
business Within the P iippi (All C, Sec. 22 (I)).
„
Q: What is mea t y ntureoanOotwrtiuni?
ANS: It is gene rstood to niean4la otanizatipn f fots4he execution of a
single ,trailsacti n an is albs of a teriiporary natuPe. 5) rporation cannot
generally enterlirlq?,-a ontraat-ofirartrgriii! less-atithoriz G
tar or its charter, it
has been held /Kati may ntarOto,z,strint7gerituri g whit YrAiki to a particular
partnership (tile Thing orp. sirf —co' niiploner f Inter ai—drenue, G.R. No.
148187, April citi rbachry Ware anu actuan Corp., G.R. No.
75875; December d
IL
Q: What are thessen "al fa veri ure?
ANS: The follow' are t esOi a o to afibint velure: (CS-JMS)
1. Each pa mak a Cod ce sarily of,papital but by way of
services, s II, know
2., Profits must aglz QI ang&a.„parti
3. Profits must belqpin liprietalytt e
4. Right of Mutual writ er the 'ec rha teeof the enterprise; and
5. Usually, there is a Sing e busine Faction (MAMALATEO, Income Tax,
supra at 41-42).
Partnerships
.1
Q: What is a partnership?
ANS: It ; a contract whereby two or more persons bind themselves to contribute
money, property, or industry to a common fund, with the intention of dividing the profits
among themselves (CIVIL CODE, Art. 1767).
Q: Discuss the tax liability of partnerships.

ANS: Partnerships, no matter how created or organized, except general professional
pattnershOs and joint ventures or consortiums engaged in construction or energy
related Operations, are taxable as corporations (NIRC, Sec. 22 (B)).
Q: What is a General Professional Partnership?

ANS: A general professional partnership (GPP) is one formed by persons for the sole
purpose of exercising their common profession, no part of the income of which is
derived from engaging in any trade or business (NIRC, Sec. 22 (B)).
780
-.:
( x-- -.....
.- ..,... ZVOL t.
a:,,,,, t.ii,/ 2019
, ..kv-,„,,,.,....,-,...,„,...,-....,.,,,.....,,,,,,ir.....
Q: Discuss tlie tax liability of GPPs.
ANS: A GPP;'„shall not be subject to income tax. Persons engaging in business as
partners in; a 'GPP shall be liable for income tax only in their separate and individual
capacities.lEach partner shall report as gross income his distributive share, actually or
constructively received, in the net income of the partnership (NIRC, Sec. 26).
Note: For purposes of computing the distributive share of the partners, the net income
of the GPP s11011 be computed in the same manner as a corporation. As such, a GPP
may claim either the itemized deductions allowed under Section 34 of the Tax Code or
in lieu thereof, it can opt to avail of the Optional Standard Deduction (OSD) allowed to
corporations in claiming the deductions in an amount not exceeding forty percent (40%)
of its gross income. Once availed, individual partner is not allowed to claim further
deduction frorn his distributive share and not allowed to avail of the 8% income tax rate
option since share from GPP is already net of cost and expenses (R.R. No. 8-2018,
Sec. 8).
Under R.M.C. No. 1-2018 dated January 4, 2018, income payments to partners of
general prOfessional partnership is subjectl.to 8% creditable withholding tax.
1
Estate and Trusts
Q: Define the term estate for inconietaxafjon purposes.
ANS: Estate'i is composed of all, oresqfghts and obligations including those
properties, earnings or obligations tfig-Alav,9crii;edilerefsince the opening of the
succession (VALENCIA & %WAS, iiicantGatiokkiiNt25).
Note: The status of theigStge is deterspin4d by the status of* decedent at the time of
his death. So,:n estate incomifaOyer, can be a citizeili or an alien. In the case
of a nonresident deci elenOto, aCthe kne of his deatA ivas not a citizen of the
Philippines, only th,a41:36rt.„14466 entire gross estate whicr is situ ted in the Philippines
shall be inCludepais taXAblObState,,(Se065, NIRC), .r '
...b _ .i.
Q: DiscusS thfitavliabijittof aniVate.
ANS: When srerson 0114,oins pro&rty les, the follOnn 3....ssipre payable under the
provisions of the incm
oeAanaw: P
1. Income 481 -IndNftluals (to cov_ the period beginning January to the time of
death) (NIRC,Ve424 and 25);
2.Estate incomegal'ff
,4. thsestate &Oration or judicial settlement
(NIRC, Sec. 62,(3)). fecr-214
Note: Estate income trMndelSec. 60 of the NIRC is different from the imposition of
estate tax. While the firstAg, the nature of income tax, the latter is a transfer tax
imposed on the privilege w to transfer the properties of the deceased to his heirs.
Moreover, the exemption amounting to P20,000 for estates and trusts is removed under
TRAIN Law.
I I
Q: Define thj,term trust for income taxation purposes.
ANS: A trust is a right of property, real or personal, held by one party for the benefit of
another (Guy v. Court of Appeals, G.R. No. 165849, December 10, 2007, citing
Gayondato v. Treasurer of the PHL Islands, G.R. No. L-24597, August 25, 1926).
Q: Discuss the tax liability of an estate.

ANS: A trust is taxable on:
1. Trust income to be accumulated;
2. Trust income to be distributed currently by the fiduciary to the beneficiaries;
3. IncOrne collected by a guardian of an infant which is to be held or distributed
as the court may direct; and
4. Trust in which the fiduciary may, at his discretion, either distribute or
accumulate the income (NIRC, Sec. 60).
, a
781
Q: Is employee's trust or benefit plans exempt from income tax?
ANS: Yes. Employees' trusts or benefit plans normally provide economic assistance to
employ9es upon the occurrence of certain contingencies, particularly, old age
retirement, death, sickness, or disability. It provides security against certain hazards to
which members of the Plan may be exposed. It is an independent and additional source
of protection for the working group. It is evident that tax-exemption is likewise to be
enjoyed 'by the income of the pension trust. Otherwise, taxation of those earnings would
result in a diminution accumulated income and reduce whatever the trust beneficiaries
would receive out of the trust fund. This would run afoul of the very intendment of the
law (Cdmmissioner of Internal Revenue vs GCL Retirement Plan, G.R. No. 95022,
March 23, 1992).
1
Co-ownerships
Q: When is there co-ownership?
ANS: There is co-ownership whenever the ownership of an undivided thing or right
belongs,to different persons (CXIL,,C0 , 484)„„,„
..i,
Q: Isla co-ownership consider has a e arateitlita tity?
ANS: It depends. It 17, ) 1-
1. Not taxabj WA erit .a.are.lirettc
41. . .m-rely&tbi reservation of the co-
owned pfgp„ egt -owners,gfe liable or‘inc me their separate and
individ/61"UVierties• 717. \‘n
2. Taxab e whe he income o th,e• .,p,-ownershi is in .i stc.,$:Abs vtheco-owners in
i
busin ss-ttle by creatingara4bistered-pa ners p.ir Commissioner
of Inte IR venue G. -1Vo..1.-r934201/tay
„.% , 197
Q: Is the dislolato of thR co-ownersfiWby agr ',lent ubjec /the division of

property to cd ita ms ta ,-,://
ANS:, No. Thei- r of arte51 change or other
dispoSition cont mplatepy Hof t e tax ( IR Ruling No. 145-
98, Oct. 9, 1998kThe aCtof p wne grope to each co-owner
should not be treated as .gktea hin tore thae terminating the co-
ownersh'p by makikeach cd-4) ntifiable portion or unit of the
property (BIR Ruling N
V
2. INCOME
a. Definition and nature
Q: Define Income.
ANS: Income means all wealth that flows into the taxpayer other than as a mere return
of capital. It includes the forms of income specifically described as gains and profits
including gains derived from the sale or other disposition of capital assets (R.R. No. 02-
40, Sec. 36).
Note: It 's an arnotifit dioney coming to a person or corporation within a specified
time, whether as payment for services, interest, or profit from investment. Unless
otherwise specified, income means cash or its equivalent (Hernando Conwi v. Court of
Tax Appeals, G.R. No. 48532, August 31, 1992).
Q: Is the increasein the value of the property considered as income?

ANS: No. It is merely an unrealized increase in capital. Increase or appreciation in the
value of the property is not even an accrual of income to the taxpayer prier to the
realization of such appreciation through sale or conversion of the property (VALENCIA &
ROXAS, Income Taxation, supra at 151). .
782
DAN RED BOOK
When income is taxable
i. Existence of income
Q: When is income considered to have been received?

ANS: Incornelis received not only when it is actually handed to a person but also when it
is merely constructively received by him (Limpan Investment Corp. v. Commissioner of
Internal Revenue, G.R. No. L-21570, July 26, 1966).
Q: Discuss the Doctrine of Constructive Receipt of Income.

ANS: Incorna'which is credited to the account of or set apart for a taxpayer and which
may be draw0 upon by him at any time is subject to tax for the year during which credit
is set apart although not then actually reduced to possession. To constitute receipt in
such sense,ifhe income must be credited to the taxpayer without any substantial
limitation or restriction as to the time, or manner of payment, or condition upon which
payment is to be made (R.R. No. 2-40, Sec. 52).
„ 445
Realization and recognition of income :
udiW4
Q: What are the requisites for irAco taxable?
ANS: The following are the requis0 e to be taxable:
1. There must be a gain orpngit
2. Th&gain or profit must rta raeca al y, or constructively; and
3. It is: notexempteOrlaw or tre from inco lanCOMmisSiOnet of Internal
Revenue v. elftp-Pine Daily -r, Inc., G.R. No. t 943, March 22, 2017).
Q: What are the consi#e sn ...2yirdete in whether some is taxable?

ANS: The;differeg.,,ansidagos are the lowing:
1. ExisAdMe of_kcbtrie— income applies on is income, gain, or
proflyirMAC4:EO, Income Ta f upra a
2. Rekation of nsome ncrease n e property is not
incOM but mere! an unre crease in c ris a o "'come is derived nor
a loss in e owns r u after the actual sale or other disposition of
the prope uu ex of its cost
3. Reaognitionof Ome — the e shall be computed upon the
ba§Ti of theiMayersann od in accordance with the
method ofibuntirfregularly employed in keeping the books of such
taxpayer; but 4cs, utamethod of accounting has been so employed, or if the
Method employe not clearly reflect the income, the computation shall be
Made in accordance with such method as in the opinion of the Commissioner
Clegrly reflects the income (NIRC, Sec. 43).
11
Cash method of accounting versus Accrual method of accounting
11
Q: What is the cash method of accounting?
ANS: Under the cash method of accounting (cash receipts and disbursements method),
income is; realized upon receipt of cash or its equivalent including those constructively
received (suCh as deposits for the taxpayer's account by customers) but not including
gifts or donations (Revenue Audit Memorandum Order No. 1-2000, Chap. II-A).
1
Q: What is the accrual method of accounting?
ANS: Under Ithe accrual basis method of accounting, income is reportable when all the
events have Occurred that fix the taxpayer's right to receive the income, and the amount
can be deterMined with reasonable accuracy. Thus, it is the right to receive income, and
not the actual receipt, that determines when to include the amount in gross income.
783
,
Gleanable from this notion are the following requisites of accrual method of accounting:
1.' That the right to receive the amount must be valid, unconditional, and
enforceable, i.e., not contingent upon future time;
2.44 The amount must be reasonably susceptible of accurate estimate; and
4
3. 4 There must be a reasonable expectation that the amount will be paid in due
course (Filipinas Synthetic Fiber Corp. v. Court of Appeals, G.R. Nos. 118498
& 124377, October 12, 1999).
c. Tests in determining whether income is earned for tax purposes

Q: What are the tests in determining whether income is earned for tax purposes?
ANS: The tests are the following:
1. , Realization - income is generally recognized when both of the following
conditions are met:
a. The earning process is complete or virtually complete; and
b. An exchange has taken place (Mandarin Hotels, Inc. v. Commissioner
of Internal Revepue,--C-Fease ,Alo,,,,5046, March 24, 1997).
2. Claim of Right Doctfirr -a t?xapeitgain ihoRditioned upon the presence of
a claim of right,tfillleged gain andlybIeri:c‘of a definite unconditional
obligation tviturq o repayMorarliWorkzoptertlacRevenue v. Wilcox, 286
U.S. 417, $124,Thisjea'Iso callgsthzDocTrinp ofciwn,ership, Command, or
Control ik_mmiisfogerelniern§ Rei7ellUe GV;Ato,A8t53, July 31, 1991).
3. , Econori6 ,nefit
e Test -iptate_ % thrany e onkl9benetfit to the employee
that increasediis net worth, whaOyemay h ve besn,tpi rode by which it is
4 elfectkisla able. Thisjs_alac/A Oditte,Raa rine of roopnetary Interest.
..
4. q Seve a ce Best
- - tier•Okup,tai,cal.gjo4pcom until ttrre-ts t separation from
capital of ethindkof aphandAable 2arue, hereby i s pplyipg the realization
4 or trams tation wirch world Te,s_ulnii the e eipt ro Ingo e. This is also
as h& M% rs4 er_test(Eisde&v...Mac rb'd 262 U S 89, 207-208).
._ ' ..&...—
5 4All
;All Ete,tifs'ik,
. st n\incornerqr xj.cte-pe c e, fits tef equires the fixing
of a net to ihco ,c;IN iabiy% tb--'00.1';a availability of the reasonable
sk . s,. r, .s.
l accurak dete inati rvo loTitcope- r bilityiThe amount of liability does
Ilnot hav&Jo be ete4)i'o..iLgt....10411
el st be"determ,ified with reasonable
raccuracyYgorniniAionma210ffliCi?e v. lsabe a Cultural Corp., G.R. .
'No. 172231 ebTa `12407,.: *,.•
d. Tax-free exchanges
'I 1.VIA
Q: What are tax-free exchanges
ANS: TO-free exchanges refer to those instances enumerated in Section 40(C)(2) of
the National Internal Revenue Code (NIRC) of 1997 that are not subject to Income Tax,
Capital Gains Tax, Documentary Stamp Tax and/or Value-added Tax, as the case may
be. Therelare two kinds of tax-free exchange:
1. Transfer to a controlled corporation : no gain or loss shall be recognized if
Property is transferred to a corporation by a person in exchange for stock or
unit
, of participation in such corporation of which as a result of such exchange
said person, alone or together with others, not exceeding four persons, gains
control of said corporation; and
2. Merger
1, or consolidation - no gain or loss shall be recognized if in pursuance
of a plan of merger or consolidation:
a. a corporation, which is a party to a merger or consolidation, exchanges
property solely for stock in a corporation, which is a party to the merger
or consolidation; or
b. a shareholder exchanges stock in a corporation, which is a party to the
merger or consolidation, solely for the stock of another corporation also
a party to the merger or consolidation; or
784 •
)AN RED
•
••:: •
c. a security holder of a corporation, which is a party to the merger or

consolidation, exchanges his securities in such corporation, solely for
stock or securities in another corporation, a party to the merger or
consolidation (NIRC, Sec. 40 (C) (2)).
Q: Define "merger" or "consolidation" for purposes of exchange of property.

ANS: Merger or Consolidation shall be understood to mean:
1. The ordinary merger or consolidation; or
2. The acquisition by one corporation of all or substantially all the properties of
another corporation, solely for stock undertaken for a bona fide business
purpose and not solely for the purpose of escaping the burden of taxation
(NIRC, Sec. 40 (C)(6)(b)).
Please see discussion on II-B (3)(d)(v) (National Taxation — Gross Income (Income from
dealings in property)).
e. Situs of income taxation

Please see discussion on I-B (Gerierai' Adel• les - Inherent Limitations).
Sources of income subject to tail

Q: What are the classificatioprOf iiipiirrjp"res OSO,
ANS: As to source, incomoiay be classed as follows.
1. Gross incomek18 taxable i t,1 from sources wit t the Philippines;
2. Gross income)axdxitaxable,Oo from sources wih the Philippines; and
3. Income parr itOoliartly witut the Philippi bs NI C, Sec. 42).
:40 4,.‘av •
Income from Sburces with'', the Philippines
Q: What aretit items t treated t t a
e from sources
h
within the P ill ippines? ---
ANS: They are:
1. Interest denim front sources wi hin the Philippines, on bonds, notes, or other
--A
interest-beariu obtfgations of re ntswrporate or otherwise;
2. Dividends recArdifrom: ,
a. Domeec corp241816, an a-
b. Foreign4orporioni provided:
i. At as 50% of its gross income is from sources within the
Phili' pines; and .
ii. Such gross income must be for the 3-year period ending with
the close of the taxable year preceding the declaration of such
dividends.
Note: It is limited only in an amount which bears the same ratio
to such dividends as the gross income of the corporation for
such period derived from sources within the Philippines bears to
its gross income from all sources.
3. Compensation for labor or personal services performed in the Philippines;
4. Rentals and royalties- from property located in the Philippines or from any
interest in such property;
5. Gains, profits and income from the sale of real property located in the
Philippines; and
6. Gains, profits and income from the sale of personal property is treated as
derived entirely from sources within the country if the property was:
a. Purchased within and sold without the Philippines; or
b. Purchased without and sold within the Philippines (NIRC, Sec. 42, par.
- (A)).
785
Note: Gain from the sale of shares of stock in a domestic corporation, shall be treated
as derived entirely from sources within the Philippines regardless of the place where the
shares were sold (N/RC, Sec. 42, par. (E)).
Income from Sources without the Philippines

Q: What are the items of gross income treated as gross income from sources
without the Philippines?
ANS: They are:
1. Interests other than those derived from sources within the Philippines (e.g.,
interest earned from deposits on banks located outside the Philippines,
interest on loans where the debtor is not a resident of the Philippines);
2. Dividends other than those derived from sources within the Philippines (e.g.,
dividends received from a foreign corporation less than 50% of the gross
income of which is from sources within the Philippines for the 3-year period
ending with the close ofnc,,.......,.
its taxable year preceding the declaration of such
dividends);
3. Compensation f r-olror o pl 'T services performed without the
Philippines; N- 1 I k
4. Rentals or rp, air f eRrIGTOtate' wifheit Philippines or from any
interest in •sru6Vp o jsid..-----...
d..--""'
5. Gains, p f" 1 ol i9cbme fror4he
5. located without the
Philippi' RC, Sec. 42,Par.0).X
AIX'
Income Partly &kb nd
IPottly-withoiltirhe-Philippi es
Q: What arefrA 1 to Is of i cc;rne;\11,
—-- eril
,e yillll cr17crmsolarces darttyiithin and partly
without the P itippi es? '.73V .. I'l
ANS: Items or g s in of allb ateb to so with or without the
Philippines shAll( Filgss ithip i'irS
\, urce without the
Philippines, blriareokas wit Tri an artly without the
Philippines (R. No. 0*40, income from the sale of
personal prope is treated a within an:/ p - artly from sources
without the Philippi s if theV o If
1. Produced, 1 holOir le wi ()Witte Philippines; or
2. Produced, in oleo i parC vith an sol v lffin the Philippines (N/RC,
Sec. 42, par. (E)
3. GROSS INCOME
a Definition
Q: Define grossincome.
ANS: Gross income means all income derived from whatever source, including but not
limited to the following:
1. Compensation for services in whatever form paid, including, but not limited to
fees, salaries, wages, commissions, and similar items; • . •
2. Gross income derived from the conduct of trade or business or the exercise of
a profession;
3. Gains derived from dealings in poperty;
• 4. Interests;
5. Rents;
6. Royalties;
7. Dividends;
8. Annuities;
9. Prizes and winnings;
10. Pensions; and
786
11. Partner's distributive share from the net income of the general professional
partnership (NIRC, Sec. 32, par. (A)).
Note: The definition of gross income is broad enough to include all passive income
subject to specific rates or final taxes. However, since these passive incomes are
already subject to different rates and taxed finally at source, they are no longer included
in the computation of gross income which determines taxable income (Commissioner of
Internal Revenue v. Philippine Airlines, Inc., G.R. No. 160628, October 9, 2006).
b. Concept of income from whatever source derived
Q: Discuss the concept of "income derived from whatever source."
ANS: All income not expressly excluded or exempted from the class of taxable income,
irrespective of the voluntary or involuntary action of the taxpayer in producing the
income and regardless of the source of income, is taxable (Gutierrez v. Collector of
Internal Revenue, CTA Case No. 65, August 31, 1965; Banco de Oro et al., v. Republic,
G.R. No. 198756, January 13, 2015).
.11
.
Q: Are the proceeds of stolen or e bezzled property included as part of gross
income? %
t.
ANS: Yes. Embezzled money cowtutpaa. ss income. It opined that unlawful, as well,
as lawful gain is comprehended with tbel
366 U.S. 213, May 15, 1961). It isIttAil
"gross income" (James v. United States,
ey or °per proceeds of the sale or
diSposition of stolen property qr redage Q-14itrryof,ght (US v. Lozia, 104 F.
Supp. 346, DCJDNY, 195201'
c.Gross income vs. net me vs. taxa income
, .0
Q: Compare Gross corAWs"-ra-vis ne ncome xable Income.
ANS: The followiware
Gross
Ar.,.., theerstinctions:
itt, I'
Net Income Taxable Income
Income
• -• -
All income, sp_ss irippme Pe ent items of gross income specified in this
gain, or profit •
subject to
Le ss stigito
ded ction
Co
suc
less deductions, if any, authorized for
come by this Code or other
income tax (R{ , lo 02 R as amended by TRAIN
under Sec. 04KSec. 36 Law, Sec. 31).
32(A) of the Note: The phrase "and/or personal and
NIRC. additional exemptions" is removed in the
definition pursuant to TRAIN Law.
d. Classification of income subject to tax
Q: What are the sources of income subject to tax?

ANS: The sources of income subject to tax are the following: (CF-PIPI-APRID)
1. Compensation income; . •
2. Fringe benefits;
3. Professional income;
4. Income from business;
5. Passive investment income;
6. Income from dealings in property;
7. Annuities proceeds from life insurance or other types of insurance;
8. Prizes and awards;
9. Pensions, Retirement benefits, or separation pay; and
10. Income from whatever source derived;
11. Partner's Distributive share from the net income of the general professional
partnership (NIRC, Sec. 32).
787
Vg-sTa•W:45)::14...;;•:,fr).•‘...4..t;"••
i. Compensation income
Q: Define compensation income.
ANS: All remunerations for services performed by an employee for his employer under
an employer-employee relationship, unless excepted under the provisions of the NIRC
are considered as compensation income (R.R. No. 02-98, Sec. 2.78.1, R.R. No. 2408,
as amended).
Note: The basis upon which the remuneration is paid is immaterial in determining
whether the remuneration constitutes compensation. Thus, it may be paid on the basis
of piece-work, or a percentage of profits, and may be paid hourly, daily, weekly, monthly
or annually. Compensation may be paid in money or in some medium other than money,
as for example, stock, bond, or other forms of property (DE LEON, NIRC Annotated, p.
355).
Q: What is the test to determine whether an income is compensation or not?

ANS: The test is whether such income is received by virtue of an employer-employee
relationship (R.R. No. 02-98, S?,702:78:r""'-'..4.....,
Note: Remuneration for setvistes co sautes ico inpezation income even if the
relationship of employ 'and dnipi.oyee-doe of exisrazy longer at the time the
payment is made If i tweeti thb,,pevor4'
1 urwho...4 wptoNhe services had been
performed and the 'rid vdualiNffb pe _rsa them, d Ion asIlle employer-employee
,.a..
relationship is exi • abg 'ffi e se Toes we'reTe orme )( .R. No. 02-98, Sec.
2.78.1). 4.4 V.
P ZiA rt1]
4.1-•
Q: Are "love iftsr 11
ceive .y_pastiirsr.from_lbei Liginistry cbnt iddred
taxable comp nsdb 1r-^"4
ANS: Yes. It i subj ct to income OthlmIding ax. Ev fo of compensation
for personal s s s taxa N, reddk103333i6vit it i Y m it is paid, the
label by which it i§st sigirt 1-the-bair pon-which de ermin , or the form by
which it is rece R 'OA DAVI !OA)?
Q: When are bo uses, 3th‘' o ay a Tothb•:. benefits pa of compensation

income?
ANS: When the bo uses,. benefits exceed the threshold
amount
amount of P90,000, t exc ss 11r e,,ct Ota:(PE.A. No. 10653).
Note: The amount of ta4x er benefits is increased to
P90,000 (Old: P82,000) pursu
H. Fringe benefits
Q: What is fringe benefit?

ANS: It means any good, service or other benefit furnished or granted in cash or in kind
by an employer to an individual employee (except rank-and-file employees) (NIRC, Sec
33 (B)).
Q: What is fringe benefit tax?

ANS: The fringe benefit tax (FBT), is treated as a final income tax on the employee that
shall be withheld and paid by the employer on a calendar quarterly basis (Commissioner
of Internal Revenue v. Secretary of Justice and PAGCOR, G.R. No. 177387, November
9, 2016).
Q: Who pays the fringe benefit the tax?

ANS: The fringe benefit tax is actually due from the employee but paid by the
employer for and in behalf of the employee. The tax is additional cost to the employer.
When the employer pays the FBT in behalf of the employee, the tax becomes an
additional benefit of the employee subject thereto. Thus, the need to gross up the
788
monetary value of the fringe benefit received in computing the FBT due thereon (R.R.
No. 3-98, Sec. 2.33 (A); DE LEON, NIRC Annotated, supra at 389).
Q: Discuss the scope of FBT.

ANS: The FBT covers only the taxable fringe benefits of managerial and supervisory
employees. For purposes of FBT, R.R. No. 3-98 clarifies that taxable fringe benefits
exclude those items considered as compensation income (BANGGAWAN, Income
Taxation (2017), p. 362) [hereinafter, BANGGAWAN, Income Taxation].
Q: Who are considered as managers? Supervisors? Rank-and-file?

ANS: Managerial employees refer to those who are given powers or prerogatives to
lay down and execute management policies and/ or to hire, transfer, suspend, lay-off,
recall, discharge, assign or discipline employees.
Supervisory Employees are those who effectively recommend such managerial

actions if the exercise of such authorityjsvot merely routinary or clerical in nature but
requires the use of independent jucigmentl
Rank-and-file employees mean 4AKTRIo pes who are holding neither managerial nor
supervisory position (DIMAAMPAOg Tel& o r supra at 40).
Q: What is the tax treatment tpl;fri e iss

ANS: If the benefit givenAtIot exemp tax, and the reel is a:
1. Rank and fqlginployee-t • lue of such fringe e eft shall be considered
as part of thecoapensatisrp In me of such emv, o e‘subject to withholding
from the empO &co mpensat and to the g d tell tax rates under Sec.
24(A) of4115WIRgN
2. Man4rial ax„ dupe isey, e loyee - th, vat 4p shall not be included in
the,gs
. ea§atIanco e of suc mployeVubjed o-ta T e fringe benefit
tax anstead levied upo the ern loyer e pay (NIRC, Sec.
33). 04‘,egal• a
Q: Discuss the speciaEis trea~iient of FB

ANS: FBT on fringe beVellis paid by tl „e .but he is allowed by law to deduct
the grossed up monetary valtialaxthetringe- eriMrnished or granted to the
employee as a busineslexpeaWin determining his taxable income provided that the
final tax imposed underAtigi,f 33 has been paid (NIRC, Sec. 34, par. (A)(1(a)(i)). The
FBT is not an additional faitiffri'the employer.- He can claim the fringe benefit and the
FBT as a deductible expense from his gross income (DIMAAMPAO, supra at 40).
Q: What is the basis of the FBT?

ANS: The FBT is imposed on the grossed-up monetary value of fringe benefit furnished,
granted, or paid by the employer to the employee, except rank and file employees,
whether such employer is an individual, professional partnership, or corporation, -"Mg
regardless of whether the corporation is taxable or not, or the government and its
instrumentalities (R.R. No. 03-98, Sec. 2.33 (A)).
Q: What does the grossed-up monetary value represent?

ANS: The grossed-up monetary value (GMV) represents:
1. The whole amount of income realized by the employee which includes the net
amount of money or net monetary value of property which has been received;
and
2. The amount of FBT thereon otherwise due from the employee but paid by the
employer for and in behalf of the employee (R.R. No. 03-98, Sec. 2.33 (A)).
789
Q: What are the taxable fringe benefits?
ANS: Fringe benefits subject to FBT are the following: (HEV-HIM-EHEL)
1. Housing;
2. Expense account;
3. Vehicle of any kind;
4. Household personnel, such as maid, driver and others;
5. Interest on loan at less than market rate to the extent of the difference
between the market rate and actual rate granted;
6. 'Membership fees, dues and other expenses borne by the employer for the
employee in social and athletic clubs or other similar organizations;
7. Expenses for foreign travel;
8. Holiday and vacation expenses;
9. Educational assistance to the employee or his dependents; and
10. Life or health insurance and other non-life insurance premiums or similar
amounts in excess of what the law allows (NIRC, Sec. 33 (B)).
Q: Discuss the FBT rates to cprrib-1;7
up yvi , rosped-up monetary value.
ANS: The rates of fringe.peffgfiqax vary del) ncling)othow the employees are taxed.
The reason is that the Tlenalto reati've6pYogie tax,:i3fIlthe employee so the rate
follows the income lion f employees an hgeinpeN121e below:
RC,
NRC, NRA- 'Special Alien Employees (SAE) and
RA, NETB Special Filipino Employees (SFE)**
NRAET
Monetary va e P XX
Divide by grqpst 65
monetary val
factor ti
c(f)
Fringe benefit tax %461 P XX

Note: ;1/4
1. Prior to 2018, the FBT was /o.
2. **Upon effectivity of the TRAIN Law, SAEs and SFEs are now subject to
graduated tax rate on their compensation income. Consequently, the FBT rate
applicable to them shall be 35% beginning January 1, 2018. Therefore, the
15% tax rate illustrated in the table shall only apply if the taxable fringe benefit
was given prior to 2018 taxable year.
Q: Discuss the valuation of fringe benefits.

ANS: If the fringe benefit is granted or furnished in:
1. Money, or is directly paid by the employer — the value is the amount
granted or paid for, •
2. Property other than money and ownership is transferred to the employee
— the value of the fringe benefit shall be equal to the fair market value of the
property. The FMV of the property is the FMV determined by the BIR
Commissioner or the FMV determined by the Provincial or City Assessor,
whichever is higher (NIRC, Sec. 6 (e)).
3. Property other than money BUT ownership is NOT transferred to the
employee (i.e. only the usufruct) — the value of fringe benefit is equal to the
depreciation value of the property (R.R. No. 03-98, Sec. 2.33 (A)).
790
Q: What are the instances when housing privilege is subject to FBT?
ANS: It may arise under any of the following:
1. Employer leases residential property for use of the employee;
2. Employer owns a residential property and assigns the same for use by the
employee;
3. Employer purchases a residential property on instalment basis and allows use
by the employee;
4. Employer purchases a residential property and transfers ownership to the
employee; or
5. Employer provides a monthly fixed amount for the employee to pay his
landlord (R.R. No. 03-98, Sec. 2.33 (B)(1)).
Q: What are the housing privileges not subject to FBT?

ANS: The following are not taxable fringe benefits:
1. Housing privileges of military officials of the AFP consisting of officials of the
Philippine Army, Philippine I\l,Aand Philippine Air Force;
Rationale: The State sh911,00Ide its soldiers with necessary quarters which
are within or accessible ;frl:Yttemilitary camp so that they can readily be on
call to meet the exigenciepAie gulitary service.
2. Housing unit which is sit at e or adjacent (i.e., the unit is located within
a maximum of 50 metetOftiali* ettr of e usiness premises) to the
premises of a business or fatiflata e°'.- -*,z , .,
3. Temporary houe-§Ifcir an ers3109ee who stays in ousing unit for three (3)
months or lee .R. No. 0348 ec. 2.33 (B)(1)).
Q: What expenses infisrrOpylfheempp ee are subject to F T?

ANS: They are: 19 116,
1. Expeefires incurt- d by the-errit3 ee, but w ich age paid by his employer
en-a tOhalthlie,pen,!:litures re duly recelptest,-pr and. gem name of the
emp o er and not iigOai bre of a personal
expensgettrifftrab to ea1516mp ee;
2. Expensespalnak the emplci ee but reimbursed by his employer except
when the ekpRnditui•es are duly i ledafor and in the name of the employer
and the exp dittlits do not ID At 03 , nature of a personal expense
attributable to said emplo;kere'Fa -,i• - - 7
3. Personal expeses
4,r 4 ii
fie employee paid for or reimbursed by the employer
whether or norArie sg e are duly receipted for in the name of the employer
(R.R. No. 03-98, c. .33 B (2)).
Note: Representation and transportation allowances which are fixed in amounts and are
regularly received by the employees as part of their monthly compensation are not
treated as taxable fringe benefits but are considered taxable compensation income
subject to regular tax rates (R.R. No. 03-98, Sec. 2.33 (B)(2)(d)).
Q: What are the instances when motor vehicles privilege is subject to FBT?
ANS: It may arise under any of the following:
1. Employer purchases vehicle in employee's name;
2. Employer provides employee cash forvehicle purchase; •
3. Employer purchases car on instalment and the ownership of which is placed in
the name of the employee;
• 4. Employer shoulders a portion of purchase price;
5. Employer owns and maintains a fleet of motor vehicles for use of business and
employees;
6. Employer leases and maintains a fleet of motor vehicles for the use of the
business and employees;
7. The use of aircraft owned and maintained by the employer; and
791
8. The use of yacht whether owned and maintained or leased by the employer (2
CASASOLA, National Internal Revenue Code (2013), p 267-269) [hereinafter
2 CASASOLA, NIRC].
Q: Is the use of aircraft subject to FBT?

ANS: No. The use of aircraft, including helicopters owned and maintained by the
employer, shall be treated as business use and not subject to FBT (R.R. No. 03-98,
Sec. 2.33 (B)(3)(g)).
Q: Is the use of yacht subject to FBT?

ANS: Yes. The use of yacht whether owned and maintained or leased by the employer
shall be treated as taxable fringe benefit (R.R. No. 03-98, Sec. 2.33 (B)(3)(h)).
Note: The high cost of ownership of aircrafts makes it inherently prohibitive or
impractical to be for personal use. Thus, aircrafts are deemed by regulations as solely
for business use; hence, they are exempt from fringe benefit tax. Yachts, though pricey
on the other hand, generally lack aily„„sensible usiness purpose aside from being for
personal pleasure; hence, its depfeciation value is bjpct to FBT in full (BANGGAWAN,
Income Taxation, supra a 72).
.„,_,....,.......,,,,,t. ,..-
Q: Are household erson e e penses of employees bap by employer subject
to FBT?
ANS: Yes. The loXD :1 er onal e4dpe,ekRkthe e pl eelybibli 1t„ ,‘are borne by the
employer shall be trek[ as t xable ing,a)enefits:
1. Salari ( s of h seho d help, pei;d4k1 driver of he emptiWiar
2. other 540a perso a expensep i epayme t for ilomeo ner's association
dues Orba e dues etcripi : AllaiD313;"Se . 2.33 00))
Li-e--yto '
1)
Q: When is in elet,i n I a • btaine .t.t /0 emp o ,.9 from the employer subject
to FBT? :;-" Ifà t',..)
ANS: If the ell Inds -I • el; toItt pl9ya ea- of ilerest a rate lower than
12%, such inter t foregone • h '. • ero' e, fferepe of t interest assumed
by the employee nd the te o I b r as taxable fri e benefit (R.R. No.
03-98, Sec. 2.33 (B),(5)).
s'cEgrkh-
Q: Are membership des' 7ppdi*to ibther.e
, xirt. bi r, by the employer for his
employee, in social an' 05.1 yr hrAginv ar organizations subject to
FBT?
ANS: Yes, these expenditures sha b-e-ta re ed as taxable fringe benefits of the
employee in full (R.R. No. 03-98, Sec. 2.33 (B)(6)). The monetary value is the amount
paid (BANGGAWAN, Income Taxation, supra at 373).
Q: What are the expenses for foreign travel which are NOT subject to FBT?
ANS: Reasonable expenses of the employee paid by the employer for the purpose of
attending business meetings and conventions are exempt:
1. Inland travel expenses such as expenses for .food, beverages and local
• transportation;
2. The cost of lodging in a hotel or similar establishmeht amounting to an
average of US $300 or less per day;
3. The cost of economy and business class airplane tickets;
4. 70% of the cost offirst-class airplane ticket (R.R. No. 3-98, Sec. 2.33 (B)(7);
DE LEON, NIRC Annotated, supra at 397).
792
Q: What are the expenses for foreign travel which are subject to FBT?
ANS: The expenses for foreign travel which are subject to FBT are the following: (30%-
LTE)
1. 30% of the cost of first-class airplane tickets;
2. Lodging cost in a hotel or similar establishment in excess of US$300 per day;
3. Travelling expenses paid by the employer for the travel of the family
members of the employee; (BANGGAWAN, Income Taxation, supra at 374)
Note: When there is no documentary evidence showing that the employee's travel -
abroad was in connection with business meetings or conventions, the Entire cost of the
ticket, including the cost of hotel accommodations and other expenses incident thereto
shouldered by the employer, shall be treated as taxable fringe benefits (R.R. No. 03-98,
Sec. 2.33 (B)(7)).
Q: Is the cost of educational assistance to the employee or his dependents
subject to FBT?
ANS: Educational assistance to the employee is generally taxable except when it is
incurred for the convenience or further 06 tof the employer's business such as:
1. Education/study of the effjpOVe 'tom directly connected with employer's trade or
business; and ".
e):.
2. There is a written contract tis employee shall remain employed with the
employer for a period of finle, tt.T yo reed uporty the parties;
Note: Educational assistance, glOnte,14-j o ziePer kits-of fie employee is generally
taxable except when thmaistance ways,provided hroug a competitive scheme
under a scholarship pffigram (R.R.A 3-98, Sec. 2.33 (B
Q: What insurance pLelni s s paidfor the employer re sLibject to FBT?
ANS: Premiums onpire—orlhealth insuran and other no -life insurance are subject to
FBT, except for a.
- 1. Cos premiums borne by emplo e °us insurance of
emp o eeg;'grid,
2. Contri utiongotith em(51cLer g, the benefi sq4o 1 %gPloyee to the SSS,
GSIS, anateiramontriblition -Arising from provisions of any existing law
(R.R. No.V-98, Sepl 2.33r(B)(1
Q: What are the non-ta able- fringe be 4e, . .As
ANS: Fringe benefitshall opiMose. owing fringe benefits:
;
1. Those which ut zed n and exempted from income tax under the NIRC;
2. Contributions of ployer for the benefit of the employee to retirement,
insurance and hospitalization benefit plans;
3. Benefits given to rank and file employees, whether granted under a• collective
bargaining agreement or not;
4. De minimis benefits (NIRC, Sec. 33 (C); R.R. No. 03-98, Sec. 2.33 (C)); and
5. If required by the nature of or necessary to the trade, business or profession of
the employer;
6. If it is for the convenience or advantage of the employer;
7. Benefits received by an employee by virtue of a CBA and productivity incentive
schemes provided that the total annual monetary value received from both
CBA and productivity incentive schemes combined, does not exceed P10,000
per employee per taxable year (R.R. No. 1-2015).
Note: Exemption from FBT is not an exemption from other income taxes, unless such
benefit is also stated expressly to be exempt from other income taxes (2 CASASOLA,
NIRC, supra at 273).
793
Q: What are de minimis benefits?
ANS: These are facilities or privileges furnished or offered by an employer to his
employees that are of relatively small value and are offered or furnished by the
employer merely as a means of promoting the health, goodwill, contentment, and
efficiency of his employees (R.R. No. 3-98, Sec. 2.33 (C)).
Q: What is the tax treatment for de minimis benefits?

ANS: The following shall be considered as de minimis benefits not subject to income tax
as well as withholding tax on compensation income of BOTH managerial and rank and
file employees: (MUM-RUM-LECO-CBA)
1. Monetized value of vacation and sick leave credits paid to government officials
and employees (no limit as to the number of credits);
2. Monetized Unused vacation leave credits of private employees NOT
EXCEEDING TEN (10) DAYS during the year (monetization of unused VL
credits in excess of ten (10) days and monetization of sick leaves even if not
exceeding 10 days are sub 9ctto4ax),,,. •
Note: Payment offfio e "A'cafign" leave credits exceeding 10
days as well as n‘meof "sik1De9.Ve, egtr ens of number of days shall be
added to "ot er-ken fi 4 •
joth-a-P9041,0,(beilingAny amount exceeding the
P90,000 cilirtg .ee—subject to basband credit ble withholding tax on
compensalioN, TR.-IT6.71E21700).
3. Medical I ow nce dep-enCents of Onus NOT EXCEEDING
P1,50 loyee per seimefir on12250 p r maRtfi;
4. Rice f P2, 00 or one sack of 50kg. ice pet* Cat amounting to not
morei ha
5. g if n clothin allbWance NOTTXbE DING .t16760 ter annum (R.R.
,000;
.\.
No. 2)
6. Actul era Benefits T` CEEILG7101000 pe annum;
7. kaun All9 AG P30 pa mob , 04
8. Employ /length of ervice or safety
achieve ent, e'fd'-!tangy' pers nal property other
than cagi or nnuar monetary value of NOT
EXCEED1 G P10, lo .61; underAn established written
plan which es not igh 'employees;
9. Gift given 4 aj sary celebrations NOT
EXCEEDING P5; R. No. 8-2012)
10. Daily meal allowanc kand night/graveyard shift NOT
EXCEEDING 25% of the basic urn wage on a per region basis (R.R. No.
3-98); and
Note: The grant of meal allowance, if not for overtime work or night/graveyard
shift, should be subject to income tax. (R.R. No. 05-2011) However, meal
allowance and lodging furnished by the employer to the employees are exempt
from tax if furnished for the "advantage or convenience" of the employer. Meal
allowance, in this particular case, should be furnished within the premises of
the employer (TABAG, Income Taxation with Special Topics in Taxation
(2018), p. 161) (hereinafter, TABAG, Income Taxation].
11. Benefits received by an employee by virtue of a CBA and productivity
incentive schemes provided that the total annual monetary value received from
both CBA and productivity incentive schemes combined, do not exceed
P10,000 per employee per taxable year (R.R. No. 1-2015).
Note: The foregoing list of de minimis benefits are exclusive. Meaning, all. other
benefits given by employers which are not included in the enumeration above shall not
be considered de minimis benefits (R.R. No. 08-2012; R.R. No. 01-2015).
794
Q: When is de minimis benefit a part of compensation income?
ANS: De minimis benefits granted by an employer shall form part of compensation
income subject to the graduated rates but only the amount in excess of the ceiling
prescribed and the same were given to rank-and-file .employees. If the same were given
to managerial and supervisory employees, the excess shall be subject to FBT (R.M.C.
No. 5-2011).
Note: The amount of de minimis benefits conforming to the ceiling of de minimis
benefits shall not be considered in determining the P90,000 ceiling of "other benefits"
excluded from the gross income under Section 32(B)(7)(e) of the Code as amended by
the TRAIN Law. On the other hand, the excess of the de minimis benefits over their
respective ceilings prescribed under this regulation shall be considered as part of other
benefits subject to tax only on the excess over the P90,000 ceiling.
IL Professional Income
Q: Define professional income.
ANS: It includes the. fees derived frqutengaging in an endeavor requiring special
training• as professional as a meansOliglihood, which includes, but is not limited to,
the fees of CPAs, doctors, lawyers;:i#400ers, and the like (RR. No. 02-98).
,ilhadit,
Q: Who is a professional incom9j: a,t5.10y,tsq
ANS: It refers to a person certified lilcglatonal bp belonging to a specific
profession by having completed reqfde , '6 67W, s el pts _ aglebnd or practice (DASCIL,
NIRC of the Philippines Wit, p. 57)1h6 einofter, DA'SOIL, IRC Annotated]. It also
refers to a person wppngages irAs.9 , e art or sport foi oney, as a means of
livelihood, rather than a:M. yobby (T4021'01Income Taxation it at 69).
t 411-2, . —of ' 1'
Q: Distinguish profsgroullincome from compensationinfonie.
1
ANS: The existwe of emp,lo9e
the fees receiAps cornp,e,
-
d
r:emizioyebelationship ifessgritiakin order to constitute
nsation inc%mat his fact isElateripl for 0.1.irposes of taxation
because there noadeVertifon allowed Apinst cotrigesi, -tio ,Trrilychrey (except for his
personal and additionmption;Awhe As allowablel efltl- Jogs:‘may be made from
(A
professional incoliteA(MARANTE0,1 1nco Tax, supra at 11j.
'9'
iv. Income from business
erL
Q: Define business inkeitie. "wow Afff11--
ANS: It arises from hNtual e .po ement in any commercial activity involving regular
sales of goods or servicese byIndividual or a corporation. The income from business,
legal or illegal, registere ntegistered, is taxable .(BANGGAWAN, Income Taxation,
supra at 219).
Q: What is the tax treatment of trade or business income?
ANS: Trade or business income shall be subject to graduated rates (5-32%) for
individuals and normal corporate income tax for corporations (30%).
v.Income from dealings in property "

Q: What are kinds of assets in taxation purpose?
ANS: The following are the kinds of assets:
1. Ordinary Assets; and
2. Capital Assets.
Q: What is the yardstick for determining whether a property is capital asset or
ordinary asset?
ANS: The yardstick for determining whether a property is capital asset or ordinary asset
is its actual use. In the determination of whether a piece of property is a capital asset or
ordinary asset, a careful examination and weighing of all circumstances revealed in
each case must be made (BIR Ruling No. DA 212-07, April 3, 2007).
• 795
Q: What are the distinctions between Ordinary Asset and Capital Asset
ANS: The following are the distinctions between Ordinary Asset and Capital Asset
Ordinary Asset • • Capital Asset

Property held by the taxpayer used in Defined by an exclusion of all
connection with his trade or business ordinary assets
Includes the following: All real properties held by a
1. Stock in trade of a taxpayer or other real taxpayer, whether or not connected
property of a kind which would properly be with his trade or business, and
included in the inventory of the taxpayer if which are not included among the
on hand at the close of the taxable year; real properties considered as
2. Real property held by the taxpayer ordinary assets under Sec. 39(A)(1)
primarily for sale to customers in the of the Code (R.R. No. 07-2003, Sec.
ordinary course of his trade or business; 2.a).
3. Real property used in tradg..op.bu§Mgs..
(i.e., buildings and/or improxementI) Property held by the taxpayer
character which is subject td,, the allowance iprinarqfor sale to customers in the
for depreciation ,p(Ovileci
,) for .under %pi'dinauy' Gb rse of his trade or
34(F) of the Code4{,.. busioession.
)
4. Real propertyAec pir5d,e-Orbustnes of ''Prope Used in the trade or
the taxpayerfRNave 0712003, Sec. • busiliesAvO ctiaracter which is
Note: The IV exc sive. The yA-dstrick for' subject *el allowance for
determining help a pro erty...is_caPitPar.... _depreciatio Vg/Rb Sec. 39 (A)(1)).
ordinary asset,_
ordinary actual'. use,(Be
No. DA 212- 7A:17
, p 3, 200). A f 4. .4
-rn 1-3
..A!,.vaill,L9.•
i
Q: When are ha es of tucks-ITe-trte:r ,,.: as ets ahp when are they
treated as cap th s/s ts?'.6 .---i 17 3 •Ct I -
/
ANS: An equityNnvest 1 piptil orcYfdi9 sse f the investor the sale or
exchange of whiot) resul in eil ep.., caz aj, tfy,o,,,a cal)) al loss. hares of- stock like
_the other securitiekdefinedliR Sec., einc0f-thq RI5C, would be y, maty assets only to
a dealer in securitidkor a pets sii-IngihitilloOth_eptirclw. ! and sale of, or an active
trader (for his own accotintri09 ritiesja,tbe,hal ryk, tyweTer, craffatfier who holds
the shares of stock by w'ay ar attrilestmprli t Igrg,t1,7fiim would be capital assets.
When the shares held by su 4i /estor b'eqbe o hless, the loss is deemed to be a
loss from the sale or exchange o c itaeassett China Banking Corporation vs. C.A.,
G.R. No. 125508, July 19, 2000).
Q: What is the tax treatment of gains or losses from the sale or disposition of
ordinary assets?
ANS: Gains or losses from sale or other disposition of ordinary asset are subject to
graduated rates in case of an individual or normal corporate income tax in the case of a
corporation (NIRC, Secs. 22, 32, and 34).
Q: What is the tax treatment of gains or losses from the sale or disposition of
capital assets?
ANS: Under the NIRC, capital losses are deductible only up to the extent of capital
gains from dealings in capital assets other than domestic stocks and real properties.
Hence, capital gain and capital losses are offset. A net capital gain is an item 9f gross
income subject to regular income tax, except for certain cases. A net capital loss is not
an item of deduction against gross income. The law views net capital losses as
unnecessary expenses since capital assets are not used in the business or trade of the
taxpayer (BANGGAWAN, Income Taxation, supra at 393).
796
BO
Q: Is the sale of goodwill subject to ordinary income tax?
ANS: No. The sale of goodwill is not subject to ordinary income tax since goodwill is not
an ordinary asset and is not among the exceptions under the definition of capital assets
in Section 39(A)(1) of the 1997 National Internal Revenue Code. It is subject to capital
gains tax (WM. H. Anderson v. Juan Posadas, Jr, G.R. No. 44100, September 22,
1938).
Q: Is a membership seat in the Philippine Stock Exchange considered a capital
asset?
ANS: Yes. The existence of seat connotes that the taxpayer is engaged in business. A
person who deals in securities or invests in stock market to monitor the day to day
transactions will have to maintain such seat in PSE where stocks are being traded. With
the said seat are some rights and privileges enjoyed by the member which are
intangible assets, the taxpayer may never have carried in his books (DE LEON, NIRC
Annotated, supra at 534).
Note: The gain realized by the subsequeat sale of the seat should be included in the
taxpayer's gross income (BIR Ruling NOT 151-98).
Q: What is the relevance of dete**444,hether an asset is capital or ordinary?
ANS: The relevance of the 4tinglips in the applicability of the following
provisions/limitations of the
1. Holding period under WC. q91q);V:Ratiljko,
2. Loss Limitation Ruldainder Sec.9(C); and •
3. Net Capital Losst arry-Ove(dLCO) Rule under 4,, A 39(D).
Note: Those three prOV;ioris apply • the asset involved is. a capital asset (NIRC,
Sec. 39).
„to, ;
Q: What is a hAillig perik)d•re;" :0,
ANS: It is th9agth Ol asset
f:),!ttr:.' hasgpen held by taxg.ayer. t covers the period
from the daterquisitiOpho thetd9te of sale of the p- noggat
Q: Discuss the Ryles onp Period-
ANS: The rules onVIA !Nod are as feel
1. In the casOiokan individual taXpayer, nly the following percentages of the
gain or loss recognized uponet,e-ori-e09gf of a capital asset shall be
taken into ac'egunt in Carribltinnide' altaih, net capital loss, and net
income:
a. 100% — ORA pital asset has been held for not more than twelve (12)
months (Aor(term capital gain);
b. 50% — if the capital asset has been held for more than twelve (12)
months (Long term capita! gain).
2. In case of a corporation, regardless of the holding period, 100% if the capital
gain or loss is recognized, the rule on holding period does not apply (NIRC,
Sec. 39 (8)).
3. The above rules do not apply to real property subject to 6% capital gain tax
and shares of stock of a domestic corporation not traded in the stock
exchange with a 15% rate. These are not included in the taxable income since
these are subject to final tax already. For corporations, capital gains and
losses are always 100% (INGLES, Reviewer, supra at 175).
Note: Pursuant to Section 24 (C) of NIRC as amended by TRAIN Law, the final tax rate
for net capital gains tax on the sale, barter, exchange or other disposition of shares of
stock in a domestic corporation not traded through the stock exchange is increased from
the 5/10% CGT to a flat rate of 15% CGT.
In sale of shares of stock not traded through the local stock exchange, what is
controlling is whether the shares of stock are traded in the local stock exchange and not
797
where the actual sale happened (Del Rosario v. Commissioner of Internal Revenue,
CTA Case No. 4796, December 1, 1994).
Q: What is the loss limitation rule?
ANS: Losses from sales or exchange capital assets shall be allowed only to the extent
of the gains from such sales or exchanges. If a bank or trust company incorporated
under the laws of the Philippines, a substantial part of whose business is the receipt of
deposits, sells any bond, debenture, note, or certificate or other evidence of
indebtedness issued by any corporation (including one issued by a government or
political subdivision thereof), with interest coupons or in registered form, any loss
resulting from such sale shall not be subject to the foregoing limitation Sand shall not be
included in determining the applicability of such limitation to other losses (NIRC, Sec.
39(c))
Q: Will the non-use of ordinary assets intended for business convert such asset
into a capital asset?
ANS: Generally, no. A property,purchTs'eTfo-cfutukuse in the business, even though
this purpose is later thwartRirifi4rcumttad,ces'44-yorld4tie taxpayer's control, does not
lose its character as ag,,,oldinary,..bsset.'Ntdoes l'rmdre:Ncontinuance of the active
use of the property chdrigekits)chargrer previousljlrestablisf ed as a business property
(R.R. No. 07-03, See. 4e)). >ri' ,,,.-.,-,,
Exception: Prop9iie&611stifirras orditiOry, a!sks,lotN12;ein id in business by a
taxpayer engagdeiri Vsiness °tip- than teal ete ' sin es are automatically
converted into capital gssets pon shog,o(Voofwiri thet the 6rin ve not been used
,than two-yeart-ii;iiria-to-the , cons in I
In business fol•r-msysi a io i of the taxable
transactions intolviAgjhe propertiesl(R.R.1:No. ;..11 c. 07-:03,
..,_,. Sec.
i 3(e))
• 1•1111 , • 6.3
Q: May a property' itially-classifiget:ap-woiPital alset theLter e treated as an
ordinary asset? --I ,.1!., \.____- -- -
t‘t..... 1 ..c";)
,, . .. .._
ANS: Yes. Junsprclafive p)consisWritl ,ijeld.that Yope , k-ifila ly classified as a
capital asset miethere,after'boll•eatO sl .'atOOr asst if a combination of the
factors indubitably tendsNo sht ;k4ilAtie ctii,i g. n fustfieranclof or in the course
of the taxpayer's Trade or business , tale:o inherited real property usually gives
capital .gain or loss wen thOtigh'tilafkirseftyli lysubdividda or improved or both
to make it salable. ovev, e,',icthe..„ir
ifieed-prop7,r e 42s 'itibgalitially improved or very
actively sold or both it'ln,a.y...bictle,ated 'IT e c ,priRaTljilor sale to customers in the
ordinary course of the heirt-Nbusiik§ss (ON+ Y.' ptitzmussioner of Internal Revenue,
G.R. No. L-26284, October 8,1986).1 /4 „,
Q: Distinguish ordinary gain from capital gain.
Ordinary Gain Capital Gain
' I
As to Source
Ordinary gain is derived from property Capital gain is derived from property not
used in trade or business used in trade or business (whether or not
connected thereto).
As to Adjustments
Ordinary gains are not adjusted by Some types of capital gains are adjusted
the holding period by the holding period
As to Deductibility
Ordinary losses can be offset from Capital losses can only be offset from
both ordinary gains and capital gains capital gains
798
DAN RF„4!?..
Q: Explain the concept of actual gain and presumed gain.
ANS: As a general rule, the income tax law imposes tax only when there is actual
income, gain, or profit by deducting the cost or adjusted basis of the property sold from
the amount realized (NIRC, Sec. 40, par. (A)); this is known as actual gain. However, as
an exception, where an individual or a corporation sold a real property (land or building)
classified as capital asset, the law presumes that there was a capital gain realized, and
the capital gains tax is 6% of the actual consideration or the fair market value at the time
of sale of the real property, whichever is higher. This is known as the presumed gain.
But, as an exception to the exception, the rule on presumed gain does not apply to sale
of shares of stock of a domestic corporation, not listed and sold through a stock
exchange, because there is actual gain whenever an individual or corporate taxpayer
sold shares of stock treated as capital assets (DOMONDON, National Taxation, supra at
152) Thereinafter 2 DOMONDON, Taxation].
Q: Distinguish the subject of capital gains tax on the sale of real properties by an
individual and a corporate taxpayer.
ANS: The following are the distincjjo06 een individuals and corporate taxpayers as
regards the subject of capital gainaelc.:Itii,•
Allan .-fonk% .
Taxpayer Capital Gains Taxable ..
I
. .1 tke,m7--- -c21 . OA
Citizen (Resident or Non-resident) q Ntgaga-pita) g in presumed to have been
r.-• 4. ;
(NIRC, Sec. 24 (D)(1)) „Iii' •,realized froni416—'saLe, exchange or other
44, -'' position of real ploperty located in the
, o', tlippines, classifidi ;Ncapital assets.
,f 1 k
,,A lamo•
Resident Alien, p 4V4 ThA capital gaing presumed to have been
S r ,S
(NIRC, Sec. 24(' )(1)), V ,realfzed from tpe sale, ekchange or other
— • • oli e ,114 - disp sition of _Tea!, ;c) ertv located in the
I:, '• i...,-
..6, j 1:
'NZ tgt% P pines, R- s li 1 0- as al assets.
— 1/4we'-•
NRA-ETB oNn , t in the • realizeoi trom the sale, exchange
Capital gains
Philippines 1, orther disposition of real property.
(NIRC, Sec. 25 (A (3)1
' ,,,,. —
'''.,,
NRA-NETS within the411
, jAppinee4W)'eTealWel a ad from the sale, exchange
(NIRC, Sec. 25 (B)) t # or other disposition of real property.
,-.1a.,..
Domestic Corporation '411! Gain presumed to have been realized on the
(NIRC, Sec. 27 (D)(5)) sale, exchange or other disposition of lands
and/or buildings which are not actually used
in the business of a corporation and are
treated as. capital assets.
The NIRC does not impose the 6% capital

gains tax on the realized from the sale of
machineries and equipment (SMI-Ed
Philippines Technology, lnc.v. CIR, G.R. No.
. . 175410, November 12, 2014).
.
Q: Is a labor union required to pay CGT when it sells its property?

ANS: No. Not being an individual, estate, or trust, a labor union is not required to pay
CGT when it sells its property. Any gain realized from the sale is ordinary income (NIRC,
Sec. 22(Z)), subject to income tax under Section 27 of the Tax Code (B1R Ruling No.
350, July 21, 1988).
799
.. .*: `. . - ,;:..
,, . is,''''•••••.;;• ,•••: R i,,..,,:,,i...s.
(
-'.-.., ZY:,4 DAN ED

Q: Is the transfer of title to real property from the trustee to the beneficiary
without monetary consideration under and by virtue of the Deed of
Acknowledgment of Implied Trust and Waiver of Rights and Interest to Real
Estate Properties subject to capital gains tax?
ANS: No. There is in fact and in law no transfer of beneficial ownership since the naked
ownership of the trustee and the beneficial ownership of the beneficiary are
consolidated in the latter (BIR Ruling No. 108-98, June 29, 1998).
Q: Discuss the basis of determining the gain or loss from sale or exchange of
property.
ANS: If the property is acquired:
1. By Purchase — the basis is the cost of the property;
2. By Inheritance — the basis is the fair market price or value as of the date of
acquisition;
3. By Gift — the basis shall be the same as if it would be in the hands of the
donor or the last preceding,,9mer.J2y. whom it was not acquired by gift, except
that if such basis is.sreatgr tIlan-ithejairmKtcet value of the property at the
time of the gift, the bals shall. b0 An' fair market value for the purpose of
determining 1_,
ostk: t‘ j': v• ...,.,;:.:.' 4' '.. ‘
_,,,-
4. For less t av . amader4tiate consideratiori If mormy or money's worth —
the basis• I e -,,.aodid-bylrans
..- me kpa he.tferee
•••,„ o lhd plqperty (NIRC, Sec. 40
(B));
1\ ''.
5. Tax fro' aiia ge Iransa ror$ ..
a. /Share of stock received:by transfero r origirtalib041s less the money
b. „pt:_ei
R ad y, a_nt (fearre io
r-m
cfa: trOmeottheither p‘dprerty teceived, plus the
fainci nt trea ted ft:.'.41tfivi,ddr,#:1,otlfyeitshireholder rarid:t 'e amount of any
gain that was\recogbiZeetitih. lieexchrge; 0, .?,....1
:Viitrinds of Fpransforee Lisame as it would
be 9 Wads, f tlittrproTinerfegs-fid bptike.ja ount of the gain
rebog ze 461 eJranger i-cirqbeffrAnsfer (TRC,'S c. 40 (C)(5)).
-.4', \ c....11 i nc.• t/..'c--/ ..4,
Q: Distinguish n t capital gain iroL, ',net lcapit‘ipp. ,04'
✓
ANS: Net capital aain meals thee'...e). 'es..be:thei airs fro sales orexchanges of capital
assets over the lases froiksuc" alreriltklil c angest, Net capital loss means the
excess of the losses atkzi staVexchmaspfzetat aqelseciver the from such
sales or exchanges (NIRGh.S 37(A)(2karld ( )).4\-"
,,,,..%,.
M I
Q: What is the difference of tfibMaxAraktentrdf net capital gain from net capital
loss?
ANS: The net capital gain, except capital gains subject to final tax and percentage tax,
shall be reported in the taxpayer's income tax return and shall be subject to the
graduated income tax rates in addition to the net income from other sources. The net
capital loss cannot be deducted from the ordinary income because the loss can be
deducted only to the extent of capital gains (INGLES, Reviewer, supra at 171 and 176).
Q: What is the general rule on exchange of property?
ANS: Upon the sale or exchange of property, the entire amount of the gain or loss, as
the case may be, shall be recognized (NIRC, Sec. 40 (C)(1)).
Note: The following are the exceptions: (RMS-Not)
1. Gains are recognized but losses are not recognized in transactions between
Related parties (NIRC, Sec. 36 (B));
2. No gain or loss shall be recognized if in pursuance of a plan of Merger or
consolidation where there is an exchange solely in kind (NIRC, Sec. 40
(C)(2));
3. No gain or loss shall be recognized if property is transferred to a corporation
by a person in exchange for Stock or unit of participation of which as a result
800
•
BOOK- .
of such exchange said person, alone or together with others not exceeding
four, gains control of said corporation (NIRC, Sec. 40 (C)(2)); and
4. Gain is recognized but loss is not recognized where the exchange is Not
solely in kind (NIRC, Sec.40 (C)(3)).
Q: Who are related taxpayers?

ANS: The following are related taxpayers:
1. Members of the same family (brothers and sisters, whether by the full or half
blood, spouse, ancestors and lineal descendants);
2. Stockholders and a corporation, when the stockholder holds more than 50% in
value of the corporation's outstanding capital stock, except in case of
distribution in liquidation;
3. Two corporations more than 50% in value of outstanding capital stock of each
of which is owned, directly or indirectly, by or for the same individual if either
one of such corporations, with respect to the taxable year of the corporation
preceding the date of the sale %exchange was a personal holding company
or a foreign personal holding#pany;
4. Grantor and fiduciary in a'hagt;t„k
5. Fiduciary of a trust andiillgyparAz'n another trust, if the same person is a
grantor with respect to ea§hairkpd
6. Fiduciary of a trust and bfirral,,,400 trust (NI C, Sec. 36 (8)).
4: ;1r ". '
Q: Define exchange solely,11(Vkind.
ANS: It is an exchang„af property vItith another property os. El no money is involved
(e.g., shares of stoclq;exchanged fOt•Fh res of stock) (2fA DOMONDON, Taxation,
supra at 306). 4e-t' A if
,,,-0' Oliwr. "1
Q: What are thern;tanaPiiihen'4the lain or loss in tie sale or exchange of
Af
property is nop,_ecogriked?
ANS: No gainiross:stel0 reCbgNzed
1. A corppraticp-..etch ispalpart o a merg plE4s jsoli•ation, exchanges
propertr Veiyafitikitock lira core oration, which is a party to the merger or
consolidakon (prof:ally forkock)"
so4
2. A sharehol8eLexcl-L anges stock trk —ration, which is a party to the merger
or consolidatiiiMOTely for the,Sto. :nolkroco • oration also a party to the
merger or coglidatio,,,ATfor
it sock ,
3. A security hItcler o a corporation, which is a party to the merger or
consolidation, el e hatg) es his securities in such corporation, solely for stock or
securities in another corporation, a party to the merger or consolidation
(security for stock); or
4. If property is transferred to a corporation by a person in exchange for stock or
unit of participation in such a corporation of which as a result of such
exchange said person, alone or together with others, not exceeding four
persons, gains control of said corporation: Provided, That stocks issued for
services shall not be considered as issued in return for property (estate
planning) (NIRC, Sec. 40 (C)(2))..
Note: Control means ownership of stocks in a corporation possessing at least
fifty-one percent (51%) of the total voting power of all classes of stocks entitled
to vote (NIRC, Sec. 40 (C)(6)(c)).
Q: What is the Net Loss Carry-Over Rule (NCLCO)?
ANS: Under the NCLCO, if any taxpayer, other than a corporation, sustains in „any
taxable year a net capital loss, such loss (in an amount not in excess of the net income
for such year) shall be treated in the succeeding taxable year as a loss from the sale or
exchange of a capital asset held for not more than 12 months (i.e., deductible in full)
(NIRC, Sec. 39 (D)).
801
Note: This is an exception to the general rule that losses shall be deducted from the
gross income in the same taxable year in which the losses were incurred
(Commissioner of Internal Revenue v. PAL, G.R. No. 179259, September 25, 2013).
Q: Discuss the taxability of gains derived from dealings in real property situated
in the Philippines.
ANS: If the real property is:
1. Capital asset - regardless of the holding period, a final tax of 6% shall be
imposed upon capital gains presumed to have been realized from the sale,
exchange, or other disposition of real property located in the Philippines
(individuals, estates and trusts) or land/building (corporations), classified as
capital assets, based on:
a. Gross selling price;
b. Current fair market value as determined by the Commissioner; or
c. Current fair market value as shown in the schedule of values of the
provincial and cityassessors, ichever is higher;
Note: Capital gainVarifiay-als be, du in„pacto de retro sales and other
forms of condi,parsal 4 U _IV t IN,
.0.:,,,,,,,,;,,„,:„,
Gains from](al s-4b h'er dispositions orteallTropertkby an individual to the
government o NanyoUts-polltraplibdivisjonkr*enPies or to government-
owned iii-rtoi trAecrcorporptickp may beNulijecto t the option of the
taxpayer, to4 6 gr duateOncohle tax ratesli or 6P06apit I gains tax (NIRC,
Sec.I 4par. D)(1) -'':: 1
2. Ordi arr,s, et - s jec g
gra ya ed rates ip case ividual or normal
corp rabin ,orne to in IfiVas 4:ifialaifibration.
Q: What is th n ur of ca I gains,stax?.-. 11,!:

:0
i
ANS: Capital g.sinri a passKe corpe, 1, j ,tp s tep..11 , g the buyer, who
generally woula‘sfidu der ge-ji fa,10fr h6LL, hilippilies, *resented by the
Department of kublid Works' R. Soriano, G.R. No. 211666,
February 25, 201B
Q: Are real prope es tags er ed-pulai nt-

rt • proprnhoo
" procebdings subject •
to capital gains tax? „ii9 Sc‘), -
ANS: Yes. The transfer e'rty thipu01- Ipr pnition proceedings is a sale or
exchange within the meaning ectiora/24r(kpe56(A) (3) of the Tax Code, and
profit from the transaction constitu es itarTain. Such capital gains is subject to
capital gains tax (Republic of the Philippines, represented by the Department of Public
Works and Highways (DPWH) v. Spouses Senando F. Salvador and Josefina R.
Salvador, G.R. No. 205428, June 7, 2017).
Note: The expropriation of property classified as capital asset is subject to CGT and
DST based on the amount of just compensation (R.M.C. No. 41-91). It is not subject to
CWT and VAT (BIR Ruling No. DA-212-07, April 03, 2007).
Q: Who is liable for capital gains tax in expropriation proceedings?

ANS: The seller is liable. It is settled that the transfer of property through expropriation
proceedings is a sale or exchange within the meaning of Secs, 24(D) and 56(A)(3) of
the NIRC, and profit from the transaction constitutes capital gain. Since capital gains tax
is a tax on passive income, it is the seller, or respondents in this case, who are liable to
shoulder the tax. Thus, as far as the government is concerned, the capital gains,tax in
expropriation proceedings remains a liability of the seller, as it is a tax on the seller's
gain from the sale of real property (Republic of the Philippines v. Spouses Salvador,
supra).
802
Q: May capital gains tax be awarded as consequential damages in expropriation
proceedings?
ANS: No. If only part of the property of the owners was expropriated, the amount of
capital gains tax cannot be awarded to the owners as consequential damages.
Consequential damages are only awarded if as a result of the expropriation, the
remaining property of the owner suffers from an impairment or decrease in value. Given
that the payment of capital gains tax on the transfer of the subject property has no effect
on the increase or decrease in value of the remaining property, it can hardly be
considered as consequential damages that may be awarded to owners (Republic of the
Philippines v. Spouses Salvador, supra).
Q: Are all capital gains realized in case of sale of real property subject to 6%
capital gains tax?
ANS: No. Capital gains presumed to have been realized from the sale or disposition of
principal residence by natural persons may be exempted from the 6% capital gains tax
subject to conditions prescribed by law, Sec. 24 (D)(2)). To be exempted, the
following requirements must be mq,(BO: 13-30-10-CP)
1. Sale or•disposition of th9col 4 al principal residence;
2. By a Citizen or resident,dltex,
3. Proceeds of which is qiilgecjil cquiring or constructing a new principal
residence within eighteene r18 lenag mon t "- from date of sale or
disposition; v
v't
4. Notify the Commissioner wi ni thirty (30)a om the date of sale or
disposition thgVuPe.h a pre,sbe return of his ntion to avail the tax
exemption;
5. Can be avale o lykinCe• eve en MR years.
6. The hiRteli I c $‘osa,,adjusted sis of his old'
e pripciA residence shall be
Car idtrover to the cost baftpf new princieal re denc-e;
7. If t e is kitilizaton, the rtion of ain L. -11u.ed to have been
realm _d shall lid so jec o api a gains ta tig:„ .4471
: ..51 V at the time of
AttA
sale, igher, spell b multiplied by a . • which the unutilized
amount b:kars e grops sel g price in order to determine the taxable
portion; and
8. Subject to release: ipon certifica .eiRD
, 0 that the proceeds of the sale
have been u zed (Esc*,Watea 3(NIR- 1,24(D); R.R. No. 17-03, Sec.
2).
Q: Discuss the taxability of dealing in shares of stock not listed and traded in the
stock exchange.
ANS: Regardless of the holding period, a final tax at the rate of fifteen percent (15%) is
imposed upon the net capital gains realized during the taxable year from the sale,
barter, exchange or other disposition of shares of stock in a domestic corporation except
shares sold or disposed of through the stock exchange (NIRC, as amended by TRAIN
Law, Sec 27 (D)(2)).
Q: How is selling price determined?

ANS: The following rules shall apply in determining the selling price:
1. In the case of cash sale — the selling price shall be the total consideration per
deed of sale;
2. If the total consideration is partly in money and in kind — the selling price
shall be the sum of money and the fair market value of the property received.;
3. In the case of exchange — the selling price shall be the fair market value of
the property received.
4. In case the fair market value of the shares of stock sold, bartered or
exchanged is greater than the amount of money and/or fair market value
803
of the property received - the excess of the fair market value of the shares
of stock sold, bartered or exchanged over the amount of money and the fair
market value of the property, if any, received as consideration shall be
deemed a gift subject to the donor's tax under the NIRC (R.R. No. 06-08, Sec.
7 (c)).
Q: Discuss the taxability of dealing in shares of stock listed and traded in the
stock exchange.
ANS: Every sale, barter, exchange, or other disposition of shares of stock listed through
a local stock exchange, other than the sale of a dealer in securities, shall be subject to:
1. A stock transaction tax of % of 1%;
2. Based on the gross selling price or gross value in money of the shares (R.R.
No. 06-08, Sec. 5).
Note: If the sale is made by a dealer in securities, the resulting gain or loss is
considered as ordinary gain subject to graduated rates (20%-35%) for individual and
normal corporate income tax (30%) fgr,corpdratipns (Sec. 127, NIRC).
The term 'dealer in secujitrie means rc t df aocis.s or securities, whether an

individual, partnershippiorebrith-art,esta6sItedprilafe of business, regularly
engaged in the purctfiseAsiotift. ties and the resale4hgieofV,customers; that is, one
who, as a mercha Arbi§Obu • es-ard7Fgells*tfterrho,di)stor4rs with a view to the
gains and profits erived-itherW)m,(N/RC,
vi Pass/ye In income
i hpLo 2E,1
CO
.
Q: Define pas .
ANS: Passive cy_mitir ' tive involvement
of the taxpaye ocess YeAN6GA axabo supra at 99).
Q: What is the
ANS: Passive inpome m y b a:•••ff
1. Subjec d
, di e received by a domestic
corpora(' tion u der Sec. 28(B)(1) of
NIRC); or
2. Subject to int tai
(-Mr t m Pte'Ign currency bank deposits
ntamaggm ro
by a resident citi el Sec 4 ,Eyea
,,HRO1),
Q: What are the sources of passiVe,income..subject to final tax?

ANS: The following are the sources of passive income subject to final tax: (DRIP)
1. Dividends;
2. Royalties;
3. Interests; and
4. Prizes, awards and winnings.
Note: They are not added to other income in the determination of ordinary income tax
liability (NIRC, Sec. 24).
Q: Define dividend income.

ANS: It refers to any distribution made by a corporation to its shareholders out of its
earnings or profits and payable to its shareholders, whether in money or other property
(NIRC, Sec. 73. (A)).
Q: When is dividend income subject to tax? •

ANS: Dividend income is taxable at the time of their declaration by the corporation, and
not at the time of actual payment of dividends, since dividend income is taxable,
whether actually or constructively received (MAMALATEO, Income Tax, supra at 213).
804
Q: Are stock dividends taxable?
ANS: The general rule is that stock dividends are not taxable (applying the Severance
Test).
Exception: Cancellation or redemption of shares of stock issued as dividends, the
amount distributed in redemption or cancellation shall be considered taxable income
(NIRC, Sec. 73 (B)).
Note: For the exempting clause to apply, it is indispensable that: (RCSE)
1. there is Redemption or Cancellation;
2. the transaction involves Stock dividends and
3. the time and manner of the transaction makes it Essentially equivalent to a
distribution of taxable dividends. Of these, the most important is the third
(Commissioner of Internal Revenue v. The Court of Appeals, G.R. No. 108576,
January 20, 1999).
Q: Does reclassification/exchange of shares give rise to a taxable event?

ANS: No. Neither the reclassification nowchange per se, yields realize income for tax
purposes. The exchange of shares, Op more, produces no realized income to the
subscriber. There is only a modifiqkttn,:plkhe subscribers' rights and privileges - which
is not a flow of wealth for tax purrOpirO:Apissioner of Internal Revenue v. The Court
of Appeals, G.R. No. 108576, Jad0:401999)
., -
*44.,
Q: Discuss how dividends rveived'apittia'donrekeorPOration is taxed.
ANS: The final tax on diy,idear receivefis ixed at:
1. 10% — cashAvitlior proper y, j Bends, actually of O structively received by
citizens andtEepident ali9Ps' (r cluding the sh9re o an individual in the
distributableigt #1.021ne after t of a taxablea hip of which he is a
partnedpIRC, ST4g4 (B)(2)); ib c,
2. 20°/ t7 andlor properthdi ends, actuapi or ctively received by
pollatiCler6aliak engaged in de or b sidessE tpAtg-the share of an
individual in the distriburghlp ne ncome a tOble partnership of
which 17.0_4140 (1\110„ Se 5 (A)(2));
3. 25% --calrgfiaialprope d* ends, actually or constructively received by
non-resident p,lienskot engaged tradmr business (NIRC, Sec. 25, par. (B));
r:"
4. Exempt — Twifk'd by do s7-• -anth resident foreign corporation
(intercorporatnividensK • ' ,i4;,ii.
,„ ••:,' . ,k
5. 15% — receivrd by nonresident foreign corporation, provided that the country
in which the nonresident foreign corporation is domiciled, shall allow a credit
against the tax dtieffrOm the nonresident foreign corporation taxes deemed to
have been paid in the Philippines equivalent to fifteen percent (15%), which
represents the difference between the regular income tax of thirty percent
(30%) and the fifteen percent (15%) tax on dividends (Tax Sparing Rule)
(NIRC, Sec. 28 (B)(5)(b)).
Note: A principal defect of the tax credit system is when low tax rates or special tax
concessions are granted in a country for the obvious reason of encouraging foreign
investments. For instance, if the usual tax rate is 35 percent but a concession rate
accrues to the country of the investor rather than to the investor himself. To obviate this,
a tax sparing provision may be stipulated. With tax sparing, taxes exempted or reduced
are considered as having been fully paid (CIR v. Procter & Gamble Philippine
Manufacturing Corporation, G.R. No. L-66838, December 2, 1991). •
•
Q: Discuss how dividends received from a foreign corporation is taxed.
ANS: If dividends declared by a foreign corporation are received by a resident citizen
and domestic corporation, it is subject to regular income tax and normal corporate
income tax respectively. If such dividends are received by a non-resident citizen, alien
and foreign corporation, it is not subject to tax since only resident citizens and domestic
805
corporations are subject to tax on income derived from sources within and without the
Philippines (NIRC, Sec. 23).
Note: Dividends received from a foreign corporation are considered as derived from
sources within the Philippines if at least fifty percent (50%) of the gross income of such
foreign corporation for the three-year period ending with the close of its taxable year
preceding the declaration of such dividends or for such part of such period as the
corporation has been in existence) was derived from sources within the Philippines
(NIRC, Sec. 42 (A)(2)(b)).
Q: Goodyear Philippines ("Goodyear") increased its Authorized Capital Stock

from P400M (divided to 4M shares with par value of P100) to P1.73B (divided to
4M common shares and 13.3M preferred shares with par value of P100 each).
Consequently, all the preferred shares were subscribed by Goodyear Tire and
Rubber Company ("GTRC"), a foreign company registered in the US. Thereafter,
Goodyear's Board of Directors authorized the redemption of GTRC's 3.72M worth
of preferred shares at the redemplign,..pric.e4 P372M representing the aggregate
par value and P97M repr".serfting 0:1-.ukipaid dividends. Is the gain
derived by GTRC subjestito 151%,fina W th ohliq6Tpx47WT") on dividends?
ANS: No. The term di1idinli ny ibufiont tpaa‘by a corporation to its
shareholders out ofoitfeeamin s,d r profits and pa beloylIkareholders, whether in
one or in other pr pe'rtydo f-ttfe—rolegoing the hays therefore that the
redemption price 94,1e
§e' fin the arurOf fil..97,73 314 etyed by GTRC could
not be treated s aZhd ulat d dividendein 44-ears at d beisubjected to 15%
FWT. Verily, reds"ponde is A S covering:44 . years 2003 to/2 0 ow that it did not
have unrestric dffita ned e nings, and fact, operated in of deficit. Thus,
.1
absent the a it bill of u resth-6 egAr tain-e&earn ngs, th of directors of
respondent h ower to issuddll.• '43 om t's ne mal Revenue v.
Goodyear Phill nc. r" No. 21\6;30,6tugust 3 a 6).
Q: What are di ..6 e •,,,s8 in morne,texatto t/

)'s
ANS: Disguised ividen s are1 to inestic corporation,
which is a subs! 'ary of latter ostensibly for
services rendered y bthe
last tarth9rfo re disproportionately
larger than the actua alue of h e, the amount over and
above the true value o s a dividend and shall be
subjected to the correspo dwIta rced gross income, or such
other preferential rate as may corresponding Tax Treaty. An
example is Royalty payments under a co ng licensing agreement.
Q: Define royalty income.

ANS: It is the payment for the use and exhaustion of property such as earnings from
copyrights, patents, trademarks, formulas, and natural resources under lease. It covers
both payments made:
1. Under a license; and
2. Compensation which a person would be obliged to pay for fraudulently copying
or infringing the right.
Note: Royaltied must be derived from sources within the Philippines to be considered as
passive income (Sec. 42(A)(2), NIRC).
Q: What is the tax treatment of royalty income?

ANS: Royalty income derived from the sale of royalty on a regular basis for a
consideration is considered as an active business income subject to the normal
corporate income tax. When a person pays royalty to another for the use of its
intellectual property, such royalty is passive income. of the owner thereof subjeCt to final
tax (MAMALATEO, Income Tax, supra at 143).
806
Q: What are the tax rates imposed on royalty income subject to final tax?
ANS: Royalty income subject to final tax is taxed as follows:
1. In general - 20%;
2. Derived from books, other literary works or musical compositions - 10%
(NIRC, Secs. 24-25).
Note: In all instances above, for non-resident alien not engaged in business, rate is
25%; while for domestic and resident foreign corporation, rate is 20% and 30% for
nonresident foreign'corporation (NIRC, Secs. 27-28).
Q: What are the conditions for interest income to be treated as passive income?
ANS: Interest income must be:
1. Derived from sources within the Philippines;
2. Earned by an individual citizen, resident alien individual, or non-resident alien
individual engaged in trade or business in the Philippines or earned by a
domestic corporation or resident foreign corporation; and
3. Derived from any currency 44 deposit and yield or any other monetary
benefit from deposit substjtpte04nd from trust funds and similar arrangements
(NIRC, Sec. 42 (B)(1)). Afte1 f ./ 1
Aitg •'.
Q: What are the different tax trdirriqts interest incomes?
r,
ANS: Interest income derived frorrAkto._ Withip,the Philippi es may be subject to final
tax or exempt. Interest income ,griv,e0diperazitpo.1 e Philippines are subject
to the graduated rates (for„ ''sident citizens) or normaitt p rate income tax rate (for
domestic corporations),7
Apil
Note: To determine if i erect incomalisAdome within or incg ewithout, determine first
the residence of the detoo.S,r rceris wit in if debtor is siqant of the Philippines
(NIRC, Sec. 42 (A .;;. ‘
, 6.
Q: How is th on if in,comesuvct to final fax determi ed?
ANS: Interestcomet4re • to fihal tax istaxed as MI
Pill
1. From4vy cvg n ba eposi yield, or an netary benefit from
deposits• bs i es nd froth trus nds and similar arrangements derived from
sources vtRin the ,ilippirre - 20 ;
2. From long to deposit (LTD) or nt in the form of savings, common or
individual trv. Ms, substiL, p, r anagement accounts, and-
_ other invest BntsY. evi•ertgalycrtificates in suc form prescribed by BSP -
exempt;
Note: In case i&-termination before the 5th year, a final tax shall be
imposed on the entire income, whose holding period was:
a. 4 years to less than 5 years - 5%;
b. 3 to less than 4 years - 12%;
c.- less than 3 years - 20%.
3. From foreign currency deposit units, except NRC - 7.5% (now 15%) (R.R. No.
14-2012).
Note: Under the TRAIN Law, the rate of final tax on interest income received by resident
individual taxpayer under the expanded foreign currency deposit system increased from
7.5% to 15% final tax (NIRC, as amended by TRAIN Law, Sec. 24(B)(1)).
Q: What are deposit substitutes?
ANS: Under Section 22(Y) of the NIRC, the term 'deposit substitutes' shall mean an
alternative form of obtaining funds from the public (the term 'public' means borrowing
from twenty (20) or more. individual or corporate lenders at any one time) other
than deposits, through the issuance, endorsement, or acceptance of debt instruments
for the borrower's own account, for the purpose of relending or purchasing of
receivables and other obligations, or financing their own needs or the needs of their
agent or dealer. Congress specifically defined "public" to mean "twenty (20) or more
807
individual or corporate lenders at any one time." Hence, the number of lenders is
determinative of whether a debt instrument should be considered a deposit substitute
and consequently subject to the 20% final withholding tax. Thus, a BIR ruling which
states that all government bonds are deposit substitutes regardless of the number of
lenders is not valid because it completely disregards the "20 or more lender rule" found
under Sec. 22(Y) of the NIRC (Banco De Oro v. Republic of the Philippines, G.R. No.
198756, January 13, 2015).
Q: What is the tax implication if the debt instruments qualify as deposit

substitutes?
ANS: If the bonds are considered deposit substitutes (20 or more lenders), the interest
income is generally subject to the 20% Final Withholding Tax. If the bonds are not
considered deposit substitutes (19 or less lenders), the interest income forms part of
gross income and is subject to the regular income tax rates (Banco De Oro v. Republic
of the Philippines, G.R. No. 198756, January 13, 2015).
Q: What are the conditions that,shou d fig'ipsentto enjoy income tax exemption
of interest income derive cfriiiiilong tprni diepCrsitX1111 or investment?
ANS: The following are e-co diticins fort%comeVax'exemptign: (DISB-5-DIET)
. • s ..--- --..
1. The Deosijo g oils an inilliTaDalkcitizen
.,., (Rsigent or non-resident) or
resident lie -residentliert.44gaged .iliWade or business in the
Philippi rdirporati4; Th. ."\— "I\
2. The L entsirbertgjeatk shoikd beN'uliderri the name of the
t
lndivi nder the name of the corporateo o jc bank or the trust
depa cti hit of tile•bank; ' .\". '
3. The L vestmbntseu ,stbeno:thoAprm c f Savin b-fdtirrron or individual
I
trust unds• eposit ubsti itas,llinveMent rpanager eQ ounts and other
inves nts vi en d by cute 666'6 in suc f orrq pre,scrib by the BSP;
4. The TD *riv 5 &issued
7,-;,t1;
an bAgly nd not by other
finanA s ' tio i ,
5. The LTsD or in stn) eg t ere of not less than five ()
years;
6. The LT or inveqme e—i m ations gfi P10,000 and other
denomina ns as col b- eiabala P.
7. Only the Int rtst4r1I-pV:ro infrestme certificates are covered by
the income taxbxe 1.19 7
8. Income tax gxeml3tio does n otteincome such as gains from
trading or foreign exchan ---
9. The LTD or investments should not be :terminated by the investor before the
5th year, otherwise it shall be subjected to the graduated rates of 5%, 12%, or
20% on interest income earnings (R.M.C. No. 18-2011).
Q: Does the 20% withholding tax on passive interest income on deposits apply to
cooperatives?
ANS: No. Under the NIRC, interest from any currency bank deposit and yield or any
other monetary benefit from deposit substitutes and from trust funds and similar
arrangements is subject to a 20% Final Withholding Tax (NIRC, Sec. 24(B)(1)). This
provision applies only to interest paid by banks and does not cover interest paid by
cooperatives. Moreover, members' deposits with the cooperatives are not currency bank
deposits nor deposit substitutes. Thus, Interest of members' savings and time deposits
with duly registered cooperatives are not subject to income and withholding tax. The
legislative intent under R.A. No. 6938 or the Cooperative Code of the Philippin'es is to
give cooperatives a preferential tax treatment and tax exemption. This tax exemption
should be construed to extend to members of cooperatives (Castillo, Dumaguete
Cathedral Credit Cooperative v. Commissioner of Internal Revenue, G.R. No. 182722,
January 22, 2010).
808
Q: Define rental income.
ANS: It refers to the amount or compensation paid for the use or enjoyment of a thing or
a right and implies a fixed sum or property amounting to a fixed sum to be paid at a
stated time for the use of the property (MAMALATEO, Income Tax, supra at 231).
Q: What is the tax treatment of income received from lease of property?

ANS: The following is the tax treatment of income received from lease of property:
Type of Rental
Income Taxpayer Tax Rate •
' RC, NRC, RA, NRA-ETB (NIRC, Sec. Normal graduated

32(5); Sec. 42(A)(4)). income tax rates
. DC and RFC (NIRC, Sec. 32(5); Sec. Regular corporate
42(A)(4)). income tax rate
Rental income 11====11111 FWT of 25%
on prop y
N RFC (N/Regart4.98(B)) FWT of 30%
locate d in
ert
the '4 • l„*Mg .
Philippines NRFC -groa • ir ' elease and ch rter FWT of 4.5%
paid to 4T ., 4ei
fees of jgreign esqb , 'C 9c.
28(Byp
.... j .t . A
-01:'
. Alm 4
RF9' -gross rpm s, lease, and chartP FWT of 7.5%
ees of .*,=aircraft, machineries, /a
oequiorp„,c, .R.28(8)(4)). /
g.e.0,, k eys
Rental income and DC (NIR Sec. 246)(1)( ; Normal income tax
on property Iz'Se_ ,2,-g(ANpc. 32 Sec. 42PIAM:VW
. .i.kg .....sio
located
outside the k.We,,. `"r " '
...RA, NR,A-E n% , NRA-NETB, RFC, Not subject to
Philippines . CNRFIN/RD, Se 24(A)(1)(b); Sec. income tax
paid to 8 ALO ;Sec. 32( ' -4P-CP 4)).
r4-'
Q: What is the tax trea ent easehold improvements made by the lessee?
ANS: When the lessee erectedsor built permanent improvements in the leased property
which will become the property of the lessor upon the expiration of the lease contract,
the value of the improvements should be reported as income of the lessor (R.R. No. 02-
40, Sec. 49).
Note: No income accrues to the lessor if the improvements are subject to removal by
tb.e_lessee (DIZON, Outline in Taxation (2006)) [hereinafter, DIZON, Taxation).
Q: What are the methods of reporting income from improvements made by the
lessee?
ANS: In reporting income from improvements made by the lessee, the lessor may use
any of the following methods:
1. Outright Method — income is recognized at the time when such buildings or
improvements are completed at fair market value;
2. Spread-out method — the lessor spreads over the life (or remaining period) pf
the lease, the estimated depreciated value of such buildings or improvements
at the termination of the lease and report as income for each year of the lease,
an aliquot part thereof. This applies when a building is erected by a lessee in
the leased premises in the pursuance of an agreement with the lessor that the
809
building becomes the property of the lessor at the end of the lease (R.R. No.
02-40, Sec. 49).
Q: What is the tax treatment of advance rental paid by the lessee?

ANS: Prepaid or advance rental is taxable income to the lessor in the year received, if
so received under a claim of right and without restriction as to its use, and regardless of
method of accounting employed. Security deposit applied to the rental of the terminal
month or period of contract must be recognized as income at the time it is applied
(CASASOLA, NIRC, supra at 221-222).
Note: If the security deposit is to ensure contract compliance (security deposit with
acceleration clause), it is not income to the lessor until the lessee violates any provision
of the contract (CASASOLA, NIRC, supra at 221-222).
vii. Annuities, proceeds from life insurance or other types of insurance

Q: What is annuity?
ANS: It refers to the periodic installmeDy'rdyrnents.a income or pension by insurance
companies during the life ol,„a,pe son odorI ntZbcttixed period of time, whichever
is longer, in considers on apltal pal IDA isNaid annually, monthly or
periodically, computedPirpal t e modfirraiaTead, btit,nbt e essarily for life (Peralta
V. Auditor General, e 80, - A b.29,4947
Q: What is the t a ent or th .prodeci:s7,froZInn "ti r nsurance?

ANS: The porti 1.1 of t pro eds r pre tirifrtetum of pr miumks aid is not taxable
(return of cape hile that I.' erest m unts in excess of
premiums pai .e r on ca. ital) te, taxg le,More t e tota prremi En returns exceed
the aggregate, rem s paid the e'c billillpfi Ili in uded ii t4i1
t r ss income (R.R.
Er
No. 02-40, Seg. kg. \IMO`
1 -..4
Please see di stn I ability pf needs .-/rfe r s n e and returns of
premiums from u ont 4 der* t9( o ).
Prizes and aBvards
Q: What is the mArting of rize 4lctRaigkp rpses o ncome taxation?
ANS: Prizes refers toIllose ptiRed, s a resu , filer innings are products of
chance or luck (DE LEO Nl nnotte i fy1„) It refers to the amount of
money in cash or in kind re by qa r\t ougff luck. Prizes and awards are
generally taxable except if spe'bificalLlation under the exclusions from the
computation of gross income under Sec. 32(B) of the NIRC.
Q: What prizes and winning are subject to final tax?
ANS: The following prizes and winnings are subject to final tax:
1. Prizes derived from sources within the Philippines by an individual amounting
to more than P10,000. Such prizes are taxed on a per transaction basis;
. 2. Other winnings (except winnings amounting to (P10,000) or less from
Philippine Charity. Sweepstakes and Lotto which shall be exempt), derived
from sources within the Philippines;
3. Philippine Charity Sweepstakes and Lotto winnings in excess of P10,000 shall
be subject to the 20% final tax (NIRC as amended by TRAIN Law, Sec. 24
(E)(1)).
Q: What prizes and winning shall be included in gross income to be taxed at
regular rates?
ANS: The following prizes and winnings shall be included to determine gross income:
1. Prizes derived from sources within the Philippines by an individual amounting
to P10,000 or less (NIRC, Sec. 24(A)(1)(b));
810
2. Prizes and winnings from sources without the Philippines by a resident citizen
individual are included in the gross income. In other winnings, there is no
threshold amount (NIRC, Sec. 24 (A)(1)(a)); and
3. Prizes and winnings of corporations from whatever source are not subject final
tax but included as part of their gross income (NIRC, Sec. 24 (B)(1)).
Q. What prizes are excluded from gross income?

ANS: The following are excluded from gross income:
1. Prizes and awards made primarily in recognition of religious, charitable,
scientific, educational, artistic, literary, or civic achievement but only if:
a. The recipient was selected without any action on his part to enter the
contest or proceeding; and
b. The recipient is not required to render substantial future services as a
condition to receiving the prize or award; and
2. All prizes and awards granted to athletes in local and international sports
competitions and tournaments. hether held in the Philippines or abroad and
sanctioned by their nationali'd associations (NIRC, Sec. 32(B)(7)(d-e)).
ix. Pensions retirement benefit-se ar • • • on • a

• Vi r
Q: What is pension in general? :;-0 *
ANS: It refers to the amount ocinorf:00, eceiv Mum sreor on staggered basis in
consideration of servicesooldered -Or after giAn !Waal reaches the age of
retirement (Peralta v. Alai' General,p fi iNo. L-8480, Marc 9, 1957).
0
it 41..
Q: What is the tax treatment ott pensiorT
ANS: Pensions, rgrefeenaRefits, gratu es are generally tixab e to the extent of the
amount receiveo0P6Xcept if4ttietdis ki,, BIR proved penpon plan d the requisites for
exemption haOeteen rittr(NIRCSec.' 32 B (6)).
tttr .gh <,ti. •
'1W
Q: What is the 'ax trei_atmla of separab pay?
ANS: Separation• aaetyk9c may At b axable, depending on the voluntariness or
'4i11,,,,
l
involuntariness of t • e da.uselk sepdratio NIRC, Sec. 32 (B)(6)(b)). It is taxable when
voluntarily availed of. IVphall not be taxabl to (VALENCIA & ROXAS, Income
Taxation, supra at 210): 4-
x. /ncome from anysource
Q: Discuss income from n, --source whatever.
ANS: It embraces all income not expressly exempted within the class of taxable income
under the law, irrespective of the voluntary or involuntary action of the taxpayer in
producing the gains, and whether derived from legal or illegal sources (2 DOMONDON,
Taxation, supra at 185).
Q: What is the tax treatment of cancellation or forgiveness of indebtedness?

ANS: The cancellation or forgiveness of indebtedness may amount to a payment of
income, a gift, or a capital transaction, depending upon the circumstances:
1. Taxable Income — if an individual performs services to a creditor who, in
consideration thereof, cancels the debt to the extent of that amount;
2. Gift — if a creditor merely desires to benefit a creditor and without any
consideration therefore cancels the debt; the same need not be included in the
latter's income•because it is an exclusion under Sec. 32(B); or
3. Capital transaction — if the corporation forgives the debt of its stockholdeib
which has the effect of an indirect dividend (R.R. 02-40, Sec. 50).
811
BO(
Q: Is just compensation received from the expropriation of property taxable?
ANS: Yes. The compensation or income derived from the expropriation of property
located in the Philippines is an income from sources within the Philippines and subject
to the taxing jurisdiction of the place. The acquisition by the Government of private
properties through the exercise of the power of eminent domain, said properties being
justly compensated, is embraced within the meaning of the term "sale" or "disposition of
property" (Gutierrez v. Court of Tax Appeals, G.R. Nos. L-9738 & L-9771, May 31,
1957).
Q: Are damages received considered taxable income?

ANS: Damages may or may not be considered taxable income depending on the nature
of damages. Compensation for loss of income and exemplary damages are taxable.
Moral damages, reimbursement for hospital bills, return of capital are not taxable (DE
LEON, NIRC Annotated, supra at 120).
Q: Define bad debts. ,„,..,.............0„,4

ANS: Bad debts refer to thow166t-S requltipg ltorirthe worthlessness or uncollectibility,
in whole or in part, of am4punts oke, the taxpaeWbYlot ers arising from money lent or
from uncollectible amountd
e --%aln'co e,trorn.gapds -51..òld or se ices rendered (R.R. No.
05-99, Sec. 2 (a)). / I,', ... - 4.0k4
e
1 V,o,"'''-m"7:-.".—''''''•,..
Q: When is the rico re Hof ccounts piviiiously wItoe oV.taxable?
ANS: it is taxa*w 1w
the r coven,/ of Ab0 X- - is clover
debts dg r th\Tax Benefit Rule;
otherwise, the r covery is not axable (Nika%Sec. 34(e) 1)).
k• li
(Jr)
Q: Discuss th amBenefit uleKr— ,is Iii 4<7,1
ANS: The rei ®very
lk 4f bad debts prreviNtrfipllowed s a depctior in the preceding
year or years Rak inc;112A1 as patt?of:file taxpa erP4Aitigs inco e in the year of
such recovery o,the-atentrOt income tax refit a}d delibctin (R.R. No. 05-99).
cz,l 4.fix ,
e. Exclusions and/ exemptionS:Z 5, IN
\ \ ...
Q: Define exclusItons fromoro§s 4,, corne,_—_,
ANS: It means incto'Te receiveitot",_
63irge. stota able income because it is
exempted by law or tit ty DEISQUE...4randir ted, teat 361).
L Rationale -YOir I, \
. `*•!.t., 1
Q: What is the rationale fOr diclusibris.
ANS: Some receipts are excluded from gross income because:
1. They are not income, gain or profit.
Examples: Life insurance proceeds paid to the heirs or beneficiaries upon the
death of the insured and damages received on .account of personal injuries or
sickness; • •
2. They represent return of capital. _ .. . .
Example: Amount received by the insured as return of premiums;
3. They are subject to another kind of internal revenue tax.
Examples: Gifts, bequests and devises. They are subject to donor's tax and
estate tax;
4. They are income, gain, or profits which are expressly exempt from income tax
under the constitution, tax treaty, NIRC, or general or special law.
Examples: Retirement benefits received under R.A. No. 7641, income, derived
by foreign governments and GSIS, SSS, or other contributions (MAMALATEO,
Income Tax, supra at 150).
812
•
ii. Taxpayers who may avail

Q: Who may avail of the exclusions?
ANS: All kinds of taxpayers, whether citizens or aliens, and whether residents or non-
residents may avail of the exclusions.
Distinguished from deductions and tax credits
Q: Distinguish exclusions from deductions.

1. Exclusions refer to the flow of wealth to the taxpayer which is not treated as
part of gross income due to its exemption by law or because it does not come
within the definition of income; deductions are the amounts which the law
allows to be subtracted from gross income in order to arrive at net income;
2. Exclusions pertain to the computation of gross income; deductions pertain to
the computation of taxable income; and
3. Exclusions are something received or earned by the taxpayer but which do not
form part of gross income,;00clions are something spent or paid in earning
gross income (MAMALATE ,nifocne Tax, supra at 257).
M -
Q: Distinguish exclusions. . fromiLi O
Al
. rAck
ANS: Exclusion is an amount recWiv,e1V .p,e,or gain of,the taxpayer but does not
form part of the gross income; ta'ic crpLit'V,nAtionAmeresenting tax previously paid
which may be deducted from0 present tax liability fOs'afri e a the tax still due.
Exclusions under the Constitution
Please see discusti .' I Pnociples of Tax

• irojIAGe% era
to on-stock, non-profit
educational instituffans unaplag:
Exclusions uniote-Vthe.NIRC
Q: What are the,exclysiqns4from gLoss income unde fide Ete
ielillowingfrgre e eluded from gross income: (PIG-CTRM)
ANS: Under the M 0,-41
1. Proceeds ife inskancepoliciejl
2. Amounts received Insured as, eium paid;
3. Value of propsacquire;:l at visor descent;
4. Compensation'or injuriO, or sickness;
5. Income exempt ugedsahe tax Treaty;
6. Retirement bene s4ensions, gratuities, etc.; and
7. Miscellaneous items:
a. Income derived by foreign government
b. Income derived by the government or its political subdivisions
c. Prizes and awards
d. Prizes and awards in sports competition
e. 13th month pay and other benefits
f. GSIS, SSS, Medicare and other contributions
g. Gains from sale of bonds, debentures or other certificate of
indebtedness with a maturity of more than five (5) years
h. Gains from redemption of shares in mutual funds (NIRC, Sec. 32, par.
(B))•
Proceedsof Life Insurance Policies
Q: What are the conditions for exclusion from gross income of the recipient of life
insurance proceeds?
ANS: The proceeds of life insurance policies must be: (D-FIB-SO)
1. Paid by reason of the Death of the insured;
813
2. To his Heirs or Beneficiaries; and
3. Whether in a Single sum or Otherwise (NIRC, Sec. 32, par. (B)(1)).
Note: Payments for reasons other than death are subject to tax to the extent of the
excess of the premiums paid. If there are any policy loans (borrowings made on the
policy), these are to be considered as advances deductible from the life insurance
proceeds received upon death (2 DOMONDON, Taxation, supra at 191).
Q: What is the rationale for the exclusion?

ANS: They partake more of indemnity or compensation rather than gain to the recipient.
Life insurance proceeds serve the same purpose as non-taxable inheritance (2
DOMONDON, Taxation, supra at 192).
Q; What is the tax treatment of interests paid on life insurance proceeds?

ANS: If the amount of life insurance proceeds is held by the insurer under an agreement
to pay interest thereon, the interest payments shall be included in the gross income
(NIRC, Sec. 32, par. (B)(1)). .--"—'7,.
Note: Interest do not form pa ,ortne in emnItyput drmarnings or income from the use
of capital (i.e., the insurance pixeed icy ricIN ken) which are taxable (2
DOMONDON, Taxatioyskaa 19 ...---
' A. •.‘.
.." . a ....
Q: Who may be the re iperf 91JifelffitTpre'proge se? .._..
ANS: The desig' 6 f tlfe beneficj Ty iviotAssentibl fo p 9;6es of exclusion of life
insurance proceeds ,ro the ,gross i conigaof4he recillient. The co ept of revocability.
or irrevocability f desi nation of the berAlty is metal o ermining whether
the insurance eiro>e s are do form rrf Ihesross dross state cedent or not (2
DOMONDON, axati n, sup at rg „A
11 4,- I
Q: What are pstns nas ere Ike: ,ulance R784- not excluded from
the gross incdrrieffthe ? 6 fqnt? R 1i ,,, i/ f
i
ANS: In the folr ivingìtari ,,,\,,tt1 Kjoi-a4.164i,
e )f.0) ur2ace poti les shall form part
of the gross inco e of t e. reCipOht): 41.1 .--.1-' ,./
,,,,F4
1. Where tle life ifturanb9,ffo is ‘'s lits dotes cure oney obligation;
2. Where the life inOarTcoaiqcyv i raqarilste or a val ble consideration;
Note: Only ,,the a5tualQ0uatils -`lictl- nd the amount of the
premiums and °the s"subsequeriffy b transferee shall be tax-
exempt. 1,1 "
3. The recipient of the 1 stgice r e tirsiness partner of the deceased
and the insurance was taTe"n mpensate the partner-beneficiary for any
loss in income that may result as the death of the insured partner;
4. The recipient of the insurance proceeds is the partnership in which the insured
is a partner and the insurance was taken to compensate the partnership for
any loss in income that may result from the dissolution of the partnership
caused by the death of the insured partner; and
5. The recipient of the life insurance proceeds is a corporation in which the
insured was an employee or officer (R.R. No. 02-40).
Return of premium paid

Q: What are the conditions for the amounts received by the insured as return of
premiums to be excluded from gross income?
ANS: The conditions for exclusion are the following: (R-LEA-TM)
1. The amounts are received as a Return of premiums paid by insured;
2. They were under a Life insurance, Endowment, or Annuity contracts; and
3. They were received either during the Term, or at the Maturity of the term
mentioned in the contract, or upon surrender of the contract (NIRC, Sec. 32,
par. (B)(2)).
•814
Q: What is the reason for the exclusion of the return of premiums paid from gross
income?
ANS: The amounts returned are not income but return of capital. They represent
earnings which were previously taxed (2 DOMONDON, Taxation, supra at 198).
Amounts received under life insurance, endowment or annuity contracts

Q: Define endowment.
ANS: In endowment, the insurer agrees to pay a sum certain to the insured if he outlives
a designated period. If he dies before that date, the proceeds are to be paid to the
designated beneficiary (2 DOMONDON, Taxation, supra at 199).
Q: What is the tax treatment of proceeds received under endowment policies?
ANS: It depends. If the insured dies, and the beneficiary receives the life insurance
proceeds, these are not taxable income because they are excluded from gross income
of the recipient (NIRC, Sec. 32, par. (B)(1)), if the insured does not die and survives the
designated period, the amount pertaiQirixto the premiums he paid are excluded his
gross income (NIRC, Sec. 32, par. fEj)(2ig6ut the excess shall be considered part of his
gross income (NIRC, Sec. 32, pari
4 ,4
Value of Property Acquired by Gift, Beq est, Devise, or Descent
.,11
Q: What gratuitous transfers aLe e4,(artgross i 'ane?
ANS: The value of property a4lired eq , e is excluded from gross
income. The income frolsaid proper , owever, is include s part of gross income
and is subject to tax (A/NC,t,Sec. 32, -per ) (3)) .
Note: Only donated pro nty is FicluEted dom gross inconi come derived from such
donated property ap." cludettris part of grcTss income and'no excluded.
Taz •
Q: What is th, reasonloyvthe excaion gratuities from gross income?
ANS: The cont gralLon Rsedi gg. pure erality aridT%•al jest to donor's tax
(gift) or estatelax be west devigetas t ase ma here is no income
(2 DOMONDON,t1Ta atioNistpra EI1206).
/
Q: When is a gift, equest, devise or d eluded from gross income?
4,
ANS: When a person gives. wing or nigh nd it is not a legally demandable
obligation, then it is tre4ted as a ,grandìe s income. However, if there
is a legally demandablegbligatio to give, such as for services rendered by one to the
donor or due to his menWeamount received is taxable income to the recipient (Gift
Tax Test) (2 DOMONDONTaxation, supra at 208).
,4mount received through accident or health insurance
Q: What kinds of compensation for injuries or sickness are excluded from gross
income?
ANS: The following compensation for injuries or sickness is excluded from gross
income:
1. Amounts received through Accident or Health Insurance or Workmen's
Compensation Act as compensation for personal injuries or sickness; and
2. Amounts of any damages received whether by suit or agreement on account
of such injuries or sickness (NIRC, Sec. 32, par. (B)(4)).
Q: What kind of damages arising from personal injuries and sickness are
excluded from gross income?
ANS: Damages arising from personal injuries and sickness that may be excluded from
gross income are: •
1. Actual or compensatory damages — this is the adequate compensation for
pecuniary loss suffered as may be duly proved.
815
BEDAN RED BOOK=
2. Moral, nominal, temperate or moderate, and liquidated damages — should be
on account of physical injuries or sickness.
Note: Punitive or exemplary damages are taxable within the broad concept of gross
income (Glenshaw Glass v. Commissioner of Internal Revenue, 75 US 473 (1955)). The
personal injury exclusion does not apply because the amounts are awarded on account
of the defendant's conduct rather than the plaintiff's personal injury (US IRS Rev. Rul.
84-108, 1984-2 C.B. 32).
Q: What is the tax treatment for compensation for lost profits?

ANS: It is not excluded from gross income. Such damages are merely replacements of
income which have been subjected to tax if earned (2-A DOMONDON, supra at 221).
They do not form within the purview of return of capital.
Income exempt under the Tax Treaty
Q; What is a tax treaty?
ANS: A tax treaty is an agreement qatered,inkOetween sovereign states "for purposes
of eliminating double taxatipn"""on ingonie And, caplal, preventing fiscal evasion,
promoting mutual trade veinveNtknent,kand al ckdrdilig air, nd equitable tax treatment
to foreign residents ovfia jon le ir;.eanact 12. 0 ssio er of Internal Revenue,
G.R. No. 169507, Jaiyaw '140f ).
Example of Tax pealliTbe.... DoubleThinprcitreorwo ioll TC4), or Double Taxation
Agreement (DTA ) t dedjbetweep, VTA-Philippine ari her contracting States
or jurisdictions f r the ida be of dbublettaxdflon an ion Ofa fiscal evasion with
respect to taxe .R. No. 104149, Sec1(F)
Q: What is th fore cluadli?-4 1 4- -'21' t''''''4
ANS: Public p 0 gnize the pli4P 88,, -OfreeCipropity and omity among nations (2
DOMONDON, 4 n, sfl t 230).., L-.4f:"--- / (,...
....1 q ft
Note: Tax tre 9sier. en ,r pqre—the ' nal/fiscal' legislations of the
contracting pa esPanok into,„ 'Ye d simditan.&Jus taxations in two
different jurisdi 'ons." VIR 0 6 in o eff In/ furthet clarifies that "tax
conventions are raftedi.th a \yie '10420 llimination of international juridical
\-
double taxation, w 'ch is detted;ggt ' skimpf c,pr5Parabltaxes in two or more
states on the same xpay9fi ds0e 6-6 ersubjctinatter and for identical
periods. The apparent ipop oingawayVi oybj6 rairation is to encourage the
free flow of goods and sZ ijfd thexn9Fesir af.:e petal, technology and persons
between countries, condition dined vall-fclea obust and dynamic economies.
Foreign investments will only thrive airl edictable and reasonable international
investment climate and the protection against double taxation is crucial in creating such
a climate" (Deutsche Bank AG Manila Branch v. Commissioner of Internal Revenue,
G.R. No. 188550, August 19, 2013).
RetirementBenefits, Pensions, Gratuities, etc.
Q: What are the retirement benefits, pensions, gratuities, etc. that are excluded
from gross income?
ANS: The following are excluded from gross income:
1. Retirement benefits received under R.A. No. 4917;
2. Retirement benefits received under R.A. No. 7641;
3. Terminal Leave Benefits;
4. Separation pay due to death, sickness or other disability or any other cause
beyond the control of the employee or the official (e.g., retrenchment);
5. Foreign social security, retirement gratuities, pensions, etc.; •
6. Benefits due to residents under laws of the United States administered by the
United States Veterans Administration;
7. SSS benefits received in accordance with R.A. No. 8282; and
816
8. GSIS benefits received under RA 8291(NIRC, Sec. 32 (B)(7)).
Retirement benefits under R.A. No. 4917 (An Act Providing that Retirement
Benefits of Employees of Private Firms Shall Not be Subject to Attachment etc.)
Q: What are the conditions for excluding retirement benefits under R.A. No. 4917
(An Act Providing that Retirement Benefits of Employees of Private Firms Shall be
Subject to Attachment, Levy, Execution, or any Tax Whatsover) from gross
income?
ANS: The following conditions for exclusion: (10-50-OA)
1. Retiree is employed by the same employer for at least ten (101 years;
2. Retiree is at least fifty (50) .years old;
3. Retiree avails of the benefit only Once (Sec. 32 (B)(6)); and
4. Benefits are given under a BIR Approved private benefit plan (R.R. No. 02-98,
Sec. 2.78.1 (B)(1)).
Note: It does not matter whether the retirement is voluntary. As long as the
requirements are met, the re.tirement4koceeds are excluded from gross income.
However, if the retirement is comppjAdVI there is no need to comply with the above
requirements before the retiremenp:OhA ould be excluded because the same would
be excluded as separation pay 1144.4a .control of the employee (2 DOMONDON,
Taxation, supra at 236). o"
If 4
The rule that retirement benefitiMayloqa al ed df-bri&To pplies only to retirement
benefit from a subsequent private employer and not to iubsestuent public employer as
the benefits are still eke iitynder R. 8291 (DE LEONI W C Annotated, supra at
363). 6, A _if" id, 1 g.
. ...ilks '
..4..
Q. What is a "rmsonablePagte benefitkan"? ii
ANS: It meartsMensio,, gratuity, stock ()opus, or profft-sharm p n maintained by an
employer forL,,,,
theibejleliVb ..poomr all his cials ol-e6pluyBas rein contributions
are made byWch employe fortAgffici or emplciya,„, or the purpose of
distributing the earnings, n prinoifig of fr,,
-4 fund thus aMirriCirdre, any part of which
shall not be usedT iik e ,jito any; urp ,&e other than for the exclusive benefit of the
said officials and empl fees NIRC, Sec. 2.4B (Va)).
Retirement benefits -de RA.No.7.764 rfiA• .Amen ing Artkle 227 of P.D. No.
442, as amended, oWierwiseViown as the Labor Code of the Philippines, by
providing for Retiremellt12#Thualified Private Sector Employees in the Absence
of any Retirement Planing'
irastablishment) • •
Q: Discuss the rules on retirement pay of qualified employees under R.A. No.
7641.
ANS: The following are the rules on retirement pay of qualified employees:
1. Where the retirement plan is established in the CBA or other applicable
employment contract — Any employee may be retired upon reaching the
retirement age established in the CBA or other applicable employment
contract;
2. In the absence of a retirement plan or agreement providing for retirement
benefits of employees in the establishment — Any employee may be retired
under the following:
a. Optional Retirement — the conditions are: (60-5-6)
i. An employee upon reaching the age of sixty ,E) ) years or more;
ii. Who has served at least five al years in the said establishment;
and
iii. May retire and shall be entitled to retirement pay equivalent to 1/2
month salary for every year of service, a fraction of at least six
1.6_1 months being considered as one whole year.
817
SEDAN RED BOON
b. Mandatory Retirement — the conditions are: (65-5-6)
i. An employee upon reaching the age of beyond sixty-five (65)
years which is the compulsory retirement age;
ii. Who has served at least five 1_41 years in the said establishment;
and
iii. May retire and shall be entitled to retirement pay equivalent to'/
month salary for every year of service, a fraction of at least six
11 months being considered as one (1) whole year.
Terminal Leave Benefits

Q: What is terminal leave benefit?
ANS: It is the commutation or monetization of an employee's accumulated and unused
vacation leave (VL) and sick leave (SL) received by a retiring, retired, or separated
employee (SABABAN, Reviewer, supra at 93-94).
Q: What is the tax treatment o termirralieave.j enefits granted to employees of

the government?
. ,fr I\. . .i -1
ANS: Section 1 of E.O. 3911orabon_d Leal
NI,7--..,
v.ir'e;fialof Government Officials and
Employees) provide!,thdftp • cnetiiderldavecredtsioNovemment officials and
employees shall be exec" ptedirom inco tax.
Q: What is the tAC tre/

p0 en of tering!, leave ben fi iiiedito retiring official
or employee film th—e" rivet sector?irr .. zes)
ANS: It depend,s1IL c.., e of: r.'^;,
1. Opticin e rrement— SL.is tax"ble; VL up t ten (1 flays is exempt, excess
is to e• k &.'-,,-'4 ' I (7" <.,'.*P'
2. Corn I retire) ent e egpf•lifA ED, R t -e—W supra at 230).
)
Separation P y
k
Q: What are the con e excluded from
gross income?
ANS: The conditiov are thejollo ig 6.,
1. Amount isi rce ..cr 1Ye r his errs;
2. It was recei fro r
Ina en
3. It was receive ',,as-a po .peque c -o sep rp_ f such official or employee
from the service atheemployel
a, Because of deaRicktaes,soroot = r physical disability; or
b. For any cause beyond the control of such official or employee (NIRC,
_ . Sec. 32, par. (8)(6)(b)). -
Note: The phrase "any cause beyond the control of such official or employee" connotes
involuntariness on the part of the official or employee. The separation from the service
of the official or employee must not be asked or initiated by him (R.R. No. 12-86, Sec. 2,
par. (8)).
Foreign social security. retirement gratuities pensions. etc.

Q: What are the conditions for excluding foreign security, retirement gratuities,
pensions, etc. from gross income?
ANS: The conditions are the following:
1. Benefits received are social security benefits, retirement gratuities, pensions,
and other similar benefits;
2. They are received by citizens and aliens who come to reside permanently in
the Philippines; and
3. They are received from foreign government agencies and other institutions,
private, or public (NIRC, Sec. 32, par. (B)(6)(c)).
818
USVA Benefits
Q: What are the conditions for excluding USVA benefits from gross income?
ANS: The benefits must be:
1. Payments of benefits due or to become due;
2. To any person residing in the Philippines; and
3. Under the laws of the United States administered by the US Veterans
Administration (NIRC, Sec. 32, par. (B)(6)(d)).
Miscellaneous /terns
Income Derived by the Government or its Politico/Subdivision
Q: Is the income derived by the government or its political subdivisions excluded
from gross income?
ANS: Yes. Income derived by the national government and local government units are
excluded from gross income, provided the income is derived from any public utility or
from the exercise of any essential goVernmental functions (NIRC, Sec. 32, par.
(B)(7)(b)).
Note: The Constitution does not #11 An Araly provision granting tax exemption to the
government. Obviously, the real, skis that the government's exemption from
taxes is an inherent limitation on e a xing power. Notwithstanding the immunity
of the government from taxes, ids ale° a, tlr'&-goized iple that the government
may tax itself (ABAN, Law of Basic Thxdi sup ate
4 O .
Please see "General iples (0 tion" for discus on exemption of the

govemment from taxe 6
4, ,
Winnings. PrizesiindA14%a fidk;includingkose
V%
in Sport ron
1
Q: What arettEcondifilijis for pxcludin rizes and . gross income?
ANS: The pri4 and award -t--
1. Made plimadlyt ecognitf
a. Freligio ,
b. CAtitable;-
c. gcientifc;
d. Educqt,
e. Artisttso
f. Literarrc
g. Civic actreKement;
2. Recipient was selected without any action on his part; and
3. Recipient is not required to render substantial future services (NIRC, Sec. 32,
par. (B)(7)(c)).
Q: What are the requisites for the exclusion from gross income of prizes and
awards in sports competition?
ANS: The requisites are the following:
1. Prizes and awards were granted to athletes;
2. They were granted in local and international sports tournaments and
competitions held in the Philippines or abroad; and
3. They must be sanctioned by their national sports associations (NIRC, Sec. 32,
par. (B)(7)(d)).
Note: National Sports Associations are those duly accredited by the Philippine Olympic
Committee (R.A. No. 7549, An Act Exempting All Prizes and Awards Gained from Local
and International Sports Tournaments and Competitions from the Payment of Income
Tax and Other Forms of Taxes And For Other Purposes, Sec. 2(2)).
819
c•-`,
SEDAN RED :BD.(

Q: Discuss the tax implications of prizes and awards in sports competitions under
R.A. No. 7549.
ANS: The following are the tax implications:
1. The prizes and awards shall be exempt from income tax;
2. The prizes and awards shall be deductible in full from the gross income of the
donor; and
3. The donors of such prizes and awards shall be exempt from the payment of
donor's tax (R.A. No. 7549, Sec. 1).
Exclusions Under Special Laws
Q: Enumerate special laws granting tax exemptions.
ANS: The following are some special laws granting tax exemptions:
1. R.A. No. 7916 (Philippine Export Zone Authority Law) - PEZA-registered
enterprises are given income tax holidays for 6 or 4 years from the date of
start of commercial operation, depending on whether their activities are
considered as pioneer wton-pioneeri,494,- enjoying income tax holidays, they
are subject to the,5%tfinal tax an their dross earned, in lieu of all
national and lo9pefate9N Li ..t V t r, 1.,`%.
2. R.A. No. 957 Icorppschen6itreAgraridn FieformkProgram) - gain arising
from the transfer , agricultural plEp..!rty cpiv!.k.!_ei)Alrlder the law shall be
exempt toln, capitpl'aainsia)770r:1b yearsta
3. R.A. N9f ZVI (New/Central Ba6k Act) - tlik BS ilei ,, le pt from all national,
provincial, mVpicipaDand citytakei.fof 5 years 1
4. R.A. * A, 72 9 (Urban Devetient Housing ActCcif -1 92) - the NHA is
exem yr all fees ant:! c4rg $ ofan4kin I whettir.loca or national, such
as income rid realty, tam* /! ' -.I,:-• I
5. R.A. t4fior1502,(4 elry4Aq14ithryf)D'evelq rognt Act of 1998) - certain
incenivel,afe a 'ail& eio..Q ettilewellyi
E *pinsps; #
6. R.A. o.19.014 ( efk, t Ampsi ing-$ec f-24, 341'357 gi -and 79 of the
NIRCA?comeen s‘pgtiocyrrle Altqg- W the term sl'statutory minimum
wage" (SMIN) paid teSr' *earn rs kla xem, from i come tax.
\ r' ,1--,„
%*``..-,e/'
4. DEDUCTIONSFROAIGl ifiA
`9,.. N.,,,,,,,,. -(-C IN
Q: Define Deductions, in
ANS: Deductions are itere•e-f o 'rnTra
„ orized--"by,..la
\ o be subtracted from the
pertinent items of gross IncomArrive 4 ALe,.
‘V, (NIRC, Sec. 34).
Note: It is a governing princip161n.taxgric? Max exemptions must be construed in
strictissimi furls against the taxpayer and liberally in favor of the taxing authority; and
one who claims an exemption must be able to justify the same by the clearest grant of
organic or statute law. Since a deduction for income fix purposes partakes of the nature
of a tax exemption, then it must -also be strictly construed (Commissioner of Internal
Revenue v. Isabela Cultural Corp., G.R. No. 172231, February 12; 2007).
No deductions shall be allowed to individual taxpayers earning compensation income

arising from personal services rendered under an employer-employee relationship, and
those who opted to be taxed at 8% income tax rate on their income from
business/practite of profession (R.R. No. 8-2018, Sec. 8).
Q: What are the general rules to be observed regarding deductions?
ANS: The general rules are the following:
1. Matching Concept for Deductibility - Deductions must match the income;
deductions must be paid or incurred in connection with the taxpayer's trade,
business or profession (2 DOMONDON, Taxation, supra at 522);
Note: A taxpayer who is authorized to deduct certain expenses and other
allowable deductions for the current year but failed to do so cannot deduct the
820
same for the next year (Commissioner of Internal Revenue v. Isabela Cultural
Corp., G.R. No. 172231, February 12, 2007).
2. Substantiation Rule — Deductions must be supported by adequate receipts or
invoices. The taxpayer has the burden of proving entitlement to a claimed
deduction or refund (Paper Industries Corp. of the PHL v. Court of Appeals,
G.R. Nos. 106949-50, December 1, 1995);
Note: Substantiation requirements are not applicable to a taxpayer claiming
deductions under the Optional Standard Deduction (05D) which is based on a
fixed percentage of deductions without regard to any actual expenditure.
3. Subject to limitation — The taxpayer is mandated to deduct amounts only
within the limits allowed by law. He could choose to avail only of a lesser
amount or even none at all (Commissioner of Internal Revenue v. Phoenix
Assurance Co., Ltd., G.R. No. L-19727, May 20, 1965).
4. Additional requirement relating to withholding — any amount paid or
payable which is otherwise deductible from, or taken into account in computing
gross income or for which depmiation or amortization may be allowed, shall
be allowed as deduction orisirigls shown that the tax required to be deducted
and withheld therefrom MIAeikpaid to the BIR (NIRC, Sec. 34, par (K);
R.R. No. 12-2013; R.M.061r6%013).
•%,
a.Concept as return of capital .? L ,r,
._$:*(f
Q: Discuss the concept ofmturn of caplii (costkges?: r services) in relation to
deductions. A ry
-0v
ANS: Income tax is *fed by law orilyro income, which rp e gross income or net
income; hence, the 404 Ifzopseriting tum of capital ighdulkbe deducted from the
proceeds from salekgesse, e' a" nd should ot be subject to in orltax (RR No. 02-40,
Sec. 65). orftay
9'11.0 ,
b.Itemizeo'cifitiofiaOptaholStaPardDecrefationTe
vira
.,44
Q: Distinguish Itgnizia.ipssluctionsifrom ptional Staridard-Deduction.
ANS: Itemized dedOt(itig*Athose !low& by the NIRC to be deducted from the gross
income before the tricome is' subjected t c, Sec. 34). On the other hand, an
optional standard dedeTkoprOOSD) is a Lei Fret -eqtage deduction without regard to
any actual expenditure4n lieu Vozitem e AVM It is merely a privilege that
may be enjoyed by cerfain taxpqrs (NIRC, Sec. 34(L)).
OSD is further tackled ba er the discussion on deductions under special laws.
Q: What are the itemized deductions allowed under the NIRC?

ANS: The following are the itemized deductions under the NIRC:
1. Ordinary and necessary trade, business, or professional expenses;
2. Interest;
3. Taxes;
4. Losses;
5. Bad debts;
6. Depreciation;
7. Depletion of oil and gas wells and mines;
8. Charitable and other contributions;
9. Research and development;
10. Pension trusts (NIRC, as amended by TRAIN Law, Sec. 34).
Note: Non-resident aliens and non-resident foreign corporations not engaged in trade or
business in the Philippines are not allowed the above deductions because they are
taxed on their gross income derived from sources within the Philippines (NIRC, as
amended by TRAIN Law, Sec. 25 (8) and Sec. 28 (8)(1)).
821
DAN RED: BC
Q: In absence of an express selection, is a taxpayer considered to have availed of
itemized deductions?
ANS: Yes. These taxpayers shall be considered as having availed of the itemized
deductions, unless they signify in their income tax return the intention to elect the OSD.
Such election of the option, when made in the return, shall be irrevocable for the taxable
year for which the return is made (R.R. No. 8-2018, Sec. 8). However, taxpayers
earning purely compensation income arising from personal services rendered under an
employer-employee relationship cannot avail of this itemized deduction (NIRC, as
amended by TRAIN Law, Sec. 34).
Expenses
Q: What are the requisites for deductibility of expenses in general?
ANS: The requisites for deductibility of expenses are: (D-STROWN)
1. It must be paid or incurred During the taxable year;
2. It must be Substantiated with adequate proof showing:
a. amount of the exRenseteing,dectLicted; and
b. the direct conrtgEtion
.;ff fv. of reTatik oflh'&#xpense being deducted to the
developywit, rnaciagdmeht,t brie StiorNand/or conduct of trade,
businessiiptotesilonrOfffitEstaxpa,er;fr N.,
3. It must beop"aid oroirfrurred in connec ibk wiXtbk conduct of Trade or
. 4.-- .., • .
business; or t g- ( xer Iselnii-7:Faiorrby.tteqxpaye or attributable to the
develo eQt7r9sna ementpr *ration of th,e trade, siless, or profession;
4. It mu be ''Reaso able (not •j4istif,''extraVagan Tessive under the
circu sjancel); y''''...,0
5. It mu t belt' lh Ordipary.apd ne6`19'ssRry;„. 1 -..--"t
6. If subject i liVithholdin'*e'sith'e tax have bee prop rly withheld and
remittect,t0i e BA.and kr':,,, :_tliLY''' 1
-,...)
7. It mqt Rob ,ce contOry_t_b_lia_p_olicyi orals (NIRO, as amended by
TRAI 1...al%'ec.'31)\ 171 , 7:,
,
--) ;.«
44 - 4 './4'....
Q: Are expens s whicti cords te—br be, tcldzack a d othe similar payment
deductible from ross itkome? . ________"". i
ANS: No. No ded tion frattlegroskiff,q191*.b90,41 owed for any payment made,
directly or indirectly, to anil t,Cia . or-ertfldlaye-CoM e Natip /government, or •to an
official or employee oNyezIpdal)govem lirtibitl,r to official or employee of a
GOCC, or to an official or nylokOe or krtre eVati tol foreign government, or to a
private corporation, GPP, or6-%sirxdar JeTiti Irtht— a ment constitutes a bribe or
kickback. While illegal income will form pa o •gross income of the taxpayer (within the
_ concept of "income from whatever source"), expenses which constitute bribe, kickback _—
and other similar payment, being against law and public policy are not deductible from
gross income. Other expenses necessary and ordinary expenses in connection of such __ .
illegal activities are, however, allowed as deduction within the purview of expenses
under the NIRC (NIRC, Sec. 34, par. (A)(1)(c)).
Q: Are payments made in exchange for the revelation of a competitor's trade

secrets deductible? .
ANS: Payments made in exchange for the revelation of a competitor's*Fade secrets is
considered as an expense which is against law, morals, good customs or public policy,
which is not deductible (3M Philippines, Inc. v. CIR, September 26, 1988).
Q: What is an ordinary expense?

ANS: An ordinary expense Is that is normal or usual in relation to the taxpayer's
business and the surrounding circumstances. In order to be deductible as a business
expense, three conditions must concur [business test]: (1) the expense must be ordinary
and necessary; (2) it must be paid or incurred within the taxable year; and (3) it must be
822
paid or incurred in carrying on a trade or business. Additionally, the taxpayer must
substantially prove by evidence or records the deductions claimed under the law (Atlas
Consolidated Mining & Devt. Corp. v. Commissioner of Internal Revenue, G.R. No. L-
26911, January 27, 1981).
Q: What is a necessary expense?

ANS: It is one which is appropriate and helpful in the development of the taxpayer's
business and is intended to minimize losses or to increase profits (General Electric [PI]
Inc. v. Collector of Internal Revenue, CTA Case No. 1117, July 14, 1963).
Note: If the expenses are extraordinary, the expenditures shall be capitalized for which
depreciation allowance may be claimed (VITUG & ACOSTA, Tax Law, supra at 115).
Q: What are the distinctions between an ordinary and a necessary expense?

ANS: The following are the distinctions between an ordinary and a necessary expense.
. ••
Ordinary Expense Necessary Expense
It connotes a payment, whit, . OF

here the expenditure is
normal in relation to the busine%). appropriate or helpful in the
the taxpayer and the surro4diribV development of the taxpayer's business
circumstances (General ElectricAng,,,, J`g-Valtat.. the ma e is proper for the
v. Collector, CTA Case No,1101,4 A1purposeer&Ore'alizing
,•-mle---,, " • •• a profit or
July 14, 1963). " minimizing-a.losN/bid).
.47 I 003
Q: Is media advertising xpehdes pai and incurred o Mute ordinary and
necessary expensesfullys"deductible -der the NIRC?
ANS: AdvertiVg is germally of two kinps namely:
1. Ad*Ligin-atqAT ulate,the curt sale se of services;
and 1,1
2. Advertising desk wed to ' timu a e future sa e ofn erc andise or use of
services', '
Note: The latter type Involve-I expenditu si cu d, in whole or in part, to create or
maintain some form of tor .94411 for the t e a ,,_
•acte or business. If the expenditures
are for advertising of thigfirst kindoilierVext*tiMtreTeMnableness of amount, there
,
r•-r
is no doubt that such eicp-enditureware deductible as business expense.
There are two conditioner American jurisprudence before an expense may be

treated as ordinary, hence deductible:
1. "Reasonableness" of the amount incurred; and
2. Whether the questioned advertising expenses are actually capital outlays to
create a "goodwill" to the product and/or business, and hence, considered as
capital expenditures to be spread over the life of the asset (General Foods
(Philippines), Inc. vs Commissioner of Internal Revenue, CTA Case No. 4386, ""431141
February 9, 1994).
Q: What is the Cohan Principle?

ANS: Under this principle, if there is showing that expenses have been incurred but the
exact amount thereof cannot be ascertained due to the absence of documentary
evidence, it is the duty of the SIR to make an estimate of deduction that may be allowed
in computing the taxpayer's taxable income bearing heavily against the taxpayer whose
inexactitude is of his own making (Cohan v. Commissioner of Internal Revenue, 39 r.
2d 540 (2d Cir. 1930 has cited in Pilmicu-Mauri Foods Corp., v. Commissioner of Infernal
Revenue, C.T.A. EB No. 97, August 29, 2006]).
823
Q: In general, what are the ordinary and necessary expenses deductible from
gross income incurred in the conduct of trade, business or profession?
ANS: Sec. 34 (A)(1) of the NIRC provides the following ordinary and necessary Trade,
Business or Professional Expenses:
1. Salaries, wages, and other forms of compensation for personal
services actually rendered including Grossed-up monetary value (GMV) of
fringe benefit;
2. Travel or transportation expenses (here and abroad);
3. Rentals and/or other payments for the continued use or possession of
property;
4. Entertainment, amusement and recreation expenses.
Salaries. Wages, and Other Forms of Compensation for Personal Services Actually
Rendered
Q: What does compensation for personal services rendered Include?
, ,,2..160.4.44
ANS: It includes:
1. Salaries, wages,,,,c4rnissiiis,T
(missions, p:Poressipnal fees, vacation-leave pay,
retirement pay,. d i' ). '''.t.,

2. Bonuses in goo 'fait ';•1-.....;,..•''''''''....s..
.. 4 1.,..--' .1.,.‘ .
3. Pensions,,-ad'''cot.
4., .riperfCation
.9 fojjgjuries, irndf corrij5.eh ated for by insurance
: ..---...., -,;,„_ •,o. )
or othe se; atid? ,,,,,-"'""''' ,:-: '',.., V.• ,,,,,41-,
4. GMV o nredb4ner provided Or, aVong as the,,firial4tak imposed has been
paid. ? N
e f" )
Note: Any anpat_g&en 4 the emit90.:Las_h_e_mfits tdi itp eblesloyees, whether
classified as a riiiifirsis bdnefit§,,,or_frifigein.n9fits, shall '-constitiite as deductible
expense upon tterlriployer 2-BTIOMCVDOkf-Taxa ion, sub at-8 0) [hereinafter 2-
B DOMCNO0 ..,10 Fon . kr%.,....)jii,111,1
t
Q: What are t. --;q4 Val 4.q..}sites for deduptibili ?.., cornlif ._ea
lig'ion for personal
services actua efid,ered-i); 1.1-T) litt...,-,74-'"
ANS: The requi tes aree fEil(dWi • -WI -SP ).,.:, 'N/
1. The exp nse most belaoth-brdio: 4 arirciiT6essi ;
2. The salar s musebe12AISf tthin telaxable ear;
3. The salaries, be rid±k-
ea 'nR„.oril Itpdp 9 business;
4. The expense niRsfrin, 43 alariesoth'avhiyernsation;
5. The salaries matte oePerso "al ge ,AtOally rendered; and
6. The salaries must:Ith4R ...e
.- asor ,„arricida (MAMALATEO, Income Tax,
supra at 187).
Q: When is payment for compensation deemed reasonable?
ANS: Only such amount as would ordinarily be paid for services in like enterprises in
similar circumstances (R.R. No. 02-40, Sec. 70).
Travel/Transportation Expense
Q: What are the requisites for deductibility of travel ortransportation expenses?
1. It must be paid or incurred while away from home;
2. It was made in the pursuit of ttade or business; and
3. It must be reasonable and necessary (NIRC, Sec. 34 (A)(1)(a)(ii)).
Note: The term "away from home" means away from the location of the employee's
principal place of employment regardless of where the family residence is maintained
like business trips. It includes transportation, meals, and lodging (R.R. No. 02-40, Secs.
65 and 66). Thus:
1. Transportation expenses from main office to branch or from branch to main
office are deductible;
824
2. Transportation expenses from office to home or from home to office are not
deductible; and
3. If company car is utilized both for business or personal use, the allowable
deduction must be in proportion to the use for business.
Q: What are travelling expenses?
ANS: Traveling expenses as ordinarily understood, include transportation expenses and
meals and lodging. If the trip is undertaken for other than business purposes, the
transportation expenses are personal expenses, and the means and lodging are living
expenses, and therefore, not deductible (R.R. No. 02-40, Sec. 66).
Rentals and/or Other Payments for Use or Possession of Property
Q: What are the requisites for deductibility of rental expenses?
ANS: The requisites are the following: (CUTTT)
1. It must be made as a condition to the Continued Use or possession of
property;
2. Taxpayer has not taken or tgAnor taking Title to the property or has no equity
other than that of a lesseeitAerkpossessor;
3. Property must be used iniT(04,k§usiness; and
4. Subjected to withholding140!,5,4(R.R. No. 02-98, Secs. 2.57.2(B) and (C)).
40744ittogic
Q: What is the composition of,rentgliP-tisii? .4 -
ANS: It includes the followtwi'r '1.1P
1. Aliquot part chtffi'amount used fo acquire leaseho Over the number of years
the lease willgiv
2. Taxes and otihrOgijiong of t )lessor paid by lief cc; and
3. Annual dfflirdbiati4pf the cost f leasehold impro is introduced by the
lesseAver thel rettiSining, te of the lease, R o er the life of the
improvementg hichevtcr period horter R. No. 02-40- Sec. 74).
Vir ....0'..,,,
Repairs and Maintenanc
gaintenance eA
,, ' .ir
Q: Discuss the dedAchm repairs e penses.
ANS: The cost of inciclentaL4j;epairs whi ' te p er materially add to the value of the
..,,,,
property nor appreciably,Whg its life, r, y-telz- l',, tAn an ordinarily efficient operating
condition, may be dedUgted as emestsa Vitt'tit or property account is not
increased by the amoukof such` penditure (R.R. No. 02-40, Sec. 68).
Note: Repairs in the natitrq o &placement, to the extent that they arrest deterioration
and appreciably prolong the' ife of the property should be charged against the
depreciation reserves if such account is kept (R.R. No. 02-40, Sec. 68).
Expenses under Lease Agreement
Q: What are the allowable deductions by a lessor?
ANS: Since the rentals are considered as income of the lessor, such lessor may deduct
all ordinary and necessary expenses paid or incurred during the taxable year which are
attributable to the earning of the income. It includes cost of repairs and maintenance,
salaries and wages of employees attendant to such lease, interest payment, property
taxes, etc. (R.R. No. 19-86, Sec. 2.01).
Q: What are the allowable deductions by a lessee?
ANS: The lessee may deduct the amount of rent paid or accrued including all expenses
which under the terms of the agreement, the lessee is reqUired to pay to, or for the
account of the lessor. If the payments are so arranged as to constitute advance rentals,
such payment will be duly apportioned over the lease term (R.R. No. 19-86, Sec. 3.01).
Note: The cost borne by the lessee in erecting buildings or making improvements on the
ground of which he is a lessee is held to be a capital investment and not deductible as a
business expense (R.R. No. 02-40, Sec. 74).
825
Expenses for Professionals
Q: What are the allowable deductions for professionals?
ANS: A professional may claim as deductions the following:
1. The cost of supplies used by him in the practice of his profession;
2. Expenses paid in the operation and repair of transportation equipment used in
making professional calls;
3. Dues to professional societies and subscriptions to professional journals;
4. The rent paid for office rooms;
5. The expenses of the fuel, light, water, telephone, etc., used in such offices;
and
6. The hire of office assistants.
Note: Amounts currently expended for books, furniture, and professional instruments
and equipment, the useful life of which is short, may be deducted. But amounts
expended for books, furniture, and professional instruments and equipment of a
permanent character are not allowable as deductions (R.R. No. 02-40, Sec. 69).
Entertainment/Amusement' e resetcjI4E ASeqfEAR)

Q: What is represents itrex
ANS: It refers to expp- ses r ed-by a twayatin.,,,,rficectio with the conduct of his
trade, business or:&e49 .„.psofessicrirt-entertarni.0 ding amusement and
recreation to or th liguest%at `-dining pla ,''ts Amusement, country
club, theater, co , fay, sporting 6ventt amilar van planes (R.R. No. 10-02,
Sec. 2).
/
Note: It shall n r o fixe epreseutdtiort-allow. Capct to withholding
NI I
tax on wages to app opriati7reye up-re- 015U° 17610-02; Sec. 2).
„e
Q: Who are g
ANS: Persons cep t brlsinest elations, such as
but not limited Vie /cu t9 cus egmer he term shall not
include employAs, offil Hers or trusses of the taxpayer
(R.R. No. 10-02, ec. 2).
Q: What are the re pwsep

ANS: The requisites fo reAtlelolleitr • PWE)
- 1. Directly connec develogrnAri Naie4ent, and operation of the
trade,- business or Kt sion1.40104 arer, or directly related to or in
furtherance of the conduct't futraderb mess, or profession (R.R. No. 10-02,
Sec: 4(B));
2. Is Reasonable;
3. Not contrary to Laws, morals, policy or public order (R.R. No. 10-02, Sec.
4(C));
4. Does not constitute as a Bribe, kickback or other similar payments (R.R. No.
10-02, Sec.4(D));
5. Substantiated with adequate proof. The official receipt, or invoices, or bills or
statements of accounts should be in the name of the taxpayer claiming the
deduction (R.R. No. 10-02, Sec. 4(E));
6. Must be Paid or incurred during the taxable year (R.R. No. 10-02, Sec. 4(A));
7. The appropriate amount of Withholding tax, if applicable, should have been
withheld therefrom and paid to the BIR (R.R. No. 10-02, Sec. 4(F)); and
8. Does not Exceed:
a. For taxpayers engaged in sale of goods/properties — one hat( of one
percent (.50%) of net sales;
b. For taxpayers engaged in sale of services — one percent (1%) of net
revenues; and
826
c. For taxpayers engaged in both sale of goods/properties and services —
determined using an apportionment formula, taking into consideration
the percentage ceiling prescribed above (i.e., Net Sales (or Revenues)
I Total Sales and Revenues x EAR) (R.R. No. 10-02, Sec. 5).
Q: What expenses are not considered EAR expenses?

ANS: The following expenses are not considered EAR expenses:
1. Expenses treated as compensation or fringe benefits;
2. Expenses for charitable or fund-raising activities;
3. Expenses for bona fide business meeting of stockholders, partners or
directors;
4. Expenses for attending or sponsoring an employee to a business league or
professional organization;
5. Expenses for events organized for promotion, marketing and advertising
including concerts, conferences, seminars, workshops, conventions and other
similar events; and
6. Other expenses of similar natyrea-
Note: Notwithstanding the foregping„Kch items of exclusions MAY, nonetheless,
qualify as items of deductions under. Se434 of the NIRC, subject to conditions for
deductibility therein (R.R. No. 10-02 Sec
4.01
,4p.
Politica/ Campaign Expense ,•; :e .. s., ..4A
d' 't
Q: What is the incomepOr'eatmentM campaign con ribukns?
ANS: Only contributio , s'pant and utilizelduring the campAnkperiod are exempt from
tax. Any political contrAutiOns or do_ riatiop spent before or aftel the campaign period
set by the Commission on Elections are subject to both &flog tai& and income tax. Any
unspent political ,ccrntributidirgrform part ofe taxable income ,and are subject to income
tax. Income p Frients,twalie by political arties and candidates )4 local and national
elections aretfijectgrati creditable wi. :holding tdi ej Q.- 6dated March 14,
2016, emphasizing RRilgk.07-204)A '..-4- Ne.,-..4.
rir
Note: CorporationarepArbited gin ging political difithailins under Section 36
......of the Corporationti5de. Should a corporation violate this, their contributions — no
matter if they are spenVithhnhe campaioU loclIjor not — will be subject to donor's tax
(Sec 36 of B.P. 68, novt-Sea---'35(i of the130,1sq, oration Code).
v 44foraiezo' 1. :A
Expenses allowed to private cid/di-at/ono/Institutions
l t .., —
Q: What are the other e astds allowed to private educational institutions?
ANS: In addition to the eijianses allowable as deductions under the NIRC, a private
educational institution may at its option elect either:
1. To deduct expenditures otherwise considered as capital outlays of depreciable
assets incurred during the taxable year for the expansion of school facilities; or
2. To deduct allowance for depreciation (Sec. 34(A)(2), NIRC).
Interest
Q: What are the requisites for deductibility of interest expense?
ANS: Section 3 of RR. 13-2000 provides for the following requirements for deductibility
of interest expense: (TID-CROWD-TA)
1. The indebtedness must be that of the Taxpayer;
Note: The term "indebtedness" has been defined as an unconditional and
legally enforceable obligation for the payment of money (Commissioner of
Internal Revenue v. Prieto, G.R. No. L-13912, September 30, 1960).
2. Interest expense must have been paid or Incurred during the taxable year;
3. There must be an indebtedness incurred by the taxpayer based on a bona tide
Debtor-creditor relationship;
827
Note: A bona fide debtor-creditor relationship is one based on a valid and
enforceable obligation wherein the debtor is under unconditional obligation to
repay the creditor (Philex Mining Corp. v. Commissioner, CTA Case No. 5200,
August 21, 1998).
4. The indebtedness must be Connected with the taxpayer's trade, business, or
exercise of profession;
5. The interest must NOT be between Related taxpayers;
6. The interest must NOT be incurred to finance petroleum Operations;
7. The interest must be stipulated in Writing;
8. The interest must be legally Due;
9. In case of interest incurred to acquire property used in Trade, business or
exercise of profession, the same was NOT treated as capital expenditure
(NIRC, Sec. 34, par. (B)); and
10. Interest expense is subject to interest Arbitrage rule. (Commissioner of Internal
Revenue vs Ludo & Luym Corporation, CTA EB No. 1559, June 8, 2018).
.--.t...,...„,,,
Q: What is the Interest Arbit, ragrilik T -;1/4.. ,.!'---,,„
ANS: The taxpayer's olpeUist, allowayd dechictijin ;tor interest expense shall be
reduced by 33% of the:siFit6rAt inc" e.whichllivetbeen .4.e.
sUbjected to final withholding
f .."
tax. Thus, the amotnt atAterest expense equivalent ta.,33% of interest income
subjected to finaldtgNiy lid' on-detlabli5I'C'and„orily,(6 - remaining portion of the
interest expense gie21-tgi ed asTpxpell6e-kythe i 6come,taRYi putation (R.R. No.
13-2000). ir /4 di:. \ (
Note: The limit ion on he allowable intei*kexpense s all akiy, rclless of whether
or not a tax a ilrig
... e scherrrw-as entered into 57.1h taxpayerArtregardless of the
date wheri the rakes bearin logiari5140 d_Ofilthentthe invame was made for as
I .o
long as, durin tl2Vgcable yeF, therd;i0;i.nteiest er ense i cu on one side and
an interest inc\ffiele,anedlt0 othetgkleTlfhich int ..e§, in me bi been subjected
to final withhol ibtai R. ''IN.,13-2029). ss's
Q: Are interest ,aid on&leli*Ucl.

ye\
\t
n,:taiti:
xel 4
sUlizt : t fl
iistlei lrtterest A4 bitrage Rule?
ANS: No. Interes aid o curredsbithe ay n all unpaid bitsiness-related taxes
•
shall be fully dedub.ible fro roiss5 yebe subject to the limitation on
deduction. Thus, su kinter9s xgzs ici-&-dc.-urred > Ali n6t be diminished by the
percentage of interesti cometa r ed.which.hatr VeetiNsubjethterd to final withholding tax
(R.R. No. 13-2000, Sec.
Q: What interest expenses are non edOtti e

ANS: The following are non-deductible interest expense: (APDC-SSSR)
1. Interest paid in Advance by an -individual taxpayer through discount or
otherwise who is reporting income on cash basis. The interest may only be
deductible:
a. In the year the indebtedness is paid; and
b. If the indebtedness is payable in periodic amortization, the amortized
amount of interest paid during the year shall be allowed as deduction in
such taxable year (NIRC, Sec. 34, par. (B)(2)(a));
2. If the indebtedness is incurred to finance Petroleum exploration, the interest
incurred is capitalized as "deferred exploration cost" (NIRC, Sec. 34, par.
(B)(2)(c) in relation to Sec. 34 (G));
3. Interest in the form of Dividends paid to preferred shareholders (R.R. No. 02-
40, Sec. 78; R.M.C. No. 17-71);
4. Interest for Cost keeping on account of capital or surplus invested in business
which does not represent charges arising under interest bearing obligations
(R.R. No. 02-40, Sec. 79);
828
5. Interest paid when there is no Stipulation for the payment thereof or where
there is no indebtedness as when the obligation is unenforceable
(Commissioner of Internal Revenue v. Prieto, G.R. No. L-13912, September
30, 1960);
6. Interest paid on earned and unclaimed Salary (Kuenzle & Streiff, Inc. v.
Collector of Internal Revenue, G.R. Nos. L-12010 & L-12113, October 20,
1959);
7. Interest paid on indebtedness used to purchase Securities by one who is not a
dealer in securities, because such interest is part of the acquisition of a capital
asset (NIRC, Sec. 34, par. (B)(2)(b)); and
8. Interest paid on indebtedness between Related taxpayers (NIRC, Sec. 36(B)).
Q: What is the optional treatment of interest expense incurred to acquire property

used in trade, business or profession?
ANS: At the option of the taxpayer, the interest incurred may be allowed as:
1. Interest expense deductible fronoross income; or
2. Treated as capital expend.itOiperein the amount of interest is added to the
cost of the property (i.e.,.Oapite.114the interest as part of the acquisition cost of
the property and subseqijerniyAall of the deduction from business income in
the form of depreciatiorONTRAgt . . 34, par. (B)(3)).
Note: Should the taxpayer ele4ft0.4,-.V bktivi serest ,plyments against its gross
income, the taxpayer cannot ,at-:fhe saki ime'calsitalmtOtiterest payments (Paper
Industries Corp. of the PI-04. Court of G.R. No.4.06949-50, December 1,
1995). .,
Taxes 4c
gr.
Q: Who are egjled to de4g c \ ltaxeq,frotF. ross income?
ANS: The taxpapr upcifirom the takes imposed (re., those l&ble for direct taxes)
are the ones qtled4olidbct takes from foss inco R7Riille40;
,,,AaawoN
s„ Sec. 80).
„oriv.,
ff "~-trZ,
Q: What are theIVLuiVeZtor deditctibilt of taxes?
ANS: T_he.requisiteWe thelowing: (TPrit !ILL)
1. Payments &Ng bent:I:axes;
2. It must be Ea) rsiiicurreillkin legeext,
3. It must be incurred connec ion witiiihetaxpayers Trade, business or
profession; .
4. Tax must be. rkas on and payable by the taxpayer (indirect taxes
are not included);d
5. Taxes are not specifically excluded by law from being deducted from the
taxpayer's gross income.
Note: In the case of a NRA-ETB and a RFC, the taxes for which deduction is claimed
must be connected with income from sources within the Philippines (NIRC, Sec. 34
(C)(2); R.R. No. 02-40, Sec. 80).
Q: What are the taxes allowed as deductions from gross income?

ANS: In general, all taxes paid or incurred within the taxable year, in connection with
taxpayer's trade, business or profession shall be allowed as deduction (NIRC, Sec. 34
(C)(1)(a)). Examples are:
1. Import duties;
2. Business license, privilege, excise and stamp taxes;
3. Local government taxes (real property taxes, license taxes, professional taxes,
amusement taxes, franchise taxes);
4. Documentary stamp taxes; and
5. Excise taxes (R.R. No. 02-40, Sec. 80).
829
Q: What are the taxes which are not allowed as deduction from gross income?
ANS: The following are non-deductible taxes: (NSEFF-SC)
1. The income tax provided for under the NIRC (Sec. 34 (C)(1)(a));
2. Special assessments and taxes assessed against local benefits of a kind that
tends to increase the value of the property assessed (NIRC, Sec. 34
(C)(1)(d));
Note: A tax is considered assessed against local benefits when the property
subject to the tax is limited to the property benefited. Special assessments are
not deductible, even though an incidental benefit may inure to the public
welfare. The taxes deductible are those levied for the general public welfare;
by the proper taxing authorities at a like rate against all property in the territory
over which such authorities have jurisdiction (R.R. No. 02-40, Sec. 83). If it
does not tend to increase the value of the property, the special assessments
are deductible as taxes.
3. Estate and donor's taxes (NIRC, Sec. 34 (C)(/)(c));
4. Foreign income tax, provigacLthe..twayer avails of the foreign tax credit;
otherwise, the otax xarre claimjd &
as adduction from gross income (NIRC,
Sec. 34 (C)(1) and' 31,,,, ‘_ . ...‘A1,41 i '".•,,
I
5. Final taxes, 1:1elga ,in VI nM,ire,ofincoide.tax; ,,.).N..,
6. Taxes on Sal; barfer15:exchange of hares ofJ4tocks listed and traded
through thcf4ystdcexctrarigar.orthrougOnitiallpulic offering (NIRC, Sec.
127 ( Ditff..0d) 5 / ir in t -v,
„ \ .r)-j .
7. Taxes aieoh Capital assets ,itipt Ore subject to, a final tax, such as real
propelty, the isposition of whiCh:is subject td the 0 (a12Pe capital gains tax
(2-B DO 0 DON, 1 axatrop, supra at 82 . j m---
Note: In the ea e-of NRA ' Ttfi'd 11.aiflf.C;Wiluct on is a lowe my if and to the
extent that th 4 taxeb for whi de uds(ary-: la)med re con dcte1 ith income from
sources within licklptpi IRC, Sep C)(2)
.,..:
Tax credit tde-falteductioa i :0'4
..,:f1);: ,1: 1
Q: Distinguish Tax Cre\ t frorf T x^laeductio
ANS: The distinctions are ttzfo
'1/4
Tax credit is defined‘6ak_aCao-fe. , x,,creclUction is a subtraction from

reduction from a taxpayer's rdxtrwarpm ,Arcislincome resulting to a lower
direct subtraction from the tax payaloreTcrt taxable income.
government.
A tax credit is used by private establishment A tax deduction is used before the
only after the tax has been computed. tax is computed. (Commissioner of
(Commissioner of Internal Revenue vs Internal Revenue vs Central Drug
Central Drug Corporation, G.R. No. 159647, Corporation, G.R. No. 159647,
April 15, 2005). April 15, 2005).
Note: Taxes withheld from the employee's salaries will not affect the former's taxable
Income because they are not allowed as tax deductions but as tax credits. Tax reduction
reduces the taxable income while tax credits reduce the tax liability (CIR v. Central Drug
Corporation, G.R. No. 159647, April 15, 2005).
Q: When is foreign tax credit allowed?

ANS: When a taxpayer has paid income taxes to a foreign country on income for which
he may also be liable for Philippine income tax, he may claim such income taxes paid to
a foreign country either as:
1. Tax credit against the Philippine income ta)cdue; or
830
2. Deduction from gross income.
Note: Only a resident citizen, resident alien (subject to the rule on reciprocity) and
domestic corporation (including taxable partnerships) are allowed to avail of this option.
These kinds of taxpayers (except a resident alien) are liable for income tax on their
income derived from sources within and without the Philippines (MAMALATEO, Income
Tax, supra at 215).
Q: What are the limitations in claiming foreign tax credit?

ANS: The rules are:
1. The amount of the credit in respect to the tax paid or incurred to any country
shall not exceed the same proportion of the tax against which such credit is
taken, which the taxpayer's taxable income from sources within such country
bears to his entire taxable income; and
2. The total amount of the credit shall not exceed the same proportion of the tax
against which such credit is taken, which the taxpayer's income from sources
without the Philippines taxable vnder Title II of the NIRC (Tax on Income)
bears to his entire taxable irtb e for the same taxable year (NIRC, Sec. 34,
par. (C)(4)).
Treatments of Surcharges, Intekes , aikkites for Delinquency

?. •441-
Q: Are surcharges, interest, apsi le;U,4%i
ANS: No. Surcharges, interes,trandfirs re nalre'diretiiilill3.R. No. 02-40, Sec. 80).
To allow them to be deflufla defeats,ffhe rescribed punish Nit (Gutierrez v. Collector
of Internal Revenue, SfkI(o. L-19530, 20, 1965).
Note: Interest on defici taxes may be llowed as dedit No. 13-2000).
e.
Q: What are t,cifigideredl gssesin relati to deducfi a ss
eincome?
wo.)44 x,r
ANS: Losses'''. tally sti TOned dUr g t taxable yematl ,.,.mpensated for by
insurance or othe forniiva Videmat NI Sec. 34, pa-00) )-
Q: What are the req !sites for de uctib osses? (TA-CDC)

ANS: The requisites arethe allowing:
1. Loss must be at of the-Taxi:la t- •• -rsonal and not transferable to
another;
Note: The loss,parent company may not be deducted by its subsidiary.
But the loss of ffiathranch within or outside the Philippines is deductible from
the gross income of the head office located in the Philippines, since the branch
is only an extension of its head office and there is only a single entity. If the
taxpayer is engaged in several businesses, loss sustained in one line of
business cannot be deducted from the other lines of business (BIR Ruling No.
123-87, May 4, 1987).
2. Loss Actually sustained and charged off during the taxable year;
3. Evidenced by a Closed and completed transaction;
Note: The taxpayer's failure to record in his books the alleged loss proves that
the loss had not been suffered, hence, not deductible (City Lumber v.
Domingo, G.R. No. L-18611, January 30, 1964).
4. Not claimed as a Deduction for estate tax purposes (for individuals);
Note: Losses within six (6) months after the death of the decedent can be
claimed as itemized deduction of losses under Section 86 par. (A)(1)(e) of the
NIRC. However, it may be claimed as deduction in the estate tax return
provided that the same are not claimed as itemized deduction of losses under
Section 34, par. (D)).
5. Not Compensated for by insurance or other forms of indemnity;
831
I•'s:..;P:Cligli.j'?„•,01gr:g7.5:•lii.:•"..,:,..:,2t, ,--Ti..!; • -*
Note: If the loss is compensated by insurance or otherwise, the loss is

postponed to a subsequent year in which it appears that no compensation at
all can be had, or there is a remaining net loss (or there is no full
compensation) (Plaridel Surety & Insurance Co. v. Collector of Internal
Revenue, G.R. No. L-21520, December 11, 1967);
6 Loss must be connected with his trade, business, or profession or incurred in
any transaction entered into for profit though not connected with his trade,
business, or profession; and
7. For casualty losses, notice of loss must be filed with the BIR (i.e. within forty-
five (45) days) from date of occurrence or discovery of the casualty or robbery,
theft, or embezzlement (RR No. 12-77, Sec 4(b)).
Q: What are the other types of losses?

ANS: The other types of losses are the following:
1. Capital losses - deductible only to the extent of capital gains;
Please see previous cliscustr-refflosseR. from sale or exchange of capital
assets. 1
2. Losses resulting'frorq sa#9,,pritieS1Momingwvo lass\
,i
,Nts
3. Special Lo -lbs'ses from wash salesNagerlogiosses, and abandonment
A
losses
4. Net Opp 40196 T ry d over( gLC9)
5. Casuatfy (NI C, Sec. 34Phar4D)).
f
Q: What are tiel.:41011es for aratilfty
osecun les becoOg ,worthless?
ANS: The reorifesiare the 'A 114
,
1. Ascerta' kip be w fthlesSik5f-citia0ad off ithin th taxabl year;
2. Secuti s-held anpital assa C, Sec.4;:p r. D)(4)eb ;
3. Loss tovps-ipt urrk taxrvgTHE z N bariK • r trust company
incorkalefl lindecfAili spin earelbst talipa of btigi ess is the receipt
of del) ots it (N/PtC, sq.)\3p s cite in China Banking
Corporation v.c G. di_Thr Alk,19, 2000.
Note: In the case kChina'Bkn inkt , 125508, July 19, 2000, the
Court upheld the CR enial rthe adad
tio -off rorgs i arof "securities becoming
worthless" claimed by/Ores. of.stocks.W8ulckt o iDdry assets only to a dealer
in securities or a person e-ftgaggdii the gurr..14,,elartdIs eV, or an active trader (for his
own account) in, securities. rrrthe andsc•NhoikeMe flnotherwho holds the shares of
stock by way of are investment, the s re o im would be capital assets. When the
shares held by such investor become worthless, the loss is deemed to be a loss from
the sale or exchange of capital assets. The loss sustained by the said holder of the
securities, which are capital assets (to him). is to be treated as a capital loss as if
incurred from a sale or exchange transaction. Capital losses are allowed to be deducted
only to the extent of capital gains, i.e., gains derived from the sale or exchange or capital
assets, and not from any other Income of the taxpayer
.,Securities becoming worthless are considered•as a foss from the sale of capital assets
on the last day of such taxable year (Sec. 34 (D)(4)(b) &-(E)(2)).
Q: Define Wash Sales.

ANS: It is a sale of stocks or securities where substantially identical securities are
acquired or purchased with sixty-one (61) day period, beginning thirty (30) days before
the sale and ending thirty (30) days after the sale (NIRC, Sec. 38).
Note: The term "substantially identical" means that the stock must be of the same class,
or in the case of bonds, the terms thereof must be the same. It is necessary that there
must be similarities on all important particulars (ABELLA, Taxation Law (2017))
[hereinafter ABELLA, Taxation].
832
Q: What are the requirements to constitute loss from wash sale?
ANS: The following are the requirements:
1. The sale or other disposition of the stock resulted to a loss;
2. It appears that within a period beginning thirty (30) days before the date of
such sale or disposition and ending thirty (30) days after such date, the
taxpayer has acquired or has entered into a contract or option so to acquire,
substantially identical stock or securities; and
The seller is not a dealer in securities (NIRC, Sec. 38 (A)).
Note: Losses on wash sales are not deductible as losses from sales or exchanges of
property.
Q: What is the rationale of the rules on wash sale?
ANS: To prevent taxpayers from claiming pretended losses. The law is designed to
prevent a situation where the alleged seller may try to give the impression of a loss in
such wash sale when the "loss" is actually negated by the effects of his having bought or
acquired "substantially identical stocks grgecurities" within a period very close to the
occurrence of the sale of his shares, 9pStciOjcs (ABELLA, Taxation Law (2017)).
Q: What are the instances oin21,inillic .'1k1! he provisions on wash sales are not
applicable? a NAV t,
ANS: The wash sale provisions deiingt 41)54 qe..tollowinR:
1. Individuals or corporations .. ittiph deareTWoo such as stock brokers and
banks and trust,ostfipanies,•4 ie sale or other- disposition is made in the
ordinary coursgafArade or Wsin ss; ._
2. Short sales tifoseetions;
3. Gains in wasit erucii gai are taxable ( f20-, Sc e. 38).
,014
Q: Are wash st ales stocksorsecwities deductible?
ANS: No. Tlay are no ductible uniesP e loss is incurr- dealer in stock or
securities, an elrerisa0 tqn friA:p4hic e loss Te•su ,,,
erfe" in the ordinary
course of busin of sue dealenqUe lo om wash sa eseis dedUaible in full (NIRC,
Sec. 38).
Note: Losses frorni,4as ses of stock o 'securities incurred by taxpayers other than
dealers in stock or see:1)1-We re treated me manner as other capital losses.
These losses, if consideell as capkalls,s,m0LIMotible only from capital gains not
from ordinary gains (2-4 OMO DOW1,—TaWaliciri,WITT29).
Q: Are wagering losse ‘.cbid ctible?
ANS: Yes, but they are ded c i le only to the extent of the gain from such transactions
(NIRC, Sec. 34 (D)(6)).
Note: R.A. No. 1169 (An Act Providing for Charity Sweepstakes, Horse Races, and
Lotteries) exempts sweepstakes winnings from taxation. It follows that no losses
incurred therefrom can be allowed as deductions from gross income.
Q: What is meant by "net operating loss"?

ANS: It is the excess of allowable deductions over gross income of the business in a
taxable year (NIRC, Sec. 34, par. (D)(3)).
Q: What are the requisites for deductibility of Net Operating Loss Carry Over
(NOLCO)?
ANS: The following are the requirements for deductibility: (NOCES)
1. It is from the Net • operating loss of the business for any taxable year
immediately preceding the current taxable year;
2. It has not been previously Offset as deduction from gross income;
3. It shall be Carried over as a deduction from gross income, for the next three
(3) consecutive taxable years immediately following the year of such loss only;
833
4. The taxpayer was not Exempt from income tax in the year the loss was
incurred; and
5. There has been no Substantial change in the ownership of the business or
enterprise.
Note: In the case of oil and gas well, losses incurred in any of the first ten (10) years of
operation may be carried over as a deduction from the gross income for the next five (5)
years following such loss (NIRC, Sec. 34 (D)(3)).
Q: When is there no substantial change in the ownership of the business or

enterprise?
ANS: There is no substantial change in ownership of the business or enterprise:
1. Where at least 75% in nominal value of outstanding issued shares, if the
business is in the name of a corporation, is held by or on behalf of the same
persons; or
2. Where at least 75% of the paid up capital of the corporation, if the business is
in the name of a corpora i .n„-,is.hekl by or on behalf of the same persons
(NIRC, Sec. 34, pat:.(D j)).
1 , 4N1
,1 **'
„?'..,t, ,
p, s.
"di
Q: In case of merger, orksol- .atione,orAcorribillationl is,fhe transferee or assignee
entitled to claim thei oLco Mlle transferor? *4,,,,,,.. A'11
ANS: The transferee o Agdine .shall-hi -enti ecrto laim t p same as deduction
from gross inco a en as1 aliesult,•of till s ofpgy, consolidation or
combination, the,sha derl of thegfran6feroffassignor, or he transferor gains control
of: AA,
1. At le % r more in nominalivlatheot the o tstan i ) ed shares or paid
up c4p alhe trarisferegissig1 e"TO`:re,Orp ration;
2. At leisyr5? Ior mor interest i Oeines , of the ttphsfe ee/assignee, if not
a corpoiatipn (75%1 uity rulelRR. No. 14A Sea 2.4)
Note: The 75°7 k golp rule wners,, jplounteresyr onl hpplie to a corporation
and in cases 'ere nsf ,.4sgign f th taxp'd er's net operating
losses as a res_alt of o 'bru:4filel ear to erynerger r consolidation or
business combing ion wit i .I
Q: Who are entitle -bldigibil-Kjitisfin‘s?

ANS: The following tax ay etluct.NOLCO !fez t vey, ross income:
1. Individuals en gag ilthi l.ide ortupink kiii- eaxercise of his profession;
2. Domestic corporatio s*azitzitNntiore ti,corporations subject to the normal
income tax; ....,
......
3. Special corporations subject to preferential tax rates (e.g., private educational
institutions, hospitals, and regional operating headquarters); and
4. Estates and trusts (R.R. No. 14-2001, Sec. 4).
Q: Who are not entitled to deduct NOLCO from gross income?

ANS: The following taxpayers are not entitled to deduct NOLCO:
1. Offshore Banking Units (OBU) of foreign banking corporation, and FCDU of a
domestic or foreign banking corporation, duly authorized as such by the BSP;
2. An enterprise registered with the Board of Investment enjoying the income tax
holiday incentive;
3. PEZA registered enterprise;
4. SBMA registered enterprise;
5. Foreign corporations engaged in international shipping or air carriage business
in the Philippines;
6. Any person, natural or juridical, enjoying exemption from income tax (R.R. No.
14-2001, Sec. 4).
834
Net Capital Loss Carry-Overs Net Operating Loss
Difference Carry-Over Sec.39(D) Carry-Over
Taxpayer must be an individual Taxpayer may be an individual

(engaged in trade or business
Taxpayer or in the exercise of
profession) or Corporation.
Involves net capital loss Losses incurred or connected

Kind of Loss with trade or business (from
operation)
Carry-over as loss from sale of Business losses not previously

capital asset in the next offset as a deduction from the
Period of
succeeding year gross income carried over as
Carry-Over
such for the next three (3)
consecutive years
Et'if'
rf
0
Bad Debts
.." la
Q: What are the requisites fVdeducpb it atad
ANS: The requisites are Allowing: (4AW)
1. Existing, valid nd legally d0,2g, dable indebtedne gi e to the taxpayer;
2. Connected wj-4thltaxpayert tr e, business, or *hie of profession;
3. Must not be;_us_ tairielin a tra action enterecrint between related parties
under A" (Tfahe NIRC;
4. ActuallY charged off in the Gtok f accounts . taxpayer as of the end of
.
the regilewoaDTfcrtlasnes
Note‘The a4 nR.L
n - f money le ust be pr2. -L C /?
&.51 0.72td$7 in the books of
the taxiDayeraireteivable and I r cancelled an . en-off (R.R. No. 05-99,
Sec. 2, eVrfigiclaby R.e. No. 5-02); and
5. Actually akegaineAto be Wo .ess=a d uncollectible as of the end of the
taxable year ppm°. 05-99, Sep ' . .„..
Note: Additionally, befose•a debtlgalirt . . - . fi ess, the taxpayer must also
Show that it is indeedrtincolleaVe even in the future. Furthermore, there are steps
outlined to be undertakte taxpayer to prove that he exerted diligent efforts to
collect the debts, viz: (1) sung of statement of accounts; (2) sending of collection
letters; (3) giving the account to a lawyer for collection; and (4) filing a collection case in
court (Philippine-Refining Company v. Court of Appeals, G.R. No. 118794, May 8,
1996).
Effect of Recovery of Bad Debts

Please see previous discussions on bad debt recovery under ll-3(d)(x).
Depredation
Q: What is depreciation expense?
ANS: It is a reasonable allowance for the exhaustion,, wear and tear (including
reasonable allowance for obsolescence) of property used in the trade or business
(NIRC, Sec. 34(1)).
835
-7.
Q: What are the requisites for deductibility of depreciation expense?

ANS: The requisites for deductibility are the following: (RUCS)
1. The allowance for depreciation must be Reasonable;
2. It must be for property arising out of its Use in the trade or business, or out of
its not being used temporarily during the year;
3. The allowance must be Charged off within the taxable year (R.R. No. 02-40,
Sec. 113); and
4. Statement on the allowance must be attached to the return (R.R. No. 02-40,
Sec. 115).
Q: How is depreciation expense determined in case of a property held by a tenant
or a trustee?
ANS: The following rules shall be followed:
1. In the case of property held by one person for life with remainder to another
person, the deduction shall be computed as if the life tenant were the absolute
owner of the property and sfAll,be.allowed to the life tenant.
2. In the case of proel held in tithe deduction shall be
apportioned betyge'en tita4nconlpjae.r/Apiarias?:nci.the trustees in accordance
with the pertirfenfkatisivs.of-theig:,.. §trPmeht,;citating the trust, or in the
absence of such presies, on the basisiAtht-trustsfricome allowable to each
(NIRC, Sec.'43. 5) a. ).
Q: What are the, mciho s aqd rate usekk l AJompute the r'egon‘able allowance for
depreciation?/ -A
ANS: The tern owance las u,§9 in calkia paragraph shall
A .
include, but ot
of ed to, I n 'alloVvàn Han with rules and
regulations pressab'ed by th Seci rea f.:
;Piiaance, &co mendation of the
v" •
CommissionetThaeTtnyq:IR following, et6ods:
1. The trTigik 'ne 5Ft if, ."N\74
2. Declirlkeb Dance d, u`sinV4 .41e ing tIfv'ce the rate which
would ave beep uskp •tizi
3. The surnef-the:years4i1 itAl la
4. Anyothervetho hc z7pRq§p s1 - -lbpd 1:y he Secs tary of Finance upon
recommendationse
oflo
t 34(F)(1).
Depletion of Oil and Gas wellsand MinV
Q: How are intangible exploralibmaa, lie op = nt drilling costs deducted?
ANS: After production in commercial quantities has commenced, certain intangible
exploration and development drilling costs:
1. Shall be deductible in the year incurred if such expenditures are incurred for
non-producing wells and/or mines; or
2. Shall be deductible in full in the year paid or incurred or at the election of the
taxpayer, may be capitalized and amortized if such expenditures incurred are
for producing wells and/or mines in the same contract area (NIRC, Sec.
34(G)(1). -. •
Q: What are exploration expenditures?
ANS: The term 'exploration expenditures' means expenditures paid or incurred for the
purpose of ascertaining the existence, location, extent or quality of any deposit of ore or
other mineral, and paid or incurred before the beginning of the development stage of the
mine or deposit (NIRC, Sec. 34(G)(2).
836
W;7:47;7:;::::.•,;i:i:fj ;
Q: What are development expenditures?

ANS: The term 'development expenditures' means expenditures paid or incurred during
the development stage of the mine or other natural deposits. The development stage of
a mine or other natural deposit shall begin at the time when deposits of ore or other
minerals are shown to exist in sufficient commercial quantity and quality and shall end
upon commencement of actual commercial extraction (NIRC, Sec. 34(G)(2).
Charitable and Other Contributions

Q: What are the requisites for deductibility of charitable and other contributions? •
ANS: The following are the requisites for deductibility: (ATAS)
1. The contribution or gift must be Actually paid;
2. It must be made within the Taxable year;
3. It must be evidenced by Adequate receipts or records; and
4. It must be given to organization Specified by law.
Note: Irrespective of the accounting metil2d used by the donor, donation is recognized
as a deduction only when it was actualpaid or made, not in the year the deed of
donation was perfected. The dedy4III donation is not governed by the ordinary
rules on deductibility of the 63.epeps% onation must be BOTH perfected and
consummated before it can be 41A1,01tia deduction (Philippine Stock Exchange v.
Commissioner of Internal Revenue; CT,. dre o..,5995, Ogtoper 15, 2002).
fe *4A
Q: What are the contribli 1-gfdns
.,. i whtcn are partially • d• tible or are subject to
-
limitation? ji I)
A, ,
ANS: The contributions, that are pa.ruall 1 deductible or i sib et to limitation are the
following:
4 et
P .:4•"'
1. Donations4he art, Ot in accordance s with the Na ion I Prtority Plan;
2. Donations to accVirea NGOs ,‘. en the conditions tdisassed below) are not
co pied with;
3. Dorigtionsrterthe9pverilraent
t o e Philiptiin ,.,.., agencies or any
polit4subclivisiwsxclutiitely f ublic purpogQ.
4. DonaticiliMagreAted doiliest •rporations or associations organized and
operated ke.xclusivikc for 4eligi 4 , charitable, scientific, youth and sports
development,kulAral or educa 6" 'oses or for the rehabilitation of
veterans, or tatiblarwrut, 0-vac. 34, par (H)).
Note: Amount deductiltvhall 2 2 eicceed:
1. Individuals — Itkof taxable income before contributions; and
2. Corporation — 5%72f axable income before contributions (NIRC, Sec. 34, par.
(H)).
Q: What are the contributions deductible in full?

ANS: The contributions that are deductible in full are the following:
1. Donations to the Government of the Philippines or any of its agencies or any
political subdivisions including fully-owned government corporations to be
used exclusively in undertaking priority activities in: (HEY-HECS)
a. Health;
b. Education;
c. Youth and sports development;
d. Human settlement;
e. Economic development;
1. Culture; and
g. Science; according to a National Priority Plan;
Note: Any donation not in accordance with said priority plan shall be subject to
the 5% or 10% limitation.
837
2. Donations to foreign institutions or international organizations pursuant to
agreements, treaties or commitments by the Philippine government and such
institutions or in pursuance of special laws;
3. Donations to accredited NGOs, provided that:
a. No part of its net income inures to the benefit of any private stockholder
or individual;
b. Organized and operated exclusively for : (SEC-CHR-SC)
i. Scientific;
ii. Educational;
iii. Character building and youth and sports development;
iv. Cultural;
v. Health;
vi. Research;
vii. Social welfare;
viii. Charitable, or any combination thereof.
c. Makes utilization dir,ectlyonot,latz than the 15th day of the third month
(unless extended) "177 clbse„,,, the taxable year in which
contributiorrs aeceiv -oj
d. Its anjottralf t iniattative-exp votlxceed (30%) of its total
expenses; '4nd
e. Ityagt4 inif Aveht-67-Birsolution, qtf distributed to another
d foripjmtV purpose pta pro OR to the state for
ubli urpo e, OR would rile distkibuteq court to another
rgan tion to be use•,ki?Nsuch manlier 'n judgment of said
hall b accomp 0-the serlerd purpo esr* ich the dissolved
torga ization a itiiO4-41.&- .
Note An ,tipnation of in cdt!Iplan -with th be subject to the
5 or CI tati corporatitiYa: nd indiv* re pecti ly.
pry • awg• wathr< ,
4. Dona
have t
Note: Whether educti te in lciA • r‘
)14)-
pilbj tiof 10-e
vid he requirements
n, the recip ent NGO must be

accredited by the hilippla Co tio .(g.0. 720, April 11, 2008). •
Staajn)
Q: What is the bass',srif theA uc ion -; Idtflati other than money?
ANS: The amount of dr% chktalilgtentributiorr6f pit er than money shall be
based on the acquisition co fogs prop' Sec
' 4 (H)(3)).
.1.V
Research and Development n7 res
Q: .What are the options granted to a taxpayer on the treatment of R&D
expenditures?
ANS: The taxpayer may either treat R&D expenditures:
1. As ordinary and necessary expenses, provided that:
'a. R&D expenditures are paid or incurred by him during the taxable year;
b. R&D expenditures were incurred in connection with his trader business
or profession; and •
c. Not chargeable to capital account;
2. As deferred expenses. Provided that the deduction may be ratably distributed
over a period not less than 60 months or 5 years beginning in the year in
which the taxpayer first realizes benefit from such expenditures.
Note: The method elected shall be irrevocable, and changing to a different method may
be allowed only with the authorization of the Commissioner (NIRC, Sec. 34, par. (I)).
838
Q: What are the limitations on deduction of R&D expenditures?
ANS: Deduction of R&D expenditures does not apply to:
1. Any expenditure for the acquisition or improvement of land or property to be
used
, in connection with R&D;
2. Any expenditure incurred for the purpose of ascertaining the existence,
lothtion, extent or quality of any deposit of minerals and oil (NIRC, Sec.
34(I)(3)).
Contributions to Pension Trust

Q: What are the requisites for deductibility of contributions to pension trust?
ANS: The requisites for deductibility are the following: (ERCA-10)
1. Employer must have established and funded a pension or retirement plan for
the payment of reasonable pension to its employees;
2. Pettsion plan is Reasonable and actuarially sound;
3. Amount contributed must no longer be subject to the Control of the employer;
4. Payment has not yet been Aljpgif,d as deduction; and
5. The amount is apportiorapiAual parts over a period of 10 consecutive
yOrs beginning with thqeViir{which the transfer or payment is made (DE
LEON, NIRC Annotatedkstrikaetr91).
sf,v
Deductions u
l rider Special Low
.11*,
Q: What are special detions? 4,4
cla
ANS: Thesedeductior slate usually alio. ed only for particul sinesses or enterprises
and not to others, or y fis
• è• alloweS
, o II but are not aed for under NIRC but
under special laws. A gp rsevare the owing:
1. Extraordiri de dfins allowe o insurance c
2. Speqiectedu, Qns for prop4a ducational I
•
3. Special " educti ns foivroduct bonus -Re k -fining under the
Progitctivarricen es /al:419
4. Deduc 'ons for mg efrelises 2if qualified je
5. Deductiorpd er Ado9r-a-S ool Act of 1990; and
6. Deductionsw der t e Expanded lizens Act of 2003.
Q: What deductions ar allowed4hd - '*1 5..7 to Senior Citizens

Act of 2003, as amendgd?
ANS: The following are owe iulider R.A. No. 9257, Sec. 4:
1. Deduction from tosI income of private establishments for 20% sales
discounts granted to senior citizens on the sale of goods and/or services; and
2. Additional deduction from gross income of private establishments for
compensation paid to senior citizens actually employed by the taxpayer.
Q: What is the tax treatment of the 20% discount granted to senior citizens?
ANS: With the effectivity of R.A. No. 9257 on 21 March 2004, there is now a new tax
treatment for senior citizens' discount granted by all covered establishments. This
discount should be considered as a deductible expense from gross income and no
longer as taz credit as provided in R.A. No. 7432. Tax credit is defined as a peso-for-
peso reduction from a taxpayer's tax liability. It is a direct subtraction from the tax
payable to the government. On the other hand, a tax deduction is only a subtraction
from gross income resulting to a lower taxable income (Commissioner of Internal
Revenue v. Central Luzon Drug Corporation G.R. No. 159610, June 12, 2008).
839
Q: What additional deductions are allowed to private establishments employing
senior citizens?
ANS: Private establishments employing senior citizens shall be entitled to additional
deduction from their gross income of 15% of the total amount paid as salaries and
wages to senior citizens, subject to the following conditions:
1. The employments shall have to continue for a period of at least six (6) months;
and
2. ,The annual taxable income of the senior citizen does not exceed the poverty
level as may be determined by the NEDA (R.R. No. 04-06, Sec. 9).
Q: Are there tax incentives given to private entities which employ disabled
persons?
ANS: Yes. Private entities that employ disabled persons who meet the required skills or
qualifications, either as regular employee, apprentice or learner, shall be entitled to an
additional deduction, from their gross income, equivalent to twenty-five percent (25%) of
the total amount paid as salaries arlipigages.todisabled
...,
...,,,. persons (R.A. No. 7277, Sec 8
(A)).
$0"1::: 1,,J Nt
t
Optional Standard Deli dan
„I- v.) A,
r- ii .1
N
Q: What is Optiorw Striclar °L,eclAstion..(Wr • 'N1

ANS: It is a fixed 1§E.ce ta' qedilEion without retire toealny act al expenditure, in lieu
of the itemized d Clbotio j NI C,
A
Si 3!")).-"F
AD, -Al
,t-:, .4,
Q: How Much o ed as BD IC i
.7. CP
ANS: The OS . all is an mRig\nct e ceApi
g:
1. Qual ed i vidual axpayer,4 "Ogle gro s sale4r
L rece pts;
2. Qual i d co por ti — 4194thp2,74Ass • me (MA. TEO, Reviewer,
supra at 8
A-=•,e(
id(
Q: Who may av i of t e OS ,.?)..
ANS: The followi g may vairb :th - SD: ASS-'-.
•
I'
1. Individu I (incl ding st t N'a t
except indiv duals earning pure
conipensa 'on incomqe kiajfais* liSsr„.
2. Corporation, ex!pnerkriliffligh—,c,Mi ns (R.R. No. 16-2008,
Sec. 2 and
3. General Professio alnersh Pv-‘\I tr
a. GPP and partne tiC partnership may avail OSD only
i once
1 b. Either by the GPP or the partners comprising the partnership (NIRC, as
amended by TRAIN Law, Section 34(L))).
Note: Unless the taxpayer signifies in his return his intention to elect OSD, he is
considered as having availed of the itemized deductions. Such election, when made by
the qualified taxpayer, is irrevocable for the year in which made; however, he can
change tolitemized deductions in succeeding years (R.R. No. 16-2008, Sec. 7).
Q: What IS the basis of OSD for qualified individuals?

ANS: The:basis of the OSD for qualified individuals is:
1. Under accrual basis — gross sales (total sales that are recognized, whether
Collected or not) during the taxable year without deducting cost of sales or cost
of services;
2. Under cash basis — gross receipts (total payments received for the sales
during the taxable year without deducting the cost of sales or cost of services)
(R.R. No. 16-08, Sec. 3).
840
l'.'4V,...r.fiiti.417Fi1` :-;741:"CT
t 2^ r'::.1'''
.
,3-0,, .
e• r;?6,- . --,
01 14.:04v,,frr-fc?,:-:c.t.tr
,, ,' 2,44;..i.x??twAl..2.1:;4-ti:',17 . -.,.:.- -;• ;•vgst
Q: What is thebasis of OSD for qualified corporations?

ANS: The OSD shall be based on the gross income (gross sales less sales returns,
discounts and allowances, and cost of goods sold) during the taxable year (R.R. No. 16-
08, Sec.4).
Q: What are the rules when a GPP avails of itemized deduction?

ANS: If the GPP availed of the itemized deduction in computing its net income, the
following rules shall apply:
1. The individual partners may still claim itemized deductions from said share;
provided
2. That in claiming itemized deductions, the partner is precluded from claiming he
same: expenses already claimed by the GPP (Sec. 26, NIRC).
Note: Every general professional partnership shall file, in duplicate, a return of its
income, except income exempt under Section 32(B) of this Title, setting forth the items
of gross income and of deductions allowed by this Title, and the names, Taxpayer
Identification Numbers (TIN), addresses and shares of each of the partners (Sec. 55,
NIRC).
Q: What is the rule when a GPR4VaikroaSD?

ANS: If the GPP avails of OSD in OK:kiting its net income, the partners comprising it
can no longer ;claim further deduCtiOpti, eireare in Lth'e said net income for the
following reasons:
-tiva 1.44,
1. The partner's distribUtive shqre ID the GPP is rear as gross income not his
grosg sales/VriSts and the 0°0 OSD allowed dividuals is specifically
mandated to befdeducteak-no from his gro, tome from his gross
salestreceRarlfl
i "vox-
2. The 0SMbeing in lieu.of the ite red deductioriallowe in computing taxable
incosbridvill appvier for BOTH, the items of deductiori allowed to the GPP and
its IWO QORf612, 2-2Q10).
F A
Q: How oftencatahe•GRA'and parpers comprising su-aval he OSD?
ANS: The general, ,partn rip and the partners comprising such
partnership may eV' il of the 'Optional stark a rdgduction
d, ONLY ONCE, either by the
general professional parlers 1p or theAppeslai p isirlg the partnership : Provided,
finally, That except whefilhe Co inibteMIRtvoselie its, the said individual shall
keep such records pertaii;iing too Ls gross sales or gross receipts, or the said corporation
shall keep such records pining to his gross income as defined in Section 32 of this
Code during the taxable ear, as may be required by the rules and regulations
promulgated by the Secretary of Finance, upon, recommendation of the Commissioner
(NIRC as amended by TRAIN Law, Sec. 34 (L)).
The rules indicated above is summarized as follows:
Type of deduction
.
claimed by the Maybe claimed by the PARTNER in computing
PARTNERSHIP in his taxable_income
computing net income
Itemized deductions Itemized deductions ONLY
Optional standard Neither itemized nor optional standard deductions

deduction
841
Deduction for Premium Payments on Health and/or Hospitalization Insurance
Note: Allowable deduction for premium payments on health and/or hospitalization
insurance of an individual is now removed (R.A. No. 10963).
c. Items not deductible

Q: What items are not deductible in computing net income?
ANS: The following items are not deductible in computing net income: (PIRPIS-N3W)
1. Personal, living, or family expenses;
2. Amount paid out for new buildings or for permanent Improvements, or
betterment made to increase the value of any property or estate (capital
expenditures);
3. Amount expended in Restoring property or in making good the exhaustion
thereof for which an allowance has been made (major repairs);
4. Premiums paid on any life insurance policy covering the life of any officer or
employee, or of any personjinancleCnterested in any trade or business
carried on by the taxAer, *ndi idualpr.dprporate, when the taxpayer is
directly or indire;t16 lag. eficia ndh suc Nile (NIRC, Sec. 36 (A));
5. Interest expensre0 ebts and,losses IR sale,s f property between related
-,,,„,...
i parties; ...„'
-4‘474 ^
6. Losses fcri p .'t 1. /fie changrd;f2yroperty4 IckSec 6 (B));
7. , Non- d9, c lb/e nter st, TD A . , 7,7
8. Non- dpduc II? tax s; Jr * .i.m.
9. Non- $teducti e los es; and 4,,?,% ( f)1
IA:
10.' Toss7sIrm ash la es orsTot ;Or secuntles
: v:7,:,,,,,
ec. 36).
Personal liyin , One mityffxpense. r(/--

- ---: jr
Q: Why are peison liv rigli4:\K-familses-no pia(
ANS: These ite (dtiatible On grol'Aln se thpl did not help earn
the income. F 0?%. Orl
ik1 i 610610t, nsider, d the theoretical
"personal, living, expe` th taxpa DO OND/N, Taxation (2016),
supra at 624).
' -
Capital Expenditure
Q: Define capital expen it IALI" ''' :1 ri'
ANS: Expenditures for repla nts, —alon-„..4 rovements, or additions which
prolong the life of the property (Alham iPIS Cigarette Mfg. Co. v.. Commissioner
of Internal Revenue, G.R. No. L-23226, November 28, 1967).
Q: Why are capital expenditures not deductible?

ANS: Capital expenditures are not deductible because they do not help earn income
when it is incurred. However, the proportion of capital expenditures which would help
earn income for. future periods are allowed as deductions for depreciation or as
amortization (2 DOMONDON, Taxation, supra at 529-530).
Example: The following are non-deductible capital expenditures:
1. Amount paid out for new buildings or for permanent improvements, or
betterment made to increase the value of any property or estate (NIRC, Sec.
136 (A)(2)); and
2. Amount expended in restoring property or in making good the exhaustion
thereof for which an allowance has been made (NIRC, Sec. 36 (A)(3))....
842
( ....W.41:i1A-, ;:fible-1, , gti: 'eV >7
:-'4. W.:',Ig•W,:fi*,
Q: What capital expenditures are deductible?

ANS: The following capital expenditures are deductible:
1. Intangible drilling and development costs in petroleum operations (NIRC, Sec.
36, par. (A)(2) in relation to Sec. 34, par. (G)(1)); and
2. Expenditures considered as capital outlays of depreciable assets incurred
during the taxable year for the expansion of school facilities, when this option
is elected by the private educational institution (NIRC, Sec. 34, par. (A)(2)).
Q: Who is a person financially interested?

ANS: A person is said to be "financially interested" in the taxpayer's business, if he is a
stockholder thereof or he is to receive as his compensation a share of the profits of the
business.
Note: The premiums may be deductible as an ordinary and necessary expense if the
insurance was taken as part of the employee's compensation package and the
designated beneficiary is not the employer (2 DOMONDON, Taxation, supra at 535).
#i)
Interest Expense. Bad Debts, and Losses from sales of property between related
,
parties
Q: Who are related taxpayers? ;
ANS: The following are related taxpa0,;„ , ., ,,,,or
1. Members of the same..familakfior.d414te Whether by the full or half
blood, spouse, ancestors andlitntal descendantsY II
2. StockholdersOicorporatibn,rhen the stockholdertholds more than 50% in
value of thecotporation't";,Witit.dtanding capital /stock, except in case of
distribution irglAuliati:ipi ' q 1 i
4/ ih
3. TwO corpor,dtirinkere than 50° n value of outttallin%capital stock of each
Aire
of it ices' ownar, pr inPectly, by or fr the same individual if either
A
one4.549.uch eorevrations, with respect to the ifaxab e year4 of the corporation
pretiding,theclatof trksRle of xchang e • gr einapiolding company
or a foreign Rersopal holdirig co fiany; h
4. GrantoNiVitteiVi in a trpst; %.
5. Fiduciary f' a trudttand fiduciary in another trust, if the same person is a
grantor with respecto each trust<rliM
.,
6. Fiduciary of tirdrand tvneSsimpAsleL
ì.'' .. C..a
tnistaRC, Sec. 36 (8)).
Note: Relatives by a pancloOteral Felaves. iDtbIr Than brothers and sisters are
not related parties. Thus,, tergItvpayments made to parents-in-law, brothers or sisters-
in-law, as well as to all laildagbousins, uncles and aunts may be deductible from gross
income (2-8 DOMONDON, Taxation, supra at 824).
Q: What losses from the sales or exchange of property are non-deductible?

ANS: These are the following:
1. Losses from sales or exchange of capital assets shall be allowed as
deductions only from capital gains — capital losses could be deducted only
from capital gains not from ordinary gains. Furthermore, if the taxpayer is an
individual, a net capital loss carry over is allowed to be deducted only from
capital gains. On the other hand, where there is a net capital gain from sale of
capital assets other than real property or shares of stock, said gain is added to
all the other income elements to form part of the gross income from which the
alloWable deductions could be made (2-B DOMONDON, Taxation, supra at
825);
2. Losses from securities considered as capital assets becoming worthless are
not allowed as direct deduction against gross income but are considered as
losses from sale or exchange of capital assets on the last day of such taxable
year (NIRC, Sec. 34, par. (E)(2)).
843
• • 4 w: 41,3
Non-deductible Interest
Please see previous discussions on non-deductible interest under IIB-4b (Itemized
Deductions).
Non-deductible Taxes
Please see previous discussions on non-deductible taxes under IIB-4b (Itemized
Deductions).
Non-deductible Losses
Please see previous discussions on non-deductible losses under IIB-4b (Itemized
Deductions).
Losses from Wash Sales of Stock or Securities
Please see previous discussions on losses from wash sale of stock or securities under
IIB-4b (Itemized Deductions).
--,1-4A-:
i7 ;/ —
S. INCOME TAX ON INDIVIDUALS
d ,--ks r ,,,. ___ i ...,.
a. Resident citizens, non-tesklentzitizens.'airdre:sidenteliehs
;,.i".,°„,
Q: How are individudisiaxed? ..-----r-
, --- ‘N... ..". v,
*ke ,
ANS: Individuals afplaxedeon t eir: - N..
' " ''S..7
h r...../ .hr 1 10) P
1. Taxable Inc9 e - pubjectgo g. dugted rats or '9.- % fctr resident citizens,
non-resident itize s, residentga lens, and on-re" .1.e t) aliens engaged in
tradekqfpsi . ess in he Philip .0 s.
),,,,mti
2. GrossAncpme - s bjectab- fipq taxTrate o 25% forThon-ilesident alien not
engaged I grade or usingsg-inihe Rif ej- (NIRC .Sec3.4 and 25).
.1 g
Q: How is th \ income ofede PemploSed-ihdfor-pf5ifiggsio ,-....i/ als 'fed (pursuant to
TRAIN Law)? () )1 v ,- ,,\„ g 1. l'
.A'. .1
As
c.:'i"
.
IN,
/...:171
ANS: Under NI .C, taxi aple irkgi'nfisidlteib ectstsv e.,.s me graduate,d rates. Under the
TRAIN Law, for Purely Self-en) toyed an or.Pt sronaly'WhoseAross sales/receipts
and other non-ope ting inbome qot-e ee e i • AT}firesholdfof P3M, the tax shall
be, at the taxpayer'svption,,thz. LIE ....,...-r>.- , ,...„ /
1: 8% income lak,oQ grelTsalgsz2 - ass,' pte(irrelicess of P250,000 in lieu
of the graduated4n 91tax rats an c t e e0e ld5e tax; OR
2. Income tax baseAnkthetgradufteek rn,e ta rates for individuals (NIRC, as
amended• by TRAIN LaTi",'Sec.2.4.(.4) —-
Note: Unless the taxpayer signifies the intention to elect the 8% Income Tax rate in the
1 Quarter Percentage and/or ITR, or on the initial quarter return of the taxable year after
the commencement of a new business/practice of profession, the taxpayer shall be
considered as having availed of the graduated rates under Section 24(A)(2)(a). Such
election shall be irrevocable, and no amendment of option shall be made for the said
taxable year (R.R. No. 8-2018).
Q: How is the Income of mixed income earners taxed (pursuant to TRAIN Law)?
ANS: Under NIRC, taxable income is subject to the same graduated rates. Under the
TRAIN Law, for mixed income earners (earning both compensation income and income
from business or practice of profession), their income taxes shall be:
1. For income from compensation - Graduated income tax rates for individuals,
AND
2. For income from business or practice of profession:
a. Gross sales/receipts which do not exceed the VAT threshold of P3M —
8% income tax on gross sales/receipts and other non-operating income
income OR graduated income tax rates on taxable income, at the
taxpayer's option
844
b. Gross sales/receipts and other non-operating income which exceeds
the VAT threshold of P3M — graduated income tax rates for individuals
(NIRC, as amended by TRAIN Law, Sec. 24(A)).
Note: The provision under Section (24)(A)(2)(b), which allows an option of 8% Income
Tax rate on gross sales/receipts and other non-operating income in excess of P250,000
is available only to purely self-employed individuals and/or professionals. The said
P250,000 is not applicable to mixed income earners since it is already incorporated in
the first tier of the graduated income tax rates applicable to compensate income. Under
the said graduated rates, the excess of the P250,000 over the actual taxable
compensation income is not deductible against the taxable income from
business/practice of profession under the 8% Income Tax rate option (R.R. No. 8-2018).
i. Inclusions and exclusions for taxation on compensation income

This section is previously discussed in detail under 118-3e (exclusions and exemptions).
Q: Give examples of items. excludeirpf 4 : 1: etermining compensation income.

ANS: The following are items not 091444in determining compensation income:
1. Fringe Benefits Subject*Ftifittenefits Tax (otherwise, such fringe benefit
will form part of compentaWri)M. 33(B), NIRC);
2. De Minimis Benefits (Seq 33(Bg(c),INtRc ; and
3. 13th month pay and otlier 00fittoo- P904001.112reshold). The amount of
tax-exempt 13th,,..!,jsifth
-r p-ayOacTd other digfitsgt increased to P90,000
pursuant to TRAI.ITLaw. Thejtotatexclusion shall colter:
,„
a. Benenreceived ball als and employe§sldt the national and local
govertneti.purwarifto ,public Act No. 988p;
b. Berlefits r it,b
evd by em oyees pursuapt to Presidential
. Decree No.
e881, as amended 4y Memorandum Oroer No. 28, dated August 13,
r1p86;41% ' '‘`, .A
d:.._
c 4'41 ,A3enefik,"ceiv1/414by officials eTWIW9M.(fiit covered by
'1, Presidentiatbeckeello. Al, as amendegjageRafandum Order No.
28dete,Ndgust 13y198 4and
d. Otieteneirs such as •roduc ' tivity incentives and Christmas bonus.
(Sea 32(B) .-1(e), NIRC).
40L. , 1:"M
Q: Before TRAIN La 4 hat areAallowable
..._. etalons from compensation income?
What are the changebrouglif
e about by TRAIN Law as regards these deductions?
ANS: The following areka,,Vble deductions from compensation income before the
TRAIN Law:
1. Basic personal and additional exemptions (NIRC, Sec. 35, pars. (A) and (B));
and
2. Premium payments on health and/or hospitalization insurance (NIRC, Sec.
34(M)).
Note: The basic personal and additional exemptions of individual taxpayers are now
removed under the TRAIN Law.
-Premium payments on health and/or hospitalization insurance es allowable deduction is

likewise removed.
II Taxation of business income/income from practice ofprofession

This section is already discussed in detail under II8-3(d)(iii) (professional income).
iii. Taxation of passive income

This section is already discussed in detail under IIB-3(d)(vi) (passive income).
845
iv. Taxation of capital gains
This section is already discussed in detail under IIB-3(d)(v) (income from dealings in
property).
v. Capital asset vs. ordinary asset
This section is already discussed in detail under IIB-3(d)(v) (income from dealings in
property).
b. Income tax on non-resident aliens engaged in trade or business
For the next six subsections, see IIB-1(d) (kinds of taxpayers) for a detailed discussion.
Q: How are NRA-ETBs taxed?

ANS: A nonresident alien individual engaged in trade or business in the Philippines shall
be subject to an income tax in thef:mLmaincs an individual citizen and a resident
alien individual, on taxable income received from all sources within the Philippines
(NIRC, Sec. 25 (A)(1)).
.49.##' I 1 1 .r. ik-...
c. Income tax on non-resident &lens not engage a Intl-ode or business
er'7,--'.4. .VN- '''---' - V I f N,
Q: How are NRA-NETBs-taxed?. ..),..,,,,-.0'---,,,,,,,zZ tr,)
ANS: There shall brnvjek,,ColleSted and paid for'sadh t#4151z year upon the entire
income received Irom'ilisccrces—ViffigiiZ-Philippilie0y..ge.ej nonresident alien
individual not ertgatet) in tride or ibpsirtessnwithin ke ph(Iippines as interest, cash
and/or property tlividarfds, rents, sal'arieS,TWas, pre luml., 6n i1es, compensation,
remuneration, 5 durnInts, ot other fix4,dr,determin le arlvd dr eriodic or casual
gains, profits, gri I collie, and ca‘ pipl,gaip,s, a laxequ I to twenVafiwipercent (25%) of
such income. pap tat(gains l'ealliecn#11neirire,gftlen alien ildividl not engaged in
trade or businfs ,: iri he Ph libineSliftf"file S-ale of hares 7fittd in any domestic
corporation a er al pro Fsty\i_all_120.sl 2ALgeslig4
: e'-ii
"-Tcorce tax prescribed under
Subsections ( til ) o :0 \.
iQn 24 on CaSpc. 5 B). e
\te
•)
ecs 44 4-1(:&' -\,
d. Individual ta paye exempf r my c metctx$N,
‘ \ 'N..
Q: Who are the Adividual taxpayeks_exe4c.tax?
ANS: The followingNp\ dividu;a1 elf&vit-eik Otilli cte,fax:
1. Senior citize s whcrpre ioiin :g,g esrs ''''"nder, No. 9504;
2. Minimum wag darn (V/R`cSec.Ap. VOR 'eas amended by R.A. No.
9504); and I.
3. Those exempted under IntengARIfje ents.
I. Senior citizens
Q: Who is a senior citizen?
ANS: A senior citizen refers to any resident citizen of the Philippines at least 60 years
old (R.A. No. 9994 orthe Expanded Senior Citizen's Act of 2010,-5ob73).
Q: Are senior citizens subject to income tax?
ANS: Yes, whether the income is derived from compensation or otherwise; except
1. If the senior citizen is a MWE under R.A. No. 9504; or
2. If the aggregate amount of gross income earned during the taxable year does
not exceed the amount of his personal exemptions (basic and additional) (R.R.
No. 7-2010).
ii. Minimum wage earners
Q: What is the effect if a MWE has other income other than the SMW?
ANS: MWEs receiving other income from other sources in addition to compensation
income, such as income from other concurrent employers; from the conduct of trade,
business, or practice of profession, except income subject to final tax, are subject to
846
income tax only to the extent of income OTHER THAN SMW, holiday pay, overtime pay,
night shift differential pay, and hazard pay earned during the taxable year (R.R. No. 11-
2018 dated January 31, 2018).
Q: Will the exemption of minimum wage earners from income tax be removed
when he/she receives other benefits in excess of the statutory limits of
Php90,000?
ANS: No. R.A. No. 9504 is explicit as to the coverage of the exemption: the wages that
are not in excess of the minimum wage as determined by the wage boards, including
the corresponding holiday, overtime, night differential and hazard pays. In other words,
the law exempts from income taxation- the most basic compensation an employee
receives—the amount afforded to the lowest paid employees by the mandate of law. In
a way, the legislature grants to these lowest paid employees additional income by no
longer demanding from them a contribution for the operations of government. This is the
essence of R.A. No. 9504 as a social legislation. The government, by way of the tax
exemption, affords increased purchasing power to this sector of the working class. The
treatment of bonuses and other benefiOiat an employee receives from the employer in
excess of the P30,000 ceiling caneSi.i"tfi the same as the prevailing treatment prior
to R.A. No. 9504—anything in elkeis:":1 ' 90,000 is taxable; no more, no less. The
treatment of this excess cannot operate isenfranchise the MWE from enjoying the
exemption explicitly granted by 1- . 94 (Jaime N Soriano v. Secretary of
Finance, G.R. No. 184450, January Z4a011 _-4,-
e4 5,
2 17
ill Exemptionsgrantecitm,erintemational agreements I-
i74.t .P ..":',.'
Q: What exemptions Fe„Kanted t tomer n ernational agtie nts?
ANS: The Governmeta 19.the Philippin s is a sign do o certain international
agreements and 04iirtyiiottlifferent ta --treaties whit secifi ally provide for the
exemption o "Certain persons or ergiti from taxesimpised y the Philippines.
Examples of gs; ,tax,dkemptio rTrp re th accordgd :ambassadors of
other countries; here jet px7vPhilirines.
%ii , e World QLoization is also tax
exempt upon anpintem401 ag k en ( 'Commissioner. Mal Revenue v. John
Gotamco and SonS7ifiraTf G.RANo. I,: 1004February r 27, 1987).
IA
fa
Summary of Rates of T_„ es on Individual
••• 1 .45.;:f03 Y
Individual Source Tax Rate on Income
Within and without the 20-35%

Philippines (NIRC, Section 24(A)(2),
Resident Citizen as amended by Section 2,
RA 9504, and further
amended by Section 5, RA
10963).
Non-Resident Citizens: Within the Philippines 20-35% (NIRC, Section

(NIRC, Section 22(E) 24(A)(2), as amended by
(1) A citizen of the Section 2, RA 9504, and
Philippines who further amended by
establishes to the ' Section 5, RA 10963).
satisfaction of the •
Commissioner the
fact of his physical
presence abroad with
a definite intention to
reside therein.
847
(2) A citizen of the
Philippines who
leaves the Philippines
during the taxable
year to reside abroad,
either as an
immigrant or for
employment
. on a
permanent basis.. .
•
(3) A citizen of the
Philippines who
works and derives
income from abroad
and whose
employment thereat
requires him to be 1%
1,...\,..
1 11‘ •
-.......,' I i .
.1.. r.,.i ,.
physically present
abroad most of the • Id'? R. '
time during the
taxable year.
*Physical presence
must be more than
183 days abroad
*Overseas Contract
Workers need not
comply with the
period of requirement
as long as the
employment contract
is registered with
POEA
(4) A citizen who has

been previously
'considered as a
nonresident citizen
and who arrives in
the Philippines at any
time during the
taxable year to reside
permanently in the
Philippines shall
likewise be treated as
a nonresident citizen
for the taxable year in
which he arrives in
the Philippines with
respect tollis income
derived from sources
abroad until the date
of his arrival in the
Philippines.
•
848
Resident Alien: Within the Philippines 20-35% (NIRC, Section
24(A)(2), as amended by
1. Not •a .mere transient Section 2, RA 9504, and
or sojourner further amended by
2. No definite intention Section 5, RA 10963).
of his stay
3. His purpose is of
such a nature that it
may be • necessary 'to
extend his 'stay for its
accomplishment
Non-Resident Alien 20-35% (NIRC, Section

Engaged in Trade or 25(A)(1)).
' Business
*Resides in the
Philippines for more
than 180 days
dint,
Non-Resident Alien Not go of gross income
Engaged in Trade or kW C, Section 25(B)).
Business
Compute
'-zsepar,,atel their
individdal acome tax
based k n thei =3
respectivealtal taxabIR
inOode: Provided, That
if arty inane cannot
be definitpa ttributed
Married Individuals to or i air"
int.0 dwer--
• a-Kvic- xc am el
=earned or realized by
e ither of the spouses,
the same shall be
divided equally
between the spouses
. (NIRC, Section 24(A),-
par. 1)).._.
Exempt from the payment

of income tax on their
taxable income: Provided,
further, That the holiday
Minimum Wage Earners pay received by such
minimum wage earner
shall likewise be exempt
from income tax. (NIRC,
Section 24(A), par. 2)).
849
Summary of Rates of Taxes on Passive Income Received by Individuals
Resident and
Pa6sive Income (Sec Non-Resident
Non-resident Resident Alien
• 24(B)) Alien
Citizen
Interest from any FT 20% (NIRC, Sec. 24(B)(1)). NRETB: 20%

currency bank deposit (NIRC, Sec.
and yield or any otlier. 25(A)(2))
monetary benefit from NRNETB: 25%
deposit substitutes and (NIRC, Sec.
from trust funds and 25(8)).
similar arrangements
NRETB: 10%
(NIRC, Sec.
Royalties on books,
25(A)(2))
literary works, and
NRNETB: 25%
• compositions
(NIRC, Sec.
25(8)).
FT 20% (NfRC;tec. 24(8)(1) .e NRETB: 20%

Royalties (others) (NIRC, Sec.
25(A)(2)).
)NRETB: 20%
Prizes (Above 10,000)' (NIRC, Sec.
25(A)(2)).
•. <1^5. (0%.,
1107
. 24(4(1)). NRETB: 20%
Prizes (10,000 and
(NIRC, Sec.
below)
S - 25(A)(2)).
Winnings . • NRETB: 20%

* Winnings that are (NIRC, Sec.
10,000 and below from 25(A)(2)).
PCSO are exempted
Interest income derived FT 15% (NIRC, Sec. 24(8)(1)). NRETB:

from a depository bank Exempt (NIRC,
under the expanded Sec. 25(A)(2)).
foreign currency NRNETB:
deposit system. Exempt
• Interest income from GR: Exempt NRETB: Same

long-term deposit or EXC: In case of pre-termination w/ citizens
investment in the form before the 5th year (NIRC, Sec.
of savings, common or 4 years to less than 5 years- 5% 25(A)(2)).
• individual trust funds, 3 years to less than 4 years- 12% NRNETB: 25%
deposit substitutes, Less than 3 years- 20% (NIRC, (NIRC, Sec.
investment Sec. 24(B)(1)). 25(B)).
management accounts
or other investments
850
1
* •'r.
--;f1 u
CZ; V-7,4t 1744 ....,47.77liiiii.g7F,7-174.fqS..,f77;.:'....r. a/ 4.. .
From domestic corporation: FT NRETB: 20%

10% (NIRC, Sec. 24(8)(2)). (NIRC, Sec.
Cash or Property. . From foreign corporation: GI 25(A)(2)).
Dividends NRNETB: 25%
(NIRC, Sec.
25(B)).
Traded in Stock Exchange — NRETB: same
Percentage Tax 6/10 of 1% of w/ citizens
Capital Gains froth. Gross Selling Price (NIRC, Sec. (NIRC, Sec.
Sales of Shares of 127(A)). 25(A)(3)).
Stock NRNETB:
Not traded- FT 15% of Net Selling same w/
Price (NIRC, Sec. 24(C)). citizens (NIRC,
Sec. 25 B .
GR: FT .679' based on gross selling NRETB: same
price oil; fair market value, w/ citizens
whichever. higher (NIRC, Sec. (NIRC, Sec.
24.00))0$ 25(A)(3)).
• • „...
,....4rao• PA. NRNETB:
17 aotion OR the same w/
iitaxpijie tr- gainrTarai6, or citizens (NIRC,
other clisrtsitions of real prci erty Sec. 25(B)).
to therbovInment
mEXC: sale & principal rest ence Ls
k.exempt
REQUISITES:
Capital Gains from Sale tk,the prcacweds is fat 4efit ear
of Real Property acAtFing fps constructs g - ,4nea r
princfflal residence within eighteen
Note: Must be fOund in (18)fcalenFr months from the date
the PH of sale or 661Fj o
If found abroad- GI 2. Connijssitos, • giR,havp been
lisclirfitetrthe axpayer within
dirty (30) days from the date of
sale or disposition
3. Only be availed of once every
ten (10) years
4. If there is no full utilization of the
proceeds of sale or disposition, the
portion of the gain presumed to
have been realized from the sale or
disposition shall be subject to
capital gains tax (NIRC, Sec.
24(D)(2)).
CGT: 6% (NIRC, Sec. 24(D)(1)).

Tax base:
.Capital Gains on Other SHORT-TERM HOLDING PERIOD:
Property 100% of the Gain (AC-SP)
LONG TERM HOLDING PERIOD:
50% of the Gain
851
6. INCOME TAX ON CORPORATIONS
a. Income tax on domestic corporations and resio'ent foreign corporations
Q: What taxes are imposed on domestic corporations?
ANS: The following are the classes of taxes imposed on domestic corporations:
1. Normal Corporate Income Tax (Sec. 27(A), NIRC);
2. Minimum Corporate Income Tax (Sec. 27(E), NIRC);
3. Gross Income Tax (Sec. 27(A), NIRC);
4. Improperly Accumulated Earnings Tax; and
5. Final Tax on Passive Income (Sec. 27(D), NIRC) (DOMONDON, Taxation
Volume 11-B (2018) at p. 225).
Q: What taxes are imposed on resident foreign corporations?
ANS: The following are the classes of taxes imposed on resident foreign corporations:
1. Normal Corporate Income Tax (Sec. 27(A), NIRC);
2. Minimum Corporate Income La&,(Sq,9.27(E), NIRC);
3. Gross Income Tax ("c9-24A)RN/pqr';"•14,,,
4. Final Tax on PassiVe Inbome (Sec: 27(D?, Nittg)4,,,
5. Interest from Dejafilts i'riCI-Yield.arlit Roy0.1ti4 („Seic,:‘27(A)(7)(9), NIRC);
6. Capital GainPrortvAaleof shares n'artraded in,tb.e.,,stock exchange (Sec.
27(A)(7)(c! M 0),,,,,....------:';;--- - --...., . 'N,, .`" • ' ,
7. Income 4eriys pndqf the EKpanded.foreibb CarencYllieposit System (Sec.
27(A)1(61'Aii c); and r .,:tz,,..1 .,:..L
., - 1 c-( aa
BranProfitiiiemitfance Tax,(Sp'q 27(A)(5), NIRO (Dp ONDON, Taxation
8. Branc
Volu 2018) tp:-227):-L ii.fr4-----
4,.'1•
pk--....
I:. • ,••
Q. Enumeratl thJAclifferenttkinds.if- egiderd foreign co prat :, s and discuss
their tax liabil •
ANS: The folio ifne‘th *.d—ofTeltdditlAdigh rkbratio ,atleir corresponding
tax liabilities:
Type of
Resident
Foreign Tax Liabilities
*Corporation
Vm
A foreign tcn oratiNlin re.Phi ippines that is allowed by the
SEC to do business in the Philippines in such activities it
normally does in its home country. It is normally taxable in like
Philippine manner as a local corporation — 12% VAT, 30% corporate
Branch income tax, and such other applicable internal revenue taxes.
Also, repatriation of its operational income in the Philippines is
subject to 15% branch profit remittance tax (NIRC, Sec.
28(A)(1); Sec. 28(A)(5)).
A foreign corporation licensed to do business in the Philippines

to deal directly with the clients of its parent company abroad on
Representative. information dissemination, as communication center, product
'office , promotion, and quality control for exports. It is not allowed to
earn income in the Philippines, thus not subject to income tax
(IRR of R.A. No. 7042 (Foreign Investments Act), Sec. 1(c)).
852
•
A special type of income producing foreign corporation. The

income to be generated is limited to specific services rendered to
Regional
its affiliates, branches, and subsidiaries within the Asia-Pacific
Operating Region. It is subject to a special income tax rate of 10% and
Headquarters 12% VAT in the Philippines. Repatriation of its operational
(ROHQ) income in the Philippines is subject to 15% branch profit
remittance tax (NIRC, Sec. 28(A)(6)(b); Sec. 28(A)(5)).
A non-income generating foreign corporation tasked to act as a

Regional Area supervisory, communications, or coordinating center for its
Headquarters subsidiaries, affiliates, and branches in the Asia-Pacific region. It
(RAHQ) is only a cost center and is not allowed to earn income (NIRC,
Sec. 28(A)(6)(a)).
Tax Payable
Q: How are domestic corporatior*. axect on their income?
ANS: A domestic corporation is t#41310,01 income derived from sources within and
without the Philippines at, whicheWilkarAkqr of:
1. 30% regular/normal corkor"11.4me4ax (NCIT imposed upon the taxable
income (NIRC, Sec. 2ploalgan"am4
2. 2% minimum colperaie income tax (MCIT)-impose4pon the gross income as
of the end ofj4-0fixableyea64.C, Sec. 27, par. (Epi or
3. 15% gross income-tax if thelfollo ving conditions acO Viet
a. A ta0frokalo twe percent .(20°/s) ol Goss National Product
evendprob
441
g
b. Alrratio of fogy percent 0%) of inc
'
election to total tax
VAT'ta5ifort bffo ur pnt

O (4%) sV*
d. 0.9A4gt (0:903 race& the Consolidd_fi Sector Financial
7t-SFP) to,.'GNP
Note: The option tube taxqbased on gross income shall be available only to firms
whose ratio of cost of e lesigross sales s om all sources does not exceed
•fifty-five percent (55% he electUi3ofataj n ...mpLtax option by the corporation
shall be irrevocable for ree (3, 'consecutive taxable years during which the corporation
is qualified under the sc IRC, Sec. 27).
Q: How are resident foreig corporations taxed on their income?
ANS: A resident foreign corporation shall be taxed in the same manner as domestic
corporations, with the exception that only income derived from sources within the
Philippines of such resident foreign corporations shall be taxable (MAMALATEO,
Q: Does MCIT apply to resident foreign corporations?
ANS: Yes. A MCIT of 2% of gross income shall be imposed, under the same conditions
as domestic corporations (NIRC, Sec. 24, par. (A)(2)). MCIT is further discussed below.
Taxon certain income of resident foreign corporations
Q: How is interest income of a resident foreign corporation taxed?
ANS: The interest income and royalties of resident foreign corporations shall be taxed
as follows:
1. Interest on currency bank deposit and yield or any other monetary benefit from
deposit substitutes and from trust funds and similar arrangements — 20%
(NIRC, Sec. 28, par. (A)(2)(a));
853
2. Royalties, derived from sources within the Philippines - 20% (NIRC, Sec. 28,
par. (A)(2)(a));
Interest income derived by domestic corporation from a depositary bank under FCDS -
15% (NIRC as amended by TRAIN LAW, Sec. 27 (D)(1))).
Q: How are income derived under the expanded foreign currency deposit system
taxed?
ANS: They shall be taxed in the same manner as domestic corporations. Please refer to
discussion below on FCDUs.
Note: Income of nonresidents, whether individual or corporation, from transactions with

depositary banks under the expanded foreign currency deposit system shall be exempt
from income tax.
Q: How are capital gains derived from sale of shares of stock of a domestic
corporation not traded in the stocOxchangelaxed?
ANS: They shall be taxed in tj e4'rne an eras atimestic corporations. Please refer to
previous discussions.
00,,,,„,„...........,,,,,,.
Q: How are inter-co orate, widends taxed? \
ANS: Dividends recent joyA: residenrforeigrrtormration4rom a domestic corporation
is exempt from to ' h' -6/fh
o e receityed-kom,a foreignIve ation is subject to 30%
NCIT (if conside d a •rived from 6urch.s.wittiin
,:.-.%, the Thilippirres) o exempt from tax.
Note: Dividendrecei -d from a foreigri '•rp.oration pre ca e e as derived from
sources withinitkPh' IppineI1a eas percen %) of taws income of such
foreign corpor tl8h-fo the thee-174§77pard7eiliirg th the lose o its taxable year
1
preceding the deter tion of uch idiVitbld -,.;00 . for 9 ch pa bf-sp , h period as the
corporation h q in ex nce) id4t_cf4'rived fr cspurc s withip the Philippines
(NIRC, Sec. 4 ‘ (2
,
....,,
,
1 Minimum Corporate ncom . w ‘:'-"i
N \-:
Q: To what corpotations it MCF p 1:1
ANS: It is applicabr to domZ ic‘a • I i. q n oratio s which are subject to
normal corporate inco e ta pa (E 8, par. (A)(2)).
Q: What are the instances he M9 i g

ANS: The MCIT shall be impose VIIMItte....AcIrrie lc corporation has:
1. Zero or negative taxable income; or
2. Whenever the amount of MCIT is greater than the NCIT tax rate of 30% due
on taxable income from the corporation (NIRC, Sec.27, par. (E)).
Q: Is MCIT a tax on capital?

ANS: No. The MCIT is imposed on gross income which is arrived at by deducting the
capital spent by a corporation in the sale of its goods, i.e., the cost of goods and other
direct expenses from gross sales. Clearly, the capital is not being taxed (Chamber of
Real Estate and Builder's Associations, Inc. v. Romulo, 614 SCRA 605, 628, G.R. No.
160756. March 9, 2010).
Q: How is MCIT computed?
ANS: MCIT is computed at 2% of the gross income of the corporation as of the end of
the taxable year, beginning on the fourth taxable year immediately following thq year in
which such corporation commenced its business operations (NIRC, Sec. 27, par. (E)).
Note: MCIT shall likewise apply to the quarterly corporate income tax but the final
comparison between the NCIT due and the MCIT shall be made at the end of the
taxable year taking into consideration quarterly tax payment made (R.R. No. 12-2007).
854
The year in which a corporation commenced its business operations is the year when
that corporation registers with the BIR and not when the corporation started commercial
operation (R.M.C. No. 4-2003).
Q: What is gross income for MCIT purposes?

ANS: Gross income shall mean gross sales less sales returns, discounts and
allowances and cost of goods sold. In case the taxpayer is engaged in the sale of
service, gross income means gross receipts less gross returns, allowances, discounts
and cost of services (NIRC, Sec. 27, par. (E)).
Note: If apart from deriving income from these core business activities, there are other
items of gross income realized or earned by the taxpayer during the taxable period
which are subject to the NCIT, the same items must be included as part of the
taxpayer's gross income for computing MCIT. This means that gross income will also
include all items of gross income enumerated under Sec. 32, par. (A) of the NIRC,
except income exempt from income tax and income subject to final withholding tax.
Q: Discuss the concept of carry-fon/Or of excess MCIT.

ANS: Any excess of MCIT over No
a4,,,e carried forward on an annual basis and be
credited against the NCIT for theriedl'ediately succeeding years (NIRC, Sec 27,
par. (E)(2)).
r
Q: What are the rules on the calfrytbrwoireIg,0019if .
ANS: The following are thsOirei on tha,aTry-forward Wilees MCIT:
1. The excess ofd' CIT over t A IT can be carried.' yard on an annual and
quarterly baslik trA
2. It can be c Off tagalngt "the CIT due in the nextl Ihree (3) immediately
succeee axab e ors;
3. Any cess not credited in the nd three (3) yedrs s forfeited;
4. Ca ofwaroirta
•aziM," ,,,,
- uall or qiiarreily) is pofi.Le o
SR
pi is greater than
,.. credited• is R. irgmount of the NCIT;
5. ande m-
6. The exces . MCIT cannot be c s a credit against the MCIT itself or
against any other gsles (NIRC, - • . _ r4E)).
,--.....:1-
...o
Q: What are the instaees wherp he imposition of MCIT may be suspended?
ANS: The Secretary fifa oan may suspend the imposition of the MCIT when the
corporation suffers substantig -I sses due to:
1. Prolonged labor dispute - losses arising from a strike by the employees for
more than 6 months within a taxable period causing temporary shutdown of
business operations;
2. Force majeure - cause due to an irresistible force as by "act of god" like
lightning, earthquake, storm, flood and the like; also include armed conflicts
like war and insurgency;
3. Legitimate business reverses - include substantial losses sustained due to
fire, robbery, theft, or embezzlement, or for other economic reasons as
determined by the Secretary of Finance (NIRC, Sec. 27, par. (E)(3);
Memorandum No. 6-2002).
Q: What are the entities exempt from the imposition of the MCIT?
ANS: The MCIT shall not be imposed upon any of the following:
1. Domestic proprietary educational institutions;
2. Domestic non-profit hospital;
Note: This is subject to the Predominance Theory. Proprietary educational
institutions and non-profit hospitals enjoy the privilege of being taxed at the
855
rate of 10% on net income, provided, that if the gross income from unrelated
trade, business, or activity exceeds fifty percent (50%) of gross income from all
sources, the domestic proprietary educational institution or hospitals shall be
subject to 30% NCIT, and thus also to MCIT (NIRC, Sec. 27 (B)).
3. Domestic depository banks under the expanded foreign currency deposit
system-subject to final income tax of ten percent (10%) of their taxable
income;
4. Resident foreign international carrier- subject to two and one-half percent
(2.5%) of the Gross Philippine Billings;
5. Resident foreign offshore banking units-subject to final income tax at ten
percent (10%) of such income;
6. Resident foreign regional operating headquarters-subject to final income tax at
ten percent (10%) of such income;
7. Firms enjoying special income tax rate under the PEZA law, Bases Conversion
and Development Act and those enjoying income tax holiday incentives;
8. Nonresident foreign corposationsian,d ..,„
9. Real Estate InvestrgenrTrusti(RA. • o.:9856 otherwise known as the Real
Estate Investment-1ms Oct 20108)S9sc 0), .---,;‘.
Note: The entities enp4latbicl, al,,,,ve.arer-,exerzpt• fro .,. MGIT because they are not
subject to NCIT (INGJ.,ARevieWer, supra at 81). N,,4
1& . i's:
, -'*() .. --717"- N., - Al
Q: Discuss the ipp,liqatii ay/ of the, mqrr were 1r 1 Citmodo . n is governed by
0 A l'
both under the •Illgt' .. and spe ial tax itncorile tax system. '--
e tax,system
ANS: In the cq, e of stic corporation whose ol)eratkne pI are partly
covered by th Y pla Irmo e-tax-systeTrand-partly-Toverect trhclea special income
tax system, th MUTIshall apply Wop ii'peralf rib covered b fie regular income tax
system. For xaDp1 , if a 141B01-(egi0 rp51.; terpripe has a.LIIMistered" and an
"unregistered" dtl'• the- , T shall .413.100' the um'etstere j acti4i (R.R. No. 9-98,
% s Y
Sec. 2.27, par. EX 1 i'4:
f***:),
L.) il
,. \
if. Branch Profi Remittance Fa •

ti.
Q: What is brandprofiNtmitt96%-% t
ANS: The 15% b ch profiwemPaape.,,a. osed on ag profit remitted by a
branch to its head o ice bal9 4onke- - 16tal-"-pro i soalieatqr earmarked for remittance
.,•
without any deductionloVADatirren ere xce hose activities which are
registered with the PhilippM &)fitmic 414-11 .t IRC, Sec. 28(A)(5)).
Note: If it is a foreign corpora 1 n-p,t e follawm a ot included - interests, dividends,
rents, royalties, including remunera ion or technical services, salaries, wages
premiums, annuities, emoluments. or other fixed or determinable annual, periodic or
casual gains, profits, income and capital gains received by such foreign corporation from
all sources within the Philippines unless the same are effectively connected with the
conduct of its trade or business in the Philippines (NIRC, Sec. 28(A)(5)).
Q: What is the rationale of imposing Branch Profit Remittance Tax?
ANS: The remittance tax was conceived in an attempt to equalize the income tax
burden on foreign corporations maintaining, on the one hand, local branch offices and
organizing, on the other hand, subsidiary domestic corporations where at least a
majority of all the latter's shares of stock are owned by such foreign corporations (Bank
of America NT & SA v. Court of Appeals, G.R. Nos. 103092 &.103106, July 21, 1994).
Itemized deductions vs. Optional Standand Deductions
Q: What are the deductions allowable to a domestic corporation?
ANS: The taxable income of a domestic corporation, for purposes of determining its
NCIT, shall be computed by deducting from its gross income the itemized deductions
allowed under Section 34 of the NIRC, or instead of the itemized deductions, the 40%
•
856
‘71•1' i"P'S•;';!F
OSD; special deductions allowed to insurance companies under Section 37 of the NIRC
and to those granting sales discounts to or employing senior citizens (R.R. No. 07-2010,
Implementing R.A. No. 9994).
The allowable deductions to a domestic corporation are itemized deductions, optional

standard deductions, and special deduction.
Note: Unless the taxpayer signifies in his income tax return his intention to elect OSD,
he is considered as having availed of the itemized deductions. The taxpayer is not
allowed to use a hybrid method of claiming its deduction for one taxable year (R.R. No.
16-08, Sec. 7).
Please see previous discussions on itemized deductions and OSD under IIB-4(b).
iv. Taxation of passive income

See IIB-3(d)(vi) (passive investment income).
V. Taxation of capita/gains .,•

06,1.
Q: How are capital gains realized•fom.the sale, exchange, or disposition of lands
and/or buildings taxed? • • ni
•: • ' .30.',i
ANS: The gain presumed to have.teepliZetcMiglhe sale; exchange or disposition of
rE
lands and/or buildings which ara4lota.OthallyIllSeactreWilsaless of a corporation and
are treated as capital assets hall be idbfict to 6% capItarbills tax based on the gross
selling price or the zogaliValuation a,s;Nte ermined by the Cdtilinissioner or the FMV in
the schedule of vat:glt., loialaTeS'el ,ors, whichever iewtliehever is higher (NIRC,
Sec. 27, par. (D)). .0 .,,A .,.,,,,../. ,
L,,,- ' .az
t.
Note: The 6% •capiral gain.Otax on cord() ations cover.,specifically only lands and/or
buildings heldltapitaledSets. In the,fak, ,vf individuals, amikindvf real property held
as capital ass'qtare segeNo the 6% capital gains lr,d,,, ....
, . ,. _A4-1
• .0,11 .4; !1 21
Please see prevLous itlig:oussioneolvtaxob ity of sale oggifa s of stock and of real
property situated infRifartines under I -3(d)(v) (income from dealings in property).
W '-
b. Income tax on non-resicleHt foreign c•rporaon
.4 ,t,v5r ..4..i•. .t,. *
Q: How are non-resid4rforeizic
? torraho
P
• s ax eir income?
ANS: A foreign corporatp in nowltaged in trade or business in the Philippines shall pay
a tax equal to 30% of Vikk,g % toss income received during each taxable year from all
sources within the Philippineg, such as:
1. Interests;
2. Dividends;
3. Rents;'
4. Royalties;
5. Salaries;
6. Premiums, except reinsurance premiums;
7. Annuities;
8. Emoluments or other fixed or determinable annual, periodic or casual gains,
profits and income; and
9. Capital gains, except from sale of shares of stock in a domestic corporation
not listed and traded through a stock exchange, held as capital asset.
Note: The tax imposed is a final tax on gross income. A non-resident foreign corporation
may not avail the benefit of any deduction (NIRC, Sec. 28, par. (B)(1)).
Q: How are interests on foreign loans taxed?

ANS: Interest on foreign loans contracted on or after August 1, 1986 shall be subject to
a final withholding tax of 20% (NIRC, Sec. 28, par. App).
857
•. '
Q: How are dividends received from a domestic corporation by a non-resident

foreign corporation taxed?
ANS: A non-resident foreign corporation will be subject to 15% preferential tax rate on
the amount of cash/property dividends received from a domestic corporation provided
that the country in which it is domiciled shall allow a tax credit against the tax due from
its taxes deemed to have been paid in the Philippines (Tax Sparing Rule). However, if
the country in which the non-resident foreign corporation is domiciled does not allow a
tax credit, the dividends received by a non-resident foreign corporation will be subject to
a final withholding tax rate of 30% (NIRC, Sec. 28, par. (B)(5)(b)).
Q: How are dividends received from a foreign corporation taxed?
ANS: Cash and/or property dividends received by a non-resident foreign corporation
from a foreign corporation are subject to 30% NCIT (if considered as derived from
sources within the Philippines) or exempt from tax (if considered as derived from
sources without the Philippines) (Sec. 24, Sec 28(B) of NIRC).
Please see previous discussiou,orra'ankirdends,received by a non-resident foreign

corporation from a foreigh48-rpozationlis delved froih-sources within or without the
Philippines. v t I • ,
fec)
Q: Is the receipt by4tie1stottholder..c?La, corAiraliqkvio • a property by way of
liquidating dividr,dsubjectto capital:gains
ANS: No. Receiptkbthrstokholdey) wAth7corplate-.0Qnaivklual, of liquidating
dividend is not bbjecti6CG The basis for ig"positi n is AdtpecaUse of the absence
of income fro bsenr-qf-saleAlOpasition_or-qonve)Oce'tnireal property, but
because such action is qubje,Vcto..crOppryjnpom4 tax orkthe-pMt of the individual
stockholders, lir co pate inaome'faxirodtcarpLigie stockholde s. NIRC provides
that any gain dived, o‘r—arly losV*1-altiedby a jockhdli rqm its receipt of
liquidating divi en Silhallated-as:1 able-incop, '-`6? desi.uSielioss, as the case
may be (Com i(s..3op r o hie al ReVe u,01, :glorerni Leisures,poirp., CTA EB No.
1702, April 15, 018).
Summary of Rates 4 Taxes on Ififfnieer Corp ration
Income Domestic Reident foreign • Nonresident
3
27(A)e
Taxabf -pa4N10, Sec. 30% of Gross
Income (NIRC,
2% Minimum Corporate Income Tax: Sec. 28(B)(1)).
Imposed beginning on the fourth taxable
year immediately following the year in
which such corporation commenced its
business operations, when the minimum
income tax is greater that the tax
computed for the taxable year (NIRC,
Business Income
Sec. 27(E)(1); Sec. 28(A)(2)).
Resident FC not subject to MCIT:
1. International Carriers (NIRC, Sec.
28(A)(3));
2. Offshore banking units (NIRC, Sec.
28(A)(4));
3. Regional Operating Headquarters
(NIRC, Sec. 28(A)(6));
4. Under PEZA
858
Interest on FT 20% (NIRC, Sec. 27(D)(1); Sec. 30% of GI (NIRC,
currency bank 28(A)(7)(a)). Sec. 28(8)(1)).
deposit and yield
or any other
monetary benefit
from deposit
substitutes and
from trust funds
and similar
arrangements
received by
domestic
corporations,
and royalties,
derived from
sources within
theyhilippines
NOTE: Interest
income or yield
earned by DC
from sources
outside the
Philippines shall
be included in
the gross income
and subject
NCIT.
Interest from a W15% NC, TEMPT (NIRC,
depository bank 27(D)01). Sec. 28(B)).
under the
expanded foreign
currency deposit
Capital Gains Not over P100,000- 5%
from the Sale of (D)(2)). emany amount in excess of P100,000 —
Shares of Stock 10% (NIRC, Sec. 28(A)(7)(c); Sec.
Not Traded in the 28(8)(c)).
-Stock Exchange
DOMESTIC TO DOMESTIC TO FT 15% if tax

DOMESTIC: RESIDENT: sparing rule
Exempt (NIRC, Exempt (NIRC, applies: _
Sec. 27(D)(4)). Sec. 28(A)(7)(d)).
The country in
•
FOREIGN TO FOREIGN TO which the
intercorporate • - DOMESTIC: RESIDENT: nonresident
Dividends. . Gross Income Exempt foreign
corporation is
Dividend domiciled shall
received from allow a credit
foreign against the tax
corporation is due from the
subject to nonresident
Philippine foreign
859
income tax if at corporation taxes
least 50% of the deemed to have
world (total) been paid in the
income of the Philippines
foreign equivalent to
corporation 15%
• must be derived
from the OTHERWISE:
Philippines for 30%
three years
preceding the (NIRC, Sec.
declaration of 28(B)(5)(b)).
such dividend
• FT 6% based
Capital Gains on: the,„grosr$ '—
Realized from the selliperice of i - -..
Sale, Exchange ifail-. garket- i 4. 'y r'
,") ,,,,;,....'''"-"--- 4 ,
.,
or Disposition of ,/1 /4 ,falrl

. 0- ,, -t
Lands and/or Jwhi beVer is
Buildings s‘hOtibr,,,-,(Nr/fo,7 7-----, ' <,‘. ) ,,.''
ec. 18(D)(9). 1, ''., ' N'TP
I ,, e t-4, (.. A
Dem:ft corporations • •
c. Income tax &A- •
i --->- z
i ProprietatyLdue& bonathntitutiaiiiiyhdhovitais
,
Q: What is a propy‘tcy ely tianal-gq Icillori? A:5 ,k,„,,..4/
ANS: It is anylkiltat sctiqpivainta;iii,edy0yas10st red by Priate individuals or
s
groups with an issued p rmitlp, ri ieVr rriVieiDep CITED, or TESDA as the case
may be (NIRC, Ac. 27, par. (8)
Q: How are propricsy educa to a i'rtte u i':'

ns t \ io sand itals taxed on their
income? 19 -1),_,,r.
ANS: They are subject tat.q -r,,a,,, o:110%-nAthairktAaj? e I come, except those passive
incomes subject to final tax). IJ.Virt-1 ,; 000".
Note: If the gross income from unrelated,traderbusiness or other activity exceeds 50%
of the total gross income derived from all sources, the 30% NCIT shall apply to the
entire taxable income (The Predominance Test) (NIRC, Sec. 27, par. (B)). Its gross
income from unrelated trade, business or activity does not exceed 50% of its total gross
income.
Q: What are the requisites for the applicability of the 10% tax rate?
1. Stock and non-profit institution;
2. Private educational institution or hospital;
3. Gross income from unrelated trade, business or activity does not exceed 50%
of gross income from all sources (Commissioner of Internal Revenue v. De La
Salle University, G.R. No. 196596, November 9, 2016); and
4. For educational institutions, issued a permit to operate from DepEd, COED, or
TESDA (NIRC, Sec. 27, par. (B)).
860
Q: What is meant by unrelated trade, business or other activity?
ANS: It means any trade, business or other activity, the conduct of which is not
substantially related to the exercise or performance by such educational institution or
hospital of its primary purpose or function (NIRC, Sec. 27, par. (B)).
See 1-F (General Principles - exclusions under the Constitution)
ii. Non-profit hospitals

Q: When will a charitable institution be exempt from income tax?
ANS: In order to be exempt from income tax as a charitable institution under the NIRC,
the charitable institution must be:
1. A non-stock corporation or association;
2. Organized exclusively for charitable purposes;
3. Operated exclusively for charitable purposes; and
4. No part of its net income or asst shall belong to or inure to the benefit of any
member, organizer, officer oparespecific person (NIRC, Sec. 30p).
Q: Is St. Luke's Medical Center5Itie;'4;tganized as a non-stock and non-profit

charitable institution, IPSO FAOTOVIte4 to a tax exemption?
ANS: NO. There is not dispute that th'Attike.s,is organized as a non-stock and non-
profit charitable institution. However,.
.5,cdpjagiatitonvigh y exempt St. Luke's from
paying taxes. This only refers. the organ zation of Wan' .Even if St. Luke's meets
the test of charity, a ctiOtage institutk;in i4 not ipso facto tade Cempt. To be exempt for
real property taxes, Segton428(3), Articled of the ConstitutiSrrepuires that a charitable
- --institution use the proRIN:atually, directleand exclusively'" charitable purposes. To
be exempt from in „d If ir Section 1E) of the NIFC Eeqdires that a charitable
e
institution must1Te 4orgarfizeiranckopers" tied exclusively' for \heritable purposes.
Likewise, to liKeicemptliwi the income axes, Section 0(GgoftheINIRC requires that
the institutiont "operatectkexcliasixelyn . social ,e pLk.taWieihner of Internal
Revue St. L Medic CenteVnc. R. No. 19590910,A&RA 66, September
26, 2012).
,t , • •Ikt4
See 1-F (General Principlestexclusions "-"_ co stitution)
Government-ownectOrconte rporations agencies, orinstrumentalities

V ;41 IF
See 1-F (General Princi• es -,elusions under the Constitution)
iv. Domestic depository banks (foreign currency deposit units)

Q: How are depositary banks (foreign currency deposit units) taxed on their
income?
ANS: General rule: Income derived by a depository bank under the expanded foreign
currency deposit system from foreign currency transactions with nonresidents, offshore
banking units in the Philippines, local commercial banks including branches of foreign
banks that may be authorized by the BSP to transact business with foreign currency
deposit system shall be EXEMPT from all taxes.
Exceptions:
1. Net income from such transactions as may be specified by the Secretary of
Finance, upon recommendation by the Monetary Board to be subject to the
NCIT payable by banks; and
2. Final tax of ten percent (10%) on interest income from foreign currency loans
granted by such depositary banks under said expanded system to residents
other than offshore units in the Philippines or other depositary banks under the
expanded system (NIRC, Sec. 27 (D)(3)).
861
Note: That interest income from foreign currency loans granted by such depository
banks under said expanded system to residents other than offshore banking units in the
Philippines or other depository banks under the expanded system, shall be subject to a
final tax at the rate of ten percent (10%) (N/RC, Sec. 27(D)(3)).
Income of non-residents (individual or corporation) from transactions with depositary

banks under FCDS is exempt from final tax.
v. International carriers doing business in the Philippines

Q: Define International Carriers.
ANS: International Carriers refers to a foreign airline corporation doing business in the
Philippines having been granted landing rights in any Philippines port to perform
international air transportation services/activities or flight operations anywhere in the
world (MAMALATEO, Reviewer, supra at 294).
Q: How are International Carrisss.taxedr''',......,„,„,

ANS: An international carrierogio cg butiels in4,t e P hilip,
shall pay a tax of 2.5%
on its "Gross Philippine 'Illigs" G10) ( !RCA . 28, pa (A)(3)).
•-t
)
Q: Define Gross Pij lit Bilari;:.
ANS: Gross Philip e I .firs•-fererstgiftrThtt
ie am . n ros r venue derived from
carriage of perp 9 ce bagage, ca o, a o iginating from the
Philippines in icontiguous and u int upted flight irre p ,ctivg f the place of sale
4.-. .4-
or issue and tilt halac fof pa paenLo ds keLor...pas age d birth (NIRC, Sec. 28,
par. (A)(3)(b)). .0". ',I$ " --'7 l''''''4
.:V-Vr
_7_
Q: How may i l ca oanallyor the re erer l e or exemption
ia m
from the 2.5% Gros's ne-Billing 0)
\
ANS: Sec. 280)0 10.lR9 s .40:1-tde 4 o. • 78 provides that
international carriers
rl, d e P4fi''' - ay a ail of a referential rate or
exemption from e 2.5°a pine Bin on basis fan applicable tax
treaty or intemati nal agre o`wla e... ili..inesA s a sig tory or on the basis
of reciprocity such' kat an inter f let e ese me co try grants income tax
exemption to Philippine c alt—hkewis - ,,b from the 2.5% Gross
Philippine Billings Tax (
•Q: Air.Canada is a. foreign corpo • .. .s.g anted an authority to operate as

an offline carrier by the Civil Aeronautics Board. As an off-line carrier, Air Canada
does not have flights originating from or coming to the Philippines and does not
operate any airplane in the Philippines. Air Canada engaged the services of
Aerotel Ltd., Corp. (Aerotel) as its general sales agent in the Philippines. Aerotel
sells Air Canada's passage documents in the Philippines. May Air Canada be
subject to the 21/2% tax on Gross Philippine Billings pursuant to Section 28(A)(3)
of the Tax Code?
ANS: No, an international air carrier with no landing rights in the Philippines is a resident
foreign corporation if its local sales agent sells and issues tickets in its behalf. An offline
international carrier selling passage tickets in the Philippines, through a local general
sales agent, is considered a resident foreign corporation doing business in the
Philippines. As such, it is taxable on income derived from sources'within the Philippines,
and not on Gross Philippine Billings, subject to any applicable tax treaty (Air Canada vs.
Commissioner of Internal Revenue G.R. No. 169507. January 11, 2016).
862
vi. Off-shore banking units
Q: How are income derived by offshore banking units (OBU) taxed?
ANS: Income derived by OBUs authorized by the Bangko Sentral ng Pilipinas (BSP)
from foreign currency transactions shall be subject to:
1. Tax exemption — if income is derived from:
a. Nonresidents;
b. Other offshore banking units;
c. Local commercial banks, including branches of foreign banks that may
be authorized by the Bangko Sentral ng Pilipinas (BSP) to transact
business with offshore banking units shall be exempt from all taxes
except net income from such transactions which shall be subject to the
regular income tax payable by banks;
2. Final tax of 10% — on any interest income derived from foreign currency loans
granted to residents other than offshore banking units or local commercial
banks, including local, branches of foreign banks that may be authorized by
the BSP to transact businessvliilj offshore banking units (NIRC, Sec. 28, par.
(A)(4)). . .
Resident foreign depositorybgh4(fail ign currency deposit units)
dra
Q: How are income derived IVaepota!w ank u der the expanded foreign
currency deposit system taxed?
ANS: Income derived by,&-alaepositary ank under t e e anded foreign currency
deposit system from foreign currency tra fictions shall be t to:
1. Tax exempti —Eincome e ed from:
a. Non-re de "
b. Q ore bane units in e Philippines-
4A:ocal commercial basics, luding bra hes f fo eign banks that may
beaukzp,d bathe B o tran a SS •reign currency
WdepositsirsTem unitt• an
d. ,Othericresitory ba ks der the expa gn currency deposit
_dt -
• sysique
2. Final tax 81,1 % — o interest i om foreign currency loans granted by
such deposito s to reside 'WEIR a offshore units in the Philippines,
or other dep ry ban sT(p//1.?G : ten
Regional or are hea quarters and regional operating headquarters of

multinational companieNVO
Q: What are regional or area headquarters?
ANS: Regional or area headquarters shall mean a branch established in the Philippines
by multinational companies and which headquarters do not earn or derive income from
the Philippines and which act as supervisory, communications and coordinating center
for their affiliates, subsidiaries, or branches in the Asia-Pacific Region and other foreign
markets (NIRC, Sec. 22, par. (DD)).
Q: What are regional operating headquarters?

ANS: Regional operating headquarters shall mean a branch established in the
Philippines by multinational companies which are engaged in any of the following
services: general administration and planning; business planning and coordination;
sourcing and procurement of raw materials and components; corporate finance advisory
services; marketing control and sales promotion; training and personnel management;
logistic services; research and development services and product development;
technical support and maintenance; data processing and communications; and business
development (NIRC, Sec. 22, par. (EE)).
863
.1.1,1e,y1...;:a.
Q: Discuss the taxability of regional or area headquarters and regional operating

headquarters.
ANS: Regional or area headquarters shall not be subject to income tax. Regional
operating headquarters shall pay a tax of ten percent (10%) of their taxable income
(NIRC, Sec. 28, par. (A)(6)).
Summary of Rates of Taxes for Special Corporations
Special domestic corporations

Corporation Tax
Proprietary Educational ' GR: 10% of Taxable Income (Section 27(B),
Institution NIRC).
- Any private school EXC: 30% if the gross income from "unrelated
maintained and administered trade, business or other activity" exceeds fifty
by private individuals or p,,ercents.(5.9y) of the total gross income derived
groups by such ed„ucOtiOnej institutions from all sources3
(N/R2)Seaion .i. v ,t27 (P.))N,,,,
., ..
.. .„. ,4 d 2. • ,c4.
_„,,.........t.„,4
"'Note: unrelafed.„tralle, bt(Si\ ess or other activity'
....meawany--tradeNls16eis • r other activity, the
Non-profit Hospitals ?oindit ofl.,Iyhichls not 84.0Sla • tially related to the
03terciLSe ,grA. perfikma.hcbtey tuch educational
instiNtion or hosp tal o its itimary purpose or
4
—fan' Vnj---
arsk,..,...
;11;1
I
1111.
Corporations, agencies or ___._,3-141
instrumentalities owned or 30-WOriLiT-exable I/go
2 Iraection 27(C) as
controlled by the • --aminCiedty-Sec foe 11009_43J
' Government jeta,
.../ce
GSIS, SSS, PHC, Local c Ocemptpsil' K Sdion 27(6), as amended by
Water Districts Lit-491717C M1'09a.
( 11 -.-
Special resident foreign corporations
Corporation Tax
2.5% on Gross Philippine Billings (amount of gross

revenue derived from carriage of persons, excess
baggage, cargo, and mail originating from the
Philippines in a continuous and uninterrupted flight,
irrespective of the pace of sale or issue and the
International Carrier place of payment of the ticket or passage
doctirrient) (NIRC, Section 28(A)(3)).
Offline carriers/ no landing rights- 30% (Air Canada

vs Commissioner of Internal Revenue, G.R. No.
169607, January 11, 2016).
Branch Profit Remittance 15% based on total profits applied or earmarked

- Any profit remitted by a for remittance (NIRC, Sec. 28(A)(5)).
branch to its head office
864
Regional or Area Exempt (NIRC, Sec. 28(A)(6)(a)).
Headquarters
Regional Operating
10% on Taxable Income (NIRC, Sec. 28(A)(6)(b)).
Headquarters
Special nonresident foreign corporations

Corporation Tax
Nonresident Owner or Lessor 4.5% of gross rentals, lease or charter fees from
of Vessels Chartered by leases or charters to Filipino citizens or
Philippine Nationals corporations, as approved by the Maritime Industry
Authority (NIRC, Section 28(8)(3)).
Nonresident Owner or Lessor
of Aircraft, Machineries and 7:59k of gross rentals or fees (NIRC,
Other Equipment Eseotto 28(3)(0. •
d Improperly Accumulated Earnin gibV7cm AErli)

44P. 8gr
Q: What is the Improperly Acthmulate farm s TAX(MET)?
ANS: It is a tax ecppalifir to 10%1 opmproperly accunpated taxable income of
corporations (NIRC, Seor-29,• par. (A)iri No. 2-2001, Sec. 2
Q: What is impropeOtacAmulated tax le income?
ANS: It refers,,tp.oprblits cfftworporationcpat are perm'A edio accumulate instead of
being distributed to itsoksbareholderslorpurpose of avoiding Vie income tax with
respect to its' ebelder atheighareho:
• eIrs of anothe gioratiol' R No. 2-2001,
Sec. 2).
'kb.,. JO
Q: What is the rabdhale beir th ,IA
Iv- N4,
ANS: If the earnings.. and pro„ its were di ibuted the shareholders would be liable for
income tax, whereas ifltdmiis
t no distil? wpuld incur no tax with respect to
the undistributed earniribrif the colp,orabo en_c_e, AM imposed:
1. In the nature ape arty to the corporation for the improper accumulation of
its earnings; anb •
2. To avoid the situi j. ri, here a corporation unduly retains its surplus earnings
instead of declaring and paying dividends to its shareholders or members who
would then have to pay the income tax due on such dividends received by
them. As a form of deterrent to the avoidance of tax upon shareholders who
are supposed to pay dividends tax on the earnings distributed to them by the
corporation (R.R. No. 2-2001, Sec. 2; Commissioner of Infernal Revenue v.
Ayala Securities Corp., G.R. No. L-29485, November 21, 1980).
Q: How is improperly accumulated income computed?
ANS: The improperly accumulated taxable income for a particular year is computed by
adding to that year's taxable income the following:
1. Income exempt from tax;
2. Income excluded from gross income;
3. Income subject to final tax; and
4. The amount of NOLCO deducted.
The taxable income as thus determined shall be reduced by the sum of:
1. Income tax paid/payable for the taxable year;
865
•
DAN.:REDBtOK
2. Dividends actually or constructively paid/issued for the applicable year's
taxable income; and
3. Amounts reserved for the reasonable needs of the business (NIRC, Sec. 29,
par. (D)).
Q: When is the accumulation of income reasonable?
ANS: The accumulation is reasonable if it is necessary for the purpose of the business,
considering all the circumstances of the case. The term "reasonable needs of the
business" is construed to mean the immediate needs of the business, including
reasonable anticipated needs (NIRC, Sec. 29, par. (E); R.R. No. 2-2001, Sec. 3).
Q: What is the period of payment of dividend/payment of IAET?

ANS: Dividends must be declared and paid or issued not later than 1 year following the
close of taxable year. Otherwise, IAET (if any) should be paid within 15 days thereafter
(R.R. No. 2-2001, Sec. 6).
Q: What are the entities exernatedfirdir 14( ET?
ANS: The IAET shall not ap IsttiRhe foli)wirl(pB1- ER)
1. Publicly-held co oritiorS,,(Sec-.29,- ed ( (2 1) cirestic corporations NOT
falling underlie fipiti' nwcircrseTPTel or orations (R.R. No. 2-2001, Sec.
4);
2. Banks noritbarilrfilitern>lepiesy//RC, Sec. 29, par.
(B)(2));
I Pc, Ak
3. Insura (Sec. 49, Ret (B 2));
4. Taxa eemediftafave_actua y or irscdc 'vely received the
taxab
5. Gen part pt; t.....able a e partners); and
6. Non- uresri —
7. Ente istered—wirhe lint E 9a9mi, Zone Authority
(P omiqone Act of 1995),
and e terpris 6. 72/7 (Bases Conversion and
Develo eent ente rises dilly registered under
special nom njoycment of special tax
rate on th registe lieu other taxes, national or
local;
8. Resident Foreig1144,......,E,
o
e. Exemptions from taxon co rations.
Q: Enumerate the exempt corporations under NIRC.
ANS: The following organizations shall not be taxed in respect to income received by
them as such: (LMB-CNB-CNG-FF)
1. Labor, agricultural or horticultural organization not organized principally for
profit;
2. Mutual savings bank not having a capital stock represented by shares, and
cooperative bank without capital stock organized and operated for mutual
purposes and without profit;
3. A Beneficiary society, order or association, operating for the exclusive benefit
of the members such as a fraternal organization operating under the lodge
system, or mutual aid association or a nonstock corporation organized by
employees providing for the payment of life, sickness, accident, or other
benefits exclusively to the members of such society, order, or association, or
nonstock corporation or their dependents;
4. Cemetery company owned and operated exclusively for the benefit of its
members;
5. No nsto ck corporation or association organized and operated exclusively for
religious, charitable, 'scientific, athletic, or cultural purposes, or for the
866
DA N
rehabilitation of veterans, no part of its net income or asset shall belong to or
inures to the benefit of any member, organizer, officer or any specific person;
6. Business league chamber of commerce, or board of trade, not organized for
profit and no part of the net income of which inures to the benefit of any private
stock-holder, or individual;
7. Civic league or organization not organized for profit but operated exclusively
for the promotion of social welfare;
8. A Nonstock and nonprofit educational institution;
9. Government educational institution;
10. Farmers' or other mutual typhoon or fire insurance company, mutual ditch or
irrigation company, mutual or cooperative telephone company, or like
organization of a purely local character, the income of which consists solely of
assessments, dues, and fees collected from members for the sole purpose of
meeting its expenses; and
11. Farmers', fruit growers', or like association organized and operated as a sales
agent for the purpose of markeipg the products of its members and turning
back to them the proceedsAples, less the necessary selling expenses on
the basis of the quantity dafod ge finished by them (NIRC, Sec. 30).
Note: The above organizations cebeik x-exempt on any income derived by them
of whatever kind and character free( '4% eir properties, real or personal, or from any
'of their activities conducted for pr 'fi e disp on made of such income
(NIRC, Sec. 30).
Q: Did the NIRC quad the tax emp on constitutiona ranted to non-stock,
non-profit education4igstitutionV
ANS: No. As provided in Nednstitutio II revenues id ssets of non-stock, non-
profit educationallatitutiiis.4ised actu directly, a d e vely for educational
purposes shay& exerntiom taxes%ed 'es (CONS . Art. ec.4, Par. (3)). The
last paragrapp,Sec30jolthe*IRC is thout fo respect to non-
stock, non-profit edu,cLiogal instiVion provided, onestock, non-profit
educational institenszkt tha i ass and revenues re sed actually, directly
and exclusively forùcatiof al purposes.ff e tax-exemption constitutionally granted to
non-stock, non-profit eslucatal instituti t subject to limitations imposed by
law. The tax exemptioffgran ad by the91 . ,69iptock, non-profit educational
institutions is condition only oplhMeMelirree-,6 11idwaclusive
— use of their assets,
revenues and income fo educitio:pal purposes. To avail of the exemption, the taxpayer
must factually prove t sed actually, directly and exclusively for educational
purposes the revenues o ncelne sought to be exempted (Commissioner of Internal
Revenue v. De La Salle University, G.R. No. 196596, November 9, 2016).
Q: Is it required that the revenues and income of non-stock, non-profit

educational institutions must have been sourced from the educational activities
related to its purpose?
ANS: No. A plain reading of the Constitution would show that Art. XIV, Sec.4, Par. (3)
does not require that the revenues and income must have also been sourced from
educational activities or activities related to the purposes of an educational institution.
The phrase "all revenues" is unqualified by any reference to the source of revenues.
Thus, so long as the revenues and income are used actually, directly and exclusively for
educational purposes, then said revenues and income shall be exempt from taxes and
duties (Commissioner of Internal Revenue v. De La Salle University, G.R. No. 196596,
November 9, 2016).
Please refer to discussions on "General Principles of Income Taxation" on the
constitutionality of the above provision in relation to non-stock, non-profit educational
institutions.
867
Q: What are proprietary educational institutions?
ANS: Proprietary educational institution is any private school maintained and
administered by private individuals or groups with an issued permit to operate from the
Department of Education, Culture and Sports (DECS), or the Commission on Higher
Education (CHED), or the Technical Education and Skills Development Authority
(TESDA), as the case may be, in accordance with existing laws and regulations (NIRC,
Sec. 27, par. (B)).
Q: Are proprietary educational institutions subject to tax?
ANS: Yes. The tax exemption granted to proprietary educational institutions under Sec.
4(3), Art. XIV of the 1987 Constitution requires prior legislative implementation since the
use of the permissive term "may" in the provision gives Congress discretion to
determine whether or not assets and revenues of proprietary educational institutions
should likewise enjoy exemption from taxes (ABAN, Law of Basic Taxation (2016),
supra at 89). Proprietary educagpnallfigtifiltiblis-which are nonprofit shall pay a tax of
ten percent (10%) on thgivrArble corbei(MRC:"*Spp. 27, par. (B)). Proprietary
edudational institutions yHjch,are-lipnpr tpedt4en percent (10%) on their
taxable income except" goecloverenTniRecpt,"ii.psection (D) in the Tax
Code: Provided, thatifiegroseincsw_e-from,,L inreare t dObbsiness or other activity
exceeds fifty percept ( traf of totaC b ross Vico e erivettby such educational
institutions or hoAV'mttaf ail sour es, tjAtta*Trescqbedltrgu ktion (A) in the Tax
Code shall be i pose oh th entire taxatkintome (NI C, S 2,7) par. (B)).
;----v• 1 ri ‘Wril
hi.' kJ ' 't
Q: What taxese acplimposed n an educa iong4instit
e ! :4-0. tion? ."....,li
ANS. Only portions actually, ire* and "kclugniely sed for charitable purposes are
4 ..A
exempt from rea folterty rjj
a2 s; whil4x5- Lp;SlVased, ;.p_civat? entries are not exempt
from such taxis Angele ity_au ation...v-.. f A les, 6.R. No. 189999,
June 27, 2012)V) '.wi 14-r,
P-41 .-E.,-(f.6'Y
Q: Are government o onfro led tion (GOCCs) exempt from
taxation?
ANS: A GOCC is aQerallytubject!
1. Governmen‘§ervice fissuFalle am SIS);
2. Social Securrk§14t Sn''''"'"'"
3. Philippine Healtfil u e Sygte
, 0);a
11i' di,
.4. Local Water Districts Seb.
Note: Under Section 27 (C) of NIRC, is among the list of GOCCs, agencies, or
instrumentalities that are exempt from payment of corporate income tax. Under TRAIN
Law, PCSO is not anymore exempt from payment of corporate income tax.
Q: If the GOCC is not included in the above enumeration, does it follow that all of
its income is automatically subject to tax?
ANS: No. Under Section 32, par. (B)(7) of the NIRC, income derived from any public
utility or from the exercise of essential government function accruing to the government
of the Philippines or to any political subdivision are therefore exempt from income tax.
Therefore, even if the GOCC is not one Of thote enumerated under Section 27, par. (C)
it may still be exempted under Section 32, par. (B)(7) if it is performing governmental
function/s.
Q: Is PAGCOR is still exempt from corporate income tax with respect to its
income from gaming operations?
ANS: YES. Under PD. 1869, as amended, PAGCOR is subject to income tax only with
respect to its operation of related services. Accordingly, the income tax exemption
ordained under Section 27(c) of R.A. No. 8424 clearly pertains only to PAGCOR's
income from operation of related services. Such income tax exemption could not have
868
•
been applicable to PAGCOR's income from gaming operations as it is already exempt

therefrom under P.D. 1869, as amended. Indeed, the grant of tax exemption or the
withdrawal thereof assumes that the person or entity involved is subject to tax. This is
the most sound and logical interpretation because PAGCOR could not have been
exempted from paying taxes which it was not liable to pay in the first place. This is clear
from the wordings of P.D. 1869, as amended, imposing a franchise tax of five percent
(5%) on its gross revenue or earnings derived by PAGCOR from its operation under the
Franchise in lieu of all taxes of any kind or form, as well as fees, charges or levies of
whatever nature, which necessarily include corporate income tax (PAGCOR v. BIR,
G.R. No. 215427, 744 SCRA 712, December 10, 2014, Peralta, J.J.
f Tax on other business entities: general partnerships, general professional
partnerships, co-ownerships,joint ventures, and consortia
Q: How are partnerships taxed?
ANS: Except for a general professional partnership (GPP) and an unincorporated joint
venture or consortium engaged in cong4tion or energy projects, every other type of
business partnership is subject to incgrteitax in the same manner and at the same rate
as a corporation (NIRC, Sec. 22).
• a
Please see previous discussions oh 1:1,!,s,ips, in general.
General Professional PartnersIcipsZtki
Q: How are general prglOssional paqne ships (GPPs) taxe
ANS: The GPP is not $jtAxa,ble entity0.4 ome tax purpont ice it is only acting as a
"passthrough" entity wtardtils incom'e is timately taxed lo t wpartners comprising it
(R.R. No. 8-2018 det020iterilary 2018
Note: The shazeti5116 irAtildbal partner r, the net profi- of6 hGPP pa ership
is deemed
net income
to have
been distributed to tbenirthe same t6xa le year in wti l.c.&s
h lw:
u . ,.
was earned, Tirp shallo. ,tredt'io,,them their iri vio9a teat Whether actually
distributed or not, at thp.,qpPuatedfiltr o income tax.
Q: What is the nattrtreof th-kpartner's s4re in the net profits of a GPP?
ANS: A partner's Aar( in t tr4 net profit4fga,:fflp is not compensation income (BIR
Ruling No. 008, Januaira7A89). PArgiits4mAIRMdual partners are subject to
the 10%/15% CREDITABLE witht Milaxlittsilariel'&Sec. 2.57.2(E) of R.R. No. 2-
98, as amended (R.R 11(2018Ad. 8).
Co-ownership
Q: Explain the tax liability on the income of co-owned inherited properties.
ANS: The co-ownership of inherited properties is automatically converted into an
unregistered partnership the moment the said common properties and/or the incomes
derived therefrom are used as a common fund with intent to produce profits for the heirs
in proportion to their respective shares in the inheritance as determined in a project
partition either duly executed in an extrajudicial settlement or approved by the court in
the corresponding testate or intestate proceeding. The reason for this is simple. From
the moment of such partition, the heirs are entitled already to their respective definite
shares of the estate and the incomes thereof, for each of them to manage and dispose
of as exclusively his own without the intervention of the other heirs, and, accordingly he
becomes liable individually for all taxes in connection therewith. If after such partition, he
allows his share to be held in common with his cb-heirs under a single management to
be used with the intent of making profit thereby in proportion to his share, there can, be
no doubt that, even if no document or instrument were executed for the purpose, for tax
purposes, at least, an unregistered partnership is formed (Olia v. Commissioner of
Internal Revenue, G.R. No. L-19342, May 25, 1972).
869
AN REDfBOOK
Please see previous discussions on Co-ownership.
Joint Ventures
Q: What are taxable joint ventures?
ANS: The following are taxable joint ventures:
1. A domestic corporation jointly owned by individuals and by two or more
existing domestic corporations and/or foreign corporations or duly registered
with or licensed by the SEC is a taxable partnership even if it is engaged in the
business of construction or energy related activity; and
2. If the unincorporated joint venture or consortium is engaged in any other line of
business than construction or energy related activity with operating contract
with the government (MAMALATEO, Reviewer, supra at 47-48).
Q: What are exempt joint ventures?

ANS: The following are exempt joint ventures:
1. Those formed for the purpose of undertaking construction projects;
2. Those formed for theprposeraZfigagin in petroleum, coal, geothermal and
other energy opeoptlorlk pursilan to,
I) op. ra ing or consortium agreement
under a servic”mtractt-with tile- oVe meht ,N ,,, Sec. 22(B));
Note: The joint ventuje pa, ie) aregedrigagre'd'es4ke t rayN with regard to the joint
venture profits. Each. t e Ast re,porLas„ezt ofg;kte,tirfr mek its share in the joint
venture profit. Th eile pt.rrarhethejointventure-is valig.onl ,aupt to the completion of
the construction r6j c nd goes nt eyandR the ubg rit tale or lease of the
developed con miniu ftoor or units to customers ( ' MA MO e /ewer, v supra
, at
94). ",
.vr-,{II .---.w V24
Q: What are e re uirements in Oa or vint venture ofco rtium not to be
considered a ktgitiblepo . orati rqk
ANS: A joint vintultiqr cd • yalis.noftolisidere t a Itcsp ration if:
1. It is f pppor th- • pose ofrain ing truc,tioi7Wo ect;
2. It invajves jOtping •tN oliff3) ., "els' by "cense local contractors
(licens•N as Opera (p• r to b `-13 1 ippine Contr ctors Accreditation
Board (PCAB) o e D a , e_k_ oar e ndyustry);
3. The locaNntracto YgnliecIA t tiqp busi ss;
4. The joint venture u i sec ji,by'l e P- B f the DTI (1 DE LEON,
NIRC Annotated, 113
7. FILING OF RCTURNS OF PA EN.T
Q: What is an income tax return?
ANS: It is a report made by the taxpayer to the BIR of all gross income received during
the taxable year, the allowable deductions including exemptions, the net taxable
income, the income tax rate, the income tax due, the income tax withheld, if any, and
the income tax still to be paid or refundable.
a. Period within which to file income tax return of individuals and corporations
Q: When should an individual taxpayer file his income tax return?
ANS: The return should be filed on or before April 15 of each year covering income for
the preceding taxable year (NIRC, Sec. 51(C)).
Persons Liable to File Income Tax Return

Q: Who are required to file Income Tax Return?
ANS: The following are required to file income tax return:
1. Individuals:
a. Resident Citizens; and
870
b. Non-resident Citizen, Resident Alien and Non-resident Alien engaged
in Trade or Business with respect to income from sources within the
Philippines.
Exceptions:
i. Individual taxpayers whose taxable income is subject to zero
percent under the new graduated tax table (i.e., does not
exceed P250,000) shall not be required to file an income tax
return;
Exception to the exception: A citizen of the Philippines and
any alien individual engaged in business or practice of
profession within the Philippines shall file an income tax return,
regardless of the amount of gross income
ii. Individual with respect to Pure compensation income derived
from sources within the Philippines the income tax on which has
been correctly withheld;
Exception to...Ahe exception: An individual deriving
compensatisOrrtly from two or more employers at any time
during the,tak6E46, ear.
Individual4140 ble incomes been subjected to Final
WithholdirV las lax;
iv. A minimum age Aper49 an in 'v dual who is exempt from
income-tax
_„ ()Tap of this Code and other
larAeneral or s cial (NIRC,Wc. A));
v. mployees d under substitu 6 iling of returns (RR 3-
200;
Note: Secti, orrfi*ttrtiduced u der TRAIN Lawi o r ifieq RR 3-2002.
67P- Scar
2. Taxablejpstate Nlidjost - The duciary shall file returnAl gross income is at
I e a stitgir, 0 0 p (NIRC, (-Sq c. t ,);
3. Genka:IFPpfesSibkaal Partnership' PPP); a
4. Corgfation.
Q; Who are thekliVi „ duals not reg o file income tax return?
ANS: The followingTndkvidua are not req edito i e income tax return:
1. An individualning purely income whose taxable income
does not exceed`two hurl* (P250,000.00);
Note: The CtificatfWithholding filed by the respective employers, duly
stamped "Rece-agh,„y the Bureau, shall be tantamount to the substituted
filing of income t7R-zretIirns by said employees.
2. An individual whose income tax has been correctly withheld by his employer,
provided that such individual has only one employer for the taxable year - the
Certificate of Withholding filed by, the respective employers, duly stamped
"Received" by the Bureau shall be tantamount to the substituted filing of
income tax returns by said employees;
- 3. -An individual whose sole income has been subjected to final withholding tax;
4. A minimum wage earner as defined in these regulations - the Certificate of
Withholding filed by the respective employers, duly stamped "Received" by the
Bureau shall be tantamount to the substituted filing of income tax returns by
said employees.
Note: In all cases, all individuals deriving compensation income, regardless of the
amount, from two (2) or more concurrent or successive employers at any time during the
taxable year are not qualified for substituted filing. Thus, they are still required to file a
return (R.R 8-2018, Sec. 9).
871
Q: What must an ITR contain?
ANS: The income tax return (ITR) shall consist of a maximum of four (4) pages in paper
form or electronic form, and shall only contain the following information:
1. Personal profile and information;
2. Total gross sales, receipts or income from compensation for services
rendered, conduct of trade or business or the exercise of a profession, except
income subject to final tax as provided under this Code;
3. Allowable deductions under this Code;
4. Taxable income as defined in Section 31 of this Code; and
5. Income tax due and payable (NIRC, Sec. 51(A), as amended).
Corporate Taxpayers
Q: What corporations are required to file income tax returns?
ANS: Every corporation subject to tax imposed by the NIRC, except foreign
corporations not engaged in trade or business in the Philippines (NIRC, Sec. 52(A)).
00 ,,„„„„,..........,..„,,..
Q: Who shall file the income,tapx retuli 69 behailrathe corporation?
ANS: The return shall bq,,,fili byilk? Presiciegti,Vie-iO4ide,Qt, or other principal officer,
and shall be sworn to 1:4"sticligofficgt,sandtptkejreasufer.orka,ssistant
••,,,,. v- treasurer (NIRC,
Sec. 52(A)). -.%.,,:
/:(Clid>/5:--------772----,,..„ -,,,.„.--?
Where and When P -le income Tax,Reeurns,. %. .ep
-.., • \,... ..4,
Q: What is the taxable' ear ?f a corporation? e
ANS: A corpo lion m y employ eitherAlendar year r fiscaleyQr s a basis for the
Ilk
filing of its ann dfjpeo e taxtreturrrpTdVipd7tharth- orporition shall not change the
accounting pe °Tem toyed theicOrinim-diplifro the Cdr+1Frrs'onerINIRC, Sec.
52(B)). im.,,,....
7..ak,,,,:ia.:.
1
,`:))
Q: What is fis al yeQ Vc.:), ..„. ,‘,..4.4
ANS: The terrrt fad ear\':rn aRs a -,ac•da?ting peiolof elvd)( 2) months ending
a@gO, Se6 22. pat. (Q)).
on the last day o any month btql-.1 an: eiC;filieri
..."4::..y
Q: When to pay inpome tax ret rV---->-,- ---T5::5
ANS: The total amciunt of inlso 'e''‘ 6
.."-
_ gi .._
.,. time t e return is filed (NIRC,
. ..p_ai,theme
Sec. 56 par (A)). 1 ‘r.laeopmv.W.°°
Q: May the Commissioner L.r.! ixtensiel o Jfirrng returns?

ANS: Yes, the Commissioner mayp.i entor o s ses, grant a reasonable extension
of time for filing returns of income subject to the provisions of Section 56 of NIRC (NIRC,
Sec. 53).
Q: May an individual taxpayer pay his or her income tax in installment?
ANS: Yes, when a tax due is in excess of Two thousand pesos (P2,000.00), the
taxpayer other than a corporation, may elect to pay the tax in two (2) equal installments,
in which case, the first installment shall be paid at the time the return is filed and the
second installment on or before October 15 following the close of the calendar year, if
any installment is not paid on or before the date fixed for its payment, the whole amount
of the tax unpaid becomes due and payable together with the delinquency penalties
(NIRC, Sec. 56 (8)).
Q: Where to file quarterly income tax return?
ANS: The return shall be file with an authorized agent bank, Revenue District.pfficer,
Collection Agent, or Duly authorized treasurer of the municipality in which such person
has his legal residence or principal place of business in the Philippines, or where there
be no legal residence or place if business in the Philippines, with the Office of the
Commissioner, except in cases where the Commissioner otherwise permits (NIRC, Sec
77(A)).
872
4V.S.J.I.,:...se,:;r:,;•,:iza.4--;,-;.4:i*+ thr=lgri:tt.1.,sesixt;:ilei illnA6r,O.-41.•-: qv.
Q: When to file quarterly income tax return?

ANS: The quarterly declaration shall be file within sixty (60) days following the close of
each of the first three (3) quarters of the year. The final adjustment return shall be filed
on or before the fifteenth (15th) day of the fourth (4th) month following the close of fiscal
year, as the case may be (NIRC, Sec. 77(B)).
Additional Provision under TRAIN Law: The ITR shall consist a maximum of four (4)
pages in paper OR electronic form. It shall also only contain the information as required
in ITRs of individual taxpayers. These requirements shall not affect the implementation
of TIMTA.
b. Substituted filing
Q: What is Substituted filing?
ANS: It is a mode of filing when the employer's annual information return of withholding
tax on compensation may be considered as the "substitute" ITR of the employee
inasmuch as the information provided in his, ITR would exactly be the same information
contained in the employer's annual infprOtion return (R.R. No. 03-2002, Sec. 4; R.M.0
No. 1-2003).
Substituted filing is when the ernaNeplannual return (BIR Form 1604CF) may be
considered as the "substitute Ind:orgq,keturn (ITR) of the employee inasmuch as
the information provided in his fIlIA), orm 1700) would exactly be the same
information contained in the employerlei:ap liarkrifkl?IR orm 1604-CF) (R.M.0 No.
A
1-2003). sSr
Acce .
Q: How is "Substitute„„Fiting" diffevn Srom "Non-Filing'
ANS: Under "substituticHitg", an 4,a1 taxpayer alttpugh tequired under the law
to file his income 19x,fidttf will no longepave to personally filk his own income tax
return but instevfl& emfiliiSfere araualpormation re grn fled it'll be considered as
the "substituf Acomep, return of the vploye e ina uch as information in the
employer's re uric iszexacOlhe same in relation c't5 taro y ii Tnplcyee's return.
"Non-filing" is applicable4to- ertaiac, apesf individual atte.,ii5 are not required
under the law to fileiaq,inco e tax return 4M.0 No. 1-2003).
Q: What are the conditions or Substitu4 lm to apply?

ANS: Sec. 51-A of NIRZSat amen e,clAy14 that individual taxpayers
receiving purely compekrtion income, regar• ess ora"mount, from only one employer in
the Philippines for thalenagyear,
c the income tax of which has been withheld
correctly by the said empWitax due equals tax withheld) shall not be required to file
an annual income tax return. The certificate of withholding filed by the respective
employers, duly stamped 'received' by the BIR, shall be tantamount to the substituted
filing of income tax returns by said employees.
Q: What are the conditions for Substituted filing to apply?

ANS: Based on Revenue Regulation no. 3-2002, substituted tax filing only applies to
employees who meet all the following conditions: (POES-FF)
1. The employee receives Purely compensation income (regardless of amount)
during the taxable year
2. The employee receives the income only from One employer in the Philippines
during the taxable year
3. The amount of tax due from the employee at the end of the year Equals the
amount of tax withheld by the employer
4. The employee's Spouse also complies with all three (3) conditions stated
above.
5. The employer Files the annual information return (BIR Form No. 1604- CF)
6. Employee has BIR Form 2316 or Certificate of Final Tax Withheld at Source
(BIR Form 2306) Issued by its employer (R.R. 11-2013, Sec. 2).
873
SEDAN _:RED BO,...
c. Failure to file returns
Q: What is the effect of failure to file income tax returns?
ANS: Failure to file and/or pay any internal revenue tax at the time or times required by
law or regulation shall be punished by a fine of not less than P10,000 and imprisonment
of not less than one (1) year but not more than ten (10) years (NIRC, Sec. 255).
Q: When must the total amount of tax imposed be paid?

ANS: Pursuant to Sec. 56 of NIRC as amended by TRAIN Law,
1. In general, at the time the return is filed. In the case of tramp vessels, the
shipping agents and/or the husbanding agents, and in their absence, the
captains thereof are required to file the return herein provided and pay the tax
due thereon before their departure. Upon failure of the said agents or captains
to file the return and pay the tax, the Bureau of Customs is hereby authorized
to hold the vessel and prevent its departure until proof of payment of the tax is
presented or a sufficient bond is filed to answer for the tax due.
2. Installment of Paymerita0Wherfflardue.12. in excess of P2,000, the taxpayer
other than a corpgatiorkmay ilei tolpay tIP,ta4, in two (2) equal installments,
in which casevtire.firstLin%allment shallibe` p 'id at,lhe time the return is filed
and the secyrld inptAl ntlifigrefore ctoiyerl5-49,1lowing the close of the
calendar yipa ~'f ailristallagiitjszot pal 'ep.Ttsy'eforg. the date fixed for its
paymen Ale Vid etarhount of:the tairtIn•atObeco es due and payable
togethe ,hitbilh, .ei
deinquen0 perialti&s.;." oe•
Note: eforgimen ed of toRc14 TRAIN La , th' was on or before
July 1
3. Pay l-tilapital aireiax, 1 ,c)ri_thi e,j:1
, ate cribed therefor is
filed erson I able telgtojilf:tbsaftelle f his intention to
avail of t nefit wernmfori of pit er existing special
.laws, h nts-sha4equired
ll=1:4 'Ili,- fire to qualify for
exem der ue on the gains
2
realiz from the zbymm lately/ ecome due and
payabl subje to t Iked nder pplicaye provisions of this
Code. I he sell r,, havi g, aict,t (ta ) bmits,such i p of of intent within 6
months frbzi the regitatiaLiAti,egc "ti.ansferri g the real property, he
shall be enfitlzi toNffbncte_ Suc11:22supoetcai tt n of his compliance with
the requirementsarxern 0o ., \,)
-1',.. ‘ _. • 41P- the gain by installments
Note: In case the taxpayerNtecis and Wiled tooreport
under Section 49 of this Code, ilte.t f atfiinstallment payment shall be paid
within 30 days from the receipt of such payments.
No registration of any document transferring real property shall be effected by the

Register of Deeds unless the Commissioner or his duly authorized representative has
certified that such transfer has been reported, and the tax herein imposed, if any, has
been paid.
Q: When is the deadline for filing of declaration estimated income for the current
taxable year?
ANS: Pursuant to Sec. 74 of NIRC as amended by TRAIN Law, the deadline for filing of
declaration estimated income for the current taxable year is on or before May 15 of the
same taxable year. The payment of the four installments shall be:
• First - May 15
• Second - August 15
• Third - November 15
• Fourth - on or before May 15 of the following calendar year when the final
adjusted income tax return is due to be filed.
874
, ::1,1;*"..1;';',":,4•••vitvi-A4- • • •f•• '71 i'S‘
8. WITHHOLDING TAXES
a. Concept
Q: Discuss the concept of withholding tax.
ANS: The practice of "withholding of taxes" which is also known as "taxation at source",
refers to the requirement that taxes imposed or prescribed by the NIRC are to be
deducted and withheld by the payor-corporations and/or persons from payments made
to payees-corporation and/or persons for the former to pay the same directly to the BIR.
Thus, the taxes are collected practically at the time the transaction is made or when the
taxable act occurs (2-8 DOMONDON, Taxation, supra at 1058).
Q: What is the nature of withholding tax?

ANS: Withholding tax is not a tax. It is a method of collecting income in advance from
the taxable income of the recipient of the income (MAMALATEO, Reviewer, supra at
264).
Q: Who are required to deduct an,d0tAhold taxes?

ANS: The following persons are cc:iiistitutgcl as withholding agents required to withhold
• #4'
income tax payments: 24,1Py° .t
1. Juridical Persons, whethe:r944e ngLY gaged in trade or business;
2. Individuals with respect AM:Jane ade in co nection with his trade or
business; 5•• , lar
3. Individual burtrufa engagOd trade or b si esst insofar as taxable sale,
exchange oritransfer
tya or reapacurty is concerned; d
4. All governmRrilt offices including GOCC S as Rs provincial, city and
municipal gpy,erriiinartte and baThngays (RR. 0- -98, Sea Z57.3 as
amende R.R016. 1,4-02).
Q: When can,' ededgiit stilLbe allo ed despite cij ilA of taxes?

ANS:, Any income tigjimeNvhiclibItheMise dedu Code, shall be
allowed as a deciuctiorlVaghe payqrs gras income only4414 flown that the income
tax required to be‘hteld-hes beerpaid the BIR in accordance with Sections 57 and
58 of the Code. NeVerthelesAa deductio 11„ba allowed in the following cases where
no withholding of tax w43rde:
1. The payee re orted t tie tax, Eal. tax due thereon and the
withholding agent pa tie tax, including the interest incident to the failure to
withhold the to d .ircharges, if applicable, at the time of audit/investigation
or reinvestigation/reconsideration;
2. The tecipient/payee failed to report the income on the due date thereof, but the
withholding agent/taxpayer pays the tax, including the interest incident to the
failure to withhold the tax, and surcharges, if applicable, at the time of
audit/investigation or reinvestigation/reconsideration; and
3. The withholding agent erroneously under withheld the tax but pays the
difference between the correct amount and the amount of tax withheld,
including the interest incident to such error and surcharges, if applicable, at the
time of audit/investigation or reinvestigation/reconsideration (R.R. No. 6-2018
issued on January 19, 2018 revoking RR No. 12-2013 relative to the
requirements for deductibility of certain expenses).
Note: Items of deduction representing return of capital, such as those pertaining to
purchases of raw materials forming pait of finished product purchases of goods for
resale, shall be allowed as deduction upon withholding agent's payment of the basic
withholding tax and penalties incident to non-withholding or under withholding (R.R. No.
6-2018).
875
•
DAN
Q: Who are exempted from withholding?
ANS: The withholding of tax shall not apply to income payment made to the following:
1. National government and its instrumentalities, including provincial, city, or
municipal governments, as well as GOCCs;
2. Persons enjoying exemption from payment of income taxes pursuant to the
provisions of any law, general or special, such as but not limited to the
following:
a. Sales of real property by a corporation which is registered with and
certified by the Housing and Land Use Regulatory Board (HLURB) or
the Housing and Urban Development Coordinating Council (HUDCC)
as engaged in socialized housing project where the selling price of the
house and lot or only lot does not exceed the socialized housing price
applicable to the area as prescribed and certified by the said
board/council as provided under Republic Act No. 7279 and its
implementing regulations.
b. Corporations whict),pre.exemp,t from the income tax under Sec. 30 of
the Tax Cosle''as imand?Fl . ,-,1.'a'nd.,,. government-owned controlled
corporatjorrtextkrpt from lincOme fax bider Section 27(A)(C) of the
sameftode-,10 witelhe•Governdenf Se:ryjcelsurance System (GSIS),
the _tqatiOctlrity System SSS‘);,:,,the Health Insurance
CorportdVljlG)reffrfile"tocal,ft,ertiter Diskicts (LWD). However,
eel spin6 payments arising-from tf any
, activitr Which is conducted for
,4, i ,,
pro ttoVincote p derd •fi m feal or personaleproAty shall be subject
to withfioldin tax as prpic.fibed in thes1 regkatictpS.1
:Jaintpentures or consolpmTalififf or the iiiirctose of undertaking
"ebnstiruction roredti'or; 4ngaRiein etroleu , col geothermal and
other ener operatiolgpvituant fo ancrating or consortium
"adrqirne er a setiiite_e_britract wikh re governm9nt.
Ingiwctual w cX1Fn Pj25-0,p0,0i.00 i rfdtbdow arn.:, dflone income payor
WA o2mp iari• vitiiii ifollOwin Ab .„,ir'ents: N
Re 1 igidkai'l ai 6#.• f4 1-•:;a page's sv om declaration of
woks r oelpti ccofilapde wit .the ; rmat per attached
--k"-?>,)
Annex "13'-•2ki.rN T r,,T.
-
ii. - The aoria_cletratEation- a,.. .,beentsuE?initted to the lone income
,Ay‘rfihrig'ilding.agenron•or.fiefoire'edgnuary 15 of each year or
lieforl:t 4Initialincrkii,akterY4hichever is applicable (R.R.
No. 02198,Zz22. 7)2.4.20 indnded by RR 11-2018).
Q: What-is-the rate of withholding tax on items of income payable by payor-
corporations/persons?
ANS: Beginning January 1, 2019, the rate of withholding tax shall be not less than 1%
but not more than 15%. Revenue Memorandum Circular No. 1-2018 provides that the
applicable EWT rate on income payments to self-employed individuals/ professionals is
8% (Sec. 57(B) of NIRC as amended by TRAIN Law).
Note: Before the TRAIN Law Amendment, the rate shall be not less than 1% but not
more than 32%. The tax withheld shall be credited against the income tax liability of the
taxpayer.
Q: When must the return for final and creditable withholding taxes be filed and
payment made?
ANS: The return for final and creditable withholding taxes shall be filed and the payment
made not later than the last day of the month following the close of the quarter during
which the withholding was made. The provision that the Commissioner may require the
payment of the taxes withheld at more frequent intervals is removed under TRAIN Law
(Sec. 58, NIRC as amended by TRAIN Law).
876
Note: Before the TRAIN Law Amendment, the return for FWT and the return for
creditable withholding taxes (EWT returns) shall be filed within ten (10) days after the
end of each month (Sec. 2.58 of RR No. 2-98).
Q: When does the obligation of the employer to withhold accrued bonuses arise?
ANS: If the taxpayer claims bonuses as a deduction in its income tax return, the
withholding tax on the said bonuses should be withheld and remitted to the BIR in the
year of accrual and not during the year of payment. The obligation of the payor
employer to deduct and withhold the related withholding tax on bonuses arises at the
time the income was paid or accrued or recorded as an expense in the
payor's/employer's books, whichever comes first (ING Bank N.V. v. Commissioner of
Internal Revenue, G.R. No. 167679, July 22, 2015).
Q: When will the prescriptive period for refund of final withholding taxes
commence?
ANS. Final withholding taxes are considered as full and final payment of the income tax
due, and thus, are not subject to entiadjastments. Thus, the two (2)-year prescriptive
period commences to run from thelitte,0vefund is ascertained, i.e., the date such tax
was paid, and not upon the disc04:riyi0ifte taxpayer of the erroneous or excessive
payment of taxes. In the case at liat.,1001trtidisputed
-.7 .
that Metrobank's final withholding
tax liability in March 2001 was remitteclifsx1Mtm,hpril 2012001. As such, it only had
until April 25, 2003 to file its adMinisiktOyndicittigraraTofor refund. However, while
Metrobank's administrative;im wask,fileti on December i 2 h2002, its corresponding
judicial claim was only pn September 10, 2003. There °red Metrobank's claim for
refund had clearly prescribed . (Metrtipolir Bank & TritstiCo v. Commissioner of
Internal Revenue G.Rplo.482582, April A 2017, First Damn, kerlas-Bemabe, J.J.
„tfg,447. ' d,f" A
irded of its ffxcess cre itable tax for 2006
Q: The taxpa -er Initiailyippted to tie--kreel
through . theqdribaQW,
I.,. ' 4, a tax credicertificateatigtax
- lii .4;;,. . X' • a .er., subsequently
indicated in 1 ft 2007 gM, atitclrnecmgver theld * -iel rditable pe tax and
applied the sarriqi,pgalhAlconielix diNfor 2007. ThesTaxpayer filed with the BIR
a claim for refundrardi5r iOuanc(of a ACC for the alleged excess credit for 2006.
This was later eleate4 to the s Court of fgaxAmials (CTA). Both CTA Division and
CTA En Banc ruled tit9Sotffe taxpayeri"TV ,)s1wised the carry-over option
when it included the' excess tai egiglits ofLtiovorrcthlworiginal ITR for 2007. The
....y
taxpayer, on the othert:and,,qoptended that the option to be refunded through the
issuance of a TCC islitevoCable. Thus, when it indicated in its annual ITR for
2006 the option "To be'''41ral
iss e a Tax Credit Certificate," such choice precluded the
other option to carry over. Is the taxpayer correct?
ANS: No. The irrevocability rule is limited only to the option of carry-over. There is
nothing in the law which prevents the taxpayer who originally opted for a refund or TCC
to shift to the carry-over of the excess creditable taxes to the taxable quarters of the
succeeding taxable years. However, if the taxpayer decides to shift its option to carry-
over, it may no longer revert to its original choice due to the irrevocability rule. Here, the
taxpayer is barred from recovering its excess creditable tax for 2006 through refund or
TCC since it constructively chose the option of carry-over when, despite its initial option
to refund, it subsequently indicated in its 2007 ITR that it carried over the 2006 excess
creditable tax and applied the same against income tax due for 2007 (University
Physicians Services, Inc. — Management, Inc. v. Commissioner of Internal Revenue,
G.R. No. 205955, March 7, 2018).
•
877
1 BEDAN RED B0
Q. The BIR assessed ABC with deficiency final withholding taxes (FWT) on
interest payments on loan agreements with XYZ for the taxable year 2000. The
CTA found that ABC was not liable for the said deficiency FWT since its liability
for interest payment became due and demandable only on June 1, 2002. The BIR
contends that ABC was liable to pay the interest from the date of the execution of
the contract on January 5, 2000, not from the date of first payment on June 1,
2002. Is the BIR correct?
ANS: No. Under Section 2.57.4 of RR No. 2-98, the obligation of ABC to deduct or
withhold tax arises at the time an income is paid or payable, whichever comes first.
Further, the same Section provides that the term "payable" refers to the date the
obligation becomes due, demandable or legally enforceable (Edison (Bataan)
Cogeneration Corporation v. Commissioner of Internal Revenue, G.R. No. 201665,
August 30, 2017).
b. Creditable vs. withholding taxes

Q: What are the kinds of withhOdindlaii?'"km,,,
ANS: The two kinds of withttoldi7 taxeiari: ;\ 7 .."'N,.
1. Withholding ofifirpl.tax Ivert in-inconiesp Nkirld,,,,c0f withholding tax which is
prescribed or oktayi jneoffirRrTien -tan ii- pp creditable against the
income to • dneloo 1he'pay„ ee on,,ot income4u14jept regular rates of tax for
the taxab sn,. At ''.6.tfiabitax 40% on oyItte ); \
Note: nd, fi al witfiholdi g Wc systema ()lint of income tax
withh d by t wit oldind agn, is 8hstitut dias fug-arid final payment of
the in • rne_d e fro e_pay.en:nra.
i saidin ome. neIliAbility for payment of
the to 101primarily res s, an I, 1 n.p,aypj as the wi poldinb agent. Thus, in
casefof hi !allure o wit: old_ 1167.stalror iri case of ,._unrp f-t,withholding, the
deft en s II-b colfecWLo3.0tRe par /..withlbkliiid agent. gent.The payee
is no req lid t ,f11.?.- R-income -ferl al paiti,,,a5r a (R.R. No.
2-98, 041RA),19
, (0). p", / .— 1/1/let holding taxes on
2. Withh Iding at creq 1 thektiTt fgs teal
ordinarkbusinks inc. . 'eh s stir cllje ted jo incom tax and therefore,
it is deductible la tax cr f e. ,..inc/o 'e d lived fromthe exercise of a
professiok CIEN-il-r"
Note: Under the craikable i olclja sstem, taxbIdvith eld on certain income ----
‘.. ,,
payments are intended Tio,, o Ft lS\ tia o 'ff e3h,tax due on said income. The
income recipient is still reqair a offile ar it sVrescribed in Sections 51 and
52 of the NIRC, as amended, t epogorn and/or pay the difference between
the tax withheld and the tax due on the income. Taxes withheld on income payments
covered by the expanded withholding ..tax xxx and compensation income xxx are
creditable in nature (R.R. No. 2-98, Sec. 2.57(A), par. (1)).
c. Duties of a withholding agent

Q: Who are required to deduct and withhold taxes?
ANS: The following persons are constituted as withholding agents required to withhold
income tax payments:
1. Juridical Persons, whether or not engaged in trade or business;
2. Individuals with respect to payments made in connection with his trade or
business;
3. Individual buyers not engaged in trade or business insofar as taxable sale,
exchange or transfer or real property is concerned; and
4. All government offices including GOCC'S as well as provincial, city and
municipal governments and barangays (R.R. No. 02-98, Sec. 2.57.3 as
amended by R.R. No. 14-02).
878
•DR:11
A
Q: What are the duties of the withholding agent?
ANS: The Tax Code imposes certain obligations upon the withholding agent to monitor
its compliance with the duty to withhold. They include:
1. The filing of the quarterly withholding tax returns;
2. The submission to the payee, in respect of his or its receipt during the
calendar quarter or year, of a written statement showing the income or other
payments made by the withholding agent during such quarter or year and the
amount of tax deducted and withheld therefrom; and
3. The filing with the BIR of a reconciliation statement of quarterly payments and
a list of payees and income payments.
The codal provisions on withholding tax are mandatory and must be complied with by
the withholding agent (Far East Bank and Trust Company v. Court of Appeals, G.R. No.
129130, December 9, 2006).
Note: A taxpayer cannot be compelled to answer for the non-performance by the
withholding agent of its legal duty to withhold unless there is collusion or bad faith.
Further, the taxpayer could not be deemed to have evaded taxes had the withholding
agent performed its duty (ibid).
Q: What are the consequences.'of!`tI e, allure of the withholding agent to collect

and remit taxes?
ANS: Any person required to withhq1.0A rkylpg) and rerrlit any tax imposed by this
Code or who willfully fails to vsligihold:SI4OhjakI4-a 401.10.Ahd remit such tax, or aids
or abets in any mannerp, ,Oade any stic itax or the paymer4thereof, shall, in addition
to other penalties prod'd for under Chapter (i.e. cfhApenalties and interests
including deficiency a01ginquencitiiife%sts), be liable thnNonviction to a penalty
&pal to—ttie total amount thd tax notrwithheld, or noeagpou ted for and remitted
(NIRC, Sec. 251) ,v rte
Q: What rg, e to anycome ,,tai` wi,tb Vd by, the income
payor/withhclOng nexcesslof w wtso, is prescr e
ANSI Any Income Tai ithheldtrY'Whe
04fr
payoraith Mg agent in excess of
what is prescribedterlfhese. regula ibris r‘e all be refunded to the payee by the said
income payor/withholdipg ag ' t. The income or/withholding agent shall reflect the
amount refunded as aditis, t to the re .019Lling tax due for the first quarter
withholding tax retum.th% 'adjusle8.Amo n -o 451401MrAhall also be reflected in the
Alphabetical List of Pay,t6s to attached in the said first (1st) quarter return. The said
list of payees, who are iakrigg,V refund either due to the change of rates of withholding
or due to the qualificatiorail of exemption from withholding tax shall likewise be
attached in the said return, which shall be filed on or before April 30, 2018 (R.R. No. 14-
2018 issued on April 5, 2018).
Q: What are the consequences of the failure of the withholding agent to refund
excess withholding tax?
ANS: Any employer/withholding agent who fails or refuses to refund excess withholding
tax shall, in addition to the penalties provided in this Title (i.e. civil penalties, interests
including deficiency and delinquency interests, and imprisonment), be liable to a penalty
to the total amount of refunds which was not refunded to the employee resulting from
any excess of the amount withheld over the tax actually due on their return (NIRC, Sec.
252).
C TRANSFER TAXES
Q: What is a transfer tax?
ANS: Transfer tax is imposed upon the privilege of passing property ownership
gratuitously without consideration (2-B DOMONDON, Taxation (2018), p. 396).
879
4•-07'41,
REP
Q: What are the different theories regarding the purpose of transfer taxes?
ANS: The theories regarding the purpose of transfer taxes are:
1. Benefit-Received Theory — the tax is in return for the protection and services
rendered by the State in the accumulation of properties transferred
gratuitously, resulting to benefits received by the estate and the recipient (heirs
or donee).
2. Equitable Recoupment Theory — the State imposes transfer taxes to
counter-act tax evasion, or to reasonably recover the current and future
anticipated reduction of government's income tax collection.
3. Ability-to-Pay Theory — the tax is based on the act that the receipt of
inheritance and gifts creates an ability to pay and thus contribute to
governmental income.
4. Redistribution-of-Wealth Theory — the properties given for free contributes
to the unequal distribution of wealth and earnings because the recipient (heir
or donee) has not actually worked for it. Thus, the imposition of transfer taxes
helps the equitable distrib,mjign..ofmealth to attain social progress and stability.
Theory— the taxiifithe„share of the State as a passive
5. State-Partnership Theory
and silent partner in he accumMatili ofip6513qty •
(VALENCIA & ROXAS,
Transfer Taxis irsaios ccessiond . 4 -43).
.h„.„.,,,. ,,- , ,,,t‘
Estate Tax
Basic Principles arkpt, ang;efilittionN, '•1'(
,:,-- ,„
"*Y" it zirk.. 21i!.. 1 \I
Q: What is an estate tax? 1 RV', ( .t.4, -)
ANS: Estate tat tan xcise taximpose n (I le-privilege of trantfesrArttg a property upon
the death of th iol- e (CAB4NERO,"F, I lilLIVIdgito Leaving Igti18), lg. 36) [hereinafter
CABANEIROJ) It is tax based onjhe•v'elue bfithe net estatd pfAthh vdecedent (NIRC,
Sec. 84). ..istr2.24.7. i
E..--)
.
r1,';.., \ ,si d .
Q: What is the 'rage of estil tax? ri
ANS: Estate tax 's: iil I,
• fi
1. A trans tr tax i pose 4 .1 the rot16-i' r ispoi) ion of private property; and
2. A privilege or excist to go .0-jqtppp" v4a because , their imposition does not
rest upon‘generaVwz biriZikka he- I:A- ex-AT imposed. on the act of
passing own higfc_prcrerty.(340MOND q,ya eon, supra at 1).
U
Q: What are the purposes o ects okt,4\ta
ANS: The following are the genera I pted-or poses for imposing estate tax:
1. To generate additional revenue for the government;
2. To reduce concentration of wealth;
3. To provide for equal distribution of wealth;
4. It is the most appropriate method for taxing the privilege which the decedent
enjoys of controlling the disposition at death of property accumulated during
the lifetime of the decedent; and
5. It is the only method of collecting the share which is properly due to the State
as a partner in the accumulation of property which was made possible on
account of the protection given by the State (Report of the Tax Commission on
National Internal Revenue Laws, Vol. I, pp. 55-57).
Q: When does the estate tax accrue?

ANS: It accrues upon the death of the decedent. Upon the death of the decedent,
succession takes place and the right of the State to tax the privilege to transmit the
estate vests instantly upon death (R.R. No. 12-2018, Sec. 3).
Note: The accrual of the tax is distinct from the obligation to pay the same, which shall
be paid at the time the return is filed by the executor, administrator or the heirs (R.R. No.
12-2018, Sec. 3).
880
• >1..z4 'if-9: '
BEDAN RED BOOK

Q: What law governs the imposition of estate tax?
ANS: Estate taxation is governed by the statute in force at the time of the death of the
decedent (R.R. No. 12-2018, Sec. 3).
Note: The tax rates and procedures prescribed by R. A. No. 10963, otherwise known as
the "Tax Reform for Acceleration and Inclusion Law" (TRAIN Law) and R. R. No. 12-
2018 shall govern the estate of decedent who died on or after the effectivity date of the
TRAIN Law which is January 1, 2018.
Q: Who is liable for the payment of estate tax?

ANS: Estate tax is paid by the:
1. Executor or administrator before delivery to any beneficiary of his distributive
share of the estate; or
2. Beneficiary to the extent of his distributive share of the estate - subsidiarily
liable for the payment of such portion of the estate tax as his distributive share
bears to the value of the total net estate (NIRC as amended by TRAIN Law,
Sec. 91 (0)).
• ft
Q: What is the rate of estate taxZ..
ANS: The . net estate of every 00'500;e0whether resident or non-resident of the
Philippines, shall be subject to ati .0etataite3( at the rate of six percent (6%) (NIRC, as
amended by TRAIN Law, Sec. 84y i:d:OP. ...
Note: Upon the effectivity of TRAIN •Le statdttatiatglipinow fixed at 6% and the
graduated schedule with,•Witte of 5-20°A under the Taii Reform Act of 1997 is now
repealed. ;. 11
-\
IDA . .
Q: When are the ,gropetties and rights of a depedent transferred to his
successors? ?41,- 1
,
ri!ed to the stOcessors a the time of death of
ANS: The properties arisl, rights are teksfew
the decedenC,10/11,90.64
_ ,.Art. 477).
Note: Despitelhe transfer of proteqips al rights a*timpfskath, no judge shall
authorize the execgtor optcial atmjnistta:tor to deliver a tligr 6Vive share to any party
interested in the gatei' nleAtherei'is a de' ification from the Commissioner that estate
tax has been paid ARA Sep94).
Classification of Deceaent 4.4107.4,,

Of At
Q: Who are the taxpayers liableno pay estate tax?
ANS: The estate left by f'ke4living individuals are liable to pay estate tax:
1. Resident;
a. Resident Citizen (RC)
b. Resident Alien (RA)
2. Nonresident;
a. Nonresident Citizen (NRC)
b. Nonresident Alien (NRA) (NIRC, Sec. 84).
Determination of Gross Estate and Net Estate

Q: Distinguish gross estate from net estate.
ANS: Gross estate of decedent who is a resident or citizen refers to the value of all the
property, real or personal, tangible or intangible, of the decedent wherever situated,
however for a decedent who is a nonresident alien gross estate includes only properties
situated within the Philippines provided, that, with respect to intangible personal
property, its inclusion in the gross estate is subject to the rule of reciprocity provided for
under Section 104 of the NIRC (R.R. No. 12-2018, Sec. 4). On the other hand, net
estate refers to the value of the gross estate less the deductions and exemptions
allowed under Sections 86 and 87 of the NIRC, as amended by TRAIN Law (R.R. No.
12-2018, Sec. 6).
881
Q: How is gross estate determined?
ANS: If the decedent is:
1. Residents and citizens - all properties, real or personal, tangible or
intangible, wherever situated, plus items includible in gross estate;
2. Nonresident aliens - only properties situated in the Philippines, provided that
with respect to intangible personal property, its inclusion in the gross estate is
subject to the rule of reciprocity under Section 104 of the NIRC (R.R. No. 12-
2018, Sec. 4).
Note: Amounts withdrawn from the deposit accounts of a decedent subjected to the 6%
final withholding tax imposed under Section 97 of the NIRC, shall be excluded from the
gross estate for purposes of computing estate tax.
Q: Discuss the rule of reciprocity in relation to intangible personal property of a

non-resident alien individual.
ANS: The intangible personal property of a non-resident alien individual, if:
1. With reciprocity—shall not.b.e.includgcl in the gross estate if:
a. The laws of teloreign- ountrwt whicb the decedent was a citizen and
resident at/the IIIRe of is 'de4a4I4 d161 notknpose a transfer tax of any
charatir in espdqt,:of.intangib e-ipers,r99alloperty of citizens of the
Phili es o e'grding in that forefgr,_dnt*).
ou ok
b. T f fAhe rei u Ural! ilar exemption from transfer
xe of ern( aracter ow. ehyfeL tile s of the Philippines
of r ing is that faeigftoulitry C, S c(101)
2. With°, t reciffroci - shall bqiiileluded in the gros &td.
Note: Reciprod s be Ma . al)/ o e osa es or cou'h , the c Ilects or imposes
and does not ;et mp any try sfelOTSsttrilleg- Wor uccess oFi tax f any character,
reciprocity doe no a ply (C/n.v. Fiihisellt- 416. L-1 :622, Ja tlatyt , 1961).
a c'
Q: What is th or a uattopio grpps es
ANS: The gros eside hal "h Weeds 010 Ap:-•
1. As to teal pry e n lc eve is di:45 twe n the HMV at the time of
death:
a. A eterminesi by g i rtrlssiiQpel• (p al value; or
b. As own ip-the, af-valyee-fiVcArb • he provincial and city
asses ozs-046)§Vc4e(B)e7 •iiN);
2. As to personalNproli.erbi, theAggn6rdNite'js MV at the time of death,
except for. "NS n4fV1 ..a2,-,00,0°
a. Shares of stock, w - - --
i. Listed - FMV is the arithmetic mean between the highest and
lowest quotation at a date nearest to the death, if none is
available on the date of death itself;
ii. Unlisted -
• Common shares are valued based on their book value;
appraisal surplus shall not be considered;
• Preferred shares are valued at par value; value
assigned, if there are any, shall not be considered (R.R.
No. 12-2018, Sec. 5);
b. As to units of participation in any association, recreation, or
amusement club, shall be the bid price nearest the date of death
published in any newspaper or publication of general circulation (R.R.
No. 12-2018, Sec. 5);
c. As to the right to usufruct, use or habitation, and annuity, there
shall be taken • into account the probable life of the beneficiary in
accordance • with the latest Basic Standard Mortality Table, to be
882
approved by the Secretary of Finance, upon recommendation of the
Insurance Commissioner (R.R. No. 12-2018, Sec. 5).
Note: Valuation of Gross Gifts (under Donor's Tax), shall also follow the rules under
valuation of gross estate, provided, that the reckoning point for valuation shall be the
date when the donation is made (R.R. No. 12-2018, Sec. 13).
Q: What items should be kncluded in. gross estate?

ANS: The following should be included as part of gross estate: (ITR-GP-PIC)
1. Decedent's Interest;
2. Transfer in contemplation of death;
3. Revocable Transfer;
4. Property passing under a General Power of Appointment;
5. Proceeds of life insurance;
6. Prior interests;
7. Transfers for Insufficient consideration; and
8. Capital of the surviving spouse,(N/RC as amended by TRAIN Law, Sec. 85).
Q: What does the decedent' s inn.Wmfjpc ude?

ANS: It includes any interest havitiONSit capable of being valued, transferred by the
decedent at the time of his deattri(eAVItionds declared by a corporation before the
death of the stockholder althougOa ge f Galt* MAMIM TEO, Reviewer, supra at
359). VVI wyjk,
Q: What is a transferdirlcontemplabon, death?

ANS: It is a transfer b2ti,(ated by :a t ought of deathl al o gh death may not be
imminent (REYES, p, Lipp a Business Taxes (0f5), Chapter 12, p. 11)
(hereinafter REYESP-Transepand Busine Taxes]. 1
Note: The coAcept of tr nsfer in contem ion of death' hasp nical meaning. It is
not the merd'agier; constitutes nsfer "n,eo death but the
retention of some type of control ove e prope 34, grip_ DOMONDON,
Taxation, supra et42,._ se a donation s made conciPli ith the execution of a
will, or where thelime4aten the of a gift and the death of the donor was
relatively close, thelagsfer vere held to Me plated, and the thought of death, as
distinguished from pu ms•I ssociated ctstibe the impelling cause of transfer
(VITUG, Tax Law and ilisprude ff0f2-014
Q: What is a revocable an2.0 r?

ANS: A revocable trans etki§4 transfer by trust or otherwise, where the enjoyment
thereof was subject at the date of his death to any change, through the exercise of
power (in whatever capacity exercisable) by the decedent alone, or by the decedent in
conjunction with any other person, to alter, amend, revoke, or terminate, or where any
such power is relinquished in contemplation of the decedent's death (NIRC, Sec. 85
(C)(1)).
Q: When is the power to alter, amend, or revoke considered to exist on the date of
the decedent's death?
ANS: The power of the decedent to alter, amend, or revoke shall be considered to exist
on the date of his death, even though:
1: The exercise of the power is subject to a precedent giving of notice; or
2. The alteration, amendment, or revocation takes effect only on the expiration of
a stated period after the exercise of the power.
Note: Whether or not, on or before the decedent's death, notice has been given, or 'the
power has been exercised, proper adjustment shall be made representing the interest
which would have been excluded from the power if the decedent had lived. However, if
notice has not been given, or the power has not been exercised on or before the date of
883
his death, such notice shall be considered to have been given, or the power exercised,
on the date of his death (NIRC, Sec. 85 (C)(2)).
Q: What is a General Power of Appointment (GPA)?

ANS: General power of appointment is the right to designate the person who will
succeed to the decedent's property which may be exercised in favor of any person
(CABANEIRO, supra at 131).
Note: A power is specific, hence NOT general:
1. If it can be exercised only in favor of one or more designated persons or
classes of persons exclusive of the decedent, his estate, his creditors or
creditors of his estate; or
2. If it is expressly not exercisable in favor of the decedent, his estate, his
creditors or creditors of his estate (34 Am. Jur. 2d, 791).
Q: How is the power of appointment exercised by the decedent?

ANS: The power of appointment maJ?e,exerojpglby the decedent:
1. By will; „0", T -Ti 1.A i. .7-',,
2. By deed executedin c emplation 9 , .9 ntendecLto i take effect in possession
or enjoymentg-or 61te . h - „death;•=or.,... ` I ..,..N
3. By deed uo4er?Whic he retained for hiPlife-dr aNDeriod not ascertainable
without revere o•ir c "dt his...deattrbrforany,Retio<Whic
, does not in fact end
before Is(' , 1 )61 lc -,'•,... ,,f,:'
a. ilrhe-`p , session or, tenjcimerit•s,of, o `g ht to i ncome from, the
- eropes6f; or i i'V\ cr)
b. T rght, ei era a one ordlin conjunctionwith rmgarpri, to designate
e-i •person hacV,Pri4)1:: ' ::: sOSP.P7Or enjoy • aiLpjoberty or income
there rom (NIRC, S‘6,--f) om-rA
,,,..1,51,,., i
" ..--1- t ,..,1 —der . ,3
Q: When may npier :.c Vemp ap 5 9 , ea ,/ eyocable4ra sfer, or property
passing under, 'PAloe e ' cl ded from h,', e,itoss(s 'te? N't
ANS: Such transfers mkt be )citi qifio o'bs',estat only en they are in the
nature of bona fide sale for ari\adeqba e and, Jli money or money's
worth (NIRC, Sec.-8 ('Be), (b) on f
61t1?.'
Q: When do proceeds ci gurance4dr e gross estate of the
decedent?
ANS: Proceeds of lifei nsuranc all fortia\AAf rocs estate when:
1. The insurance policy is taken rbythe decedent upon his own life; and
2. The proceeds are receivable by:
a. Estate of the deceased, his executor, or administrator, irrespective of
designation; or
b. Any beneficiary designated in the policy of insurance as revocable
beneficiary (NIRC, Sec. 85 (E)).
Note: Under the Insurance Code of the Philippines, a designation of beneficiary is
generally revocable, unless stated expressly in the policy that the designation is
irrevocable. In such cases, the proceeds are not considered as part of the decedent's
estate (INGLES, Tax Made Less Taxing, page 264).
Q: When is the rule on prior interests applicable?

ANS: The rule on prior interest shall apply to the transfers, trusts, estates, interests,
rights, powers, and relinquishment of powers in:
2. Revocable transfer; and
3. Proceeds of life insurance, whether made, created, arising, existing, exercised,
or relinquished before or after the effectivity of this Code (NIRC, Sec. 85 (F)).
884
Q: When is the rule on transfers for insufficient consideration applicable?
ANS: The rule is applicable only in the following cases, when it is made, created,
exercised or relinquished for a consideration in money, or money's worth, but is not a
bona fide sale for an adequate and full consideration in money of money's worth:
2. Revocable transfer; and
3. Property passing under general power of appointment (NIRC, Sec. 85 (G)).
Q: What shall be included in the gross estate in cases of transfers for insufficient
consideration?
ANS: The value to be included in the gross estate is only the excess of the fair market
value of the property at the time of the decedent's death over the consideration received
(NIRC, Sec. 85 (G)).
Note: Based on the foregoing, the formula to be used is:
FMV of the property at the time of death
Less: Actual value of.cdtisideration received
Amount includibleiede,"" dent's gross estate
i,•%rb .•
Q: How is net estate determined?'.., ,

ANS: If the decedent is: 1: l'fie- 4,
1. Citizen or resident - nal e4tketkl sEeterugd byff. Aducting from the value of
the gross estate thpftiliowiriaite .'s: (SC2:iillaTAVAN)
a. Standxfclgduction; ..
b. ClairriOninst the et..t
c. Claimstigainst iosolfent &rsons;
.1,S, 1,"'w-sti,
d. Ugegia mOgages, taxesprid casualty lases;
e. ..,BUperty preVratisly Ved ii
TransfeWor public use;
g -starnilVt.i3V; ' .... ' 4*-7'.. ..o7
h. AmourklieCeived,bReirs der R.A. -491103d- .
i. 'NeWljerettlf the urvi spouse in 'the conjugal partnership or
colprinity Oroperti(N/R as amended by TRAIN Law, Sec. 86).
2. .. Nonresident4alien-
.. net estate fined by deducting from the value of
. • .,,61
the part of h toss estates hic Ittne,,94his death is situated in the
Philippines the ollowirOms o e uc ion: rePio2TraN)
a. Standerg. edNtibn;
b. Proportie fee total losses and indebtedness;
i. Claims against the estate;
ii. Claims against insolvent persons;
iii. Unpaid mortgages, taxes and casualty losses;
The allowable deduction under this subsection shall be computed using

the following formula:
Phil Gross Estate Allowable
X Item (b) =
World Gross Estate Deduction
c. Property previously taxed;

d. Transfers for public use;
e. Net share of surviving spouse in the conjugal property or community
property (NIRC, as amended by TRAIN Law, Sec. 86 (B)).
Note: Prior to TRAIN Law net estate is equal to gross estate less ordinary and special
deductions and exduions allowed by law (INGLES, Tax Made Less Taxing, page 267-
268). With the effectivity of TRAIN Law, the concept of ordinary and special deductions
is abandoned.
885
BEDAN R
Q: What are the steps in determining the gross estate, net estate, and estate tax?
ANS: The following are the steps in determining the gross estate, net estate and estate
tax:
1. Determine the nationality and residence of the decedent.
2. Determine the nature and location of the properties of the decedent.
3. Determine the composition and value of the gross estate.
4. Determine the nature and value of the allowable deductions and subtract from
the gross estate in order to arrive at the net estate.
5. Apply the rate of estate tax to the net estate.
6. Determine the applicable penalties and surcharge, if any (2-B DOMONDON,
Taxation, p. 405).
Deductions and Exclusions from Estate

Deductions from Estate
Q: What may be deducted from themoss,q§tate
, of citizens and resident aliens?
ANS: The deductions allowed..s equei a Tilrior4o TRAIN Law are as follows:
(NIRC, Sec. 86)
TRAIN Law (RA No. 10963)
. Tax Reform Act (RA No. 8424)
(SC2-UP-TraFAN)
ZC, -,,,,,,
AN,
Standard Dedtl16
ti '1'
0../
(PY, 0( )0) 10
1,0'
1 Ataiyard Deidu i?n4i(R1,o1
00,000)
..,
xxx REMOVID- itt • 4111-T,—Eune al l' lel and Judicial
\ ....,r - IlExperpes i
I I
i I . ::: -.1d 1 '''"1
Claims agairst‘ e qstata\ ',‘..:::L§J5.ims ag,IftAtile eistate i
y. g 11 i 5, h. A\ -II
Claims againkirrsdAnt l:--c 11 ql:00sa;gqgsf insilvent irsons
._,
it. . . .., , .,9., -`-i
Unpaid mortg ges, `taxes, Unpfiro m rtgages, taxed; losses
casualty losses CI ,N1W,./
. /
.3.
.9
Property previously tax‘l eig00d [(taxed
O'74'71:' if:/° :
Transfers for public use 'LliTrans7;ril;ipublic use
Family Home (P10,000,000) Family Home (P1,000,000)
xxx REMOVED xxx Medical Expenses
Amount received by heirs under RA Amount received by heirs under RA No.

No.4917 4917
Net share of the surviving spouse Net share of the surviving spouse
Q: What is meant by standard deduction?

ANS: It is a deduction without need of substantiation in the amount of:
1. Citizens and residents — five million pesos (P5,000,000); or
2. Nonresident aliens — five hundred thousand pesos (P500,000).
3. The full amount of either P5,000,000 or P500,000 shall be allowed as
deduction for the benefit of the decedent (R.R. No. 12-2018, Sec. 6 (1) and
Sec. 7 (1)).
886
EDAN:=:RED BC
Q: How are claims against the estate construed?
ANS: The word "claims" is generally construed to mean debts or demands of a
pecuniary nature which could have been enforced against the deceased in his lifetime
and could have been reduced to simple money judgments (R. R. No. 12-2018, Sec. 6
(2)).
Note: Claims against the estate or indebtedness in respect of property may arise out of
contract, tort, or operation of law (id.).
Q: What are the requisites for the claims against the estate to be allowed as
deduction?
ANS: The following requisites should be present: (PGVC)
1. The liability represents a Personal obligation of the deceased existing at the
time of his death;
2. The claims must be contracted in Good faith and for adequate and full
consideration in money or money's worth;
3. The claims must be a debt or claim which is Valid in law and enforceable in
court; and
4. The indebtedness must .jjei"Fe.tieyeteen Condoned by the creditor or the action
to collect from the decedettrfilfStigot have prescribed (RR. No. 12-2018, Sec.
' I
6 (2.1)).
Note: The date-of-death valuatiofpr dATARglied - net value of the property
transferred should be ascertaigdd, yr4-trds.titile,
4s- f the instance of death.
This means that post-death developments, hould NOT brEd tdered in determining the
net value of the estatelebriory v. CouctioN fix Appeals, G.R fo 140944, April 30, 2008,
agreeing with the (lt. tSupremi s `Co' rt in Ithaca T sst Co. v. United States,
279 U.S. 151, 49 S. Cth9 Zee. 647 929).
Q: What are thesubstAtiation reqtikeme is for claims againslthe estate?

ANS: The folrearg aceothiVbstggiationP uiremer,
-te4 `Vbvlas'
rrarg:se fr9A,a si le loan Inc
If the unpaid qpligatio_, ad' antes):
1. The debtAsirtFA_ ent muEffe du otarized ailhe ime e indebtedness was
incurred ex" organs grantek y financial institutions where notarization is
not part °Pits kusinOs practice/ .
2. Duly notarized pertillcation fry ditor as to the unpaid balance,
including inte r of,lt tilffor
Note: The s 45:rn cergation should be signed by the President, or Vice-
President or ofter.,mcipal officer in case of a corporation, or by any of the
general partnersScase of a partnership, or by the branch manager in case of
bank or other financial institutions.
3. Proof of financial capacity of the creditor to lend the amount at the time the
loan was granted; and
4. A statement under oath executed by the administrator or executor of the estate
reflecting the disposition of the proceeds of the loan if said loan was
contracted within three (3) years prior to the death of the decedent (R.R. No.
12-2018, Sec. 6 (2.2.1)).
If the unpaid obligation arose from purchase of goods or services:

1. Pertinent documents evidencing the purchase of goods or services such as:
a. For sales of goods — invoice or delivery receipt;
b. For sale of service — contract for the services agreed to be rendered;
2. Duly notarized certification from the creditor as to the unpaid balance of the
debt, including interest as of the time of death;
3. Certified true copy of the latest audited balance 'sheer of the creditor with a
detailed schedule of its receivable showing the unpaid balance of the
decedent-debtor (R.R. No. 12-2018, Sec. 6 (2.2.2)).
887
I.‘,.1.;..•:'.: - '''", t."'4:'*'‘'g.Fp1.7-0-7- ;,ifAt.31`1,:i,.YF.i.::iiit..trti.S...e.rits?:':-.41-" ,('^1 .; •
. ,' ,-t.;`,..'f
S,- q.
1..1 ":,:?e-li•;,0fre4siSik*,..,:;;;,...;.;,....p....*,,j,:,,,,,..1 ...
Note: When the lender, or the President/Vice-President/principal officer of the creditor-

corporation, or the general partner of the creditor-partnership is a relative of the debtor
within the fourth civil degree, either by consanguinity or affinity, a copy of the promissory
note or other evidence of the indebtedness must be filed with the RDO having
jurisdiction over the borrower within fifteen days from the execution thereof (R.R. No.
12-2018, Sec. 6 (2.2)).
Q: What are the requisites for claims against insolvent persons to be deductible?
1. The amount thereof has been initially included as part of the gross estate of
the decedent (NIRC, Sec. 86 (A)(3)); and
2. The incapacity of the debtors to pay their obligation is proven (Monserrat v.
Collector of Internal Revenue, CTA Case No. 11, December 28, 1955).
Note: The claims against insolvent persons are required to be included in the gross
estate only if the same are claimed as deductions in computing the amount of the gross
estate (R.R. No. 12-2018, Sec. 6 (3)).,„„„,
T i t 1, •:'"440
Q: What are the requisitesAor paid mo gageso ae,.deductible?
ANS: The requisites areZc ..f
N‘
1. The value o e dece erirrirSZTifiere nai9Vq,hed by such mortgage
or indebt94 '531ircl5legLin.the.value,,of th rosp estate; and
2. Limited o,t e nt.that they we're contracted nVielltond for an adequate
and ful e do in moFey i‘lna(ey's worth qi8c, Sec. 86 (A)(4)).
1 %(
Q: What are tble-reguifites orainpaidts Os.to-be_ddsductittle?)
ANS: The reqy iteg a e: -
1. TaxeE whi have accrued, q(:0 e the death oTitejetedent; and
2. Unpaidtherti kof his &gala gardlesdAwhetber od t it was incurred
in ctec wit de-or-buSIWT-(NIR (A
,M4
Note: This wil k e tarumilkcc fvOralef eath, or property
taxes not accrub 401 eK4r 6e fr m the transmission of his
estate (R.R. No.4,
Q: When are losses,‘deduc rble corgliagrif&N e?

ANS: Losses are dediVible
1. Incurred dunng rlienrirth estate
2. Arising from fires, o o e casualties, or from robbery,
theft, or embezzlemen ,
3. Not compensated for by insurance or otherwise;
4. At the filing of the estate tax return, such losses have not been claimed as a
deduction for income tax purposes in an income tax return; and
5. Incurred not later than the last day for the payment of the estate tax as
prescribed by law (NIRC, Sec. 86 (A)(4)).
Note: Casualty losses can be allowed as deduction in one instance only, either for
income tax purposes or estate tax purposes (NIRC, Sec. 86 (A)(4)).
Q: What is meant by property previously taxed?

ANS: A property previously taxed is a property forming part of the gross estate situated
in the Philippines of any person who died within five (5) years prior to the death of the
decedent, or transferred to the decedent by gift within five (5) years prior to his death
(NIRC, Sec. 86 (A)(5)).
Note: In case of property previously taxed, there are two (2) transfers of the property, in
which an estate tax or donor's tax is imposed upon the first transfer. The deduction is
called a vanishing deduction (VD) because the deduction allowed diminishes over a
period of five (5) years. This is considered as allowable deduction to prevent double
taxation of property (CABANEIRO, supra at 137).
888
Q: When may a property previously taxed be claimed by a taxpayer as deduction?
ANS: Property previously taxed or vanishing deductions may be claimed when the
following requisites are present: (DIPIN)
1. Death — the present decedent died within five (5) years from the receipt of the
property from a prior decedent or donor;
2. Identity — the property sought to be deducted is the one received from a prior
decedent or donor;
3. Previously determined and paid — the donor's tax on the gift or estate tax on
the prior succession was finally determined and paid;
4. Inclusion — the property must have formed part of the gross estate situated in
the Philippines of the prior decedent, or the total amount of the gifts of the
donor; and
5. No previous deduction — no vanishing deduction on the property was allowed
to the estate of the prior decedent NIRC, Sec. 86 (A)(5)).
Q: Give the formula for computing vanishing deduction.

ANS: The amount of vanishing dedp_cti_dripay be computed as follows:
.1•4.12r
Step 1: Computation of Initial B,$)S70. -r.
Value of the property subject to'vVD,0
Less: Any:Mortqaqe paid on thatdro4 ., 10X4,14
Initial Basis woAams404
•
‘1 rt
afr
Step 2: Computationt2--peductiol n•
Initial Basis
pars. (7), (3), (4),
Value of the GrosOilt
(6) of I86(A)*
Sc.
Estate
*The sum of t(j'6ffitillowjpg- s,the n ulttplier: clUTra)

:m4t
1. Claims againsAtestat4
2. Claimstagairth:t2I]golvent. persons
3. Unpaid ii0agealaxes, and ca. tialty losses;
4. Transfers forpubliAse;
Note: Prior to train laNt, „ whLtrefers to Expenses, Losses,
Indebtedness, Taxes, dTd Trans et-trcr'p jirctitrp seiLIZM'
ttep 3: Computation ofIF,inaL asis

Initial Basis
Less: 2nd Deduction
Final Basis
Step 4: Computation of Vanishing Deduction

Final Percentage provided under
= Vanishing Deduction
Basis x Section 86 (A) (5) of NIRC
Note: The following are the percentages:

If prior decedent died within 1 year prior to the 100%
death of the decedent
If prior decedent died more than 1 year but not 80%
more than 2 years prior to the death of the
decedent
If prior decedent died more than 2 years but not 60%
decedent
889
decedent
decedent
Q: What are the requisites for transfers for public use to be deductible?
ANS: The requisites are: (LAGPI)
1. The disposition is in a Last will and testament;
2. To take effect After death;
3. In favor of the Government of the Philippines or any political subdivision
thereof;
4. For exclusive Public purpose; and
5. The value of the property given is Included in the gross estate (REYES,
Transfer and Business
Note: The inclusion in the 9c,oatp.state . ndithk19.dvtioQ from gross estate shall result
in a net taxable estate f-pfMhe i'plwerty,of Rbp40.90 REYES, Transfer and Business
Taxes).
Q: Up to what am6 f!,ter sfer

s for p ,blic"Tuse>rr a ucted from the gross
estate?
ANS: The amount depctibl Ilequests, legacies,
devises or trans s to or thRepublic of the
Philippines or Ay. olitical s )publi purpose (NIRC,
Sec. 86 (A)(6)
Q: What is family ogle

ANS: Family fior the ling ha-as ich it is situated,
where the husband wife, eadi heir family reside,
as certified to Bar way . home is deemed
constituted on th house-Nind t . ro tually o cupied as a family
residence and is c 0.:_ej ny of it beneficiaries-actually
resides therein (FA Y COP
Note:. Family home is en Iychara hcy, that is, the place to
which, whenever absent fo ikess ill intends to return (R.R. No.
12-2018, Sec. 6 (7) (7.1)).
Q: What are the conditions for the deductibility of family home from the gross
estate?
ANS: The conditions are:
1. The family home must be the actual residential home of the decedent and his
family at the time of his death, as certified by the barangay captain of the
locality where the family home is situated;
2. The total value of the family home must be included as part of the gross estate
of the decedent; and
3. Allowable deduction must be an amount equivalent to:
a. The current fair market value of the decedent's family home as
declared or included in the gross estate; or
b.. The extent of the decedent's interest (whether conjugal/community or
exclusive property), whichever is lower, but not exceeding P10,000,000
(R.R. No. 12-2018, Sec. 6 (7) (7.2)).
Note: The family home is deemed constituted on the house and lot from the time it is
actually occupied as a family residence and considered as such for as long as any of its
beneficiaries actually resides therein. Actual occupant of the house or house and lot as
890 .
a'•
the family residence shall not be considered interrupted or abandoned in such cases as
the temporary absence from the constituted family home due to travel or studies or work
abroad, etc. (R.R. No. 12-2018, Sec. 6 (7) (7.2)).
Q: When may the amounts received by the heirs under R.A. No. 4917 be
deductible from gross estate?
ANS: Any amount received by the heirs from the decedent's employer as a
consequence of the death of the decedent-employee as retirement benefits under R.A.
No. 4917 (An Act Providing that Retirement Benefits of Employees of Private Firms shall
not be Subject to Any Tax Whatsoever) is allowed as deduction from gross estate,
provided the amount of benefit is included as part of the gross estate of the decedent
(NIRC, Seca 86 (A)(8)).
Note: The amount received by the heirs under R.A. No. 4917 is required to be included
in the gross estate only if the same is claimed as a deduction in computing the amount
of the net estate (R.R. No. 12-2018, Sec. 6 (8)).
4
Q: How is the amount dedg,.7112 2,.,1.:,enas net share of the surviving spouse
determined?
ANS: The amount deductible shaltpget ned as follows:
1. The conjugal property stibirftA4 etermined;
2. Then all obligations prope,,, h' .gea,ble, to it (ordRary deduction under Sec.
86(A)(1)) shall be d9FILICteckt e rom;- n
3. From the bald ,ceAtiet conj g estate), the riete (1/2 thereof) of the
surviving spoti§rshall be &alit d from the net ,gal estate for purposes
of imposing the net estateOPVE LEON, NIRC A otated, supra at 778).
a *0'
Q: Discuss the concept qtatpAtax credukt
ANS: The esjat ?lax imOed by the'ist41 shall be cr„ dite he amounts of any
estate tax impLeellt&itfelat.thori of a fo gn county, 4/RC 6 p)(1)).
Q: How is the anKLunfligvable4;4 ax cr dit determln

ANS: The amountZfittierit takeryshalr subject to each of the following limitations:
1. Per count . basis —{The amount exredit in respect to the tax paid to any
country shall Pocilsprxleed the sa—' ortion of the tax against which such
credit is take' which hp , Qee-e e Affiraituated within such country
taxable under the N RO bears to his entire net estate (NIRC, Sec. 86
(D)(2)(a));
Note: The form In computing this limitation is: (1 DE LEON, NIRC
Decedent's net estate

Phil.
situated in foreign country = Tax credit limit
estate tax
Entire net estate
2. Overall basis — The total amount of the credit shall not exceed the same
proportion of the tax against which such credit is taken, which the decedent's
net estate situated outside the Philippines taxable under the NIRC bears to his
entire net estate (NIRC, Sec. 86, (D)(2)(b)).
Note: The formula in computing this limitation is: (1 DE LEON, NIRC
Decedent's net estate Phil.

situated outside the Phil. X = Tax credit limit
estate tax
Entire net estate
891
..., ' ' •': '..' ! s''.'"?'.,4.",:t.-;',1 :4`•::M,•'......:
,.......'..1.•";.,....t.,,,:,.-..., *: . ,..
•:''...-
;/.1,$ •
t..,w
„. RED
..:41\) ...:::.A.. ,:. ,,,,,
Exclusions from Estate

Q: What are the exclusions from the gross estate?
ANS: The following are exclusions from the gross estate:
1. The capital (exclusive property) of the surviving spouse is considered as
exclusion in the gross estate under Sec. 85(H) of the NIRC;
Note: In Sec. 86 (C), the share of the surviving spouse in the absolute
community/conjugal partnership is considered as a deduction.
2. Other items which are excluded from the gross estate are the following:
a. GSIS proceeds/benefits;
b. Accruals from SSS;
c. Proceeds of life insurance where the beneficiary is irrevocably
appointed;
d. Proceeds of life insurance under a group insurance taken by employer
(not taken out upon his life);
War damage payments;
f. Transfer by wa thorfairdetales;,
g. Transfer 91,4 ro erty to ttielgtive0hri nt or to any of its political
subdiviskipsN ip . '34
t>.
h. Merg i eror ustfrructArrtfiniMITh
l e rOkedlitip;
i. Prope s heldli.tr„ ustD.y.lbehitceenti and \
j. Ad" uisi Arnd/criiinsferitexpregly.dealdred as hot taxable.
-1r s rr
„A•
Exemption of rtain cquisitions and rransitiissions
Q: What are exerptacquisliarrs-andir' ssians?
ANS: The follopingar exemptedtgireAte,taMMIFft)
1. TheW TI- f usufn5ct in ierAger-eil fitre naked title;
Illus Awl: A gacreAo B thg:ki -ruftibt of a of land - oo B to gather the
fruits ourid trte*acar idtb s4 and' ufr ctkeve s to A, the value
of the stifrackdo snrm1P.0 1.4t„IPig atetf
11
2. The transmission orsieivTAif thd•Iii or)egacy b r the fiduciary heir
or lega4 to thhdeic • rn,qt
RationareitTlittslereiszl tr,9%s. from tV decedent to the final
heir throught he fi tic a smission from the fiduciary
heir or legatekt tcomMiss.arris_pif\ta, ."The fideicommissary heir
merely holds thftrOp or trvsinipsiNnAVII,,uffimate heir.
3. Transmission fror.;NtleFirst tipllatgeoNir donee in favor of another
beneficiary, in accordancittrihe,d6g-rof the predecessor; and
4. All bequests, devises, legacies or transfers to social welfare, cultural and--
charitable institutions, no part of the net income of which inures to the benefit
of any individual: Provided, however, that not more than 30% of the said
bequests, devises, legacies or transfers shall be used by such institutions for
administration purposes (NIRC, Sec. 87).
Period of Filing Estate Tax Returns

Q: In what cases is estate tax return required?
ANS: The return is required:
1. In all cases of transfers subject to estate tax; or
2. Regardless of the value of the gross estate, where the estate consists of
registered or registrable properties such as real property, motor vehicle,
shares of stock or other similar properties for which a clearance frofri BIR is
required as a condition precedent for the transfer of ownership thereof in the
name of the transferee (R.R. No. 12-2018, Sec. 9 (1)).
Note: Prior to TRAIN Law, the filing of estate tax return is required only if the gross
value of the estate exceeds Php. 200, 000.00.
892
Q: In what cases is filing of notice of death required?
ANS: Under the TRAIN Law, notice of death is no longer required (NIRC as amended
by TRAIN Law, Sec. 89).
Note: Prior to TRAIN, notice of death is required to be filed:
1. When the transfer is subject to estate tax; or
2. Although exempt, the gross value of the estate exceeds P20,000.
Q: When must the estate tax return be filed?

ANS: The return must be filed within one (1) year from the decedent's death. But the
period may be extended by the Commissioner for another thirty (30) days on meritorious
cases (NIRC, Sec. 90, pars. (B) and (C)).
Note: Prior to the effectivity of the TRAIN Law the filing of tax return must be made
within six (6) months from the death of the decedent.
Q: When must the estate tax be paid?

ANS: As a general rule, the estate tax immsed under the Code shall be paid at the time
the return is filed by the executor, adepjtfigrator or the heirs (R.R. No. 12-2018, Sec. 9
(4)). ''W` ..,l'i,
i
,.44.,.,..:0„..,.•
Q: May the Commissioner grantexsens o. ,for the payment of the estate tax?
ANS: Yes. As an exception, the;::CA. /owner ay gra • '3.an extension of time if it
would impose undue hardshil?,,upontlfe: too 'elm. He may extend the
time for payment of suchMlit any part h reof:
1. Not to exceetfiCte (5) years4t6,, se the estate is seott el d through courts.
2. Not to exceeNtwq:(2) yeassim case the estate ispe le extrajudicially (NIRC,
as amended , SITAN , IV:taw, Sec (8)).
Note: Where th94erifensionAbygeason o egligence, in intio al disregard of rules and
regulations, oefi-aud 9p. the part ofMa aver, no e nsio e granted by the
Commissionerlphy,WiTent paq. after statutow,, tax,
1, but within the
Seension petd, shall brbbjecl;f9tintere t but not R.R.
R No. 12-2018,
c. Air
V ii.Vir
Q: When must the estate ta2clieturn be duty..certi ied by a CPA?
ANS: The estate tax P tur gshowing as& v u exceeding P5,000,000 shall be
supported with a statement duly.StifiEset iifr EPT11 5 is Accountant containing the
following:
1. Itemized item oyz... al decedent with their corresponding gross value at the time
of his death;
2. Itemized deductions from gross estate allowed in Sec. 86; and
3. The amount of tax due whether paid or still due and outstanding (NIRC, as
amended by TRAIN Law, Sec. 90 (A) (3)).
Note: Prior to the effectivity of TRAIN Law, estate with gross value exceeding
P2,000,000 must be duly certified by a CPA.
Q: When is payment by installment allowed?

ANS: In case the available cash of the estate is insufficient to pay the total estate tax
due, payment by installment shall be allowed within two (2) years from the statutory date
for its payment without civil penalty and interest (NIRC, as amended by TRAIN Law,
Sec. 91 (C)).
Q: What are the requisites of payment by installment?

1. The cash installments shall be made within two (2) years from the date of filing
of the estate tax return;
893
2. The estate tax return shall be filed within one year from the date of decedent's
death;
3. The frequency (i.e., monthly, quarterly, semi-annually or annually), deadline
and amount of each installment shall be indicated in the estate tax return,
subject to the prior approval by the BIR;
4. In case of lapse of two years without the payment of the entire tax due, the
remaining balance thereof shall be due and demandable subject to the
applicable penalties and interest reckoned from the prescribed deadline for
filing the return and payment of the estate tax; and
5. No civil penalties or interest may be imposed on estates permitted to pay the
estate tax due by installment (R.R. No. 12-2018, Sec. 9 (6.1)).
Q: May the bank allow withdrawal of deposits upon knowledge of the death of a
person who maintained a bank deposit account alone or jointly with another?
ANS: Yes. Upon the effectivity of TRAIN Law, banks shall now allow any withdrawal
from the said deposit account, suagct,toza.,,ftgot withholding tax of six percent (6%)
(NIRC, as amended by TRAINAtitif, Sec( 97).
Note: Prior to TRAIN Law rie bihk shall alle0 any withdrawal from the said deposit
account, unless the Dfotrup.iigiotierItas.certifie04 the takes imposed thereon have
been paid: Providecyloweil9ri,,,TtEdi the administrator4-the,eate or any one (1) of the
heirs of the decegeriiNtay, upprp-atIffiliTintiOn-.by th4.bm '''Issioner, withdraw an
amount not excedding)T gntylhousanclgesos,-;(P26,006wit p ti fie said certification
(NIRC, Sec. 97)/ estl.
$
Donor's Tax f
Basic Principles. concept. add defiiiiticth;-'•
'';%7,7rril
Q: What is a cf obe
ANS: It is an 4cisp•Ox imesgra-th-e"T:if
f RftWo-j- prppekty by way of gift inter
vivos based on144ndeiact oftbkralityjhit sidt,'4ny/0 {bps than adeti6ate consideration
and without anylegal coknpul give ' N, Taxation, iupra at 156).
Q: What is the nature of do,Ror',g

ANS: It is not a prOlperty tax
i,. buianSzekdiS6it edm.theftransfer of property by
way of gift inter vivosilJadoo.,Commissioberwof
s ..Pf g teva.V. Oenue, G.R. No. L-19201,
June 16, 1965). 't /1 A
IL
ck
Q: What are the purposes of donoet.tax?
ANS: They are:
1. Donor's tax supplements the estate tax by preventing the avoidance of the
latter through the device of donating the property during the lifetime of the
deceased (donor); and
2. It also prevents the avoidance of income taxes. Without the donor's tax, the
donor may escape the progressive rates of income taxation through the simple
expedient of splitting his income among numerous donees (1 DE LEON, NIRC
Q: What transfers are subject to donor's tax?

ANS: The donor's tax is imposed on donations inter vivos or those made between living
persons to take effect during the lifetime of the donor (CIVIL CODE, Arts. 729 and 734).
The tax shall apply whether the transfer is in trust or otherwise, whether the gift is direct
or indirect, and whether the property is real or personal, tangible or intangible (NIRC,
Sec. 98).
894
:.^g-:.'.•1',.%;.••• • • ‘.4.:Kf:••••,:;',.i;:%ti-loli:4,:,-•°:',:k4;•:•*--.
Q: When is donor's tax imposed?

ANS: Donor's tax is imposed upon the transfer by any person, resident or non-resident,
of any property by gift. The tax shall apply whether the transfer is by trust or otherwise
and whether the gift is direct or indirect, and whether the property is real or personal,
tangible or intangible (NIRC, Sec. 98).
Note: The donor's tax shall not apply unless and until there is a completed gift. The
transfer of property by gift is perfected from the moment the donor knows of the
acceptance by the donee; it is completed by the delivery, either actually or
constructively, of the donated property to the donee (R.R. No. 12-2018, Sec. 12).
Q: Who are liable to pay the donor's tax?
ANS: The following shall be liable to pay donor's tax:
1. Resident Citizens (RC);
2. Non-Resident Citizens (NRC);
3. Resident Alien (RA);
4. Non-Resident Alien (NRA);
5. Domestic Corporation (DQ);,andW
6. Foreign Corporation (FC)10,9ifig,4-Sec.98).
„
Note: A corporation, whether dcitif6n9r oreign, is included since it is capable of
entering into a contract of donatiotiphititig Board Resolution.
:•• *.g
Q: In a donation made by the Visb,ppg-a,n0 Ifeallo.pa•••the donor's tax?
ANS: Husband and wife ar,F49;cinsideretPa' separate andYdigt ct taxpayers for purposes
of the donor's tax. Howe, -4r, if what vas kionated is a conj al or community property
and only the husbandligned the de-ai!Ebritlonation, there i jirk one donor for donor's
tax purposes, without Ice to grie rig of the wife tdiqueglion the validity of the
donation without her cOnsirittpursuant to gp vistns of the Civil Code and
pertinent prOl
the Family Coclor.R. No.0 2;2018, Sec.
1
141
Q: What lawit al goVetriuttr inippsition -of donor's
ANS: The laWln forc9tie tir04f th etfectio OIM, he donation shall
t, —
govern the imposition of t donor's tax (R No. 12-2018, Sec 12).
' Vet f
Date of Donation Law Applicable Rate of Tax
TRXIMM ed rate of 6%
On or after January 1, 2018
(RA No. 10963)
On or after January 1, 1998 NIRC of 1997 Graduated rate of 2-15%

until December 31, 2017 (RA No. 8424) and 30% for strangers
Donations made before NIRC of 1977 Graduated rate of 1.5-20%

January 1, 1998 (RA No. 7499) and 10% for strangers
•
Q: What donations are covered by the donor's tax?

ANS: The donor's tax is imposed only on donations inter vivos. The donor's tax is not a
property tax, but is a tax imposed on the transfer of property (R.R. No. 12-2018, Sec.
12).
Q: What is the rate of donor's tax?
ANS: The donor's tax for each calendar year shall be six percent (6%) computed on the
basis of the total gifts in excess of two hundred fifty thousand pesos (P250,000) exempt
gifts made during the year, regardless of whether the donation is made to a relative of to
a stranger (NIRC, as amended by TRAIN Law, Sec. 99).
Note: The application of the rate is imposed on donations made on or after the
effectivity date of the TRAIN Law which is January 1, 2018 (R.R. No. 12-2018, Sec. 11).
895
N•
Q: What is the rate of donor's tax for strangers?

ANS: Six percent (6%). The rate of donor's tax after the effectivity of TRAIN Law is fixed
at six percent (6%) regardless of whether the donation is made to a relative or to a
stranger.
Note: Upon the effectivity of TRAIN Law the donor's tax rate is now fixed at 6% and the
graduated schedule with a rate of 2-15% under the Tax Reform Act of 1997 is now
repealed.
Q: When is the return of the donor filed and when is the donor's tax paid?
ANS: The return of the donor shall be filed within thirty (30) days after the date the gift is
made and the tax due thereon shall be paid at the time of filing (NIRC, Sec. 103 (B)).
Q: What is the basis in computing donor's tax?
ANS: The basis shall be the total net gifts made during the calendar year (NIRC, Sec.
99).
Q: What is meant by net gifts/00''7771,''..
ANS: Net gift means the get economic b nefit fro'''''tht transfer that accrues to the
donee (R.R. No. 12-201VSec, 1t2X. r
Note: Accordingly, if Kfrovage,g1xproTiWirtransferrpd'as gift, but imposing upon
the donee the obligaiiciVo pallih5mprigagelabiliNthe e Feet gift is measured by
deducting from th 17,41fie,pfoperty amount' moltga 5atsumed by the done
(R.R. No. 12-201 , S /2). I
e
Q: What is the umyl‘tive ethod forpyrgoses of d ieterm (Km ihv tax base?
ANS: The co utatioA of they don,Ks tax0 on„,g =nu ative basis,•oVer a period of one
calendar year ko. 2-20103, gdc7,441 A s.64rat return tshoul ibe filed for-each
donation mad eren dates darriffateara ng t ny previous gifts
made on the same end?aelbaCABIRIEIED,su 6).
Note:
1. Only (V ret rp shakbe. lefjAo .0.1t,ey)( ft.s• o_n_theisame date by the
donor rqgardle oft -eCtilirtik9r of clspp49/..).
2. Under tfit cumu tive e‘. odNbelax- -falft foi?tee prey donation will be .- -
considerectak,s, tax edit,foc: on trons. Fie e, there is no double
taxation. s
Requisites of a VadDonatio :1
-90
Q: What are the requisites ;;PgValid,, g_ ton?
ANS: The following are the requisites of a valid donation: (CD2AF)
1. Capacity of the donor;
2. Donative intent (intention to donate);
3. Delivery, whether actual or constructive, of the subject gift;
4. Acceptance by the donee (CIVIL CODE, Art. 746); and
5. Form prescribed by law (CIVIL CODE, Art. 749).
Q: Who may donate?
ANS: All persons who may contract and dispose of their property may make a donation
(CIVIL CODE, Ad. 735). The donor's capacity shall be determined as of the time of the
making of the donation (CIVIL CODE, Art. 737).
Q: When is donative intent or the intention to donate necessary?

ANS: Donative intent is necessary only in cases of direct gift.
Note:
1. If the gift is indirectly taking place by way of sale, exchange or other transfer of
property as contemplated in cases of transfers for less than adequate and full
consideration (NIRC, Sec. 100), donative intent is not necessary to constitute
896
a gift. Even if there is no actual donation, the difference in price is considered
a donation by fiction of law (Philippine American Life and General Insurance
Co. v. Secretary of Finance, G.R. No. 210987, November 24, 2014).
2. However, even if the sale, exchange, or other transfer of property is for an
insufficient consideration, the same will be considered as made for an
adequate and full consideration in money or money's worth if made in the
ordinary course of business (NIRC as amended by TRAIN Law, Sec. 100).
Q: When is a subject property considered delivered?
ANS: There is delivery if the subject matter is within the dominion and control of the
donee.
Q: Why is acceptance of the gift necessary?
ANS: Acceptance is necessary because nobody is obliged to receive a gift against his
will. The wills of the donor and of the donee having concurred, the donation, as a mode
of transferring ownership, becomes perfect (Osorio V. Osorio, G.R. No. 16544, March
,,g
30, 1921).
Q: What are the formal requiremeptsSof•a valid donation of movable or personal
property? WX1441
ANS: The donation of a movable Kir jtiq'Spnal property may ,e made orally or in writing.
An oral donation requires the slriitettiV, crtat th ing or of the document
44,
representing the right donapellowever, Tthe v5reao G1 roperty donated exceeds
P5,000, the donation ar atteptance sha be in writing. Oth ise, the donations shall
be void (CIVIL CODEV. 7448). sr
,
Q: What are the fopnal itg.'irrements of a valid do of immovable or real
property? 'V.
ANS: The donation of an immovae br real prope shall be made in a public
cvl M
document, sperfyingsthneta ththp ope mated Ma' charges which
the donee must, satis ,./Ze2ccept !ice ay be made ged of donation or
in a separate pUb *c, ocanwt, but sh fl'hot take effect unless it is done during the
lifetime of the dono e aTeptan5e is de in a separate instrument, the donor shall
be notified thereof in an authentic form, age. • t p shall be noted in both-instruments -
(CIVIL CODE, Art. 749,43-A7No. .12-2924
Transfers which maybe Constituted as Donation
',:
WI
Q: What transfers may De4castituted as donation?
ANS: The following transfers may be constituted as donation:
1. Sale, exchange or transfer of property for insufficient consideration (NIRC,
Sec. 100);
2. Condonation or remission of debt;
3. Renunciation of share in the conjugal partnership or community property by
surviving spouse; and
4. Renunciation of share in the hereditary estate by an heir in favor of specific
heir/s.
Note:
1. Renunciation by the surviving spouse of his/her share in the conjugal
partnership or absolute community after the dissolution of the marriage in favor
of the heirs of the deceased spouse or any other person/s is subject to donor's
tax (R.R. No.12-2018, Sec. 12).
2. General renunciation by an heir, including the surviving spouse, of his/her
share in the hereditary estate left by the decedent is not subject to donor's tax,
unless specifically and categorically done in favor of identified heir/s to the
exclusion or disadvantage of the other co-heirs in the hereditary estate (R.R.
No. 12-2018, Sec. 12).
897
Transfer of Property for Insufficient Consideration and Bona fide arms-length
transfers
Q: Up to what amount may the sale, exchange, or transfer for insufficient
consideration be subject to donor's tax?
ANS: A transfer for less than adequate and full consideration be deemed a gift, to the
extent of the amount by which the FMV of the property exceeds the value of the
consideration (NIRC, Sec. 100).
Note: The rule does not apply to real property held as a capital asset, under Section 24
(D) of the NIRC, since regardless of the amount paid for, the basis for determining the
capital gains tax therein would be the FMV or gross selling price, whichever is higher
(NIRC, Section 24 (D) in relation to R.R. No.12-2018, Sec. 12).
Q: What are the requisites in order that the excess of FMV over the value of
consideration be considered as donation?
ANS: In order that the amount by which the FMV of the property exceeded the value of
consideration be constituted avlonatiahnh-efollallying .. ..,,. requisites must be observed:
(PLI) ,>040 k / " .N,
1. Property transp(ed4s ?Apt or‘..t92t.,
-/ hproperiy, except real property referred
to in Sec. 24(D) ottl.pc;....---- ,,,
,._ -4, / ,
--, P- N
2. Transfer i L4s than4li ade, uate.aad till! COCISlyerratioq n money or money's
,.5f:, \ .,,,,, ,
worth; ap V.
3. Transf f is,leet ivos (NIRC; asiisreWled by TRA , Sec. 100).
Note: Based on he foe 'oing the formula'l a be used isc
Personal Property.
I Nti7o1
FMV of the grope i at the me566..At!
-.... . ,,,,--•
- p gi ,,,, ,,-;-
..,, ,.
Less: Actuallvalue f consicteratioi.-eceived
Amount congtitiftedlc ail ,Ton ;117_ _ _. c _-,
Real Property
FMV whicheverqs hig4r, of t ‘,zo ky,zue,o
Less: Actual value of corisider.itiontrecer‘d-'
Amount constitute as dona l
Transfers made bona fide in 'Ordinary courge.:1;WinAs and free from donative
intent, even if the considers 'on i§ inadealateN6- accd6nt, is excluded. They are not
considered as donations (e.g., a Bad.,BargairP)rThii is also provided in Section 100 of
the NIRC, as amended by TRAIN Law, which state that a sale, exchange, or other
transfer of property made in the ordinary course of business (a transaction which is a
bona fide, at arm's length, and free from any donative intent), will be considered as
made for an adequate and full consideration in money or money's worth.
Q: When is a transaction considered done at arm's length?
ANS: Transaction was done at arm's length if:
1. The parties are unrelated (whether in the familial or business sense);
2. They have equal bargaining power; and
3. They are acting in their own self-interest (DASCIL, NIRC ANNOTATED, supra
at 253).
898
...•...•.•
DAN:RE,b-,5 ?•;.
•••••1 1',/,
Condonation/Remission of Debt
Q: What are the rules applicable in cases of condonation or remission of debt?
ANS: If the creditor condones the indebtedness of the debtor the following rules shall
apply:
1. If an individual performs services for a creditor, who, in consideration thereof
cancels the debt, income to that amount is realized by the debtor as
compensation for his services.
2. If a creditor merely desires to benefit the debtor and without any consideration
therefor cancels the debt, the amount of the debt is a gift from the creditor
3. If a corporation to which a stockholder is indebted forgives the debt, the
transaction has the effect of payment of dividend (1 DE LEON, NIRC
Determination of Gross Gift

Q: How is gross gift determined?
ANS: In case of a: t,
1. Resident donor — gross,,gfOnc ludes real properties, tangible and intangible
personal properties whew d;
2. Non-resident donor — rfgrOs g includes real properties, tangible and
intangible properties loc9:tedm - • ipiines (NIR6 Sec 104).
.,401
Q: What is the situs of dopor's taxajo
ANS: The situs of dorieraxation isgs the transfer too p ipe. Thus, only transfers
that take place within qt,PAillippineSpresubject to donor's a es unless the donors are
N are in the nature of
Filipino citizens or a reW_dettigleri. This is so because dortor tabs
taxes imposed 9p4911the.Nilege to do something, which i th case is to transfer
property (3 DOVIONDON. supra at 174).
Q: What is incjuded asipa of thevrosd.: ift?

ANS: As a generCrulegVi sp giftate jud-''4Z%-al and person ItPro erty, whether tangible
or intangible, or me' esP• er sibfated
f
Sec. 104).
i"Cx
Q:
Q: What propertiesartco didered situ - aft- -4,
iilippines?
ANS: The following properties ar,Mnsi9 1.9 s I ua earrithe Philippines:
1. Real, intangt andiNgible personal properties, or mixed, located in the
Philippines an4u.tside of the Philippines, depending on the kind of donor;
2. Franchise whichlultiloe exercised in the Philippines;
3. Shares, oblig_ations or bonds issued by any corporation or partnership,
organized in the Philippines in accordance with our laws;
4. Shares, obligations or bonds issued by any foreign corporation, 85% of which
is located in the Philippines;
5. Shares, obligations or bonds issued by any foreign corporation if such shares,
obligations or bonds have acquired a business situs in the Philippines; and -"mg
6. Shares or rights in any partnership, business or industry established in the
Philippines (NIRC, Sec. 104).
Q: How are gifts subject to donor's tax valued?

ANS: In case of: •
1. Real property — it shall be valued at the FMV as determined by the
Commissioner of Internal Revenue (Zonal Value) or the FMV as shown in the
latest schedule of values of the provincial and city assessor (MV per Tax
Declaration), whichever is higher (R.R. No. 12-2018 Sec. 5).
899
DAN RED`.
Note:
a. If there is no zonal value, the taxable base is the fair market value that
appears in the latest tax declaration.
b. If there is an improvement, the value of improvement is the construction
cost per building permit and or occupancy permit plus 10% per year
after year of construction, or the market value per latest tax declaration.
2. All other property — it shall be valued at the FMV of the property at the time of
the gift (NIRC, Sec. 102).
Q: Discuss the concept of foreign tax credit in relation to donor's tax.

ANS: The donor's tax imposed upon a citizen or resident at the time of the donation
shall be credited with the amount of any donor's tax, of any character and description,
imposed by the authority of a foreign country (NIRC, Sec. 101, par. (C)).
Q: Is the whole amount of tax payment made in a foreign country creditable?

ANS: No. The tax credit is subject to tit limitations:
1. Per country basis —,„..T-ti6 amountrofff it-0,zespect to the tax paid to any
country shall not4ic'ceg,the keje_prvoVion,et,the tax against which such
credit is takeoff is thepetsgifts--,sitgae4 wifhlo, such country taxable under
the NIRC bArs to it enure net gifts (NIRONSIC . 1p0c)(2)(a)); .
Note: Mg lb la' i ,comffulgirthisAinnitettoPis: xi DE LEON, NIRC
Annotateckuprat 0) ,o) 7 ,..7 .)
i1 *.,. ;./.z,
..,:,
Net gi situated .''..,"-x Ph I. fax credit limit
in a foi;ti- o
Entire It '''-':.'5. ; ::' 727/ t
EH.,,,....17; .;14,,i-ii
i
2. .0ver Iota' amotitit of cr9 ,t4hall not 'e ceed the same
.
propoitpn-q ainst peat! sicch cre eisltals;er*vrtii , h the donor's net
gifts srthaleti hiligleetoalIel. Ar t 'e NIR ears to his entire
net gifts (NIR ,,Sec.;,0„.0"ril )(4(pf4::',./ '
Note: T.te forrlya inidotitiputibg, Thj ritati DE LEON, NIRC
Annotate supra a 820.S r,,,t t t,.. Fe
4
Net gifts situate = Tax credit limit
outside the Phil.
Entire net gifts
Exemption of Gifts from Donor's Taxes

Q: Enumerate gifts which are exempt from donor's tax.
ANS: The following gifts are exempted from donor's tax:
1. Gifts made to or for the use of the National Government or any entity created
by any of its agencies which is not conducted for profit;
2. Gifts in favor of an educational institution, charitable, religious, cultural, social
welfare corporation, institution, accredited non-government organization, trust,
philanthropic organization, or research institution or organization (NIRC, Sec.
101 (A));
3. Athlete's Prizes and Awards; (R.A. No. 7549)
4. Encumbrances on the property donated, if assumed by the donee;
5. Donations to entities exempted under Special Law; and
6. Those specifically provided by the donor as diminution of the property
donated.
Note: TRAIN law removed the exemption of dowries or gifts made on account of
marriage.
900
Q: Are all donors entitled to the above-stated exemptions?
ANS: No. A non-resident alien and a foreign corporation donor are exempt from donor's
tax only with respect to:
1. Gifts made to the national government or any entity created by any of its
agencies which is not conducted for profit, or to any political subdivision of said
government; and
2. Gifts in favor of an educational and/or charitable, religious, cultural or social
welfare corporation, institution, accredited non-government organization or
philanthropic organization or research institution (NIRC, Sec. 101 (B)).
Q: When are gifts made in favor of an educational and/or charitable, religious,

cultural or social welfare corporation, institution, accredited non-government
organization, trust or philanthropic organization, and/or research institution or
organization be exempt from donor's tax?
ANS: The gifts shall be exempt from donor's tax if the donee is:
1. A non-stock, non-profit organizaMn or institution;
2. Not be authorized to pay diviOnds;
3. Governed by trustees wh.0:46ceive any compensation;
4. Devotes all of its incomdjOttlg*kqmplishment and promotion of its purposes;
and
5. Not more than 30% of tfta ft:amid •e uses" administrative purposes
(NIRC, Sec. 101(A)(4)P Rir
Q: What are the requiShes in ordepAa:Pthe donation gien to athletes as prize or
award be exempted (audonors tale?
ANS: The donation mEt ba:3pri±e or awag-19)1 given to athletes.,
1. In local an sports tonrnaments
• ancr co petitions;
2. HelOn'the PhjlOines or aftada d
3. Sartcres,1„1:ii.sitt'Cr respective national spo soc p-A. No. 7549).
Note: In relation to Secgo0
2 2 (B710 (d)P f the NIR ,Y II n n• wards granted to
athletes in local-andirite " • tional sciF7rts mpetitions and.tt ment, whether held in
the Philippines orittlfdad, •Ond sanctioned by their national sports associations are
excluded from grosnn9ome.
What entities are exe pted fr,o,;ifilon uriddr%special laws?

ANS: The list below consists oWntities exempt from donor's tax under special laws
including, but not limiteaktteloltwing:
1. Aquaculture Departffent of the Southeast Asian Fisheries Development
Center (P.D. 292, Sec. 2);
2. Aurora Pacific Economic Zone and Freeport Authority (R.A. No. 10083, Sec.
7);
3. Development Academy of the Philippines (P.D. 205, Sec. 12);
4. Girl Scouts of the Philippines (R.A. No. 10073, Sec. 11);
5. Integrated Bar of the Philippines (P.D. 181, Sec. 3);
6. International Rice Research Institute (P.D. 1620, Art. 5(2));
7. National Commission for Culture and the Arts (R.A. No. 10066, Sec. 35);
8. National Social Action Council (P.D. 294, Sec. 4);
9. National Water Quality Management Fund (R.A. No. 9275, Sec. 9);
10. People's Survival Fund (R.A. No. 10174, Sec. 13);
11. People's Television Network, Incorporated (R.A. No. 10390, Sec. 15);
12. Philippine Investors Commission (R.A. No. 3850, Sec. 9);
13. Philippine Normal University (R.A. No. 9647, Sec. 7);
14. Philippine Red Cross (R.A. No. 10072, Sec. 5);
15. Philippine-American Cultural Foundation (P.D. 3062, Sec. 4);
16. Ramon Magsaysay Award Foundation (R.A. 3676, Sec. 2);
901
AN RED BO
17. Rural Farm School (R.A. No. 10618, Sec. 14);
18. Task Force on Human Settlements (E.O. 419, Sec. 3(b)(8));
19. Tubbataha Reefs Natural Park (R.A. No. 10067, Sec. 17);
20. University of the Philippines (R.A. No. 9500, Sec. 25).
Q: Are donations for campaign purposes exempt from donor's tax?

ANS: Any contribution, in cash or in kind, to any candidate, political party, or coalition of
parties for campaign purposes shall be governed by the Election code. Hence, if the
donation has complied with the requisites under the Election Code, the donation is
exempt from donor's tax (NIRC, Sec. 99 (B)).
Note:
1. Sec. 13 of R.A. No. 7166 provides that "any provision of law to the contrary
notwithstanding, any contribution in cash or in kind to any candidate or political
party or coalition of parties for campaign purposes, duly reported to the
Commission on Elections, shall not be subject to payment of any gift tax".
2. Sec. 36 (9) of the Corporatjp.A.Code.mayjdes that, "no corporation, domestic or
foreign, shall give nations ip aid VhINpaiitical party or candidate or for
purposes of pa 'seri Teti al aktiyjty.1 r tf
,...-*
Q: Are gratuitous dp o,ern;;;
orneov ;Itociafio9S-,subject to donor's tax?
ANS: Gifts, don do ....other- 61p.,:tib-Ution.Q-eqfM ti , the homeowners'
associations (asOcT i aje subject V the;payrrient,i5.a, s tax pursuant to
Section 98 and/9 o Tax `Code, bs artiende.d. Endowm6Qttor gifts received by such
associations ar not e mpt rom dono,04.ac considering th ik lot ti), associations are
not qualified f eprn •er ec io 2)-6 ' the Tax Code (R.M.C. No. 53-
2013, Pain°. 14.-1 v7---, -7-/
i --
" -'
ia ?flzi
D. VALUE-AD f"
Conce t and Etege-A
Q: Define Valu
ANS: It is a tax o arter lexchange, or lease of goods
or properties and Thifi pin, po ) on importation of goods into the
Philippines (R.R. No. 6-05, ,Sec,
Q: What are the character:atm:p./3f VAT/

ANS: The characteristics ofNTQA:z: ,t,„0"-
.
1. It is an indirect tax;
2. It is a tax imposed on the value added to goods, properties, or services of a
taxpayer;
3. It is a transparent form of sales tax imposed on the taxable sale, barter, or
exchange of goods, properties or services;
4. It is a broad-based tax on consumption imposed on all stages of taxable sale
but the tax burden rests with the final consumer who consumes the goods,
properties, or services;'
5. It is computed through "tax credit method" or "invoice method" wherein the
input tax shifted by the sellers to the buyer is credited against the buyer's
output taxes .when he in turn sells the taxable goods, properties, or services
(NIRC, Sec. 105 and Sec. 110 (A));
6. It adopts the "tax inclusive method". Unless otherwise stated, any price
charged by a VAT-registered person shall be deemed to include the VAT
charged (MAMALATEO, Reviewer, supra at 404);
7. It follows the "destination principle/cross-border doctrine" (MAMALATEO,
Reviewer, supra at 402-403);
8. There is no tax cascading/tax pyramiding (tax on tax);
902
9. VAT foregone in a prior exempt transaction may be recovered from the
succeeding customer liable to VAT under the "catching-up principle" or
"recoupment principle" (MAMALATEO, Reviewer, supra at 405); and
10. It is a regressive tax. By its very nature, it is regressive. VAT paid eats the
same portion of an income, whether big or small. The disparity lies in the
income earned by a person or profit margin marked by a business, such that
the higher the income or profit margin, the smaller the portion of the income or
profit that is eaten by VAT (ABAKADA Guro Party List v. Executive Secretary,
G.R. No. 168056, September 1, 2005).
Q: Who are persons liable for VAT?

ANS: Any person who, in the course of his trade or business, sells, barters, exchanges,
leases goods or properties, renders services and any person who imports goods shall
be subject to VAT (NIRC, Sec. 105).
Q: When is a person characterized as Maxable person for VAT purposes?

ANS: A person is characterized as a to914e person, if:
1. He undertakes taxable tri2OgliPas in goods, properties or services consumed
or destined for consumpkkinte Philippines;
2. Such transactions are eritdr&kinL cilp the course of his trade or business; and
3. The amount of his grossItakesiregOttUs over ttie threshold fixed by law or
regulation (MAMALATE6,1,3t4,0 1'10444 4, 4 06
Note: A taxable person rgeregisterto value adablax-p • rposes (NIRC, Sec. 236
(A)). However, his failure'' register asAT taxable persoci does not exculpate him
from his liability to paji; t e galue added on his taxable sal 4of goods, properties or
services (NIRC, SecsA06$041;ancr 108 Any person To required to register but
failed to do so, sheaLlt TlialteftyAT, as if .,‘ e were a VAT, egistertil person, but without
the benefit Ocoptit tax credits or the, pdqpd in which e w4s no properly registered
(NIRC, Sec. 236 ,G) (2 N
...5..--. Nit
Q: What is meant by siase,irg he urse of hietrA business"?

ANS: In the coursWislcti . e or litisin s means the regular conduct or pursuit of a
commercial or an ecodomeactivitji; inclding transactions incidental thereto, by any
person regardless of pett:ispor not the - n . aged therein is a non-stock, non-
profit private organizatdpirrespeptive.ofi „.i3-f,-Wil its net income and whether
or not it -sells exclusively to rine b'ers or eir blies , or government entity (Rule of
Regularity) (NIRC, Sec . No. 16-05, Sec. 4.105-3).
Q: What is meant by "regular?
ANS: Regular means more than one isolated transaction. It requires repetition and
continuity of action (INGLES, Reviewer, supra at 277).
Q: What is meant by "incidental"?

ANS: The term "incidental" means something necessary, appertaining to, or depending
upon another, which is termed the principal, something incident to the main purpose
(Magsaysay Lines, Inc. v. Commissioner of Internal Revenue, CTA Case No. 4353, April
27, 1992).
Note: The Rule of Regularity does not apply to the following transactions which means
that they shall be subject to VAT although not made in the course of trade or business:
1. Services rendered in the Philippines by non-resident foreign persons (NIRC,
Sec. 105);
2. Importation of goods (NIRC, Sec. 105). There shall be levied, assessed and
collected on every importation of goods a VAT equivalent to 12%. The
importation of goods herein contemplated refers to importation by any person,
who may or may not be engaged in trade or business in the Philippines (NIRC,
Sec. 107 (A)).
903
-4:
DAN..a
Q: When is VAT imposed?
ANS: There is VAT imposed whenever there is:
1. Sale of Goods or Properties (NIRC, Sec. 106);
2. Importation of Goods (NIRC, Sec. 107);
3. Sale of Services and Use or Leases of Properties (NIRC, Sec. 108).
Q: What goods or properties are subject to VAT?

ANS: The goods or properties subject to VAT are as follows: (RP-EMT)
1. Real properties held primarily for sale to customers or held for lease in the
ordinary course of trade or business;
2. The right or privilege to use Patent, copyright, design or model, plan, secret
formula or process, goodwill, trademark, trade brand, or other like property or
right;
3. The right or privilege to use in the Philippines of any industrial, commercial, or
scientific Equipment;
4. The right or privilege to use ilotion.,pictures films, tapes, and discs; and
5. Radio, television, sa ellitrTransmissionlhrIkcable television time (NIRC, Sec.
106 (A)(1)). I ;t- ;"N„
Note: "Goods or Prope ref hbli pan.alkangibte apCintangible objects which are
capable of pecuniaryktpl atio S4cr:/. 06 Et!qc %
Q: What is the taX*as VIon sale goods or propectieV

ANS: The 12AT'Itt rbe based cathegrogt selling pria‘'t'iComputed as follows:
1. For real pro erty -f the consideferon stated in the Sales }l or the fair
markval (whichever is higheyp e z -Oirallvalue or:MO r market value as
shower-1-d e sch dulka-vaitilpsTclfie rovinciarand city assessors),
whiclieverA higher (R.R. /14-00iSec. 4.196-4); arld,,-
2. For ia;reiof oo s r propeiitgeatier tha ea proper y = the total amount
of mdn9ygoe'ts u alent w t g-.purc, ayslandeobligated to pay to
the Alter hi one e.talion heig*,13' or 9xchangp of the goads or
proper"es, ex udingr fie tisyp41 ny, gn such goods or properties
shall fonv part of the r *Mc, S6C. 106 0)); R.R. No. 16-05,
Sec. 4.10 -4 c
)
Q: What are the allo le,de iffns.from.ttle gross selling price?
ANS: The following shall e.,,,Costv as dMictibn fr4p\...0tc selling price:
1. Discounts determinethar&I grantedlatih 'reed the sale, which are expressly
indicated in the invoice, the ereof forming part of the gross sales
duly recorded in the books of accounts;
Note: The grant of the sales discount must not be dependent upon the
happening of a future event in order to be excluded from the gross income
from the same month or quarter it was given (NIRC, Sec. 106 (D); R.R. No.
16-05, Sec. 4.106-9);
2. Sales returns and allowances for which proper credit or refund was made
during the month or quarter to the buyer for sales previously recorded as
taxable sales (NIRC, Sec. 106 (D); R.R. No. 16-05, Sec. 4.106-9).
Q: What are the requisites for the taxability of goods or properties?

1. For goods or properties other than real property: (SCPN)
a. There is an actual or deemed Sale, barter or exchange of goods or
properties for a valuable consideration;
b. The sale is undertaken in the Course of trade or business or exercise
of profession in the Philippines;
904
c. The goods or properties are located within the Philippines and are for
use or consumption therein; and
d. The sale is Not exempt from VAT under Sec. 109 of the NIRC, special
law, or international agreement binding upon the government of the
Philippines (MAMALATEO, Value Added Tax in the Philippines (2013),
p. 74) [hereinafter MAMALATEO, VAT];
2. For real property: (SPR-PN)
a. The seller executes a deed of Sale, including dacion en pago, barter or
exchange, assignment, transfer, or conveyance, or merely contract to
sell involving real property;
b. The real property is located within the Philippines;
c. The seller or transferor is engaged in Real estate business either as a
real estate dealer, developer, or lessor;
d. The real property is held Primarily for sale or for lease in the ordinary
course of his trade or business; and
e. The sale is Not exemptagm VAT under Sec. 109 of the NIRC, special
law, or internatioripAreiement binding upon the government of the
Philippines (Id.). ,1040
,„,ora.
Note: Absence of any of the akontro*ites exempts the transaction from VAT.
However, percentage taxes may apple •
Q: What is the tax base of imperrtatici

ANS: The 12% VAT is bassaVn: •11
1. Total value OW0 the Bq;ea, of Customs (608 In determining tariff and
customs dutiaji„Rys custo„. ''S'll! ties, excise taxes, zany, and other charges
prior to thegeadk'agifio
ds fro phe customs; co'
2. Landect,01 in ettate valuati used by thep0 is based % on volume and
quart . Landed ost conesl,s o he invoice amour, customs duties, freight,
angrer charges an also ex • et if
inseiVee.....-- R,p, Sec. 107 (A);
R.R. _a 16-05 c. 4.16- ).
..g.t
Q: Who pays foriftelak on mporterd goLids?
ANS: The VAT on Apgrtatio shall be pa ,l prior to the release of such
goods from customs custody R.R. No. 1.01750:rgi07.1 (b)).
otgEt.;..;• ,,.. , r-4
- ,7,,b
Q: Who is an Importe
ANS: Importer refers to g, rson who brings goods into the Philippines, whether or
not made in the course o rade or business. It includes non-exempt persons or entities
who acquire tax-free imported goods from exempt persons, entities or agencies (NIRC,
Sec. 107 (B); R.R No. 16-05, Sec. 4.107.1(b) and (c)).
Q: What is meant by sale or exchange of services?

ANS: The term "sale or exchange of services" means the performance of all kinds of
services in the Philippines for a fee, remuneration or consideration, whether in kind or in
cash (NIRC, Sec. 108). It shall likewise include:
1. The lease or the use of or the right or privilege to use any:
a. Copyright;
b. Patent;
c. Design or model plan;
d. Secret formula or process;
e. Goodwill;
f. Trademark;
g. Trade brand; or
h. Other like property or right;
905
2. The lease or the use of, or the right to use of any:
a. Industrial;
b. Commercial; or
c. Scientific equipment;
3. The supply of:
a. Scientific;
b. Technical;
c. Industrial; or
d. Commercial knowledge or information;
4. The supply of any assistance that is ancillary and subsidiary to and is
furnished as a means of enabling the application or enjoyment of any such
property, or right as mentioned in number (2) or any such knowledge or
information as is mentioned in number (3);
5. The supply of services by a non-resident person or his employee in connection
with the use of property or rights belonging to, or the installation or operation of
any brand, machinery or oltter.appareims purchased from such non-resident
person;
T T
6. The supply of tschnicaLadviceisisLeQf epr bervices rendered in connection
with technical, mgagetime ,>ofradmigis,Vtio gVaqy scientific, industrial or
commerciaindeAakt o gVventure, project drksc
7. The !easy° rt4ib epic ure-filtris7filNisriap craiscs' nd
8. The le9s,,Cos se o(plor'Alle .right t8 u jp, television, satellite
trans issiort.A. le telekrisioqiimeyN/RSec. ).
eAA
Q: What is m
ANS: Service s-be ed "6-6ftlie,10
attalflifig
• methi use, I for a person or
company for a fe&..
' borici6vokrOderedir to be thdde l to another for a
fee (Commiss endr..4 Revehl.ILV.z?Americ pre s Intl Inc., G.R. • No.
152609, June
Q: When is the ease ofkproperti sNsjij c to

ANS: The lease properfigs 41)11k1 subjwc irrespective o the place where the
contract of lease o icensingq•gr eythe pro rty is leased or used
in the Philippines (NI, C, Segy10
Q: What is the tax brie Lthe VATk of fsalekvf, efvice and use or lease of
properties?
ANS: The 12% VAT is based orrthre derived pisfrom the sale or exchange of
services, including the use or lease of properties (NIRC, Sec. 108). -
Note: Absence of profit or margin does not make the performance of taxable services
for a fee exempt from VAT. It is immaterial whether the primary purpose of a corporation
indicates that it receives payments for services rendered to its affiliates on a
reimbursement-of-cost basis only, without realizing profit, for purposes of determining
liability for VAT on services rendered. As long as the entity provides services for a fee,
remuneration or consideration, then. the service rendered is subject to VAT
(Commissioner of Internal Revenue v. Court of Appeals, G.R. No. 125355, March 30,
2000).
Q: What is meant by gross receipts?

ANS: It refers to the total amount of money or its equivalent representing the contract
price, compensation, service fee, rental or royalty, including the amount charged for
materials supplied with the services and deposits applied as payments for services
rendered and advance payments actually or constructively received during the taxable
period for the services performed or to be performed for another person, excluding VAT
(NIRC, Sec. 108; R.R. No. 16-05, Sec. 4.108-4).
906
BEDAN RED BOC
Q: When is there constructive receipt?
ANS: Constructive receipt occurs when the money consideration or its equivalent is
placed at the control of the person who rendered the service without restrictions by the
payor. The following are examples of constructive receipt:
1. Depcisit in banks which are made available to the seller of services without
restrictions;
2. Issuance by the debtor of a notice to offset any debt or obligation and
acceptance thereof by the seller as payment for services rendered; and
3. Transfer of the amounts retained by the payor to the account of the contractor
(R. R. No. 16-05, Sec. 4.108-4).
Q: What are the requisites for taxability of sale of service and use or lease of
properties?
ANS: The requisites for taxability are the following: (SP-CoVaN)
1. There is a Sale or exchange of service or lease or use of property enumerated
in the law or other similar services;
,
2. Theservice is performed org; performed in the Philippines, and in case of
lease, property leased or tjp-Od 'fist be located in the Philippines;
a The service is in the Co9r00,_ 04 , xpayer's trade or business or profession;
4. The service is for a Valuable. aderation actually or constructively received;
and
5. The service is Not eOrnptRlhder-
4' •'Cile-Oecial law or international
agreement (MA/g6M TEO, lin, upra at 160
Note Absence of anyof e requisites re ders the transac EXEMPT from VAT but
may be subject to otheOereentage tail'
.,410
Q: Are advance.paymentripade by th essee for lease of properties subject to
VAT? t,,
ANS: It depq. si lllOckanceRaymen& actually4 opn -des or, or an option
money for theibropertyAP secaSty deposit for tli prmance of certain
obligations of theOsse"041adflarlOe p& ent is not suojectqI5' AT. Security deposit
that is applied to relitakth'alllt subjk_to IAT at the time of its application. On the other
hand, if the adVancetpymenV constitutes ER
-pre aid rental, then such payment is taxable
to the lessor .in the cutlAvhen recer pective of the accounting method
G e _,.
employed by the lessor,'12.R. No dfk-t75gSecs tiVfM
" p
Q: Are lawyers liable fq,yador legal services rendered?
ANS: Yes. R.A. No. 9337""dleaily provided that sale of legal services by a lawyer or a
law firm shall be subject to VAT effective November 1, 2005.
Impact and Incidence of Tax

Q: What is impact of taxation in relation to VAT?
ANS: The impact of taxation is the point where the tax is originally imposed or the one
on whom the tax is formally assessed (INGLES, Reviewer, supra at 6). In VAT, the
seller is the one directly and legally liable for payment of indirect tax (Commissioner of
Internal ReveOue v. Philippine Long Distance Company, G.R. No. 140230, December
15, 2005).
Q: What is incidence of taxation in relation to VAT?

ANS: The incidence of taxation is the point on whom the tax burden finally rests
(INGLES, Reviewer, supra at 6). In VAT, it is the final purchaser or end-user of such
goods or services who, although not directly and legally liable for the payment thereof,
ultimately bears the burden of the tax (Commissioner of Internal Revenue v. Philippine
Long Distance Company, G.R. No. 140230, December 15, 2005).
907
Q: Discuss the impact and incidence of taxation in relation to indirect taxation.
ANS: In indirect taxation, there is a need to distinguish between the liability for the tax
(impact) and the burden of the tax (incidence). The amount of tax paid may be shifted or
passed on by the seller to the buyer. What is transferred in such instances is not the
liability for the tax, but the tax burden. In adding or including the VAT due to the selling
price, the seller remains the person primarily and legally liable for the payment of the
tax. What is shifted only to the intermediate buyer and ultimately to the final purchaser is
the burden of the tax. Stated differently, a seller who is directly and legally liable for
payment of an indirect tax, such as the VAT on goods or services is not necessarily the
person who ultimately bears the burden of the same tax. It is the final purchaser or
consumer of such goods or services who, although not directly and legally liable for the
payment thereof, ultimately bears the burden of the tax (Contex v. Commissioner of
Internal Revenue, G.R. No. 151135, July Z 2004).
Destination Principle /Cross Border Doctnne

Q: What is Destination Principl wrglalibletotVAZZ
ANS: This principle provides goods j ncill
tm•rviFe's are taxed only in the country
where these are consumed (Affe5, Cogslidatkid g nd Development Corp. v.
Commissioner of Inteaf4F?e G7rNi3§:".44, 0 ,k).1482 63, June 8, 2007). It is
also knCwn as "cro sorrlaepi octrine" Jerbg ein de ti atiprpAthe goods determines
taxation or exemp g froni,taxeExport sares of go o zero percent (0%)
rate, while imp s',•k rood are Objea toNlfie 12 e'k rts are zero-rated
because the co sump &n of uch gbodAT 1 04 mad outs ttie hilippines; on the
other fiend, im 9 o f good are_subjed ollthe_regula VAT atev b'e ause they are for
consumption thi e Philippines40/11/ T.B9,,,,Rev ewer, pra-et 02-403).
Note: In the cises'ervices, condiftti felsei dlilac where e se ice is performed,
following the situ& IltiCO-D "ncipg1(41,1MALAYEO, R f 403).
The Philippine 5 ate cording to which,

no VAT shall b Impoe d t for consumption
outside of the erritoria sioner of Internal
Revenue v. Tosh ba Info afio uo L Inc. R. Ng 150154, August 9,
2005).
Imposition of VAT on traneegagoo ytaxexg pt pie4ons

Q: Who is tax-exempt person -/,e M
ANS: An exempt party is a per7sOntr" entitrg ed VAT exemption under the NIRC, a --• -
special law or an international agreement. to which the Philippines is a signatory
(Commissioner of Internal Revenue v. Seagate Technology, G.R. No. 153866, February
11, 2005).
Q: What is the effect of transfer of goods by tax exempt persons?

ANS: In .the case of tax-free importation of goods into the Philippines by persons,
entities or agencies exempt from tax where such goods are subsequently sold,
transferred or exchanged in the Philippines to non-exempt persons or entities, the
purchasers, transferees or recipients shall be considered the importers thereof, who
shall be liable for any internal revenue tax on such importation. The tax due on such
importation shall constitute a lien on the goods superior to all charges or liens on the
goods, irrespective of the possessor thereof (NIRC, Sec. 107 (B)).
908
Transactions Deemed Sale subject to VAT
Q: What is meant by transactions deemed sale?
ANS: Under Section 106 (B) of the Tax Code, certain transactions which are not
actually sales because of the absence of actual exchange between the buyer and seller,
are considered or included in the term "sale" for value added tax purposes (TABAG &
GARCIA, TranSfer and Business Taxation (2018), p. 270).
Note: In a transaction deemed sale, the input vat was already used by the seller as a
credit against the output VAT. However, since there is no actual sale, no output vat is
actually charged to customers (Supra. p. 271).
Q: What are the instances of "Deemed Sale" transaction?

ANS: The specific instances are as follows: (TDCR)
1. Transfer, use, or consumption not in the course of business of goods or
properties originally intended for sale or for use in the course of business;
2. Distribution or transfer to: 44%
a. Shareholders or investorwas share in the profits the of VAT-registered
person; or 4V•
b. Creditors in payrdeleciftiat or obligation;
v,z493,
3. Consignment of goods itactua sq e is not made within 60 days from the date
of such consignment; anci b 3 '
4. Retirement from or ces5aticgto: to inventories on hand:
a. Change ofownershiVot business,
b. DissolOkif a party ip and creation __ a new partnership which
takes Dver the business NIRC, Sec. 106(B 1 R.R. No. 16-05, Sec.
4.1060 . i "46'
1
Note: -Before consl iAterik figther the saction is ee ed . ale it must first be
determined whVel- the sae ag in th ordinary course tra e orbus'iness. Even if the
transaction was‘'deeme'doale," if it Was i of done in e or ina course of trade or
r
business, stilt trandaik is ricktobje o VAT om(l foie A' ntemal Revenue
v. Magsaysay n o es, Inp..44P. No:34:4698Puly 28, 2
N.N
.,.... jet y 0,1I
Q: What is the tax raseof VAT on'transtions deemed sale? .
vh
ANS: For transaction s deeniel sale, the at ki: shall be based on the market value
of the goods !deemed' rti as of the ..:4 --,.g...„.
.1 ,.,a,c,urrence
--e of the transactions
enumerated. Howeve retirement or cessa ion o •usiness, the tax base shall be the
acquisition cost or th uenrinarket price of the goods of the goods or properties,
whichever is lower. In the sElof a sale where the gross selling price is unreasonably
lower than the fair market value, the actual market value shall be the tax base (NIRC,
Sec. 106 (B); R.R. No. 16-05, Sec. 4.106-7).
Q: When is a change in or cessation of status of a VAT-registered person subject

to VAT?
ANS: The goods or properties originally intended for sale or use in business, and capital
goods which are existing as of the occurrence of the following changes are subject to
12% VAT:
1. Change of business activity from VATable status to VAT-exempt status
(e.g. ;when a VAT-registered person engaged in a VATable activity like a
wholesaler or retailer of goods subject to VAT decides to discontinue such
activity and engages instead in a non-VAT business activity);
2. Approval of a request for cancellation of a registration due to reversion
to exempt status (e.g. when a person commenced a business with the
expeCtation of gross sales or receipts exceeding P3,000,000 (R.R. No. 16-11),
but who failed to exceed this amount during the first 12 months of operation);
909
VOL 1.
2019
Approval of request for cancellation of a registration due to desire to

revert to exempt status after lapse of three consecutive years (e.g. when
a person who is VAT exempt and not required to register for VAT opted to
register as a VAT taxpayer and after the lapse of three years' desires to revert
to exempt status) (R.R. No. 16-05, Sec. 4.106-8).
Q: When is a change in or cessation of status of a VAT-registered person not

subjeCtto VAT?
ANS: The goods or properties existing as of the occurrence of the following are not
subject to 12% VAT:
1. Change or control of a corporation by the acquisition of the controlling
interest of such corporation by another stockholder or group of
stockholders - the goods or properties used in the business or those
comprising the stock-in-trade of the corporation will not be considered sold,
bartered or exchanged despite the change in the ownership interest since the
; same corporation still owoijberni...,„,
Note: The following prett.
-bjeq tolVAT:
, a. Exchangp,tif prOerty b!y,soirp,or@poyfac3016ng control for the shares of
stockso5f-t6elprgehorporaticin,kgbj‘ to`VA,T.
b. Frooi thg Point4titiew of the person4hoeiqry the corporation, who
e dhAge.VicssopertieTreIdlor-salpN ftleaee for shares of stocks,
dthelesuifing torisorAiate.coontrolkor ote, crlexchange is subject
"An 1041,
°
2. Change in thfi trade or corpor44ame;
3. Merge4,cinsolichior a Thirecif,'"Idoratirifil/ R. No. WA ec. 4.106-8).
;$13111 -
Zero-Rctted and Effectively aro-Retied alga-:of Go dsorPrciper4i s

.
Q: What is th17 24 of ies?
ANS: A zero-r tOisp of 14o s̀ ir prppeitie§V 9 .p 7 egg ered erson is a taxable
14oAsi:•
transaction for 'AT purloosg;bdt e s'Ale cr6e4Aor s If in atly outp Hex (R.R. No. 16-
05, Sec. 4.108-5X \
Q: Distinguish a z1T-rate*hale-kgAbLdtAfir t.1;:? t transaction.

ANS: The differencevare a ol ow •
1. Under the zeros-callag, ee from VAT because the
tax rate applied N4 exemption only removes the
VAT at the exempt sta -,
2. A VAT payer who is subject to zero-rate of tax on his taxable sales can claim
and enjoy a credit or refund for the excess input tax invoiced to him on his
purchases directly attributable to the zero-rated sales; such privilege is not
given to exempt taxpayers;
3. Although zero-rated sales are not subject to actual tax charge since the tax
levied is at 0%, they are nevertheless taxable sales for the purpose of
measuring turnover sales to determine whether VAT registration is required. In
contrast, exempt sales are not taxable sales;
4. In zero-rating, the VAT-registered taxpayer has the following remedies with
respect to unused input taxes:
a. file a claim for refund;
b. file a claim for tax credit; or
• c. carry-over of excess input taxes attributable to zero-rated sales.
On the other hand, in exempt sales, the seller does not have the same remedies
because the input taxes passed on to him become part of his cost of asset or expense
(MAMALATEO, VAT, supra at 131-132).
910
Q: What are the types of zero-rated transactions?
ANS: A zero-rated transaction may be:
1. Automatically zero-rated sale - refers to export sale of goods, properties
and supply of services to a Freeport Zone-registered enterprise by a VAT-
registered person;
2. Effectively zero-rated sale - refers to the local sale of goods and properties
by,a VAT-registered person to a person or entity who was granted direct and
indirect tax exemption under special laws or international agreements (R.M.C.
No. 50-07, Sec. 3).
Q: Distinguish an automatically zero-rated sale from an effectively zero-rated sale.

1. As to nature, automatically zero-rated sale generally refers to the export sale
of goods, properties and supply of services by a VAT-registered person; while
effectively zero-rated sale refers to the local sale of goods, properties and
supply of services by a VAT-regi stered person to a person or entity who was
grPnted indirect tax exemptIONDder special laws or international agreements
(i.e.,; sale of VAT-regetlierson p to Asian Development Bank or
Inteational
rn Rice Rese#104);
2. As to for whose bendfitigeOtended, automatically zero-rated sale is
primarily intended to bp*enjo9,09W;spitpr whop, and legally liable
for the VAT, makingAdigteiterniferlifiditall.„, -111petitive by allowing the
refund or crediteinput taOskat are attnbinb e to export sales; while
effectively zerrated sale ip!trit ded to benefit thd rchaser who, not being
dirpctly and le94 liable f9 .ayment of the PA. \yin ultimately bear the
burden of theta shifted by the uppliers (CIR legate Technology (PHL),
N970518664rehtuary 11, 5);
3. AS tigThe need or applicition d approval of the BIRD- no such is required
in arOomitielly,zero-rated s le.; while i eaivel -J.-rated sale, an
app14tion for zerli5rating, filed an l - 6.24,;;S)- ecessary before
the transactiorfafibe don as such (MA Alf i= 0, Reviewer, supra at
460; and
4. As to theNprgsenC'e of the wo E 0-RATED" on the face of the VAT
invoice or to be is,z:b4t, no such requirement is
necessary fo n autpattgai y.ktroir teiteffhile in an effectively zero-
rated sale, the word " ,ERO-RATED" must be stamped on the face of the VAT
invoice or rece"t, reason for this requirement is that the buyer of the
goods or services-TS located within the Philippines, or he is located outside the
Philippines merely by fiction of law (Id.).
Q: What are the instances of zero-rated export sales?

ANS: The following are considered as zero-rated export sales: (SR-R01)
1. The sale and actual Shipment of goods from the Philippines to a foreign
country irrespective of any shipping arrangement that may be agreed upon
which may influence or determine the transfer of ownership of the goods so
exported, paid for in acceptable foreign currency or its equivalent in goods or
services, and accounted for in accordance with the rules and regulations of the
BSP;
2. The sale of Raw materials or packaging materials to a non-resident buyer for
delivery to a resident local export-oriented enterprise to be used in
manufacturing, processing, packing or repacking in the Philippines of the said
buyer's goods, paid for in acceptable foreign currency, and accounted for in
accordance with the rules and regulations of the BSP;
911
•.,•• • Nr" z,Y;P14:54>-•
3. The sale of Raw materials or packaging materials to an export-oriented

enterprise whose export sales exceed seventy percent (70%) of total annual
production;
Note: Any enterprise whose export sales exceed 70% of the total annual
production of the preceding taxable year shall be considered an export-
oriented enterprise.
4 Transactions considered export sales under E.O. No. 226, otherwise known as
the Omnibus Investments Code of 1987, and other special laws; and
Note: Considered export sales under E.O. 226 even without actual exportation
the following shall be considered constructively exported for purposes of these
provisions:
a. sales to bonded manufacturing warehouses of export-oriented
manufacturers;
-b. sales to export processing zones;
c. sales to registered export traders operating bonded trading
warehouses supplying.raw,..m.a4Fials in the manufacture of export
products undeprgaideliqesito be fetkhy the Board in consultation with
the Bure eof IhternakRdveh e oiR apd the Bureau of Customs
(B0C1., 1 „0;swg.C5
d. sa10," to iplomatic mission an11 Aher agencies and/or
insfra unitip:C:onically manufactured,
as e bled4or repacised Pm/ducts whe o foreign currency or
.1not. A. A
The le of oods supplies,Quipment aqd fu fo pe°csons engaged in
Interria hippirgorii7teTI— m9onal trap port o 90119 s: Provided, That
the gdodsl supplie , /shall be used exclusively for
inter atio shippin or airili.‘nOorfibPeratiins (NI Os.Sdc 106 (A)(2);
No. 'I'D 7.:
Q: What are th ce1). #•te .g. ‘ rKqp

ANS: The folio g are ero- to '01r - of seNkei4 R)
1. ProcesdV, mahufac ucil0Brqipapija§veof gooas for /her persons doing
business • utsidelh d re subsequently exported and
paid for in cept*1 reign e untelfor in accordance with
the rules anduraiap; 9 e43SP,
2. Services other tilaWhbd.qimentiprifid ing paragraph.edered to a
person engaged inIu —ess cthlidixted Ou ide the Philippines or to a non-
resident person not engage neta ess who is outside the Philippines when
the services are performed and paid for in acceptable foreign currency and
accounted for in accordance with the rules and regulations of the BSP;
3. Services rendered to persons or entities whose exemption under Special laws
or international agreements to which the Philippines is a signatory effectively
subjects the supply of such services to 0% rate;
4. • Services rendered to persons engaged exclusively in International` shipping or
air transport operations, inclUding ledies of property for use thereof. Provided,
that these services shall be exclusively
.- for international shipping or air
transport operations;
5. Services performed by Subcontractors and/or contractors in processing,
converting, or manufacturing goods for an enterprise whose export sales
exceed 70% of the total annual production;
6. ; Transport of passengers and cargo by domestic air or sea vessels from the
; Philippines to a foreign country; and
7. Sale of power or fuel generated through Renewable sources of energy such
as, but not limited to, biomass, solar, wind, hydropower, geothermal and
912
;DAN``1RED' BOOK
steam, ocean energy, and other emerging sources using technologies such as
fuel cells and hydrogen fuels.
Note: The sale of power or fuel is the one being subject to 0% and not the sale of
services related to the maintenance or operation of the plants generating said power
(NIRC, Sec. 108 (B); R.R. No. 13-18, Sec. 2).
VAT-Exempt Transactions
Q: What are VAT exempt transactions?
ANS: It refers to the sale of goods or properties and/or services and the use or lease of
properties that is not subject to VAT and the person making the exempt sale of goods,
properties or services (seller) shall not bill or pass on any output tax to his customers.
Note: The f011owing are the features of VAT exempt transactions:
1. The seller is NOT allowed to credit the VAT (input tax) passed to him on his
purchases of taxable goods, properties or services, because he has no output
tax to deduct it from;
2. VAT-exempt transactions shap t be liable for VAT or the 3% percentage tax;
and
3. VAT-exempt transaction:Ole dll:Mt be included in determining the general
threshold prescribed byttai iiitdfiaTriount of which is P3,000,000 (RR No. 13-
18).
5•
Q: Distinguish exempt tramAtion fro xemp pa
ANS: An exempt tranNtidn involvek9yeds or services 0, by their nature, are
specifically listed in and expressly eprn ted from the V4Twiader the NIRC, without
regard to the tax statir 0g-exempt or ot) of the party t41 HIV transaction. Indeed,
such transaction's li 11*e/tithe VAT d the seller isgnoriallowed any tax refund of
or credit forl a yginput taxerrata. Apmex pt party, on jhe olheAand, is a person or
entity granted T elm tion under t NIRC, a specia law ior an international
agreement tomicht4h-e_Olippihts is a gnatory, d i ezpr:Thich its taxable
transactions bebome i exert frorupt e Such pa 444..11 . 0,0 ubject to the VAT
but may be, alloVadoOkefund 8- or dit for input taxes paid, depending on its
registration as a itT or nip-VATS taxpa er (Commissioner of Internal Revenue v.
Seagate Technology (1;',gos, GOR. No. 153 5Wrnia 11, 2005).
49— ard11
Q: What are the transactions exempt from
ANS: The following traftsa tio shall be exempt from-VAT:
1. Sale or Importiii &AB)
a. Agricultura and marine food products in their original state; livestock
and poultry of a kind generally used as, or yielding or producing foods
for human consumption; and breeding stock and genetic materials
therefore;
Note: The following are the conditions for exemption from VAT:
i. Considered in their original state - even if they have undergone
the simple process (not a physical or chemical process which
would alter the exterior or inner substance of a product in such a
manner as to prepare it for special use to which it could not
have been put in its original form or condition; like the addition
of preservatives or anti-oxidants) of preparation or preservation
for the market such as freezing, drying, salting, broiling,
roasting, smoking or stripping. Advanced technological means
of packaging such as shrink wrapping in plastics, vacuum
packing, or tetra-pack, in itself does not make the products
liable to VAT. Polished and/or husked rice, corn grits, raw cane
sugar and molasses, ordinary salt and copra shall be
considered in their original state by express provision of law.
913
.4.,•:••••••(°:,.•
1
ii. Not included in the exemption: non-food products; fighting

cocks, race horses, zoo animals, and other animals generally
considered as pets; bagasse.
Note: The sale of Andok's roasted chicken is exempt from VAT.
However, should Andok's maintain a facility by which the roasted
chicken will be offered as a menu to customers who would dine-in, then
it will be subject to the VAT on sale of service which is similarly
imposed on restaurants and other eateries (VAT Ruling No. 009-07,
June 21, 2007). The sale of marinated boneless milkfish (bangus) by a
tuna canning corporation is not considered in its original state (BIR
Ruling No. 348-2011, September 28, 2011).
b. Fertilizers; seeds, seedlings, and fingerlings; fish, prawn, livestock and
poultry feeds, including ingredients, whether locally produced or
imported, used in the manufacture of finished feeds;
Note: Excluded are those specially made feeds for Race horses,
Fighting cocks, A. Zoo animals and Other animals
generally consideredaq pets (IFAZO),
c. Or lease,,orpasgeoger pr dargo,,estelagd Aircraft, including engine,
equipr,p4nt: Irrt. tare.parti;elhereof; far' -ctomestic or international
transfiort op,datioTis: ,,,„:„, 1.,- ,,,A,
Note:4T-tfolrOying.artr tWolinditiodIocezeriAr from VAT:
41.Q.--1 ,easd of ex triptitkp lap VATrnimpoption:
, Yi 1. i The vessellinciOding the en''n and‘vpare parts of said
vessels, trust at i4ast o e(1 .2ftliFed fifty (150) tons;
2. t"Te ACTISTWArted s co ply with the age
( 1..r...:
1•
Ye-f:,1 1 liniitl4irOiefitAtrtheitime of cquisi on counted from
*1the
.. date:44-01:ot
s.7,10.... ' vessOl's 1f orig rithiormissioning, as
i Tows: •......1::-..: i )2:,,D
-
1 CD le), a. ki:as "engers aps//or) cargtkvesels — fifteen (15)
(...)\\ Mr ,104,?/ ;/,-1L,
‘c,cb Tan ers4tAt) yea?: old;‘‘-il
,,,,,, . •--
g -speedlla seng6r crafts five (5) years old;
4,1 1 1
\/„,,, 3.7 "Sec ion eptij)lit e No. 9295, The Domestic
— t ll rig.Devel . me A t pr 2004, must have been
c.o plied 4t1.f tk _.„."."
ii. In cas 4o. exemOonifroYkron local purchase - the vessel
must weigh, iric ErdirigIFe engine and spare parts, at least 150
tons;
d. Printing or publication of Books and any newspaper, magazine, review,
or bulletin which appears at regular intervals with fixed prices for
subscription and sale and which is not devoted principally to the
publication of paid advertisements;
Note: The printing and manufacturing of posters, novelty items,
supplementary educational books and tutorial items for children, such
as bilingual books, jigsaw puzzles, memory games, flashcards and
telling time posters fall under this exemption (BIR Ruling DA-378-2005,
July 7, 2004). The terms "book", "newspaper", "magazine", "review",
and "bulletin" shall refer to printed materials in hard copies, and do not
include those in digital or electronic format or computerized versions,
including but not limited to the following: e-books, e-joumals, electronic
copies, online library sources, CDs and software (R.M.C. No. 75-2012,
November 22, 2012).
914
,
2. Sale (REC2-SGD)
a. Real properties:
i. Not primarily held for sale to customers or held for lease in the
ordinary course of trade or business;
ii. Utilized for low-cost housing;
iii. Utilized for socialized housing;
iv. Residential lot valued at P1,500,000 and below;
v. House and lot and other residential dwellings valued at
P2,500,000 (R.R. No. 16-2011) and below; or
vi. Two (2) or more adjacent residential lots where the aggregate
value do not exceed P1,500,000 (R.R. No. 13-18).
Note: Even if the real property is not primarily held for sale to
customers or held for lease in the ordinary course of trade or business
BUT the same is used in the trade or business of the seller, the sale
thereof shall be subject to VAT being a transaction incidental to the
taxpayer's main busineIR.R. No. 04-07, Sec. 14).
b. Export sales by pe,r,pgi fio are NOT VAT-registered;
Note: If the taxpay4ISRM-registered, his export sales are zero-rated
c By agricultural Cqnesatk of food and non-food products (whether in
original or proce'S)ed*Iduly registered and in good standing with
the Cooperative DeNt,ict Metlizity (CD% to:
i. Their members A- A 'W'eilipthefilv or not the cooperative is
thevtducer oith goods; or
fi4 on-membersil AT-exempt only if the cooperative is the
gEpdeucer;
Note, mribtaticfn of dir farm inputs, paRhinpries and equipment,
i ing *g
qp.,parts thereof, o to be userdirehctly and exclusively in the
ireproducttonl and/or pillpe g of theirprodirce s all also be exempt
rom 1
"3k"
4rvr. 1 "t" 1/4
By noncagncultur:4 non-elctrical an gritcrOceliooperatives duly
°regist in ta,d stall mg with the OPP vided that:
IMShal.tkcapitil co t bution of each member does not exceed
P15,0g0; and
iLtriLeggi9less of ateavapital and net surplus ratably
digtribute MiTIViVarrga
Note: Impo tign by these cooperatives of machineries and
equipment, i eluding spare parts thereof, to be used by them are
subject t617A11:4
e. Lease of goods and services to Senior citizens and persons with
disabilities under R.A. No. 9994 and R.A. No. 10754.
f. Gold to the BSP
g. Drugs and medicines prescribed for diabetes, high cholesterol, and
hypertension to beginning January 1, 2019 as determined by the
Department of Health.
3. Importation (PPF)
a. Personal and household effects belonging to residents of the
Philippines returning from abroad and non-resident citizens coming to
resettle in the Philippines: PROVIDED, that such goods are exempt
from customs duties under the Tariff and Customs Code of the
Philippines;
b. Professional instruments and implements, tools of trade, occupation or
employment, wearing apparel, domestic animals, and personal
household effects;
915
Note: The following are the requisites to be exempt from VAT:
i. The items must belong to persons coming to settle in the
Philippines or Filipinos or their families and descendants who
are now residents or citizens of other countries in quantities and
of the class suitable to the profession, rank or position of the
persons importing said items, for their own use and not for
barter or sale, accompanying such persons, or arriving within a
reasonable time;
ii. That the Bureau of Customs may, upon the production of
satisfactory evidence that such persons are actually coming to
settle in the Philippines and that the goods are brought from
their former place of abode, exempt such goods from payment
of duties and taxes; and
iii. The exemption does not apply to any vehicle, vessel, aircraft,
machinery, other goods for use in the manufacture and
merchandise,,,ptany.kinsjLn commercial quantity;
c. Fuel, goodssudtUpplies 14y pgrrftstengaged in international shipping
or air traps ort keratickpiditiec I td-a 4breign port without stopping at
any orKpo e .4f61-4.15jek..4,1iat the fuel, goods and
suppligs) 1- used for inte tiOnalAtiipping or air transport
oagralov,;)./ .f_
4. SerViCef7gERr "Ar
a. iSubje • th Percehlagel.axaunder Sec 11 6 to 17 of the NIRC;
b. By Ag cultural contracktOwers and millingo of palay into rice,
grits sugarcane into rawbugarN
c 'Medical, denial, it6.1pitpl #19d.:Fielaffnan si servi excr t those rendered
biAtifessio als. tfrabor,kop,tat &vice are e tript9 because it is a
itcsp al e
potq. Th p.y,R o me • ci t ac spitel or clinic to
its° irf- tie (s..fswqrsi:Fr-d.,. i 'mice, ence, AT exempt. If the
ale of ediei ade o ent, uch sage is subject to VAT
AMA/AM°, d 27, .
d. ENcationdl e • •riv.afe educational institutions duly
accklited by e ep o_onzt nd those rendered by
gover'arzerif e Onal.institutf6rik;S:(
Note: Edbea I013 servitgophip-I.itidu eminars, in-service training,
review class- d othI firgla e ices rendered by persons not
accredited by Dep E , and/or TESDA (R.R. No. 16-2005, Sec.
4.109-1). The exemption does not extend to the institution's other
activities involving sale of goods and services. Thus, gross
sales/receipts from the sale of school uniforms by a proprietary
educational institution and from rental of parking areas in the school
premises are subject to VAT (BIR Ruling DA-531-2004, October 19,
2004).
e Rendered by individuals pursuant to an Employer-employee
relationship;
f. Rendered by Regional or area headquarters established in the
Philippines by multinational corporitions;
g. Of Banks, non-bank financial intermediaries performing quasi-banking
functions, and other non-bank financial intermediaries such as money
changers and pawnshops;
Note: Pawnshops are considered non-bank financial intermediaries,
thus exempted from VAT but liable to percentage tax (Tambunting
Pawnshop, Inc. v. Commissioner of Internal Revenue, G.R. No.
179085, January 21, 2010).
916
5. Others (01TO-MAS):
a. Lease of residential units, if the monthly rent:
i. Does not exceed P15,000/unit, regardless of the amount of
aggregate rentals received by the lessor for the year;
ii. If it exceeds P15,000/unit but the aggregate rentals received by
the lessor do not exceed P3,000,000, the same shall be subject
to 3% percentage tax;
Note: "Residential Units" shall refer to apartments and houses & lots
used for residential purposes, and buildings or parts or units thereof
used solely as dwelling places (e.g., dormitories, rooms and bed
spaces) except motels, motel rooms, hotels and hotel rooms, lodging
houses, inns and pension houses. 'Unit' shall mean an apartment unit
in the case of apartments, house in the case of residential houses; per
person in the case of dormitories, boarding houses and bed spaces;
and per room in case of rooms for rent.
b. Gross receipts from Lvding activities of credit or multi-purpose
cooperatives duly regiggled and in good standing with the CDA;
Transactions whiVrpaexempt under International agreements to
which the PhilipitoWaggnatory or under special laws except those
under P.D. No. 529":0:1Vg../m Exploration Concessionaires under the
Petroleum Act of.i,19' §44Nrost,
d. Transport of gaged% irlfrrifatittuaa,Irs (R.A. No. 10378);
el. Sale orAgse of goods he performance of services
properties or the
Other., the trartsVo s mentioned in preceding paragraphs,
the ges Annual sObs- a d/or receipts do OT exceed the amount of
P3,0.0,0'i000(80. No. 13 .8).
[tote: Therare exempt fm VAT but stj6jecy to Vo percentage tax.
f. -9'Transfer of Property'purspspt to Merge jor consolMation of corporation
tindeS041 .0(0)),(3 of NI os
Associatiowdues*.limem 'e hip fees ssessments and
c prgapilacted o iiV a purely reimbursemen basis by homeowners'
AM-.
• 0,
associations and cond minium' corporations established under
Rake Act No. 99 Ma•na Carta for Homeowners and
Homewfs 1P Associati e ublic Act No. 4726 (The
Condominium
h. Self-ems iridividuals and professionals availing of the 8% tax on
gross alexand/or receipts and other non-operating income, under
Sections '24(42)(b) and 24(A)(2)(c)(2)(a) of the NIRC.
Note: A VAT-registered person may elect that the above exempt transactions shall not
apply to his sales of goods or properties or services. Once the election is made, it shall
be irrevocable for a period of three (3) years counted from the quarter when the election
was made except for franchise grantees of radio and TV broadcasting whose annual
gross receipts• for the preceding year do not exceed P10,000,000 where the option
becomes perpetually irrevocable (R.R. No. 04-07).
Input and Output Tax

Q: Define output tax.
ANS: It refers to the VAT due or paid on the taxable sale, barter or exchange of goods,
properties or services by a seller or transferor (NIRC, Sec. 110 (A)(3)).
Q: Define input tax.

ANS: It refers to the VAT due from or paid by a VAT-registered person on importation of
taxable goods, or on local purchase of taxable goods, properties, or services, including
lease or use of properties, in the course of his trade or business. It includes the
transitional input tax and the presumptive input tax, It likewise includes input taxes,
917
ED BO
which can be directly attributed to transactions subject to VAT plus a ratable portion of
any input tax, which cannot be directly attributed to either the taxable transaction or
exempt activity (NIRC, Sec.110 (A); R.R. No. 16-05, Sec. 4.110-1).
Q: What are the sources of input tax?

ANS: The input tax evidenced by a VAT Invoice or Official Receipt issued in accordance
with Sec. 113 of the Tax Code (Invoicing and Accounting Requirements for VAT-
registered persons) on the following transactions shall be creditable against the output
tax: (GRS-DPT)
1. Purchase or Importation of Goods
a. For sale;
b. For conversion into or intended to form part of a finished product for
sale, including packaging materials;
c. For use as supplies in the course of business;
d. For use as materials supplied in the sale of service; or
e. For use in trade or business,fk!i which deduction for depreciation or
amortization is,ellbwed'undrr epx‘Code.
2. Purchase of RepyProp r ies foi,,whicp vq170 ectually been paid
3. Purchase of Sei-vice vi ich.VAlha ctuatpebrt paid
4.i TransactioulDge?gectfsge
5. Presump leihkuttA N-"\ (...",
6. Transitio Vnp t a NIRCii,Sed;(11( ,,R.R. o. h15-954'pec. 4.110-1).
Q: What is pre e in 't tax credit?A

ANS: It is an in t redit ql1Fw—Ed-to persons offir7n—siengag
1. Proc f: (MMS) %!§.: e
a. rel; re
b.
c. s;
2.' Manu@stu
a. 1Qookin oil;
b. necked Aoodle- nstasit mpai4 br
, c. Refined Bulbar( ji-VB)) ,o.e-
Note: The term "pFackessingnii eaio::VasteSization anni9' Or
g and activities which
through, physical or aherrifig ro ss—alterih crdexture or form or inner
substance of a product irNuch runner Is e erspecial use to which it could
not have been put in its origialla or co?Klition IR , Sec.111 (8)).
Q: What is the allowed presumptive input tax credit?

ANS: VAT-registered persons are entitled to presumptive input taxes equivalent to 4%
of the gross value in money of their purchases of primary agricultural food products
which are used as inputs in their production (NIRC, Sec. 111(8)).
Q: What is transitional input tax credit?

ANS: It is an input tax credit allowed to a person who:
1. Became liable to VAT (exceeds the minimum turnover of P3,000,000 in any
12-month period),
2. Elects to be a VAT-registered (even if the turnover does not exceed
P3,000,000 (NIRC, Sec. 111 (A)), or
3. Is already a VAT-registered person and also deals in goods or properties, the
sale of which is exempt, but it becomes a taxable transaction under a:new or
amendatory law (Fort Bonifacio Dev't. Corp. v. Commissioner of Internal
Revenue, G.R. No. 173425, January 22, 2013).
918
DAN RED BOO
Q: What is the allowed transitional input tax credit?
ANS: The allbwed transitional input tax credit is whichever is higher between:
1. 2%iot the value of the beginning inventory on hand; or
2. Actual VAT paid on such goods, materials and supplies (NIRC, Sec. 111 (A)).
Note: The Supreme Court held that prior payment of taxes is not required to avail of the
8% (now 2%) transitional input tax credit. There is nothing in the provisions of Sec. 105
(now 111) of the Tax Code which indicate that prior payment of taxes is necessary for
the availment of the 8% (now 2%) transitional input tax. All that is required under Sec.
105 (now 111)1of the Tax Code is for the taxpayer to file a beginning inventory with the
BIR (Fort Bonifacio Dev'f. Corp. v. Commissioner of Internal Revenue, supra).
Q: Who may'ayail of input tax credit?

ANS: The input tax credit on importation of goods or local purchase of goods, properties
or services by a VAT-registered person shall be creditable:
1. To tile importer upon payment of VAT prior to the release of goods from
customs custody;
)
2. To the purchaser of the Oiliest( goods or properties upon consummation of
the sale; or
3. To ',the purchaser of s''414ro
. the lessee or licensee upon payment of
compensation, rental, re i7.14 ' (R.R No. 16-05, Sec 4.110-2).
7,
Q: Flow is output tax determined?
ANS: The output tax is sqmptited by:
1. Multiplying they sellinkbee" (for sellers of -gods or properties) or the
"grossreceiptA(for sellerspfse ices) by 12%; o
2. Where theArTiotflpfoVAT is e neously bille invoice or receipt, by
multiply he tairattjavoice am 4,nt by a fracti n the rate of VAT as
flume-War arah,100% plus the of VAT a/the deno inator (i.e., 12/112)
(R. i3 4g10-6).
Note: In all carps whereiffalasiefo :4zorrip ing the o aitttp
: her • the gross selling
price or the gross.recei dtut the anou f VAT is erroneously billed in the invoice,
the total invoice itall be kreamed to be comprised of the gross selling
price/gross receipts lu the correct amouip e
Q: How will the inputda es on depreea. r -r00i m p ted?

AWL
ANS: When a VAT r teredvirson purchases or imports capital goods, which are
depreciable assets fors ritoo
_ tax purposes, the aggregate acquisition of which
(exclusive of VAT) in a careti6at month exceeds P1 M regardless of the acquisition cost
of each capital 'good:
1. Estimated useful life is 5 years or more — Input tax shall be spread evenly over
a period of 60 months to commence in the calendar month when the capital
good 's acquired;
2. Estimated useful life is less than 5 years — Input tax shall be spread evenly on
a monthly basis by dividing the input tax by the actual number of months "w11/4
comprising the estimated useful life. Such claim for input tax credit shall
commence in the calendar month the capital good is acquired.
Note:
1. Where the aggregate acquisition cost (exclusive of VAT) of the. existing or
finished depreciable capital goods purchased or imported during any calendar
month does not exceed PIM, the total amount of input taxes will be allowable
as credit against output tax in the month of acquisition.
2. An asset acquired in installment for an acquisition cost of more than P1M,
excluding VAT, will be subject to amortization of input tax despite the fact that
the monthly payments or installments may not exceed P1 M (R.R. No. 16-05,
Sec. 4.110-3).
919
DAN R • • •
3. F The amortization of the input VAT shall only be allowed until December 31,
2021 after which taxpayers with unutilized input VAT on capital goods
purchased or imported shall be allowed to apply the same as scheduled until
fully utilized (R.R. No. 13-18, Sec.2).
For purchase made on January 2022, no amortization shall be made and the
input VAT shall be claimed on the month of purchase or January 2022 (R.R.
No. 13-18, Sec.2).
Q: What are capital goods or properties?
ANS: It refers to goods or properties with estimated useful life greater than one year and
which ',ere treated as depreciable assets under the Tax Code, used directly or indirectly
in the production or sale of taxable goods or services (R.R. No.13-18).
Q: What is aggregate acquisition cost?

ANS: It refers to the total price, excluding VAT, agreed upon for one or more assets
acquired and not on the payments ac ually..ma e during the calendar month (R.R. No.
16-05, Sec 4.110-3).
1 1
,
N. ....,, v/ ,
Q: What is the effect4f4a pr.ottansfer-offteprectabje goods within a period of
five years prior to theiexhlu ion of the amortriebleelhpuft)x?
ANS:'In,Icase of sale 6? a sfer„..of,dep-i-alpiegoo4ithint per:O'd of five years or prior
to the eXl-laustionta h; a orfizableimpdtctaxp the en ireNn9 lied input tax on the
capital, goods s rd or • dsfer ed canibe CI(Nirn, ed-as in ,ut to redit during the month or
quarter when s e or transfer as made.M.A No. 16-0 Sec. 0,3).
1
, •
/---a•
K: ,,,,-.• I
CI: What is Construction in Prodr,lary? 'ft”
• o,
ANS: H It! is•the
t cost of constructiori*ork;i-Whith
.,..:w., ,.,;••
isjnot ye Completed. CIP is not
deprecieted u 'Ige4 ssecitced in serVice.. NormglIg?.6- on fomple ion, a CIP item is
reclasSified an thel clag)ft a assetAs capi,tqlize epreCiatleed (R.R. No. 13-18,
Sea 2).. U1 1":")
. Enl, ,r(--'J-
iii"..ii "-•-: V
Q: What are the ,'ales on npu tC P I
ANS: Input tax on GIP shall d cf-a rte.co as folloiiis:
1. i CIP is consi ered, os' Y1 161 ing x, agra purchase of service,
1,
I the value of Fb eterminedtls,e' he/progress billings;
‘
2. , Until such time e goli tructi Mak. Ae6.01, pleted, it will not qualify as
1 capital goods as liereirLdefin d'Aili :Whjeti case, input tax credit on such
1 , transaction can be recogniie'dIffltiellinth the payment was made; and
3.1 Provided, that an official receipt of payment has been issued on the progress
I billings.
Note: Once the input tax has already been claimed while the construction is still in
progress no additional input tax can be claimed upon Cdttipletioh—Of the asset when it
has been reclassified as a depreciable capital asset and depreciated (R.R. No. 13-18,
Sec. 2)'.
Q: How is Input tax on mixed transactions allocated?
ANS: A VAT-registered person who is also engaged in transactions not subject to VAT
shall be allowed to recognize inptit tax credit on transactions subject to VAT as follows:
1.: , All input taxes that can be directly attributed to transactions subject to VAT
, may be recognized for input tax credit;
' Note: Input taxes that can be directly attributable to VAT taxable sales of
goods and services to the Government or any of its political subdivisions,
instrumentalities or agencies, including GOCC's, shall not be credited against
output taxes arising from sales to non-government or private entities. Claims
for VAT refund/tax credit certificate with the BIR, BOI and DOF Center should
920
be deducted from the allowable input tax that are attributable to zero-rated
sales.
2. The input tax attributable to VAT-exempt sales shall not be allowed as credit
against the output tax, but should be treated as part of cost of asset or
operating expense; and
3. If any input tax cannot be directly attributed to either a vatable or VAT-exempt
transaction, the input tax shall be pro-rated to the vatable and VAT-exempt
transactions and only the ratable portion pertaining to transactions subject to
VAT may be recognized for input tax credit. The allocation of input taxes shall
be done proportionately to each category of transaction (R.R. No. 16-05, Sec.
4.110-4).
Q: How is input tax creditable determined?

ANS: The amount of input taxes creditable during a month or quarter shall be
determined by:
1. Adding all creditable input taxes; rising from the transactions during the month
or qOarter plus any amount OnOtit tax carried over from the preceding month
or quarter; - .:.
,.'h,t,,,t,
..t.;:;f -t/fet •
2. RedUced by the amountgiopi:4or VAT refund or tax credit certificate and
4
other adjustments, sudii'ls ,jrip Chase returns or allowances, input tax
attributable or allocated iip iOgirfig ales,,s,, nd inpuqpx attributable to sales to
goVernment subject to final ItiShiedi, g(g.TRA 16-2005, Sea 4.110-5).
•
, 440
Q: How is VAT payabjeldetermineci
ANS: Therashall be 48'weil as a decictti n from the outp • tax\the amount of input tax
deductible to arrive atWAVRayeble on t monthly VAT . edlarAtion and the quarterly
VAT returns: , ,00 4A6s,
1. If, akile end of taxablg'qua er, the outptitax exceeds the input tax, the
exceT041140bid byte VAT isteredterson•
2. If thqinput ta2equsivftinp, ax carne revious quarter,
exceeds the eft tax; Ve e ss input tax the carried over to the
succeeding dile ;Or qua0ers AR No. 16-05, Sec. 4.110-7).
Note: The 70°A, calVon creditable input tai sfia eady been removed (R.A. No. 9361
4 ao r',01 ,4
- ,...„
amended NIRC, Sec. 110,1ag,
NIRC, Ay' Iggorietizr:
4. ,
Q: What are the subs tiatiou vequirements of input tax credits?
ANS: The following are eutl-stantiation requirements of input tax credits:
1. Input taxes on dc5irfe" is purchases of goods or properties — VAT invoice;
2. Input tax on purchase of real property under cash/deferred payment basis —
public Instrument (i.e., deed of absolute sale, deed of conditional sale,
contract/agreement to sell, etc.) together with the VAT invoice for the entire
•selling price and Non-VAT official receipt (OR) for the initial and succeeding
payments;
3. Input tax on purchase of real property under installment basis — public
Instrument and VAT official receipt for every payment;
4. Input tax on domestic purchases of services — VAT official receipt;
5. Input tax on importation of goods — import entry or other equivalent document
showing actual payment of VAT on the imported goods;
6. Transitional input tax — inventory of goods as shown in a detailed list to be
submitted to the BIR;
7. Input tax on "deemed sale" transactions — required invoices;
8. Input tax from payments made to non-residents (such as for services, rentals,
or, royalties) — Monthly Remittance Return of Value Added Tax Withheld (BIR
Form 1600) filed by the resident payor in behalf of the non-resident evidencing
remittance of VAT due which was withheld by the payor; and
921
7Te
'DAN
9. Advance VAT on sugar — payment order showing payment of the advance
VAT (R.R. No. 16-2005, Sec. 4.110-8).
Note: Before a VAT-registered person can claim input taxes, the input tax should be
supported by an Invoice or Official Receipt showing the information as required under
Sections 113(A) and 237 of the Tax Code.
Q: What is the information that must be contained in the VAT Invoice or VAT
Official Receipt?
ANS: The following information shall be indicated in the VAT invoice or VAT OR:
1. Statement that the seller is a VAT-registered person followed by his TIN;
2. The total amount paid by the purchaser with the indication that such amount
includes VAT; provided that:
a. Amount of tax must be shown separately on the receipt.
b. If the sale is exempt, the term VAT-exempt sale must be written or
printed prominently on the invoice or receipt.
c. If the sale is subject to.,12/orthe,,tv "zero-rated" sale must be written or
printed pro* ea? on tpe InvqiceArrek ? ipt.
d. If the saleornvoOks ,r
ppperties .or.:§ervices some of which are
subject4gAT and:§,ome.areextmpt zero;, the "breakdown" of
the sale pricel'''between the Iaxere,/eicenpt, and zero-rated
compo'rfe 'tsdrnust-be-ghWrTtin'the..lnrice'cir relt;
A
'Date of) cti n, quantity',-,p,hit•Fost antic desErjr4lop f goods; and
In casecof s ei in e amckint4P1-ri000 orlmore and th‘ sale is made to a
VAT-r ister per on, the na1:66;, businesst style, addrU.,,s and TIN of the
pure R. No SecrqFr(S)):1
Q: What ar t e4 nvoici and-f-,recOychg re• iremerttsfs3 lri deemed sales
transactions? ‘ C;
5 )
...e, •
ANS: The invo dna e ng reqiiiip 1 9nAs.i or ee d saLtranjsictions are:
1. Trans 'rli s or bTptio cropriA c~odrse 4bf busipess of goods or
prope es on I ally\
\ tat_QA-i d- for sal. s in e couTe of business — a
memo nflum e try i Itiktidi s jou al to record withdrawal of
goods foNersona se s k*V
2 Distribution\2r trans e o ir bffdbr vetlorrs share in the profits of
the VAT-re sre'icloej- o creAtols,,1-94ayment of debt; and
consignment of ctua sateAs, o m.Xiiewithin 60 days following the
date such goods were.otnsign pie b shall be prepared at the time of
the occurrence of the triratfito , ich should include all the information
prescribed above (Invoicing requirements in general). The data appearing in
the invoice shall be duly recorded in the subsidiary sales journal. The total
amount of "deemed sale" shall be included in the return to be filed for the
month or quarter; -
3. Retirement from or cessation of business with respect to inventories on hand —
an inventory shall be prepared and submitted to the RDO Who has-jurisdiction
over the taxpayer's principal place of business not later than 30 days after
retirement or cessation form business. An invoice shall also be prepared for
the entire inventory, which shall be the basis of the entry into the subsidiary
sales journal. The invoice need not enumerate the specific items appearing in
the inventory, but it must show the total amount. It is sufficient to just make a
reference to the inventory, regarding the description of the goods. However,
the sales invoice number should be indicated in the inventory filed andta copy
thereof shall form part of this invoice:
a. If the business is to be continued by the new owners or successors, the
entire amount of output tax on the amount deemed sold shall be
allowed as input taxes;
922
•-• • •• • •
VOL 1.
2019
If the business is to be liquidated and the goods in the inventory are

sold or disposed of to VAT-registered buyers, an invoice or instrument
of sale or transfer shall be prepared, citing the invoice number wherein
the tax was imposed on the deemed sale. At the same time, the tax
paid corresponding to the goods sold should be separately indicated in
the instrument of sale (R.R. No. 16-05, Sec. 4.113-2).
Q: What are the consequences of issuing erroneous VAT Invoice or VAT OR?
ANS: If a person who is not VAT-registered issues an invoice or receipt showing his
TIN, followed by the word "VAT", the erroneous issuance shall result to the following:
1. The issuer shall, in addition to any liability to other percentage tax, be liable to:
a. The 12% VAT without the benefit of any input tax credit; and
b. , A 50% surcharge;
2. The VAT shall be recognized as an input tax credit to the purchaser, if the
requisite information is shown on the receipt or invoice;
If a VAT-registered person issues a'VAT invoice or VAT OR for a VAT-exempt

transaction, but fails to display promihe' 1kkY.on
. the invoice or receipt the term "VAT-
exempt sale" the issuer shall be liable to .account for the 12% VAT as if the transaction
is not an exempt transaction. The be entitled to claim an input tax credit
on his purchase if the requisite infornidOt *rpm, on theipceipt or invoice (RR No.
, ; . fy gV:17.414r,4..
1605, Sea 4.1134). me f,04-,41
Note: Failure or refusatted,. ply with' the
- ra requiremen Kai e amount of tax shall be
shown as a separate item in the invoipp:,.orreceipt, shall, up cqnviction, for each act or
omission, be piinishedj`by a fine of not s than P1, 000 but not more than P50, 000
and suffer imprisonmeill o6sot.i:les Than years but not,friore than 4 years (RR No.
, 1,005''' f$1":1i r.,
k
18-2011).
00-- q .,,., .,
Q: Are the mympirmrequirements unde0

i
,4
lle Tax Code-mn4q,t3Ey
ANS: Yes. strict compt@ce it.h su s antiationN Cairketrig requirements is
necessary. consideAr!glSfs nature and ,, T system's- a Errkdit method, where tax
payments are ba6dtbrt oatput and inp . taxes and where the- seller's output tax
becomes the buyel; input (a) that is 444ablees tax credit or refund in the same
transaction. It ensurett0„eforoper colLealbittaxes at all stages of distribution,
facilitates computationIttax croitolii-aegvISCGRe audit trail or evidence for
BIR monitoring purpote's_(741 Energy Corporation v. Commissioner of Internal
Revenue, G.R. No. 197‘660,4ch 14, 2018).
Note: If the claim for refundktax credit certificate) is based on the existence of zero-
rated sales by' the taxpayer but it fails to comply with the invoicing requirements in the
issuance of sales invoices (e.g. failure to indicate the TIN), its claim for tax credit/refund
of VAT on its -purchases shall be denied considering that the invoice it is issuing to its
customers does not depict its being a VAT-registered taxpayer whose sales are
classified as zero-rated sales. Nonetheless, this treatment is without prejudice to the
right of the taxpayer to charge the input taxes to the appropriate expense account or .."41111
asset account subject to depreciation, whichever is applicable. Moreover, the case shall
be referred by the processing office to the concerned BIR office for verification of other
tax liabilities of the taxpayer (R.M.C. No. 42-03, A13).
Ir,
Refund or Tax Credit
I
Q: Who may claim for refund or apply for the issuance of tax credit certificate
(TCC)?
ANS: A VAT-registered person whose sales of goods, properties or services are zero-
rated or effectively zero-rated may apply for the issuance of a TCC or refund of input tax
attributable to such sales (R.R. No. 16-05, Sec. 4.112-1).
1: 923
Q: May a taxpayer who has pending claims for input VAT credit or refund, set off
said claims against his other tax liabilities? Explain your answer (2001 Bar
Question).
ANS: No. Set-off is available only if both obligations are liquidated and demandable.
Liquidated debts are those where the exact amounts have already been determined. In
the instant case, a claim of the taxpayer for VAT refund is still pending and the amount
has still to be determined. A fortiori, the liquidated obligation of the taxpayer to the
government cannot, therefore, be set-off against the unliquidated claim which the
taxpayer conceived to exist in his favor (Philex Mining Corp. v. Commissioner of Internal
Revenue, G.R. No. 125704, August 29, 1998).
Q: When should the application for the issuance of TCC or refund made?
ANS: The written application for the issuance of a TCC or refund must be filed with the
BIR within two (2) years after the close of the taxable quarter when the sales were made
(R.R. No. 16-05, Sec. 4.112-1).
Note: A VAT-registered person whos,e„registratio..khas been cancelled due to retirement
from or cessation of businesgoot16 e to cliari9e ni,telt.cessation of status under Sec.
106 (C) of the Tax Code _y, Oin tdoS) ye s litr e date of cancellation, apply
for the issuance of tax "t Ikate.for.an.x. nitsecf.ppattax which he may use in
payment of his otherte cyegirie taxes: Prow ecl„.fioweleNhat he shall be entitled
to a refund
, if he has fes 14eVairrplar-liablities4:gainst‘which the tax credit
certificate may befplijizg ided futtlf#,,' thgt-the deteV Ilation being referred
hereto is the da 6 ofits' of tax.dearaceOy the ItR, 1 qrr full ettlement of all tax
liabilities relativ to ce f businessf9- hange of tatus t e c o ncerned taxpayer
(R.R. No. 13-1 ,.-6-0:23.
x...i1
4 1
-1:-.4. • ii.-1/:itV'' i
Q: Where sho 1_d .thei claim for reffin Tp\cinade
I
ANS: It must d'fire4 twit tppropri e-BIWOffice- payersi Service (LTS) or
RDO having jutVictipp o e,pnncippl the,ta
, payer. Claims for
input tax refun efidfract e kts shall ith thIVAT Credit Audit
Division (VCADy.R. Ng 13 ps g2).
Note: The filing tthe claim with ,69 "ba the filin of the same claim
with another office .R. No. .,(Sec
Q: What is the perk) 'thi ,hic fund=o ade?

ANS: The Commissioner h I .§1.6,t a TOchr ditable input taxes within 90
days (previously 120 days) the claret ssion of the official receipts or
invoices and other documents in supporrt3f'tttapplication filed (R.R. No. 13-18).
Note: That all claims for refund/tax credit certificate filed prior to January 1, 2018 will be
governed by the one hundred twenty (120)-day processing period (R.R. No. 13-18, Sec.
2).
Q: What is the recourse of the taxpayer in case of denial of refund by the BIR?
ANS: In' case of full or partial denial of the claim for tax refund, the taxpayer affected
may, within thirty (30) days from the receipt of the decision denying the claim, appeal
the decision with-the Court of Tax Appeals (NIRC, Sec.112 (C)).
Q: What is the effect of BIR's failure to act upon the claim for refund within 90
days?
ANS: Failure
.1! on the part of any official, agent, or employee of the BIR to act on the
applicabon within the ninety (90)- day period shall be punishable under Section 269 of
the Tax Code, as amended (NIRC, Sec. 112 (c)).
Note: Punished by a fine of not less than Fifty thousand pesos (P50, 000) but not more
than One, hundred thousand pesos (P100, 000) and suffer imprisonment of not less than
ten (10) years but not more than fifteen (15) years and shall likewise suffer an additional
924
penalty of perpetual disqualification to hold public office, to vote, and to participate in
any public election (NIRC, Sec. 269).
Q: What is the manner of giving refund?

ANS: Refunds shall be made upon warrants drawn by the Commissioner or by his duly
authorized representative without the necessity of being countersigned by the Chairman
of the Commission of Audit (R.R. No. 16-05, Sec. 4.112-1).
Q: What is required from a VAT-registered person to issue?

ANS: A VAT-registered person shall issue:
1. VAT Invoice — for every sale, barter or exchange of goods or properties; and
2. VAT Official Receipt (OR) — for every lease of goods or properties and for
every sale, barter or exchange of services.
Note: Only VAT-registered persons are required to print their Tax Identification Number
(TIN) followed by the word "VAT" in their invoice or OR, which shall be considered the
"VAT invoice" or "VAT OR". All purchas_emot covered by invoices/receipts other than
the VAT invoiceNAT OR shall not giveliSpo any input tax (R.R. No. 16-05, Sec. 4.113-
1(A)).
San Roque Doctrine

01%.
Q: What is the periOd to file a tuclic!pIRII inicasei pfAcnon of BIR to refund?
ANS: In case of full or paggIvElenil iitttke clairriaM(gaddnd, the taxpayer affected
may, within :thirty (30) oalrefrom the receipt of the decisionAnying the claim, appeal
the decision with the Court of Tax Appea NIRC, Section 1,12 G)).
Note: I • '"
1. Prior to the •TRAIN law, Secti h 112(C) states tha "incase of full or partial
denilptaf tax refUrfer or (laxdit, or the faildre on the party of the
COmmissionetotact on the app tion within e period prescribed above, the
taxpayer may tHilik30) froml '767-6710We'pecision denying
the crap or aftentthe extfira ion Ofahe one hun a4Wigeday period, appeal
the decgiodontlinnacteAlainfirvith the Court of Tax Appeals."
2. However,ti el-RATIO omissio f CIR's inaction does not bar the filing of a
judicial claimATheATA Charter ovie rn at CTA shall exercise an exclusive
appellate juri talon to jegely42R - N -Alactiqn by the Commissioner of
Internal-Reve,k, e in cases involving disputed assessments, refunds of internal
revenue taxes? fees ,1 .15ther charges, penalties-in relations thereto, or other
matters arising itacto the National Internal Revenue Code or other laws
adrpinistered by the Bureau of Internal Revenue, where the National Internal
Revenue Code provides a specific period of action, in which case the inaction
shall be deemed a denial (R.A. No. 9282, Sec. 7(a) (2)).
3. The Commissioner's inaction on the claim during the 120-day period is
"deemed a denial," pursuant to Section 7(a)(2)[63] of Republic Act No. 1125,
as amended by Section 7 of Republic Act No. 9282. Team Energy had 30
days from the expiration of the 120-day period to file its judicial claim with the
Court of Tax Appeals. Its failure to do so rendered the Commissioner's
"deemed a denial" decision as final and unappealable (Team Energy
CorpPration v. Commissioner of Internal Revenue, G.R. No. 197663 & G.R.
No 197770, March 14, 2018).
925
Q: What is the effect for failure to comply with the period of filing the judicial
claim?
ANS: It bars the taxpayer's claim for tax refund or credit.
Note:
1. It is indisputable that compliance with the 120-day [now 90 days] waiting
period is mandatory and jurisdictional;
2. Failure to comply with the 120-day waiting period violates a mandatory
provision of law. It violates the doctrine of exhaustion of administrative
remedies and renders the petition premature and thus without a cause of
action, with the effect that the CTA does not acquire jurisdiction over the
11 taxpayer's petition;
3.: Strict compliance with the mandatory and jurisdictional conditions prescribed
by law to claim such tax refund or credit is essential and necessary for such
claim to prosper. Well-settled is the rule that tax refunds or credits, just like tax
exemptions, are strictly construed against the taxpayer. The burden is on the
taxpayer to show that he has,strictly,gozplied
_,,_ with the conditions for the grant
of the tax refund or c dilr
Non-compliance ith r andakoj per dsas on-observance of prescriptive
periods, and -a hirente.to-exhaustion o Vstrative remedies bar a
taxpayersbe p-tix4grund or credit issiokkof Internal Revenue v.
San Roqq5 0 ratiorf,7R7Wa.-1,8748k bru*N12, 2013).
Enhanced VATIefu n7 P 41t

Q: Wha,t is th Enh T-RefundVsfem? cr)
ANS: VAT re t gr,,ags-arOleamrefunils of cta.ditd6le input tax within
ninety (90) da he filing of thg-000 appl" tion Wit t ureau (R.R. No.
13-18,, Sec.2). • „m-,It.IFT2V
Q: What is tikeCcffe stalift entation of the

Enhanced VATI efun Sys e4-(c't
ANS: The followi sale ubj s al
Zero Ra ed Sale f Goods e Lqs.
" a. Thkpale °SR b mate als to a non-resident
buye , or 14e 1 cAex dented enterprise to be
used in an durin plopept,_\ ae mg or repacking in the
Philippines ef. said t.tf4.0 6srfaid for in acceptable foreign
currency, and a coup eciaor-,oin .accordance_ with the rules and
regulations of the BSP;
b. The sale of Raw materials or packaging materials to an export-oriented
enterprise whose export sales exceed seventy percent (70%) of total
annual production; and
c. Transactions considered export sales under E.O. No. 226, otherwise
known as the Omnibus Investments Code of 1987, and other special
laws.
Zero-Rated Sale of Service:
a. Processing, manufacturing or repacking of goods for other persons
doing business outside the Philippines, which goods are subsequently
exported and paid for in acceptable foreign currency and accounted for
in accordance with the rules and regulations of the BSP; and
b. Services performed by Subcontractors and/or contractors in
processing, converting, or manufacturing goods for an enterprise
whose export sales exceed 70% of the total annual production (R.R.
No. 13-18, Sec. 2).
926
Note: In addition to the establishment of Enhance VAT Refund System, to subject to
12% VAT, all pending VAT refund claims as of December 31, 2017 shall be fully paid in
cash by December 31, 2019 (R.R. No. 13-18, Sec. 2).
Filing of Returns and Payment

Q: Who are required to file a VAT return?
ANS: Every person liable to pay VAT shall be required to file a return (NIRC, Sec. 114).
I
Q: What are the rules regarding the time for filing a return?
1. Even) person liable to pay VAT shall file a:
a Monthly VAT declaration not later than the 20th day following the end of
each month;
Quarterly VAT return of the amount of his quarterly gross sales or
receipts within twenty-five (25) days following the close of the taxable
quarter;
2. A VAT-registered person!) TK•II ay the VAT on a monthly basis. Amounts
reflected in the monthly( ttl n for the first 2 months of the quarter shall
still be included in the?' g AT return which reflects the cumulative
figures for the taxable gua , er a vents in the monthly returns shall be
credited in the quarterigetill t
GA payable or excess input
tax as of the end of rie'quarte
3. Taxable quagtiihall mean he uarter that is synctir nized to the income tax
quarter of thVtax ayer (LWc ea ender or fiscal y ar (R.R. No. 16-05, Sec.
4.114-1)•
Note: That beginni g , 2023, tV2, filing and pa meRt reguired under the Tax
Code shall be diihe within faity-fiye (2.5j days folio g t e crose of each taxable
quarter (R.R. /1.181i7,2).
Q: Discuss
Discuss the rule on wit holdiii• of fi 1 VAT on slesaa.,_ ernment.
ANS: The GoVemom1 gy,of itsjpolif e:- subdivisions, instrumentalities or agencies,
including GOCCs, sha l befo% making p- ent on account of each purchase of goods
and/or services taxed a 12° 'deduct an nal VAT due at the rate of 5% of
the gross payitient ther4go.f R.R. No 164 , - 7V ,
Note:
1. The 5% final 1irtthhol ing VAT rate shall represent the net VAT payable to the
seller. The rem in4g % effectively accounts for the standard input VAT for
I of goods or services to government or any of its political subdivisions,
sale's
instrumentalities or agencies including GOCCs, in lieu of the actual input VAT
dire9tly attributable or ratably apportioned to such sales. If actual input VAT
attributable to sale to government exceeds 7% of gross payments, the excess
may form part of the seller's expense or cost. On the other hand, if actual input
VAT :attributable to sale to government is less than 7% of gross payments, the
difference must be closed (deducted) to expense or cost (R.R. No. 16-05, Sec.
2. That beginning January 1, 2021, the VAT withholding system under this
subsection shall shift from final to a creditable system: Provided, That the
payment for lease or use of properties or property rights to nonresident owners
shall be subject to twelve percent (12%) withholding tax at the time of payment
(R.R.1No. 13-18, Sec. 2).
927
2019
Summary of Changes in Value Added Tax under the TRAIN Law

Topic NIRC TRAIN
Value Added Tax
Gross sales or receipts for Gross sales or receipts for the
• the past twelve (12) months, past twelve (12) months, other
1. VAT other than those that are than those that are exempt, have
Threshold exempt, have exceeded exceeded P3,000,000 (R.A. No.
P1,919,500 (NIRC, Sec. 236 10963, Sec. 72).
(G)( 1))•
Anyperson who is not Retained with additional

required to register for VAT provision:
may elect to register for VAT
2. Option to (NIRC, Sec. 2.0„,(17)1-,,.......„, Provided, That any person taxed
.-7''' 1,1 4. '-urider Section 24(A)(2)(b) and
register mss'N.,, t ) piol 4 A)(2)(c)(2)(a) of the NIRC
under VAT -) .1...„
-'-:
.,„..„„,„,.:-.- -__ whpeftle,cted to pay the eight
system " 4. per erp(1804) tax on gross sales
. 0,
.-----17------, oTtTecelpt'S
.,.._ -,‘, ., •,,shall not be allowed
•/ ,
• ,<Ly ,, ,‘,. ..,,
- is avail. ors option (R.A. No.
• if . --, 10963 ec. 7b.
. -... - " 1 t
1 L u
?Sale of olTto -13 S 47) , 1-<G,• -R1 qmove Si zero-rated
--4c. 106 )(2)(F)(4))11,11
o
,-7'; ' tansactio Firip transferred to
at,„ -::i ' Vkr-exe pt.irp sactions under
; .:pai
..:..-`-`2-̀? Serp,;- ,0i109 Z) of the NIRC, as
.. ' . • ---- .,:) Arnei hded (R. (No. 10963, Sec.
Sale ,‘'\-,,I
goad J4:14r0".0'r .4"
,<" etved ith additional
3. Zero-rated quipm t i e;. ) pr fusion:
ar,r ue f•--
sale of goods ‘sonsy,.., d IN )- n ,,,' ,,,,,I,
and • irate afidall 1"PPing'ircf>i civli,90 That the goods,
properties intern ti Al/ air t ft .0 res, equipment and fuel
operations . IR ,„ ' .o.s all be used for international
d-
106(A)(2)(a)(6)). -- ..-.•--- shipping or air transport
operations (R.A. No. 10963,
Sec. 31).
• .
Foreign Currency Repealed (R.A. No. 10963, Sec.
Denominated Sales (NIRC, 31).
Sec. 106(A)(2)(b)).
- (2) Sale and delivery of goods to:

(i) Registered enterprises within
4. Additional a separate customs territory
zero-rated as provided under special
sale of laws; and .
goods and (ii)Registered enterprises within
properties- Tourism Enterprise Zones as
declared by the TIEZA (R.A.
No. 10963, Sec.31).
-• •
928
A system that grants refunds of
creditable input tax within ninety
(90) days from the filing of the
VAT refund application with the
Bureau and all pending VAT
refund claims as of December
31, 2017 are fully paid in cash
bay December 31, 2019 (R.A.
No. 10963, Sec.31).
Effect of Successful
Establishment of Enhanced VAT
Refund System: The following
zero-rated sales will be subject
to VAT:
Goods or Properties:
1. The sale of Raw materials or
packaging materials to a non-
resident buyer for delivery to
a Isident local export-
*. ed enterprise to be used
in manufacturing, processing,
pacV or repacking in the
inRs of the said buyer's
gOd p id for in acceptable
5. Enhanced foreig currency, and
VAT Refund iccou ted or in accordance
System bit %DA nd regulations
.4:Titr%
2. Tfie e of Raw materials or
packaging materials to an
export -oriented enterprise
whose export sales exceed
-sev nty percent (70%) of total
annual production; and
3. Transactions considered
export sales under E.O. No.
226, otherwise known as the
Omnibus Investments Code
of 1987, and other special
laws (NIRC, Sec.
106(A)(2)(a)).
Service:
1. Processing, manufacturing or
repacking of goods for other
persons doing business
outside the Philippines, which
goods are subsequently
exported and paid for in
acceptable foreign currency
and accounted for in
accordance with the rules and
regulations of the BSP; and
929
, ,c,:,..„:.,„„..::„.,,,,ny.,,,„7.3.,,,,,,„,,,,......,.....„,
fo:11.7L ,...A
•
2. Services performed by
Subcontractors and/or
contractors in processing,
converting, or manufacturing
goods for an enterprise
whose export sales exceed
70% of the total annual
production (NIRC, Sec.
108(B)).
Sale or exchange of Sale or exchange of services

services includes "sales of includes "sales of electricity by
6. Definition electricity by generation generation companies,
of sale or companies, transmission, transmission by any entity,
exchange of and distributiw companies":, and distribution companies,
service (NIRC, Sfic:1 08(A)). T X r 'Iiitluding electric cooperatives"
• f f , --,
oc,
e, N
-4,, ;At, i•
b, --/ -, $4, (R.A.'No. 10963, Sec. 33).
-,%,,, ,c) ‘;
tiSe'rtlic)7 rehlrere- drliff"---..Retaified with additional
, Z6' ors rengggere -.in Plevrdion!
,:
international shipping "or
7. Zero-rated 1
intematiotilal air ,:transport Provid)i(Tgat‘these 'services -
sales of
services
operations, i F-4-...<
cludinglilleases
- I. • -,- /,-,'-Sil
i all Iire,,,....4q•xclusive for
-II propeky or-1•upedtpereof-- iniernatio al lipping or air
AIIRCc. 108. OD 751.7 " - - '''' tr !wort 'pergtibns (R.A. No.
\''';)', ‘
. - k \4,-
'\, " 'J'"(N5eivices rendered to:
' s
''(iii) Registered enterprises
ts )with) a 'separate customs
8. Additional ',SClE1\11 . \. r"'01drnto .4,
---...._,_---- „as provided under
zero-rated
/ ..000% ke, cip aw
es; and
sale of goods
Registered enterprises
and services
I I\AP\.) .-..wit in Tourism Enterprise Zones
as declared by the TIEZA (R.A.
No. 10963, Sec.33). -
Lease of a residential unit Lease of a residential unit with a

with a monthly rental not monthly rental not exceeding
exceeding P12,800 (R.R. P15,000 (R.A. No. 10963,
No. 16-2011). Sec.34).
9. VAT Importation of fuel, goods Retained with additional

Exempt and supplies by persons provision:
Transactions: engaged in international
shipping or air transport Provided, That the fuel, goods,
operations (NIRC, and supplies shall be used for
• Sec.109(U)). international shipping or . air
transport operations (R.A. No.
10963, .Sec.34).
930
VOLT.
2019
Il
Sale of real properties not Sale of real properties not
primarily held for sale to primarily held for sale to
customers or held for lease customers or held for lease in
in the ordinary course of the ordinary course of trade or
trade or business, or real business, or real property utilized
property utilized for low-cost for low-cost and socialized
and socialized housing housing residential lot valued at
residential lot valued at P1,500,000 and below, and
P1,919,500 and below, and house and lot, and other
house and lot, and other residential dwellings valued at
residential dwellings P2,500,000 and below.
valued at P3,199,200 and
below (NIRC, Sec. 109(P) Provided, That beginning
and R.R. No. 16-2011). January 1, 2021, the VAT
exemption shall only apply to
sale of real properties not
primarily held for sale to
customers or held for lease in
the ordinary course of trade or
business, sale of real property
Potilizeaaor socialized housing
to la ouse and lot, and
other r s dential dwellings with
d
selling ice of not more than
P2,000,090- Provided, further,
That ev qry years thereafter,
the nt erein stated shall
be sadjus • its present value
0,, r Price Index,
a Kt_ 'ay the Philippine
Statistics Authority (PSA) (R.A.
No. 10963, Sec. 34).
..V
Imgartation 9 tarp mpo ation of professional
JmentsaticrAplemen s,
inaffi ins ruments and implements,
widfirig qpIrel, domestic tools of trade, occupation or
anim ' and personal
*aM, employment, wearing apparel,
househZId effects belonging domestic animals, and personal
to persons coming to settle and household effects belonging
in the Philippines, for their to persons coming to settle in the
own use and not for sale Philippines or Filipinos or their
within ninety (90) days families and descendants who
before or after their arrival, are now residents or citizens of
upon the production of other countries, for their own use
'evidence satisfactory to the and not for barter or sale,
Commissioner (NIRC, Sec. accompanying such persons, or
109(D)). arriving within a reasonable
time (R.A. No. 10963, Sec. 34).
Additional VAT-exempt
transactions:
(w) Sale or lease of goods and
services to senior citizens
and •ersons with disabili ;
931
(x) Transfer of property pursuant
to Section 40(C)(2) of the
NIRC, as amended (Tax-free
exchange);
(y) Association dues,
membership fees, and other
assessments and charges
collected by homeowners'
associations and
condominium corporations;
(z) Sale of gold to the BSP;
(aa) Sale of drugs and
medicines prescribed for
diabetes, high cholesterol,
and hypertension beginning
*,•, January 1, 2019; and
Xb11)\,,, Sale or lease of goods
of c7.4. ,
v
f orproperties or the
1 e o( ance of services
o r'th n the transactions
en oh in the preceding
1: irks dih pa _tg, aph the gross
anntgcs61 and/or receipts
do n t the amount of
• P3,01 ,TWO' A. No. 10963,
Sec. 4)
• ri 'at p tax glon rtiza nput VAT shall

pur has <p
a be until December
with exceed npx , 2021.
10. P1,00 000 II-
• Amortization ate, taxpayers with
mortize
of input VAT
• from
tFhefulA input VAT on capital
whIb2v.e qsh7err/C/ , purchased or imported
purchase of
Sec.110( (g).fb))• Kt l- be allowed to apply the
capital goods ame as scheduled until fully
utilized (R.A. No. 10963, Sec.
35).
Within 120 days from the Within 90 days from the date of
11.Period of date of submission of submission of the official receipts
VAT complete documents in or invoices and other documents
Refund/Tax support of the application in support of the application filed
Credit filed (NIRC, Sec. 112(C)). (R.A. No. 10963, Sec. 36).
That failure on the part of any

12.Criminal official, agent, or employee • of
Liability of the BIR to act on the application
BIR's failure within the 90-day period shall be
to act upon punishable under Section 269 of
VAT Refund this Code. (R.A. No. 10963, Sec.
36).
932
-;:':;'_•`;.cs'''',..:1-A;f•• *:. ',.. : r•:''''.. ftt%'1:4,!,.;,-:
,::;• P.,.r.i .:'.'4.'
`BED
k,:w:.,,tr:,
- '—',.:•:14:-,,,-;-• ':ic!,14,
:;: r. 1 •
VAT taxpayers shall file a Retained with additional

quarterly return of the provision:
amount of his gross sales or
receipts within 25 days That beginning January 1, 2023,
13. VAT
following the close of each the filing and payment required
Filing and ' under this Subsection shall be
taxable quarter prescribed
payment for each taxpayer and shall done within 25 days following the
pay the value-added tax on close of each taxable quarter
a monthly basis (NIRC, Sec. (R.A. No. 10963, Sec. 37).
114(A)).
The Government shall Retained with additional

deduct and withhold a final provision:
value-added tax at the rate
14. of five percent (5y2) pf the That beginning January 1, 2021,
Withholding gross payment, (NIRC, Sec. the VAT withholding system
of VAT 114(C)). under this Subsection shall shift
from final to a creditable
system (R.A. No. 10963, Sec.
aftlyznatiP
11
E OTHER TAXES
I ..
Other Percentage Tcoec ..,,, P
li ,AfriP
Q: Define OtherigercentageliTaxes (OPT
ANS: It refetjvlecificallyA the busiNess xes. covered/ y Ti le V f the NIRC of 1997,
-4,1 ..-zn ii.
as amendedr ayable.,,bra „A, y
,, paug. n or en ity whose al services is not
covered by thin syst-04(2 CAS S O
, IRC, stir:4:149A
. •:,,,_,
'4.
Q: What are, the tra sictio A covegd b. 4OPT?
ANS: The following risactipis are subjegtiV9p4Tknfanunder the NIRC:
i
• 1. Sale of goods sAloes ol.peerf, -,-La e pt from VAT under Section
109 (1)(BB) eil the Tax , 5" ZIPaTia finFHO 4a-4VAT-registered person and
whdse gross 'tat alai or receipts do not exceed P3,000,000.00;
2: Other kinds of'6t subject to the other percentage taxes under Title V of
the NIRC of 199r'aramended, regardless of whether or not the gross annual
receipts exceed P3,000,000, such as:
a. Domestic carriers by land and keepers of garages (Sec. 117);
b. International carriers (Sec. 118);
4. Franchise grantees (Sec. 119);
Cl. Overseas dispatch, message or conversation originating from the
Philippines (Sec. 120);
e. Banks and non-bank financial intermediaries (Sec. 121);
f Other non-banking financial intermediaries (Sec. 122);
6. Life insurance companies (Sec. 123);
h. Agents of foreign insurance companies (Sec. 124);
Proprietors of amusement places (Sec. 125);
.1; Winnings (Sec. 126); and
I. Sale, barter or exchange of shares of stock listed and traded through
the local stock exchange or through initial public offerings (Sec. 127) (2
CASASOLA, NIRC, supra p. 936).
933
VOL
2019
Q: What is the nature of OPT?

ANS: The nature of OPT is essentially a tax on the transaction and not on the articles
sold, 1:.rtered or exchanged. It is an indirect tax which can be passed on to the buyer
(Philippine Acetylene v. Commissioner of Internal Revenue, G.R. L-19707, August 17,
1967).
Q: Whet is the tax rate for transactions subject to OPT?
ANS: Any person whose sales or receipts are exempt under Section 109(V) of this
Code from the payment of value-added tax and who is not a VAT-registered person
shall pay a tax equivalent to three percent (3%) of his gross quarterly sales or receipts
(NIRC, 'Sec. 116).
Q: Who are exempt from payment of OPT?
ANS: dooperatives shall be exempt from the 3% gross receipts tax (NIRC, Sec. 116).
I;
Excise Tax
Q: Define excise tax I
ANS: is a tax levied an-a specificrti9le ragerphankone upon the performance,
carrying on, of the exerceotari,raBtiyity-xctS,Ogrefirs Ntaxes applicable to certain
specified or selected/ oods•-).,prticles manufactured of rod4c.xd in the Philippines for
domestic sale or q n rigption or nrottterdispo*Nrtto t tugs imported into the
Philippines, which/a3tssp ll b ad 'oriAi the,valLiataddecc,ta (VAT) (2 CASASOLA,
NIRC, supra at 04).
Note: In com tang e gr ss sellingAp)-iqe, the e cise tait ay be included in
determining th a subje titrIATISN-o71-6:05 Sec. 4./
i I
Q: What is th nature of excse- se tax?('
ANS: *ise tt fakielftducti are llected only from
manufacturers ap asica *ndirec Ir ctly levied upon
manufacturer o, rrn qr u rOq ovarof tiONsabr m i Brace of production
or from the cuss cu stody Ae tree actually passed on to the
end consumer apart of goods sold, bartered or
exchanged (Silkarrk4Pte. Lt Revenge, G.R. No. 184398,
February 25, 2010).N
Q: What''J ere the kinds o cI$ at

ANS: There are two kinds o xzsl taxe 4. '\ILv ode:
1. 1 Specific tax — refers to theaeX. x,
irbTaosed which is based on weight or
(volume capacity or any other physical unit of measurement; and
2. / 4c1 valorem tax — refers to the excise tax which is based on selling price or
'other specified value of the goods (NIRC, Sec. 129).
Summary of Changes in OPT under the TRAIN Law
Topic NIRC TRAIN -
Other Percentage Tax
Cooperatives are exempt Cooperatives shall be exempt
1. Exemption
from the 3% gross receipts from the 3% gross receipts tax
from OPT
tax (NIRC, Sec. 116). (R.A. No. 10963, Sec.. 38).
Subject to 1/2 of 1% OPT Subject to 6/10 of 1% OPT on

on the gross selling price or the gross selling price or the
2. Sale of the gross value in money of
Listed Shares gross value in money of the
the shares sold (NIRC, Sec. shares sold (R.A. No. 10963,
127(A)). Sec. 39).
934
VOL 1.
2019
Documentary Stamp Tax

11
Q: Define documentary stamp tax (DST)
ANS: It is a Itax on documents, instruments, loan agreements, and papers evidencing
the acceptance, assignment, sale, or transfer of an obligation, right or property incident
thereto (2 CASASOLA, NIRC, supra at 1077).
Q: What is the nature of DST?

ANS: A DST is in the nature of an excise tax levied on the exercise by persons of
certain privilOes conferred by law for the creation, revision, or termination of specific
legal relationships through the execution of specific instruments such as leases of lands,
mortgages, pledges, and trust and conveyances of real property (Commissioner of
Internal Revenue v. Frist Express Pawnshop Co., Inc., G.R. Nos. 172045-46, June 16,
2009). Henc0, in imposing DST, the Court considers not only the document but also the
nature and character of the transaction (Philippine Banking Corp. v. Commissioner of
Internal Revenue, G.R. No. 170574, January 30, 2009).
11
Q: What documents are subject.046?
ANS: It 14 applicable on alltid.641 efts not otherwise expressly exempted,
notwithstanding the fact that they42100 stronic form (2 CASASOLA, NIRC, supra at
1077). 71 1
MN,
Q: When DST ir should be paid?
ANS: Documentary s tri ptaxes arOgyled independentlyeoj the legal status of the
transactions giving riregteto. They -rr @st be paid uporr fh issuance of the said
instruments, without tegardiA,/,whelher pe contracts viic ye rise to them are
rescissible, rid, ylfSdable,grzitAiqenforcea e (Jake Investments C rp. v. Commissioner
of Internal Reveffue, G.R. IVo.117,,629idu 8, 2010). if
il
,,
t,
Q: Who are 14, e forDST N f'1 pgii
ANS: The DST,,tis a.otS- 4.-64) certai ctions. It is'uttfiph, gainst "the person
making, signing, itr uin pa epting,br tr n ferring" the document or facility evidencing
the transaction. Thttfjn general, it may b m.osed on the transaction itself or upon the
document underlying such acy(R.R. 9-20
6 )
Q: What is the effect ffailuiZcystamp a taxable document?
ANS: An instrument, duffle or paper which is required by law to be stamped and
which has been signed, • sitIe ; accepted or transferred without being duly stamped,
shall not be'i.ecorded, nor shall it or any copy thereof or any record of transfer of the
same be adMitted or used in evidence in any court until the requisite stamp or stamps
are affixed th'ereto and cancelled(N/RC, Sec. 201).
f
No notary public or other office authorized to administer oaths shall add this jurat or
acknowledgMent to any document subject to documentary stamp tax unless the proper
documentary, stamps are affixed thereto and cancelled (NIRC, Sec. 201).
935
AN VOL 1.
2019
Summary of Changes in DST under the TRAIN Law

Topic I - NIRC. TRAIN
Documentary Stamp Tax
All transactions subject to DST shall have 100%

increase in DST Rates
1. DST Except:
Rates 1.All debt instruments — 50% increase in DST rate; and
2. Deed of Sale and Conveyances of Real Property —
No increase in DST rate (R.A. No. 10963, Sec.69).
Not Subject to DST except the following donations made by

subject a Resident or Nonresident not a Citizen of the
to DST Philippines:,--,„ ..
2.
,teGovernment lk
Donations
2.gclucatkpil iricl/orich4titable, religious, cultural or
of Real
IsoW...welfareZcolpo(atjerilk, institution, accredited
Property
..priongovernment argarliiatiRn,Nrust or philanthropic
J. r,p rganiaflpirbr-Tese'a'rch(ipsi9tion or organization
(R.A4Vd1R1095.3, Sec6§NRJR• NN4-2018, Sec. 20).
it 0-,
ii-- ,.... :;•,..
,r yr 'i...
F TA X REMEDI011 DER T EIVIRnr
1 ZI4'..1 1 !ii :,
GeneralConce is
..f.' '!11. • -
, , „ .„7 -) ri
&-
i
RequIsItesofaVal) Asse ent k ;1 1 ALJ&*
t \ ,,,N..\
Q: What is a tiNaggissnien P
--1.- I
4
ANS: It is an oAl action o mittratAftti 126%4 • determining the amount of tax

due from a taxpayer, or office Ito effe that jhe amotant therein stated is
due from a taxpr as a ,,,,x, 't abrila fifp, ymeprof the .tax or any deficiency
stated therein (ABAk Law of,IFIak v..xjarci up 44).7.12. It als/refers to the notice to
the effect that the amount tlpiitpte t- uerroxnq taxpaye as a tax with a demand
AO"
for payhient of the sa 6<w fi arate. rtodAotVe Commissioner of Internal
Revenue vs. Pascor Rea
1999).
Oelop V ukatic,i, G.R. No. 128315, June 29,
Q: What are the requisites for a valid tax assessment?

ANS: The requisites for a valid tax assessment are as follows:
1. The Final Assessment Notice (FAN) (BIR Form 17.08) contains the name,
address, and TIN of the taxpayer; the kind of tax, period covered, basic tax
and penalties; signed by the authorized BIR official, and the date of payment
of the tax. The demand letter (DL) contains the computation of the deficiency
tax, including penalties, if any, the factual and legal bases of the assessment,
and the demand for payment of the tax. Thus, the FAN and DL must always go
together (RR 18-2013, Sec. 3.1.3).
2. The FAN/ DL must be issued on account of or covered by a validly issued
letter of authority (RMC No. 75-2018);
3. The FAN/ DL must state the factual and legal bases of the assessment and
jurisprudence o which it is based; otherwise, the assessment is void (RR 18-
2013, Section 3.1.3);
4. The FAN/ DL must be signed by the Commissioner of his duly authorized
representative (RR 18-2013, Section 3.1.3);
936
VOL 1.
2019
5. The FAN/ DL must be issued within the original prescriptive period as validly
agreed between the BIR and the taxpayer; and served by personal delivery or
by; registered mail (RR 18-2013, Section 3.1.6); and
6. The FAN/ DL must be addressed and served to correct person in his/ its
registered or duly notified address (RR18-2013 Section 3.1.6).
Q: What are the kinds of assessment?

ANS: Asseasments may be classified as follows:
1. Self-Assessment — The tax is assessed by the taxpayer himself, reflected in
the return filed by him, and paid,Qn the day of filing of the return (pay-as-you-
file system) (ABAN, Law of Basic Taxation, supra at 176);
2. Deficiency
,, Assessment — Made by the assessor himself whereby the correct
amount of the tax is determined after an examination or investigation
conducted.
i. This assessment is made for the following reasons:
a. The amount ascertained exceeds that which is shown as the tax by the
f! taxpayer in his return;
b. No amount of tax is sAkiik in the return; or
1[
c. The taxpayer did fl return at all (NIRC, Sec. 56 (b));
3. Illegal and Void Asse4en. ‘4 An assessment wherein the tax assessor
has no power to act at allTyrclOpAs Milling Co., Inc. v. Court of Tax Appeals,
G.R. . No. L-24213, Marcli,131464perrth
: ;, ,..1;,,,, ,. 4.,, AI
4. Erroneous
1 Assessment n‘,990 fibre' Wessor has the power to
assess but errs.,• ifre exercise ofsuch power B N Law of Basic Taxation,
supra at 176)( '
011
,.= - I' k
Q: What are.the Impomen principles governing - tax assessin
s' efts?
g
ANS: The principle, governinghtax assess nts are:
1. AesegKents a ef prima fad-ie, p med correg,t anc! mad'in good faith. The
taxpa ,•% uty ()Waving erwise Ils • resu •.,19Aplie in favor of tax
1, ...,..•er,hpl,the
assessments (in a rovirrdial obus Co., - Irebtor of Internal
Reventre4,20..,__ Ro,L-674,an 31, 1956);
2. Aaaessmcqtalioaknot b based on presumptions but on actual facts;
k
3. Assessment discjigtionary on f the Commissioner. Mandamus will
not lie to comeajAnd to assess ....,.,::01,..e.vestigation, he finds no ground to
assess (MERi.00 Sep, es-Co , ano, G.R. Nos. L-36181 & L-
36747,
li Octobar23, la9 , .
Exception: TriNcemissioner of Internal Revenue may be compelled to
r
assess by man a" if in the exercise of his discretion, there is evidence of
arbitrariness and grave abuse of discretion as to go beyond statutory authority
(Maceda v. Macaralg, Jr., G.R. No. 88291, June 8, 1993);
4. Ttie authority vested in the Commissioner to assess taxes may be delegated.
However, the power to make final assessments cannot be delegated based on
the principle of Delegatus Non Potest Delegari (City Lumber, Inc. v. Domingo,
G.R. No. L-18611, January 30, 1964); and
5. Msessments must be directed to the right party (Republic v. De la Rama, G.R.
NO. L-21108, November 29, 1966).
I
Q: What are the means employed by the Commissioner in the assessment of
taxes? •
ANS: The commissioner or his duly authorized representatives are authorized to use
the following powers to make assessments and prescribe additional requirements in .tax
administration:
1. Examination of returns and determination of the tax due (NIRC, Sec. 6 (a));
2. Assess the proper tax based on the best evidence obtainable (NIRC, Sec. 6
(b));
937
3.i Conduct inventory-taking, surveillance and prescribe presumptive gross sales
and receipts (NIRC, Sec. 6 (c));
4. Issue jeopardy assessments and terminate the taxable period (NIRC, Sec. 6
(d));
5. Prescribe real property values (NIRC, Sec. 6 (e)));
6. Inquire into bank deposit accounts of:
a. a decedent to determine his gross estate;
b. any taxpayer who has filed an application for compromise of his tax
liability under Sec. 204(A)(2) by reason of financial inability to pay his
tax liability (NIRC, Sec. 6 (f)); and
c. A specific taxpayer or taxpayers subject of a request for the supply of
tax information from a foreign tax authority pursuant to an international
convention or agreement on tax matters to which the Philippines is a
signatory or a party of: provided, that the information obtained from the
banks and other financial institutions may be used by the Bureau of
Internal Revenue ,for.tax assessment, verification, audit and
enforcement.purines (R.A. NR. .10024 Sec. 3).
7. Accredit and regIsOr tagentb ORA eq.'61grk
8. , Prescribe addifio arlicoceXurar;or.dO ments (NIRC, Sec 6
(h)). ) 6-\
Tax Delinquency4Vel?susVa: Deficiency' 4 -,‘,7
Q: What is theOiffere ee between Ittaaefigency aid ata delAquency?
ANS: Tax Deficiency is thetamount-ISjahich-the-talc duely teed the sums of tax
shown 'n the tax a r's realm, *lies. priRountql5r ; evivsly absesSed or collected as
deficiency, les pa nts, crbdits 6411-100o p g(tyqc, Sec. 56 (b)).
On the other tart,i Tax Delipquenc ste-ferSlo e state-oaf a perso9 upon whom the
persona obligbtiorita pAr et-tax-ha? en-fixel•fWjawf I assessment and who
thereafter fails V9(13 t 'I in the e.litrAecriefg::101v /theft], G.R. L-
A • .4--
12362, August 1917
Q: Whatls a jeop rdy assessm no _bon- itsstled?

ANS: A jeopardy a Vssmen14.1,vanV4sWeliNA -Co Cnr *ssione(if he believes that the
collection of taxes is Irk jeopi rddue4o.j.2yprodf sestflt may be issued when
the taxpayer is:
I A' .
1. :Retiring from busiu.s subject t2,4a;
a„ts,,
2. Intending to:
a. Leave the Philippines;
b. Remove his property therefrom; or
c. Hide or conceal his property;
3. Performing any act tending to obstruct the proceedings for the collection of the
tax for the past or current quarter or year or to render the same ineffective
(NIRC, Sec. 6 (d)).
Note: The same grounds are applicable in the exercise of the Commissioner's power to
terminatela taxable period (NIRC, Sec. 6 (d)).
Prescriptive Petiod for Assessment

Q: What is the prescriptive period for the assessment of taxes?
ANS: Asa General Rule, the period for assessment prescribes within three (3) years:
1. After the last day prescribed by law for the filing of the return; or
2. After the day the return was filed, if the return was filed beyond the period
prescribed by law, whichever is later (NIRC, Sec. 203).
938
•
Exceptions:
1. False, fraudulent return with intent to evade taxes: within 10 years from date of
discovery of the falsity or fraud; and
2. Failure to file a return, at any time within ten (10) years after the discovery of
the omission of the return (NIRC, Sec. 222 (a)).
Note:
1. A return filed before the last day prescribed by law for the filing thereof shall be
considered as filed on such last day (NIRC, Sec. 203).
2. Befo!'e the expiration of the 3-year prescriptive period, both the Commissioner
and the taxpayer may agree in writing to extend the period of assessment. The
peri9d so agreed upon may be further extended by subsequent written
agreement made before the expiration of the period previously agreed upon
(NIRC, Sec. 222 (b)).
3. For the 10-year prescriptive period to apply based on fraud, such must be
proved as a fact by BIR (ARAN, Law of Basic Taxation, supra at 274).
False Returns vs. Fraudulent Return:swig Non-Filing of Returns

itni.r 44
Q: Distinguish False returns frcrifFrabdujent returns.
m,--,tyei•,Npl4,1
ANS: A false 1,return contains wrOtigÌnformation whether due to mistake, carelessness
... , pwg
or ignorance. pn the other hand,s3•WrmAptAleturn implies intentional or deceitful
entry with intent to evade the takes kceogia,V
- corro %.
g er of Internal Revenue,
G.R. No. L-20569, August .00§74).' W :
.
Or ,14.1.r`
Q: Give examples ail stances con:sla ed as failure toffie return aside from the
non-filing itself. 1 1
ANS: The follOwinwin a,gg,4 4vere considered by the Stipreme Court as constituting
failure to file r,elufn which Werra& theq-ypr prescriptiv pea
1. A deficient rertito which preven E4 the CIR f taxes due. Such
defeeve 'retilroM he taw as no retir ommissioner of
Intern-e0,everiu, v- Gonteres,Gr No. L-19 90NOVein er 24, 1966);
2. Failure toolgtt me injthe e, ms which were not clearly exempted from
tax. The 0-Rita did treat this. s a simple omission as the same involved
substantial st't s 'dtandard C`14,04V:eqk v. Commissioner of Internal
Revenue, cTA,p6, Case 910:41 - gfo rd-Ng012); and
3. Undeclared VAT-able1 s more than 30% of that declared in the VAT returns
(Commissioner of In err al Revenue v. Asalus Corporation, G.R. No. 22159,
February 22, 20.
Note: False returns, fraudulent returns, non-filing, and failure to file returns have
corresponding penalties such as interests and surcharges under the NIRC. See section
on civil penalties for a detailed discussion.
Suspension of the Running of Statute of Limitations
Q: What is the rationale behind the statute of limitations in the collection of taxes
and how is it construed?
ANS: Our tax aw provides a statute of limitations in the collection of taxes to safeguard
taxpayers from any unreasonable examination, investigation or assessment. Thus, it
should be liberally construed in order to afford protection to the taxpayers (INGLES,
Reviewer, supra at 345). As a corollary, the exceptions to the law on prescription should
perforce be strictly construed (Commissioner of Internal Revenue v. BF Goodrich PHL,
Inc., G.R. No, 104171, February 24, 1999).
939
VOL 1.
2019
Q: What, are the rules to consider in the prescription of the period to assess?
ANS: The rules are:
1. The fact that the assessment notice was mailed before prescription period sets
in must be proved with substantial evidence by the CIR. In determining if
prescription to assess has indeed set in, the important date to remember is the
date when the demand letter or notice is released, mailed or sent by the
Collector of Internal Revenue to the taxpayer, and it is not required that the
notice be received by the taxpayer (Basilan Estates, Inc. v. Commissioner of
Internal Revenue, G.R. No. L-22492; September 25, 1967);
If the taxpayer makes a direct denial of receipt of a mailed demand letter, such
denial shifts the burden to the Government to prove that such letter was
indeed received by the taxpayer (Republic v. Court of Appeals, G.R. No. L-
38549, April 30, 1987);
If the date on which assessment is due to prescribe falls on a Saturday, the
following day being a Sunday, it is understood that the Government has until
the next succeeding businegs.day.nalcnday within which to assess the tax
(Commissioner of I ternal Reyjuew.44 -Weslem Pacific Corp., G.R. No, L-
18804, May 27,) 65); 1 .""1,
In order that ,ttib-nftliThg f veturmay
n- s p as pe, starting point of the period
for making 'kagesi ant, the return m kbk-as si4slantially complete as to
include t e need tails-bn44wffith,4 NI, a sesknent may be made
(Republic Ma ma Dev'toCo:AG.RyNo. L 8g ,t,A-01X7, 1972);
If the t xpa les n amehdeOpturiiC-which 's s stantially different from the
origlretu , the eriod of prOcription of e ri KtPskue the deficiency
assesFfrit hould Is e coun e• rpm e ling of thelawd d return, and not
the canal eturn ( ommi Vorfeif o(nefnal Reven e v. oenix Assurance
Co., ,tc1. G. . No. L-1972. 4-119,0mi 65);
If thefaxbq r wrong telLinifit is as Leh h filed o return at all. In
situa thik,,tt e 0-yep p scriptive p dtv ivi Pap* (Butuan Sawmill,
Inc. v. Cold 6 . f Ap* .RtNo 0 Ara 28, 19 6); and
7.' It is i cumbek upb lay4.= o avail f the defense of
prescrip on to p ve t aritp214d u um. If e fails to do so, the
conclusio shout: •e ttLgt- urn file which case the
Govemme has, e the 'COtrespOtiding
assessments ifigumber ommissioner of Internal
Revenue, G.R. -(57t16, Ma yk
Q: Wha are the grounds for e ension of running of the statute of

limitations in case of assessments?
ANS: The running of the statute of limitations on the making of assessment and the
beginning bf distraint or levy or a proceeding in court for collection, in respect of any
deficiency, shall be suspended: (PRC-DO)
1.1 For the Period during which the Commissioner is prohibited from making the
assessment or beginning distraint or levy or a proceeding in court and for sixty
(60) days' thereafter,
2. When the taxpayer requests for Reinvestigation which is granted by the
Commissioner;
3. Nhen the taxpayer Cannot be located in the address given by him in the return
filed upon which a tax is being assessed or collected; except if the taxpayer
Informs the Commissioner of any change in address;
4 When the warrant of Distraint or levy is duly served upon the taxpayer, his
authorized representative, or a member or his household with sufficient
discretion, and no property could be located; and
5 When the taxpayer is Out of the Philippines (NIRC, Sec. 223).
940
Note: Revepuel Memorandum Order (R.M.0) No. 14-2016 issued on April 18, 2016
revises the Guidelines for the Execution of Waivers from the Defense of Prescription
pursuant to Section 222 of the NIRC of 1997.
1 I
The waiver mayi be, but not necessarily, in the form prescribed by R.M.O. No. 20-90 or
Revenue Delegption Authority Order (R.D.A.O.) No. 05-01. The taxpayer's failure to
follow the aforeraid forms does not invalidate the executed waiver for as long as the
following are Complied with:
1. The Waiver of the Statute of Limitations under Section 222 (b) and (d) shall be
executed before the expiration of the period to assess or to collect taxes. The
date of execution shall be specifically indicated in the waiver;
2. The waiver shall be signed by the taxpayer himself or his duly authorized
I
representative. In the case of a corporation, the waiver must be signed by any
of its responsible officials;
3. The expiry date of the period agreed upon to assess/collect the tax after the
regula three-year period of prescription should be indicated (R.M.O. No. 14-
2016). Aft ,
The two (2) m

aterial dates that nee resent on the waiver are:
1. The dlate
i
of executiohr aiver by the taxpayer or its authorized
representative; and
2. Thel , expiry date of4fhep lexpayeamaives the statute of
limitations (RM.04No. 14-20'
Before the expiration fettthg period se the previouslyec ted waiver, the period
earlier set may exteridepby subseque written waiver rage in accordance with this
Order (R.M.O. No. 1 42616);
Q: What are i e requirements of theNia aiver of the statute k limitations?
ANS: The BI @ issued V.O.Vo. 20 and -;§ ,85-yl, outlining the
procedures Mr prorAexecutiqi a v d waiver, vi
1. The waiver mu_sin in the •-,‘„ orm prescribe. .y -.M.O. No. 20- 90. The
phrse "b Tiekafte 119[20] ", which indicates the expiry date of
the ,pe!riod greed on to ass- /co the tax after the regular three-year
periodiof presori tiOnesh uld 112.-1
2. The waiver Lst be e -by \I
-'page
W -i l. self or his duly authorized
representativ-r For corporation, the waiver must be signed by any of its
respo9sible offiria ...4 case the authority is delegated by the taxpayer to a
representative, such elegation should be in writing and duly notarized.
3. The waiver should be duly notarized.
4. The CIR or the revenue official authorized by him must sign the waiver
indicating that the BIR has accepted and agreed to the waiver. The date of
such acceptance by the BIR should be indicated. However, before signing the
waiver, the CIR or the revenue official authorized by him must make sure that
the'waiver is in the prescribed form, duly notarized, and executed by the
taxpayer or his duly authorized representative.
5. Both the date of execution by the taxpayer and date of acceptance by the
Bureau should be before the expiration of the period of prescription or before
the,lapse of the period agreed upon in case a subsequent agreement is
executed.
6. The waiver must be executed in three copies, the original copy to be attached
to the docket of the case, the second copy for the taxpayer and the third copy
for the Office accepting the waiver. The fact of receipt by the taxpayer of
his/her file copy must be indicated in the original copy to show that the
taxpayer was notified of. the acceptance of the BIR and the perfection of the
agreement.
941
VOL 1.
2019
Q. What is the effect of failure of the waiver to strictly conform to the

requirements of a waiver of the statute of limitations under R.M.O. No. 20-90?
ANS: Te requirements are mandatory and must strictly be followed. Defective and
invalid *aivers of Statute of Limitations do not extend the CIR's period to issue
assessments. Thus, the right of the government to assess or collect the alleged
deficinCy taxes is already barred by prescription. Assessments issued by the BIR
beyond the three-year prescriptive, are considered void and of no legal effect
(Commissioner of Internal Revenue v. Systems Technology Institute, G.R. No. 220835,
July 26, 2017).
II
Civil Penalties
I,
Q: Is the Commissioner of Internal Revenue authorized to prescribe penalties?
ANS:' NCi. The CIR has no power to prescribe penalties since it is the Secretary of
FinanCe Who issues rules and regulations (NIRC, Secs. 7 and 244).
I
Q: What;is the purpose behind effnliqiiirrof.,p,pnalties?
ANS: To; discourage delapinq ?,,payrn:entiofifaxOs di:le4c the government and in this
sense, the penalty and;triterest aratflot pe
en alp buikeortipe:ns'atqry for the concomitant use
of the funds by the ta3pi
gydrpfyilindlifgViieribe
date"v ikstippb ed to have paid them to
the Government alining.Ca-K-Court ol'Ap e No. 118794, May 8,
1996),I
1 110
Delinquencyln erestandDeficiencylnterest
I
Q: What are t e cias es of i terest an r, en are t 9y imp sp,?,,A
.et" 0
ANS: Interest n gen'eral is colnpaqtiasy,,Cizig.frif unpaid an?ount gtax at the rate of
double the leg I i test rate r loarislOrbe,drance of any molibriq fie absence of an
.
express stipul e Ban `1(62dgifiral ne47115ras from the date prescribed
for payment ur il(thej moully pptcl.ineifSPi CKlar 146.6,79g1Ser. of 2013, the
interest rate is 6,70,Tfie efor'e e teAg'prierg;,ipte(v is 12% (N) C, as amended by
TRAIN law, Sec: 49 (A Thessa's s s--of lytesrefitartas foil s:
1. Deficient lnte 4: Impp d the taV due. Any deficiency
,n the taxue e ublectitccitNekibtdes ,rate abo e, which interest shall
be assessekand 5,o ecL ed-6-6M-ithe-da-fe- escirkd r its payment until the
full paymentlt ere 9r-ffrpon.issti nce-bfv,ce and demand by the
Commissioner fNIsi erri I Re eflu vhltche,,v F comes earlier (NIRC as
amended by TRAINTaw:. 24 Via)).
2. Delinquency interest: Impodi se of failure to pay:
a. The amount of tax due on any return required to be filed;
b. The amount of tax due for which no return is required to be filed; or
c. A deficiency tax or any surcharge or interest on the issue date
appearing in the notice and demand (NIRC as amended by TRAIN law,
Sec. 249 (C));
3. Interest on Extended Payment: Imposed when the taxpayer has opted to pay
by installment but fails to pay the tax or any installment on the date prescribed
for payment and also in cases where the Commissioner has authorized the
extension of the time for the payment of the tax (NIRC as amended by TRAIN
law, Sec. 249 (0)).
Note: In no case shall the deficiency and delinquency interest be simultaneously
imposed (NIRC as amended by TRAIN law, Sec. 249 (A)).
942
1;1
Surcharge
Q: What are the additions or increments to the basic tax?
ANS: The! fo lowing are the additions to the basic tax imposed by reason of the
taxpayer's refusal to comply with the legal requirements or due to refusal or failure to
pay taxes on t me, or for violations of the tax laws:
Civil penalty or surcharge:
1. 25% (NIRC, Sec. 248 (a)):
a. Failure to file any return and pay the tax due thereon as required by the
NIRC or the rules;
b. Filing a return with an internal revenue officer other than those with
whom the return is required to be filed;
c. Failure to pay the deficiency tax within the time prescribed for the
payment of the same in the notice of assessment;
d. Failure to pay the full or part of the amount of tax shown on any return,
or the full amount of the ax due for which no return is required to be
filed, on or before the4pOrcribed date for its payment.
2. 50% (NIRC, Sec. 248 (b)).:".=4:?:
a. Willful neglect to fgliArdilirn within the period prescribed by the NIRC
. or the rules; ,.. ! .' ìt;
b. Willful filing of a fejs0:,,i'Aitra
1 dulent return.
:, .v,tyrfr
Note: Substantial under-declaralicifiF# i , pb easaats income or substantial
overstatement of deductions: 'shall ' dihetute pnmaVfacie evidence of a false or
fraudulent - return. Failgregco report sales, receipts or incom, an amount exceeding
30% of that declared return and anccial , of deductions in mount exceeding 30%
of the actual deductionsolttcenderfthe taxpayer liable forAubstkitial under-declaration
of sales, receipts or<irfebmefbnbr overstate'. ent of the deductions (NIRC, Sec. 248 fb)).
-7.' II k •
Q: Is the paytent andl atillection of sur arge man ?I
ANS: Yes. Tkelayrtfatotturchkg, is rag' , datory All, e:go'nalifier is not vested
with any authOrity to wai egr disrarise the collec iorrtoR heA'ame, however, such
rule is not absoluta and-. is Object to .4- &cep ons (ARAN, Law of Basic Taxation, supra at
208).
Q: What are the excep ions to th gt.tte aboyme.ntftsurcharge and interest is

mandatory? it
ANS: Surcharge and intepst maybe deleted in the following instances:
1. When there is gOSAhltaith
t and honest belief that one is not subject to tax on the
basis of previous interpretation of government agencies (Michel J. Lhuillier
Pawnshop, Inc. v. Commissioner of Internal Revenue, G.R. No. 166786,
September 11, 2006); or
2. Whe9 the imposition of a tax statute was controversial (Cagayan Electric
Power & Light Co., Inc., v. Commissioner of Internal Revenue, G.R. No. L-
60126, September 25, 1985).
Compromise Penalty
Q: What is h-Compromise Penalty?
ANS: These are amounts collected by the BIR in lieu of criminal prosecution for
violations committed by taxpayers, the payment of which is based on the compromise
agreement between the taxpayer and the BIR (DIMAAMPAO, Tax Principles and
Remedies, 2015, p. 190).
•
943
'VOL. 1.
2019
I
Q: What is the effect of the taxpayer's failure to comply with the compromise
1, 1
agreement?
ANS:' If 'the taxpayer reneges to pay the suggested compromise, the CIR may NOT
collect the compromise penalty through a court action or by distraint/levy. This is
because: a compromise penalty is neither a tax nor an administrative penalty for tax
delinquency. The remedy of the CIR is to file a criminal action against the taxpayer for
the tax tiolation (R.M.O No. 19-2007, III (5); Commissioner of Internal Revenue v.
Philippine Daily Inquirer, Inc., C.TA. E.B. Case No. 905, November 4, 2013).
Assessment Process ant/ Reglementory Periods
Q: Discuss the assessment process of internal revenue taxes.

ANS: The steps in the assessment process of internal revenue taxes are:
1. Letter of Authority
a. A Letter of Authority (LOA) must be served within thirty (30) days
from the date of issuance, otherwise, it shall become null and void. The
LOA shall bellquedf6Tizpqiue,,Qtficer (RO) by the:
i. Commissipner qr his auttiorlNd,representative after a return
hafbepri.filed; 01-- ' -,- V / f \..
1 ''
ii. ,Feri,en,ue,,Re'diona 7tr"Bt• ire or„fpr• gil•Audi
` ' t-cases within his regional
4 'urisCrotibn ecept,in;—. ,., ,
, 'eases invokiing ciZtiror criminal a‘ fraud falling under
,-.)/ the jesdidtionpf theTait'''. etau Division of the
Enforcement-Seri/ice; orli
Rolicy—caOplunder—a dit bj 4Speci I Teams in the
1 Natiqpal P ce-RA40. ko. 36-
4 ,...,, .,-,1 , ,
,„-e g......da ....;,.-
b. -,qt ..4e
_ . enpe• tficeriROJT.Prall cond %this atli it
__ tc..-,) ..,
1.-4
, \With' c1pe-hundre enty ,i, Otdays from date of issuance
(.1 ) andexice ofNie 105 ,1110`.541/co Eluc audit and submit
is repdAtafttn.: t0tisy,::,\7•
.ii. I# the iif**ort is not q-fpl ted ithin q 120-day period, a
‘, progress(re,borOtha-V's(ibm* to t e head of the audit
officeN"-1, -)
,
iii. Ng t4eT,„, 0 fincts,„.....,
• ,,,,,,0 ,.,-
1.---Ngeficieycy qmdilerl , 51,k, '
2. ny:deficiegt thaviiflidn
em orm the taxpayer and writes in
his pow erihe taxpayer is amenable with his
findings. If the taxpayer is:
a. Amenable with his findings, the taxpayer pays the -
tax;
b. Not amenable with his findings, the RO shall state
in his audit report that the taxpayer does not
agree with his findings. Such report is submitted
to the Revenue District Officer or the Special
Investigation Division (in case of Revenue
Regional Office) or to the Chief of Division (in
case of the BIR National Office) for review
(R.M.O. No. 36-99).
Note: A LOA is the authority given to the appropriate revenue officer to
ekamine the books of account and other accounting records of the taxpayer in
order to determine the taxpayer's correct internal revenue liabilities and for the
purpose of collecting the correct amount of tax (Commissioner of Internal
Revenue v. De La Salle University, Inc., G.R. Nos. 196596, 198841 & 198941,
November 9, 2016).
944
VOL 1.
2019
2. Issua ce of Notice of Informal Conference

a The Revenue Officer who audited the taxpayer's records shall state in
his report whether or not the taxpayer agrees with his findings that the
taxpayer is liable for deficiency tax or taxes (R.R. No. 7-2018).
bl If the taxpayer is not amenable, based on the said Officer's submitted
report of investigation, the taxpayer shall be informed, in writing, by the
Revenue District Office or by the Special Investigation Division, as the
case may be (in the case of Revenue Regional Offices) or by the Chief
of Division concerned (in the case of the BIR National Office) of the
discrepancy or discrepancies in the taxpayer's payment of his internal
revenue taxes, for the purpose of "Informal Conference," in order to
afford the taxpayer with an opportunity to present his side of the case
(R.R. No. 7-2018).
3. Informal Conference
The Informal Conference shall in no case extend beyond thirty (30) days from
receipt of the notice for inforrrOgonference. If it is found that the taxpayer is
still liable for deficiency tax 5iktAkes after presenting his side, and the taxpayer
is not amenable, the ReviiudVDistrict Officer or the Chief of the Special
4;:giott
Investigation Division ofittie;;Ree ue Regional Office, or the Chief of Division
in the National Office, as411 . 43* ay be, shall endorse the case within seven
(7) days from the conclu'satir @RIElpfprjria1 Con9sence to the Assessment
Division of the Revenue Re of K.)ffic.MOVIittip-Itommissioner or his duly
authorized reprpritative forls ance of a deficie y tax assessment (R.R.
No.1! 7-2018).0, .-. e-.4„.
4-itz7Zei
4. Issuance of Preliriiinary AsSe-ss ent Notice (P)
ai WherttEeklimrffisiloner his duly authatriz re resentative finds that
ArOirar ta#S1.4tould be a essed, a PAWshll be 'ssued, except in the
I tPfollowing,instances: (iVie ET)
' ...„WfieT the
• itet•- .4.-
the findin or any4
,
• the result of
Piratke m a tiAlkgrrd the corn6 ax as appearing
.. qw-8-/tke
.,4 • face 'oiDthe urn; or
hdriea discrep y has been determined between the tax
Withireld and the actually remitted by the withholding
4v
-agen - or
iii. :a/hen
-y,
a taxpayer-'ottipted O.cfatm a refund or tax Credit of
.Lexcess,r,pditable withholding tax for a taxable period was
VeteEErifned to have carried over and automatically applied the
same amount claimed against the estimated tax liabilities for the
taxable quarter or quarters of the succeeding taxable year; or
iv. When the Excise tax due on excisable articles has not been
paid; or
v. When the article locally purchased or imported by an exempt
person has been sold, traded or Transferred to non-exempt
persons (R.R. No. 18-2013).
Note: In the above-cited cases, a FLDIFAN shall be issued outright
(R.R. No. 18-2013, Secs. 3.1.1 and 3.1.2);
b. The PAN shall be issued by the Commissioner of Internal Revenue or
his duly authorized representative. The term "duly authorized
representative" refers to Revenue Regional Directors, Assistant
Commissioner-Large Taxpayers Service, and Assistant Commissioner-
Enforcement and Advocacy Service (R.R. No. 18-2013, Sec. 3.1.1;
R.M.C. No. 11-2014, February 19, 2014);
C. The PAN shall show in detail the facts and the law, rules and
regulations, or jurisprudence on which the proposed assessment is
based (Sec. 3.1.1, R.R. No. 18-2013)
945
R
%
ED /VOL
2019
1.
5. Reply to PAN by the taxpayer within fifteen (15) days from the date of receipt
with the duly authorized representative of the Commissioner who signed the
PAN (R.R. No. 18-2013, Sec. 3.1.1; R.M.C. No. 39-2013, May 7, 2013; R.M.C.
No. 11-2014, February 19, 2014);
Issuance of a Formal Letter of Demand and Final Assessment Notice
(FLD/FAN)
a. After the issuance of PAN, FLD/FAN shall be issued in any of the
following instances:
i. If the taxpayer fails to respond to the PAN within the said 15-day
period in which case he shall be considered in default (R.R. No.
18-2013, Sec. 3.1.1);
ii. If the taxpayer responds within the said period but he/it
disagrees with the findings of deficiency taxes in which case the
FLD/FAN shall be issued within fifteen (15) days from
filing/submission of the taxpayer's response or even beyond
fifteen (15) days.proxidgtthat it is issued within the period of
limitaijorK) assesslintimarretenue taxes (R.R. No. 18-2013,
kl2(04,crekruary 19, 2014); or
iii. vBe or the tgpse.Of=perip4 td fill3epiy,to PAN and the taxpayer
2has\n
.4S yi
etoliel filed his/its441 pons,q0akwood Management
See es A—GoThrrifftroner.oflp e aiePe Pnue C.T.A. Case No.
9. 9, ugusg 2-04:3);v7
ote. amp in ME'TERigtheitendin of a P N to' taxpayer is part of
he dire pr ess reqqi414,nt in th issu efA a deficiency tax
settment, as prescribed in . 12-9p, th, absence of which
end rs nu tot4Ralist,?psOtifirent made 114 tax authorities
mission r of Mfg 111R,zeiVenue
, v,Metro Superatna, Inc., G.R. No.
ber 8, Mr(
Cortim[stipner or his duly
e IPANVR.R. No. 18-2013,
„Al s arld-regulatins or jurisprudence

e adbessme t shall be VOID (R.R.
No.
7. Protest agal AN.within't (3iAays from receipt thereof
(R.R. No. 18-20 >dC .1.4);
Note: Failure to fire'b&re to th PAN_Vicfrear the taxpayer from protesting
the FAN of the BIR because Vi not the final assessment contemplated
by the NIRC which can be protested. The only effect of failure to respond to
the PAN is that the Commissioner or his duly authorized representative shall
*ssue an assessment (which is final that can be the subject of protest) based
pn his findings (NIRC, Sec. 228 (e)).
8. ssuance of Final Decision on a Disputed Assessment (FDDA)
The decision of the Commissioner or his duly authorized representative on the protest,
which shall be appealable to the CTA shall:
a. State the facts, the applicable law, rules and regulations, or jurisprudence on
which such decision is based, otherwise, the decision shall be void; and
b. State that the same is his final decision (NIRC, Sec. 228; R.R. No. 18-2013,
. Sec. 3.1.4).
Q: What is a Disputed Assessment?

ANS: It is when the taxpayer indicates its protest against the delinquent assessment of
the Revenue Officer for reconsideration, through a letter. After the request is filed and
received by the BIR, the assessment becomes a disputed assessment (CIR v. Isabela
Cultural Corp., G.R. No. 135210, July 11, 2001).
946
.• . f r VOL1.
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Q: What is the effect of issuance of Final Assessment Notice (FAN) without prior
issuance of a Preliminary Assessment Notice (PAN)?
ANS: As a general rule, the absence of a PAN is fatal in the assessment of a taxpayer.
A PAN is a due process requirement in the issuance of a deficiency tax assessment and
cannot be dispensed with (Commissioner of Internal Revenue v. Metro Star Superama,
G.R. No. 18,p1 , December 8, 2010).
Exceptions: Instances (MeW-CET) when a PAN is not required as provided in R.R. No.
18-2013, Sed. 3.1.1 and 3.1.2.
1
Q; What isithe due process requirement for FLD/FAN?
ANS: Under Section
g 228 of the NIRC, a taxpayer shall be informed in writing of the
law and the facts on which the assessment is made, otherwise, the assessment shall
be void. 1!,
The requirement of providing the taxpayer with written notice of the factual and legal
bases applies both to the FLD/FAN and the FDDA. Section 228 of the NIRC should not
be read restrictively as to limit the wrilah notice only to the assessment itself. As
implemented by R.R. No. 12-99, the Oritte4.notice requirement for both the FLD and the
FAN is in observance
IL of due propeas4tpalford the taxpayer adequate opportunity to
file a protest
ri on the assessment lai4tiieeOfter file an appeal in case of an adverse
decision (Conimissioner of Internal 1,30gq,,.9
leyoksurgaz
• i pines Corporation, G.R.
Nos 215534 and 215557, April 16, 2Q6):•rMeg,
I
Q: Is the assessmentyAlifif •it coversatberiod outside thes e cope of the LOA?
ANS: No, the taxable Var covered bf,brOssessment outspdiat the period specified in
the LOA is (void (Comnitsic ” perof InTemarkRevenue v. Ladbastee Philippines, Inc. G.R.
No. 183408, July /002b/Orider Sec.16,(A) of the NIFC, he e must be a grant of
authority before, reveapej6fficer,,canfinduct
, examyiatioi°Assessment. Equally
important Item regerwe officer so a4orized must not beyond the authority
given. In th alo'sencelAych authority,, asse4 „nation is a nullity
(CommissiOnerbf Intei 1#6venue,70 Soh PHL, Inc., GR 8697, November 17,
2010). "P7
f
514
Q: What is the rule b%the Best Evidenceetthable?
ANS: Best Evidence Obtain' ale refers,toratigdeflikgrd papers, documents, or any
agr,e4irt
other evidence gathered the4ternat revenue o icers trom the government offices,
corporationS, Clients, laeyrrif)loyers, patients, tenants, vendees, and all sources,
with whom the taxpayerlei,,frvious transactions or from whom he received income.
The law authdrizes the Corrimissioner to assess taxes on the basis of the best evidence
obtainable in the following cases:
1. If is person fails to file a return or other document at the time prescribed by law;
or
2. He 411fully or otherwise files a false or fraudulent return or other document
(ABAN, Law of Basic Taxation, supra 181).
Note: The best evidence obtainable does not include mere photocopies of records/
documents The BIR, in making a preliminary and final tax deficiency assessment
against a taxpayer, cannot anchor the assessment on mere machine copies of records/
documents'(Commissioner of Internal Revenue v. Hantex Trading, G.R. No. 136975,
March 31, 2005).
Q: Is the issuance of a subpoena duces tecum a condition sine qua non before
resorting to best evidence obtainable?
ANS: No. the issuance of subpoena duces tecum is not a condition before resorting to
the best evidence obtainable. Said issuance is merely one of the powers that the CIR
may exercise in ascertaining the proper tax based on the best evidence obtainable. In
the absence of a subpoena, the CIR may still exercise the power prescribed by the
947
•,,.;'''-''''''t . .' .-: ';' •:' :',.1. ' . 4 l';.:1-..,T..!1..:.;g1;',71;,.4''Z':•ite;' '7,;Y:--;'' -',',•••••
...,... t 4::.) VOL t.
,...,. 2019
.4.,;),,;
NIRC tp determine the taxpayer's liability (Mendez v. People, C.T.A. E.B. Crim. No. 014,
Decemberll , 2012).
Q: When is the Commissioner authorized to Conduct Inventory-taking and
Surveillance?
ANS: The Commissioner may, at any time, during the taxable year, order inventory-
taking 'of goods of any taxpayer as a basis for determining his internal revenue tax
liabilities, or may place the business operations under observation or surveillance if
there is reason to believe that such person is not declaring his correct income, sales or
receiptalor internal revenue tax purposes (NIRC, Sec. 6(c)).
Q: When is the Commissioner authorized to prescribe presumptive gross sales
and receipts as a basis for determining tax liabilities?
ANS: The Commissioner, after taking into account the sales, receipts, income or other
taxableI.base of other persons engaged in similar businesses under similar situations, or
after cons derin
g other relevant information may prescribe a minimum amount of such
gross receipts, sales and taxablebaggir ,
1. It is found that a petgankbas falled)toMie ebipts and invoices in violation of
Sections 113 .prid-23 (3flhe._CO'd,g; or- V Al
2. If there is reaaon'to b'ereffthat the bobla:0 pcdouts, or other records do not
correctly sefielt e9191;ationsinade • r tot ta'cl ii.t‘the return required to
be filed u de t ' e (NIRC,
15) 4, Sec. 6,(o)).
•<„,,,, "1.06
Collection Ji- ;Ill. Zeils e', ,e.‘
Q: When colle taxesi's-allowea— , )
IIIII, .
ANS: Collecti y allowpd wttel-thejp is-already final ags-eltnent made for the
determinat on tf the x due ( R. NL64.84:3)::::-c,
- -e'r
..,:' 1 ,---(1 - 71,
Q: When Ass nferkts amfti med-fina
ANS: It s dee in 1whe \t \ ri'Y
.4,
1. The to payerlails tcli *pro_._g ai: (Op recsipt of th assessment;
2. •After % 180-hy p it 4`,„: 414.th CI !Sot y$1 acted on the protest, the
taxpayer ails to fil apiliAl • , .;
3. After 30 s from eiVMpfEfttgArebi io f the CIR the taxpayer fails to
appeal (R. .lif1
:40
Requisites'I .
Q: What are the requisites for colksioxof.t xes?
1. For Delinquency Tax — can be immediately collected administratively through
issuance of warrant of distraint or levy and/or through judicial action (NIRC,
Sec. 205); and
2. Fin- Deficiency Tax — can be collected also through administrative and/or
judicial remedies but has to go through the process of filing the protest by the
taxpayer against the assessment and the denial of such protest by the BIR
(R.R. No. 18-2013).
Prescriptive Periods
Q: Discu'ss the rules on the prescriptive period for the collection of taxes.
ANS: As a general rule, where an assessment was made, the prescriptive period to
collect the taxes due is five (5) years from the date of assessment. The following are the
exceptions.
1. False or fraudulent return with intent to evade taxes: within ten (10) years
from the discovery without need for prior assessment;
2. Fa lure or omission to file a return: within ten (10) years from the discovery
without need for assessment; and
948
/VOL 1.
2019
3. Waiver in writing executed before the five (5) year period expires: within
the;period agreed upon (INGLES, Reviewer, supra at 392).
Note: When it comes to self-assess taxes where a return is filed by the taxpayer. The
taxpayer is the one to assess himself and such assessment is deemed to be adopted by
the goverrirnegt. Thus, the filing of the return would also be the date of assessment.
Taxes are ; generally self-assessed. They are initially computed and voluntarily paid by
the taxpayei. The government does not have to demand it. If the tax payments are
correct, thel; BIR need not make an assessment (SMI-ED Phil. Technology, Inc. v.
Commissioner of Internal Revenue, G.R. No. 175410, November 12, 2014).
Q: What are the grounds for the suspension of the running of statute of
limitations?
ANS: The
The; running of the statute of limitations shall be suspended in the following
instances:
1. Commissioner is Prohibited from making the assessment or beginning distraint
or levy or a proceeding in court,nd for sixty days thereafter;
2. Wilie9 the taxpayer Reques*fgc a reinvestigation which is granted by the
Comiiiissioner; iPk
Note: A request for a teirAtig-,Apon alone will not suspend the statute of
limita ions. Two things rftOsitlictiegto stop the running of the period: (1) there
must be a request for ceirlyegtger asEU2) th IR must have granted it
(China Banking Corgfratioire Oommtssiongof h emal Revenue, G.R. No.
172509, Februawle2015). TIO
3. When the to aver Cannot be located in the Acicless given by him in the
return filed upon Which theetax lekeing assessed of eloffected;
4. Warrant ofdi&ratigprfwiy is dg ' served upothitalipayer, his authorized
reOre;eragfe orPinember of his household wi h s - trident discretion and no
Property coulpje located; and ill_ IS
5. Wkietitielapaster is Ott of the lippines,( 1E?.ex. 22:31
.40 ' 'I--
( ile.V1P
IN .0.z •41iIii&.'
G. TAXPAYERSRgMeff&k "
It . trath130-
Protesting an Assessment
Q: What is Rrotestingt a"s"sessment?

,.,-ivr
ANS: The act by the axpayealfra s fo ing-tne v is of the imposition of the
corresponding Oelinquegy, increments for internal revenue taxes as shown in the notice
of assessment and letterotee and (CEBALLOS, Reviewer, supra at 37).
Q: Give the procedure to be followed in protesting an assessment.

ANS: The procedure shall be as follows:
1. BIR issues assessment notice;
2. The taxpayer files an administrative protest against the assessment. Such
prOtet may either be a request for reconsideration or for reinvestigation. The
protest must be filed within thirty (30) days from receipt of assessment.
3. All relevant documents must be submitted within 60 days from filing of protest;
only if taxpayer request for reinvestigation unless a waiver of prescriptive
period is executed otherwise, the assessment shall become final and
unappealable;
4. In case the CIR decides adversely or if no decision yet at the lapse of one
hundred eighty (180) days, the taxpayer may appeal to the CTA Division, thirty
(30) days from the receipt of the decision or from the lapse of the one hundred
eighty (180) days otherwise the decision shall become final, executory and
demandable (RCBC v. Commissioner of Internal Revenue, G.R. No. 168498,
April. 24, 2007);
949
. .e.---tty•-•• .•.::"'..Ts-i,1%,: i;•f ':,-,f::..v( ,, q.,-.A... •
(r.
..Z,liA1 •
4 7 '! .Z.1 , .
5 If the decision is adverse to the taxpayer, he may file a motion for

reconsideration or new trial before the same Division of the CTA within fifteen
(15) days from notice thereof;
6 In case the resolution of a Division of the CTA on a motion for reconsideration
or new trial is adverse to the taxpayer, he may file a petition for review with the
CTA en banc; and The ruling or decision of the CTA en banc may be appealed
with the Supreme Court, through a verified petition for review on certiorari
pursuant to Rule 45 of the 1997 Rules of Civil Procedure (R.R. No. 18-2013,
Sec. 3.1.4).
Q: VVhat are the forms of protest that a taxpayer may file?
ANS: The protest may be a:
1 " Request for Reconsideration which is a plea of re-evaluation of an assessment
1 . on the basis of existing records without need of additional evidence. It may
involve a question of fact or of law or both; or
2 Request for Reinvestigatiora.vvhichj§,a plea of re-evaluation of the assessment
on the basis of newly,disd'overed oar adartionat.evidence that a taxpayer intends
to present in thepinve049atioUtimNIsTinkblye a question of fact or of law
or both (R.R. o =20 31-SeQ...T.,1„.4),. 1 1 ). "\
$,--
..
Q: What are the cqntegts d'va_Lid„protest?.....„ S., yy. \
-„
ANS: The taxpayefrs r teirrhis protegiA .s.,.p. \ i \
1. The ni tre ,prot bt wheinerAcorqderation o r investigation, specifying
newly iscove ed o additional evidence he intends (Sor t if it is a request
for re'n(fAig
t tion; -•V'n i
ii , • ),,,.....-4
2. Date f issess entnotice; a;n, di--".,,, Z,-,"
1 The ppfiRaple law, rules'andltreOlations,
ay k, ,,„ .. . fe on which his
protestA‘aseds; ..--411.w.A.t.7 Cn
,. r_ __. .....
Otherw se, his &at ha If effect (R.R. No.
18-2013, Sec. 331.4).
Period to We Protest
rrk
Q: When should Aq2cpaye5filvprotestwit13.1 e issio er?
ANS: The taxpayerNrjpapiutitori4KLrepresentatiye o,lax agent may protest
administratively against 1h liTsWrrce of, t.Rweo 6` Commissioneror his duly
authorized, representative wi Dirty (3Waggsfro ate of receipt thereof (R.R. No.
18-2013, Sec. 3.1.4).
Submission ofSupporting Documents
Q: What are supporting documents which are required to be submitted?
ANS: The term "relevant supporting documents" should be understood as those
documents necessary to support the legal basis in disputing a tax assessment as
determineCI by the taxpayer. The BIR can only inform the taxpayer to submit additional
documents. The BIR cannot demand what type of supporting documents should be
submitted. Otherwise, a taxpayer will be at the mercy of the BIR, which may require the
producfion of documents that a taxpayer cannot submit (Commissioner of Internal
Revenue v. First Express Pawnshop Company, Inc., G.R. Nos. 172045-46, June 16,
2009).11
Q: When should the taxpayer submit the relevant supporting documents after the
filing of protest?
ANS: The taxpayer should submit such documents as follows:
1. If the protest is a request for reinvestigation, the taxpayer shall submit all
relevant supporting documents in support of his protest within sixty (60)
days from the date of filing of his letter of protest; •
950
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• • BEDAN .;RED` BO
VOL 1.
i
2. If the'protest is a request for reconsideration, the 60-day period shall not apply
(RJR. No. 18-2013, Sec. 3.1.4).
Q: What isi,,the effect of failure to submit the relevant supporting documents

within the prescriptive period?
ANS: The assessment shall become "final" by operation of law and the taxpayer shall
be barred frorri disputing the correctness of the issued assessment by introduction of
newly discoliered or additional evidence because he/it is deemed to have lost his/its
chance to present this evidence. The BIR shall then deny the request for reinvestigation
through the issuance of FDDA (R.R. No. 18-2013, Sec. 3.1.4; R.M.C. No. 11-2014,
February 19;12014).
Effect of f-allure to File Protest

Q: What is the effect of failure to file a protest against FLD/FAN?
ANS: The assessment shall become finCexecutory and demandable and no request
for reconsideration or reinvestigation snallOe granted (R.R. No. 18-2013, Sec. 3.1.4).
,i4e 4.44
Decision of the Commissioner o,1 the Pkitest Filed
; ..;,
47,
11iraq
.11 -g;
Q: What is the period for the Comn1 spjoryer or his duly authorized representative
to act upon!a valid protest agaiMil'afilD/FXN% trig0
ANS: The Commissioners choffuthonzedlepresen auigapat act upon a valid protest
within one, hundred eighty days Anted from the d IR of filing of the protest
in case of al request figiecpnsideratie* r from date of submission by the taxpayer of
the required documen within sjxtyi(60) edays from the dfieloh,,filing of the protest in
case of a request fo reinvestigation (RR. a 18-2013, Sec. 331.4).
'tys
Q: How ma e Comissioner eci a on the p otesj adversely against the
taxpayer?
ANS: The Ccmmissio er, :
1. Deny t et 94
2. Not act upkn ir(R.RA18-2013, Sep 3.1.4).
Q: What is the remedy".4 f.4he tax pl&g 4.51

eltr,WAsttnied?
ANS: Underl!Sec. al*R.R. 9,X118-29 e taxpayer may:
1. If the protests ~derfied, in•whole or in part, by the Commissioner's duly
authorized repte,sen bye:
a. Appeal to the CTA within thirty (30) days from date of receipt of the said
1, decision; otherwise, the assessment will become final and executory; or
b: File an administrative appeal to the Commissioner through request for
reconsideration within thirty (30) days from date of receipt of the
decision but only issues raised in the decision of the duly authorized
representative shall be entertained (Commissioner of Internal Revenue
v. International Pharmaceuticals, Inc., CTA E.B. No. 608, October 25,
2011). However, if the taxpayer elevates his protest to the CIR, such
decision will not be final and executory (CEBALLOS, supra at 38).
2. If the administrative appeal is denied by the Commissioner:
a: File a motion for reconsideration with the Commissioner; or
b. Appeal to the CTA within thirty (30) days from date of receipt of the said
decision (R.R. No. 18-2013, Sec. 3.1.4)
3. If the protest is denied, in whole or In part, by the Commissioner:
a. Appeal to the CTA Within thirty (30) days from date of receipt of the said
decision; or
b. File a motion for reconsideration of the denial of the administrative
protest with the Commissioner (Fishwealth Canning Corp. v.
951
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AN RED BOOK /VOL 1.
2019
Commissioner of Internal Revenue, G.R. No. 179343, January 21,

2010).
Note: A motion for reconsideration of the Commissioner's denial of the
protest or of the Commissioner's denial of the administrative appeal
shall not toll the 30-day period to appeal to the CTA (R.R. No. 18-2013,
Sec. 3.1.4; Fishwealth Canning Corp. v. Commissioner of Internal
Revenue, supra). On the other hand, a motion for reconsideration filed
with the Commissioner against the decision of his duly authorized
representative did toll the period for the filing of a judicial appeal
(Commissioner of Internal Revenue v. International Pharmaceuticals,
Inc., supra).
Q: What actions of the Commissioner are equivalent to denial of the protest of a

taxpayer?
ANS: These include:
1. s Filing of criminal action aggiost.the...tax a er;
2. ssuance of warranjA•rdistraipt ands le to enforce collection of deficiency
assessment witbott st.sequdol f civil . -tion for collection (Hilado v.
OommissionspOririterneLVevenueiX,11A..cas po. 256, February 25, 1964;
' Commissioner o forty! Revenue v.'In(e,criaticni Pharmaceuticals, Inc.,
supra);
• Note: T he d thatitthe`011eplion ofi ta k_gh summaryremedies
during e pe enc of the prcitestAlid not ns tte a ecision for lack of
finali and t t the appealablAecision was the s 145$ t action taken by
the he it fild a civil action tor co e tion (gam spioner of Internal
Rev -vr nion S ipP7OTtp I .1f4N6. 6.160, M 21 $990).
3. Civil of n (Yab s v. Flo .gn• O. 469,54, July 0;4 2; Commissioner
of In rnAL4 u Uniontilb-•rng Cor' pra Adv sing Associates,
!pc. fA s .R o 9,.58, De , • er ); and
4. efe reqd repi .atio to t Solicitor General
(Repubk v. 1..1 77a A G:R' • \ 173 ; Marc 31, 1966).
Q: What is the rpedy (the LOx eop Inactio of the protest or
administrative apeal - L. 1: from submission of
documents/filing off* test . - —6"Vase.ma
ANS: Under Sec. 3.1.4 of 18-2Uags as 'er either:
File a petition for rev ew .4fth thdtTA days from the lapse of the 180-
day period; or
2.1 Await the final decision of the Commissioner or his duly authorized
u representative on the disputed assessments and appeal such final decision to
the CTA within 30 days after receipt of a copy of such decision (Rizal
Commercial Banking Corp. v. Commissioner of Internal Revenue, G.R. No.
168498, April 24, 2007).
Note: The aforementioned remedies are mutually exclusive (R.R. No. 18-2013, Sec.
3.1.1). The failure of the taxpayer to appeal the inaction on the disputed assessment by
the Commissioner or his representative within 30 days after the lapse of 180 days from
the submission of supporting documents will result in the finality of the FAN (A.M. No.
05-11-07-CTA, Rule 4, Sec. 3 (A)(2); Rizal Commercial Banking Corp. v. CIR, supra).
Q: What s the effect of a failure of a taxpayer to appeal a decision of the

Commissioner with regard to a protest?
ANS: The final assessment notice shall become final and executory (R.R. No. 18-2013,
Sec. 344)
952
BOOK: VOL 1.
2019
Compromise and Abatement of Taxes

Q: Whatisla compromise?
ANS: ComPromise is a contract whereby the parties, by making reciprocal concessions,
avoid litigation or put an end to one already commenced (CIVIL CODE, Art. 2028).
Q: What is fa tax compromise?

ANS: A tak compromise involves the reduction of the taxpayer's liability (ABAN, Law of
Basic Taxation,
l supra at 235).
Note: A tax compromise is possible at any stage of the litigation, even during appeal,
although legal propriety demands that prior leave of court should be obtained
(PampangaiSugar Dev't. Corp. v. Court of Industrial Relations, G.R. No. L-13178, March
25, 1961). But a compromise can never be entered into after final judgment, because by
virtue of such final judgment, the Government had already acquired a vested right
(Roviro v 'Anwar°, G.R. No. L-5482, May 5, 1982).
Q: What are the requisites for the comabmise of taxes?

1. The ' taxpayer has a tax Alt
2. There must be an offer WA ayer or Commissioner) of an amount to be
paid by the taxpayer; k
3. A reasonable doubt aso,t6 t 4o Re laim,ainst the taxpayer exists;
or, the financial posn
jA t 'xpayer eM013s ra es a clear inability to pay
the, assessed t4 and
4. there must % 4acceptarrAb the taxpayer orhargmissioner, as the case
maybe) of t gaffer in settlemen Al the original clal (NRC, Sec. 204).
Q: Who may com

ANS: The Co missioWs the onIkicial vested with owes and discretion to
compromiSe wandgtiimigal uses aris from ARC (NIRC, Sec
204). Courts have no jx
,"? to cqmtl hi o exercise 'al one way or the
other. HoWever,IftqleyLonfivalua "on Ward may enter into a compromise on:
1. Assessments issue by th6 reg. al offices involving basic deficiency taxes of
P500,000 or less; and
2. Minpr crimina legions disco a. and district officials (NIRC,
Sec. 7 (C)).
Q: When may the CommitSjoer enter into a compromise of taxes?

ANS: The Ccimmissioner may compromise any national internal revenue tax when:
1. A reasonable doubt as to the validity of the claim against the taxpayer exists
(minimum compromise rate: 40% of the basic tax assessed); or
2. The financial position -of the taxpayer demonstrates a clear inability to pay the
assessed tax (minimum compromise rate: 10%, 20% or 40% of the basic tax
assessed, depending upon the condition of the taxpayer) (R.R. Nos. 30-2002
and 8-2004).
Note: The Compromise must be approved by the Evaluation Board when:
1. The basic tax involved exceeds P1 million; or
2. The settlement offered is less than the prescribed minimum rates (NIRC, Sec.
204).
Q: What are the cases which may be compromised?

ANS: The following cases may be compromised:
1. Delinquent accounts;
2. Cases under administrative protest after issuance of FAN to the taxpayer
which are still pending in the Regional Offices, Revenue District Offices, Legal
953
' `-= -""i•
2019
Ya.
I Service, Large Taxpayer Service (LTS), Collection Service, Enforcement

Service, and other offices in the National Office;
3. Civil tax cases being disputed before the courts;
4. Collection cases filed in courts;
5. Criminal violations, other than those already filed in court or those involving
i .
criminal tax frauds; and
6. Cases covered by pre-assessment notices but taxpayer is not aggreable to the
findings of the audit office as confirmed by the review office (DIMAAMPAO,
Taxation, .supra at 190-91).
I
Q: What are the cases that cannot be the subject of a tax compromise?
ANS: The, following cannot be the subject of a compromise:
1. Withholding tax cases, unless the applicant taxpayer invokes provisions of law
that cast doubt on the taxpayer's obligation to withhold;
2. Criminal tax fraud cases confirmed as such by the Commissioner or his duly
authorized representative; ,...,.,,„,„
,
3. Criminal violations alcefilectin
aW -cou(t; • —
4. Delinquent acco_urifs:wilihduly app)oh`dit4c0bd .1e,p,f installment payments;
5. Cases wherwfin'arrppori ',of.reinvesigdon or: reconsideration have been
issued
1
resulting tO1,,reeciiib
,,,,,ion in the , or.igilia
, ,,Ltes...7),
grn. nt and the taxpayer is
6greeable," 44' ..--------,..,
6. Cases '6'6 -4 m final aqd 6.)seculory a fte fi naliudAment of a court, where
.,
compr mise s, equ sted oii thavrourrd of do btfalkv lidi 'of the assessment;
aind 6 ::
,f • ,1
7. Estat 57t c.ises w ere co*niFigrZir , tilted o Bound of financial
incapacity-ofthe taxpay6W.R.: I:o.c30.P002, pec. 2).
o •
I ‘ rmil tv
Q: May criming "v of 1 -147ccompro:mised?
ANS: Yes,1 excbpft:r \,-c.-\ ;, CPs. i-:\
1. Thos alreddy fileclInjRczurt; 6N1 ''4--
'- ".
,.:,
tc.7
2. Those volviii cnrni 4>t ffau s (R:
Q: What is a compromise eitila tYsliNTENrckil"-

ANS: A r cOmpromi4 enalty40 c rtairimaaunt of.smone h the taxpayer pays in
lieu of criminal prosecution,(-2C,/ MP-AOrTaXgqesu radoe 180).
Note: Asa compromisCitkiizee6 n agiyegg IN ecrie rty cannot impose it upon the
other. If ap offer of compromise is reje - axpayer, the Commissioner of
Internal ;Revenue should file a cnmiffa on if he believes that the taxpayer is
criminal y liable for violation of the tax law as the only way to enforce a penalty
(Commissioner of Internal Revenue v. Abad, G.R. No. L-19627, June 27, 1968).
I
Q: What is tax abatement?
ANS: T6x abatement is the cancellation of the entire tax liability of the taxpayer (ABAN,
Law of Badic Taxation, supra at 235). , • .
I
Q: When may the Commissioner abate or cancel tax liability?
ANS: The :Commissioner has the authority to abate or cancel internal revenue taxes,
penalties and/or interest pursuant to Sec. 204(B) in relation to Sec. 7(c) of the NIRC in
the folloWinig•cases:
1. The tax or any portion thereof appears to be unjustly or excessively assessed;
or
2. The administration and collection costs involved do not justify the collection of
th6 amount due.
954
( 4..7...
, s. ,
„ :-.1.:::.?.13:f-4,::7-.4;:•:,)., "-
-4,....);., ,.. VOL 1.
t--.4 k.,,•,,,,„ 1 2019
‘'., ,,,,....f,1,.1 -,Aii,,:-, • /-8 '
Recovery of Tax Erroneously or Illegally Collected

I
Q: What is a tax refund?
ANS: A tax refund refers to actual reimbursement of the tax. A "refund" is a written claim
for the payment of cash for taxes erroneously or illegally paid by the taxpayer to the
government (ARAN, Law of Basic Taxation, supra at 325).
Q: What is the statutory basis for a tax refund under the NIRC?
ANS: The statutory bases are:
1. The Commissioner has the authority to credit or refund taxes erroneously or
illegally received or penalties imposed without authority, refund the value of
internal revenue stamps when they are returned in good condition by the
purchaser, and, in his discretion, redeem or change unused stamps that have
been !rendered unfit for use and refund their value upon proof of destruction
(NOG, Sec. 204(C)); and
2. Any national internal revenue tax lleged to have been erroneously or illegally
assessed or collected, or of taDy penalty claimed to have been collected
without authority, of any etifft alleged to have been excessively or in any
maInnler wrongfully colleCf t authority, or of any sum alleged to have
been excessively or in agyinanrielvrongfully collected may be filed as a claim
fori refund or credit with ttieiar mitsion,er (NIRC, Sec. 229).
Ast"
Q: Why is proof I fora clairo,drrefundiliecessaryr1
ANS: Tax refund is in pnature of aax exemption and mu Nherefore, be construed
strictly against I the taxpayer (ComrtfigSto er of Internal RANO v. Fortune Tobacco
Corporation,I G.R. Noie1647427b75/Sep wther 11, 2011 311 encie, before recovery is
allowed, it must beAbiLdWeTthat they -44as an actua Col ection and receipt by the
Government ;ofilketax soughtto be r,e,co ed and this requires fatal proof (Collector
of Internal Reefue v. dip°, G.R. No. '861, Decernter 21, 196
I: . "
Q: Who has, tlitp,burdpripAPfoofOo' cl Q1 of refunds
ANS: The CourVitcovizeg• as it lwalohas, that the burden of proof to establish
entitlement to refund is on le claimant , xpayer. Being in the nature of a claim for
exemption, refund is construe in strictissWds- a gainst the entity claiming the refund
and in favor of the taxiapoliver.3hiptisiret.hlaimant must positively show
compliance with the stelutory4ep(oirerfients provided for under the NIRC in order to
successfully', pursue ort's. cla ref (Winebrenner & Iiiigo Insurance Brokers, Inc. v.
Commissioner ol f IntemaMIV ue, G.R. No.206526, January 28, 2015).
Q. In a claim for refund of excess income tax payments resulting from unutilized
creditable withholding taxes, is the taxpayer required to present in evidence its
quarterly income tax return of the subsequent year to prove that excess income
tax payment was indeed not carried over to the succeeding year?
ANS. No. According to the Supreme Court, subsequent quarterly income tax returns are
not indispensaOle. What Sec. 76 of the Tax Code requires is to prove the prima facie
entitlement:to 4 claim, including the fact of not having carried over the excess credits to
the subsequent quarters or taxable year. It does not say that to prove such a fact,
succeeding quarterly ITRs are absolutely needed. This simply underscores the rule that
any document, {other than quarterly ITRs may be used to establish that indeed the non-
carry over clause has been complied with, provided that such is competent, relevant and
part of therecords (Winebrenner & Iiiigo Insurance Brokers, Inc. v. Commissioner of
Internal Revenae, supra).
955
Q: Discuss the nature of an erroneously paid or illegally assessed or collected
tax.
ANS: There is a mistake of fact when a taxpayer erroneously pays a tax, as for instance
in a case where he is not aware of an existing exemption in his favor at the time the
payment was made (51 Am. Jur. 1023, cited in UST Cooperative Store v. City of Manila,
G.R. No. L-17133, December 31, 1965).
Q: Distinguish tax refund from tax credit.

ANS: In tax refund, there is actual reimbursement of the tax while in tax credit, the
reimbursable amount is applied against the sum that may be due or collectible from the
taxpayer (DIMAAMPAO, supra at 227). On the practical side, the taxpayer to whom the
tax is refunded would have the option, among others, to invest for profit the returned
sum, an option not proximately available if the taxpayer chooses instead to receive a tax
credit (Commissioner of Customs v. Philippine Phosphate Fertilizer Corp., G.R. No.
144440, September 1, 2004).
Note: .4k
1. The options of Cref or tax 6reffikareYelte ative and the choice of one
precludes the errfailur dirtflicite oice by the taxpayer will
not bar a v fe e eF a refund, show d e chosen later on. The
indicatio jrbsep-optroirgrdrily-k(liN of tax administration
(Philam ana emenbln . Gpmmislio al Revenue, G.R.
Nos. 1 62 04, Debem14*005)
21 rrevo ule ec. 76) iri no applicabl to t er who originally
opte fund rove xcess creditable
taxe e tax cceedi ble -years. The
rrev rule. is on of r, hence, if the
taxp e ides carry y no'I nger revert to its
origi oe(Ì aryq Se 4Ma agement, Inc. v.
Com ione of , Mall 7, 2018).
Grounds. Requlites. a Perio efundir Issuance of Tax

Credit Certificate
C'I CrE1\1-0>)
Q: When may a taxp yer aim4941 tax efuncl-qr 4:ro dit?
ANS: 'A claim for tax refliko edit a by rp4)013 . (EPS)
1. Tax is colleptpclgrront9 sly or
2. Penalty is collected with tea =V44
3. Sum collected is excessive or in any manner wrongfully collected (NIRC, Sec.
229).
Q: What arelhe requisites for a claim of a tax refund or tax credit?

ANS: The, requisites are: (ErCla-Cat-2-Proof)
1. There is a tax collected Erroneously or illegally, penalty is collected without
authority, or a sum collected is excessive or in any manner wrongfully
Collected (NIRC, Sec. 229);
2. There must be a written Claim for refund filed by the taxpayer to the
Commissioner (Vda. de Aguinaldo v. Commissioner of Internal Revenue, G.R.
No. L-19927, February 26, 1965);
Note: The following are exceptions to the filing of a written claim for refund:
a. A return filed showing an overpayment shall be considered as a written
claim for credit or refund (NIRC, Sec. 204 (C));
b. The Commissioner may, even without the written claim therefore,
refund or credit any tax where on the face of the return upon which the
payment was made, such payment appears clearly to have been
erroneously paid (NIRC, Sec. 229).
956
3. The claim for refund must be a Categorical demand for reimbursement. The
idea probably, is first, to afford the collector an opportunity to correct the action
of subordinate officers; and second, to notify the Government that such taxes
haNie been questioned, and the notice should then be borne in mind in
estimating the revenue available for expenditure (Bermejo v. Collector of
Internal Revenue, G.R. No. L-3029, July 25, 1950);
4. The claim for refund must be filed within two 21 years from the date of
1 1
payment of the tax or penalty regardless of any supervening cause (NIRC,
SeC. 229); and
Note:
. A claimant for refund must first file an administrative claim for refund
before the CIR, prior to filing a judicial claim before the CTA. Both the
administrative and judicial claims for refund should be filed within the
two (2)-year prescriptive period indicated therein, is allowed to file the
latter even without waiting for the resolution of the former in order to
prevent the forfeiture offits claim through prescription (Metropolitan
Bank & Trust Cos tAldEilnmissioner of Internal Revenue, G.R. No.
182582, April 17„40
b. It should be poinfgaro tf l er that while the prescriptive period of two
1 (2) years com5 Pferi run from the time that the refund is
ascertained, the, r -p erphis dete fined by law (in this case,
from the data,goT pa la - o ) 1, o on the discovery by the
taxpaye lit% erron ou or excessive pay pt of taxes. The issuance
by thgAIR of the RJja. declaring the t7 empt status, if at all, is
mereffAco firmato.vki n ature, hence, asis that the subject
exem s)*.provide nd ascertained nlj through BIR Ruling
(,gamissiongsAf Intern evenue v. ani ctric Company, G.R.
No. 18,1_ 451, June 9,W,1
fc
5. The' At' nararliTs show proof payme p!, must.be actual-
co leclon and t pt bflP, ,e G.', - rnment o o ' to be recovered
1 . -.1
and this4e.9dires ctuarMof iillector of Intern enue v. Li Yao, G.R.
NC. 11-11861gbece ber 27, 1961
I I ‘ i, k, ..-1,
: .
Q: What are the essetial basic conditi e or a taxpayer to be entitled to
a refund claim or issw nce of ta-F-CIA presenting any excess or
unutilized creditable wifhholdm income tax?
ANS: The co n ditions are
1. The claim is fileditli the Commissioner of Internal Revenue within the two-
year 'period from the date of payment of the tax;
2. It is shown on the return of the recipient that the income payment received was
declared as part of the gross income; and
3. The fact of withholding is established by a copy of a statement duly issued by
the payor to the payee showing the amount paid and the amount of the tax
withheld therefrom (Commissioner of Internal Revenue v. Team (Philippines)
dperations Corporation (formerly Mirant Phils., Operation Corporation), G.R.
N9..17.9260 April 2, 2014).
I
Q: When will the prescriptive period for refund of final withholding taxes
commence? I
ANS: The Claim for refund must be filed within two (2) years from- the date of payment of
the tax or Penalty regardless of any supervening cause (NIRC, Sec. 229).
Note: ' I
1. In case of corporate income tax, in which the corporate taxpayer is required to
i
fi e and pay income tax on a quarterly basis. Quarterly income tax payments
are treated as mere "advance payments" of the annual corporate income tax,
,
I
957
.r14
there may arise certain situations where such "advance payments" would
cover more than said corporate taxpayer's entire income tax liability for a
specific taxable year. Thus, it is only logical to reckon the two (2)-year
prescriptive period from the time the Final Adjustment Return or the Annual
Income Tax Return was filed, since it is only at that time that it would be
possible to determine whether the corporate taxpayer had paid an amount
exceeding its annual income tax liability (Metropolitan Bank & Trust Co. v.
Commissioner of Internal Revenue, G.R. No. 182582, April 17, 2017).
2 For Final withholding taxes are considered as full and final payment of the
income tax due, and thus, are not subject to any adjustments. Thus, the two
(2)-year prescriptive period commences to run from the time the refund is
ascertained, i.e., the date such tax was paid, and not upon the discovery by
the taxpayer of the erroneous or excessive payment of taxes (Metropolitan
Bank & Trust Co. v. Commissioner of Internal Revenue, supra.).
3. The payment of the DST and the filing of the DST Declaration Return upon
loading/reloading of the D§,ritetering„Rachine must not be considered as the
"date of payment",,,,wren the Rrewrytive..q.eriod to file a claim for a
refund/credit musr6om nce since it is me:talt'a advance payment for future
application. Thilalilit 9,:Lthewpayrnek(if the,,D falls due only upon the
occurrence/of-,a tax13It
.04 transaction, hehcefhe mencement of 2-year
period pi:I-4V s-Ny. "ssioner of Internal
Revenue, yo. $065-ronek2040/6).
4. n casOf eclafin for refunetf Input VAT attqutablei o zero-rated sales under
2 (A) f the the hnio,,Year prescriptive peEdE)s liould be reckoned
from he—1b e of thr to
Sec.y guider WWI I PO relOral s or transactions
were of from? thAi§te:ot!,6a100tifolthe taxorbenal, (Commissioner
of I evenue v. AlC4isr eAr,g0giCo. of Asia, Inc; R. No. 184823,
Octo e 01.0A • ComnitYSIO'br of Inte Re enu tfifi Mirant Pagbilao
. Corp1Q.R. o. 1, Ail 9, Septe(n • er_.1,?, 20 8
•{' ‘. --.. .1., i
Proper Party ta_File Claim forlisetbndor ax` edit
y°,4...rt
Q: Who may claika tax re[uncOrv fax
a;(-
ANS: ,The proper pakty to citrelinì.„., ififfint,ci6n indirect tax is the statutory
taxpayer, the person an,whjorohett is im os d%111aw n paid the same even if
he shifts the burden thereof to Roller 1 air/ S(rgapo0
-N Pte. Ltd. v. Commissioner of
Internal Revenue, supra).
Q: May a withholding agent claim or apply for tax refund or tax credit?
ANS: Yes The withholding agent has a legal right to file a claim for refund because:
t He is considered a "taxpayer" under the NIRC as he is personally liable for the
Withholding taxes should it be found to be less than the amount that should
have been withheld under the law; and
2. As an agent of the taxpayer, his authority to file the necessary income tax
return and to remit the tax withheld impliedly includes the authority to file a
claim for refund and to bring an action for recovery of such claim. While the
withholding agent has the right to recover the taxes erroneously or illegally
collected, he nevertheless has the obligation to remit the same to the principal
taxpayer (Commissioner of Internal Revenue v. Smart Communication Inc.,
G.R. Nos. 179045-46, August 25, 2010).
Q: Is payment under protest necessary in order to obtain refund to internal

revenue taxes?
ANS: No. 'payment under protest is not necessary in order to obtain refund to internal
revenue taxes (NIRC, Sec. 229).
958
I.4,-77, U.
1-,,;171,::::,;;iirirl:e;It'l.:!- '., ligef-,1>;jii:•:).c"," ? . 7;44:,,,12;,,',;57.4;;Tcfir,;;:i
3 iif1,..t7-'
R
-.,.\.,.16, ..:.„.....,,,,..,...,..„..Aatt:,..V3,-.15..Af-''/:,,!-r.t.. ..:::•!:..V...e41:4,1.k 1!ilf,::7?..,:,' .
Q: Is partial payment of a tax sufficient basis for a tax refund?

ANS: No. The partial payment of a tax cannot be the basis for a tax refund (Collector of
Internal Revenue v. Prieto, G.R. No. L-11976, August 29, 1961).
H. GOVERNMENT REMEDIES
Kinds
Q: What are the remedies of the Government?
ANS: The Government has the following remedies:
1. Administrative remedies:
a. Tax lien (NIRC, Sec. 219);
b. Distraint and levy (NIRC, Sec. 205);
c. Forfeiture of real property (NIRC, Sec. 224);
d. Further distraint and levy (NIRC, Sec. 217);
e. Suspension of business operations (NIRC, Sec. 115); and
f Non-availability of injunction to restrain collection of tax (NIRC, Sec.
218). hi
2. Ale& remedies
a. Civil; and (N/RC,.Sete,04
6. I Criminal. (NIRC, 40305):
Administrative Remedies
Tax Lien 1
Q: What is te,natureprptextent of;a1a4len?
ANS: Tax lien is a legel ortkcif charge. n property, real oipereonal, established by
law as securitaiegfault*ihe paymen f taxes (Ho 'gkon and Shanghai Banking
Corp. v. RafferirG.R. Novejibier 15, 1918
• ' 1,
Q: Discuss itiqnattire of Aux
ANS: When a taxpapye?1,i0 cts or refusgilo pay his infernal-revenue tax liability after
demand (issuanceir&FFX*, e arribuntreo demanded shall be a lien in favor of the
IPA —
government from the time thej assessme as made by the Commissioner until paid
with interest penaltiesgappeosts that ma :imddition thereto upon all property
and rights to propertyz btfiging togael9a .,11/4//
I I
Q: When does the lierrintgy* of the Government arise?
ANS: Tax lien attaches:
1. With "respect to personal property — from the time the tax became due and
demandable; or
2. With respect to real property — from the time of registration with Register of
Deeds (Commissioner of Internal Revenue v. National Labor Relations
COminission G.R. No. 74965, November 9, 1994).
Note: The lienishall not be valid against any mortgagee purchaser or judgment creditor
until notice of such lien shall be filed by the Commissioner in the Office of the Register
of Deeds of the province or city where the property of the taxpayer is situated or located
(NIRC, Sec. 2)9).
Q: Which is superior — a tax lien or a claim based•on a judgment? •

ANS: It is settled that the claim of the government predicated on a tax lien is superior to
the claim ofd a private litigant predicated on a judgment. Execution sales affect the rights
of the judgment debtor only, and the purchaser in an auction sale acquires only such
rights as the judgment debtor has at the the of sale. It is also well-settled that the
sheriff is net authorized to attach or levy on property not belonging to the judgment
debtor (CoMmissioner of Internal Revenue v. National Labor Relations Commission,
supra).
959
B EDAN RED BO( VOL 1.
2019
DistraintandLevy
Q: What is distraint?
ANS: Ibistraint is the seizure by the government of personal property, tangible or
intangible, to enforce the payment of taxes, to be followed by its public sale, if the taxes
are nof voluntarily paid (1 DE LEON, NIRC Annotated, supra at 475).
Q: Wh'pt is garnishment?
ANS: Garnishment is the taking of personal properties, usually cash or sums of money,
owned!by a delinquent taxpayer which is in the possession of a third party.
Note: Bank accounts may be distrained notwithstanding the Bank Secrecy Act (R.A. No.
1405) which prohibits inquiry into bank accounts, since in the case of distraint, no inquiry
is madO. The BIR simply seizes so much of the deposit as is sufficient to discharge the
obligation, without having to know how much the deposits are, or where the money or
any pailit Of it came from (1 DE LEON, NIRC Annotated, supra at 481, citing Op. of Sec.
of Justicej No. 54, s. 1956).
Q: Discuss the procedurajoilli(Etrainfoflpe o-al pro erty.

ANS: They procedure is alollorp.'$.
1. Distraint prime' comrrienn,cedAr:
c.~~edAr:
a. The omplissItin__ er or....hii .duly au *z,,eVe sentative where the
unt rf 61-vpdie in exd s of P1 mil io cor
b. Theenu? OocelaRDO) wtie mount involved is
million or less;
-,."
2. A Wa ano Dislaint-shall-b i'a-served-wh re the I property of the
iiil
PR
taxpa ,erS YsicalY takeRby,t4 distraping , fficer;
3. The istrai g officer shIlli q_CibbittiA the R 0 and tp venue Regional
Dire o port-q the' cligffarritrwit in pc 0) days m receipt of the
warra t, ptide Ai 4he-Gemmissioner-or I' ly Nuth d representative
hall tth po $1NE ift thMorp,V9"&lis r f nd hat nsolidated report
by the Reverke Reggir) by the Commissioner as
often a necesgary; ‘k..1 • I
4. The Not ce of S'atp iRtcaing_ Styr p sted in not less than
two (2) placaqa_lh"iaeittiqni
a -'p ll distraint is made. The
time of sale% all 8. 6"les an e er notice to the owner or
possessor of Voile ncypublà lo or,p , uch notice; and
5. At the time and Ol'acqfiied in 04 otiR4j1e evenue officer shall sell the
goods subject of thedistrain -91,Publ c auction, to the highest bidder for
sash, or with the approval of the Commissioner, through duly licensed
commodity or stock exchanges (NIRC, Secs. 207-209).
Note: Any' residue over and above what is required to pay the entire claim, including
expenses, shall be returned to the owner of the property sold (NIRC, Sec. 209)..
Moreover, if at any time prior to the consummation of the sale, all proper charges are
paid to the officer conducting the sale, all distrained properties shall be restored to
owner (Right of Pre-emption) (NIRC, Sec. 210).
Q: When may the Government purchase the goods subject of the distraint?
ANS: The Commissioner or his deputies, in behalf of the National Government, may
purchase the goods subject of the distraint when the amount bid for the distrained
property is not equal to the amount of tax or very much less than the actual market
value o0he property (NIRC, Sec. 212).
Note: Property so purchased may be resold by the Commissioner or his deputy, subject
to the rules and regulations prescribed by the Secretary of Finance, the net proceeds
therefrom ,shall be remitted to the National Treasury and accounted for as internal
revenue (NIRC, Sec. 212).
960
Q: What is the' duty of the distraining officer with respect to the sale?
ANS: The Officer making the sale shall make a written report of the proceeding of the
sale to the COrrimissioner within two (2) days after the sale (NIRC, Sec. 211).
t:
Q: When cap tuere be constructive distraint?
ANS: To pr9tect the interest of the Government, the Commissioner may place under
constructiveldistraint the property of a delinquent taxpayer or any taxpayer, who in his
opinion is: (RLR-HO)
1. Retiring from any business subject to tax;
2. Is riteriding to Leave the Philippines;
3. Is tending to Remove his properties therefrom;
4. Is ntending to Hide or conceal his property; or
5. Is intending to perform any act tending to Obstruct the proceedings for
co iecting the tax due or which may be due from him (NIRC, Sec. 206).
Q: What is evy?
ANS: It refet,s to the seizure of real,p penes and interest in or rights to such properties
the satisfaction of taxes due frog inquent taxpayer (2 DIMAAMPAO, Taxation,
supra at 158).
Q: When may levy be effected?,

ANS: Levy can be made:: el ' .i.
1. Before, simulta_MOSiy, or after straint of personal operty; or
2. In case the wdtant of levy is
'4, ar dalT;
a. not issAtoefore 9,-,simu aneously with th aront of distraint, and
O. the egsonlgtrdberty of e taxpayer is uffi lent to satisfy his tax
d51Thquenpfte Comm s oner or his a tho .representative shall,
..-.
v
''within a ays after The cution of th distr oceed with the levy
Ildhaxprybr's read grope NIRC, eogi2g
Q: Discuss the plinet:,_ or le ryon reel property.

ANS: The procedureM
1. A idUly auTheuticatel certificate Of Levy) shall be prepared by the
Commissioneq909duly author! se tative.
Note: The celficate stakOritat
• a. DescriWon ofipproperty levied;
b. Name of6thm e taxpayer; and
C. Amount cletWind penalty due from him.
The certificate shall operate with the force of a legal execution throughout the
2. Levy shall be effected by writing upon the certificate a description of the

property upon which levy is made. At the same time, written notice of the levy
shal be mailed to or served upon:
a. The Register of Deeds of the province or city where the property is
located; and
b. The delinquent taxpayer, or if he is absent from the Philippines, to his
agent or the manager of the business in respect to which the liability
arose, or if there be none, to the occupant of the property in question.
3. Within ten (10) days after receipt of the warrant, a report on any levy shall be
submitted by the levying officer to the Commissioner or his duly authorized
representative, provided that a consolidated report by the Revenue Regional
Director may be required by the Commissioner and that the Commissioner or
s duly authorized representative shall have the authority to lift warrants of
levy issued;
961
VOL 1.
2019
!The officer conducting the proceedings shall proceed to advertise the sale
6.
mithin twenty (20) days after the levy, and the same shall be for a period of at
least thirty (30) days. The advertisement shall contain: (ANTS)
a. Amount of tax and penalties due;
1.• b. Name of the taxpayer against whom taxes are levied;
! c. Time and place of sale; and
d. Short description of the property to be sold.
Note: Advertisement shall be effectuated by: (Po-Pu)
i. Posting a notice at the main entrance of the municipal building
or city hall and in a public and conspicuous place in the barrio or
district in which the real property lies; and
ii. Publication once a week for three weeks in a newspaper of
general circulation in the municipality or city where the property
is located (NIRC, Sec. 213).
A public sale of the property under levy shall be held either at the main
entrance of the municipal Pailidingax,citx hall, or on the premises to be sold, as
the officer conducti3glie propeedinns .shalt determine and as the notice of
pale shall spec' cIttfficat.429 saleAll' bpdplivered to the purchaser. If
the proceedsOf tlfe—Sple eXceed.the,clairmandlcosebtsale, the excess shall be
turned overAo`the ger Of the propertylVf 0,"Sect\210).
Note: 44'
1. The tanOa'yer,
. .
iay a iscontreiall -41,1e pr ceediqg ) paying the taxes,
Wait] s arrolnterept at any tirile• before th dayNti ed fors the sale (Right of
Pre-e pli_o_n)h(WIRCI Sec. 213),AA ‘Wl!I for less than its
Real pro ertf place under evyi way, e so t public
cnark6tt vvalud (NIRC Sk7415).tnc61115tthxpayer is iVienre•right to redeem
(NIR , 214). 'th rat! t diStrain d prop rty-t rule is different
(NIR ,'Sbq. 12
.SC) 5")
Q: What is the ( eat ettonA gie-Opf eyy?
ANS: Thelieal p perty iay betelleeined citgn,o entjt xpayef or anyone for him,
within One 'year film the to tli141)e_.:0Figo theReventre District Officer the
amount of: ,
1. Public Tax in SCIE1\101%),"
• 2. Penalties;
3. Interests thereontWitime of e to the date of sale, and
4. Interest on purchase e at 1d% (a from the date of purchase to the
date of redemption (NIRC,er2111).
Note: In case of natural persons, for purposes of reckoning the one-year period on the
foreclosedrasset of natural persons and the period within which to pay Capital Gains
Tax or Creditable Withholding Tax and Documentary Stamp Tax on the foreclosure of
Real Estate Mortgage, the period shall be reckoned from the date of registration of the
sale in the0ffice of the Register of Deeds. For juridical persons in an extrajudicial
foreclosure, Section 47 of The General Banking Law of 2000 (R.A. No. 8791) provides
that its right of redemption shall be until, but not after, the registration of the certificate of
foreclosure sale with the applicable Register of Deeds, which in no case shall be more
than threelmonths after foreclosure, whichever is earlier. The right of redemption shall
be reckoned from the date of approval by the executive judge (R.M.C. No. 55-2011).
Q: When is a Final Deed of Sale issued to the purchaser?

ANS: It Shall be given to the purchaser only after the failure of the taxpayer to redeem
the property after the expiration of redemption period (NIRC, Sec. 202).
962
r,q 7;114.4
Q: What is the remedy of the Government when there is still tax delinquency after
initial distraint or levy?
ANS: Distraint and levy may be repeated if necessary until the full amount of the tax
delinquency due, including all expenses, is collected from the taxpayer (NIRC, Sec.
217). Further distraint and levy is necessary because a clever taxpayer may able to
conceal most, of the valuable part of his property from the revenue officers to escape
payment of his tax liability by sacrificing an insignificant portion of his holdings (Castro v.
Collector of IPternal Revenue, G.R. No. L-12174, April 26, 1962).
I 1.
Forfeiture or Real Property
,;
Q: May the real property subject of a levy be forfeited to the Government?
ANS: Yes. The ,Internal Revenue Officer conducting the sale shall declare the property
forfeited to the Government in satisfaction of the claim for taxes in case:
1. There is no bidder for real property exposed for sale; or
2. Thei highest bid is for an amouJt insufficient to pay the taxes, penalties and
costs (NIRC, Sec. 215)
Note: Within .lone (1) year from tke,,ci ifillt.such forfeiture, the taxpayer or any one for
him may redeerri said property bymOymathe Commissioner or the latter's Revenue
Collection Officer the full amourittOleejteTes and penalties, together with the interest
thereon and the costs of sale, btif ifiltielT • ertyJpe
Cl
not thusredeemed, the forfeiture
shall become absolute (NIRC, Sec. 2;f50 ., . " t
, l* '
. . , de
Q: How is thle remedy4ofilorfeiture 1)7,k the Government en ?iced?
ANS: ForfeitUre 40-
„.1,is enlarged?
1. In came of pirsA.ao* ,,prfipertY — seizure and s e destruction of specific
forfeited fope-rtyipfi : , /
2. In case of real property — ,b,y, j dgment of co dem ationend sale in a legal
-4-,9.- prodgeging, civil orc !nal, as the case troy require (NIRC, Sea
actiono
von; .7,- t..,
224;4 '"' 1'1 T, k% 4
;1
'tk., .4;41' 4,
Q: When is the P 49074 ° ekritest th
, f elture
. of chattel?
ANS: The owner deting to eintestihe va ity of forfeiture may:
1. At enje, time tgforAthe sale or o of the property, bring an action
again6t the gerT8h seizLngAgttie• eying possession thereof to
recover the same, and,"' on- giving proper bond, may enjoin the sale; or
2. After the saleidizd w” n six months, he may bring an action to recover the net
ti ,
preeds
of realized - e sale (NIRC, Sec. 231).
11
Q: What arelthe modes of resale of real estate taken for taxes?
i
ANS: The Commssioner
i may:
1. Sell and dispose of the same at a public auction upon giving of not less than
twenty. (20) days of notice; or
2. Dispoee the same at a private sale with the approval of the Secretary of
Finance.
Note: In either' case, the proceeds of the sale shall be deposited with the National
Treasury, and len accounting of the same shall be rendered to the Chairman of the
Commission on Audit (NIRC, Sec. 216).
; 1!
Q: How are`•111e forfeited goods or articles disposed of?
ANS: The goods or articles are:
1. Soldli ;' — in case of forfeited chattels and removable fixtures, so far as
practicable, in the same manner and under the same conditions as the public
notice
, , and the time and manner of sale as are prescribed for sales of personal
property distrained for non-payment of taxes;
963
"VOL 1.
2019
2. C Destroyed - in case of distilled spirits, liquors, cigarettes, other manufactured

products of tobacco and all apparatus used in or about the illicit production of
such articles, by the order of Commissioner, when the sale of the same for
L consumption or use would be injurious to public health or prejudicial to the
, enforcement of law;
3. r Sold or destroyed - in cases of all other articles subject to excise tax, which
,have been manufactured or removed in violation of the NIRC, dies for printing
or making of internal revenue stamps and labels which are in imitation of or
purport to be lawful stamps, or labels, in the discretion of the Commissioner
(NIRC, Sec. 225).
Note: Forfeited property shall not be destroyed until at least 20 days after seizure.
(NIRC, Sec. 225).
Q: How care funds recovered in legal proceedings or obtained from forfeitures
disposed?
ANS: All, judgments and monies recovered and received for taxes, costs, forfeitures,
fines and penalties shall be paid to the.,Comrnieloner or his authorized deputies as the
taxes themselves are requireWre pad, ante;i0eptAs specifically provided, shall be
accounted for and dealt VA'k thatsame
'- lea§ (N
0/RC, $ec.'226).
V
ate'
Suspension of Busine‘ '' -. 17) .'tk
"Nt ' t .1.. \
Q: Discuts the poliverof;Commissioner to s spend hejoUs" ness operations of
a taxpayer. 1 i i "i A -•:,--
ir 4 `ti
ANS: The Conirnissio er or is authorize: represent tive rsuf end the business
a
operations anditemgo rily dpse-the-bilsras-establishment -an person for the any
of the folloiwin 'yiefq ns: ) `t'ifc-*
—•1111 i -1.7,"1
1. Ip th cas%I f a VArgis ierefi ,0492.L.,
a. -FAlu e tocisl e receipte.Ori.invoices;
b. Fai 6 to\file\\> T-return ay-tax.
i c. tate dle,s li y ,0/0 or more of his
.correc , dififrfds e quarter; or
2. Failure f Valu kddekT ct 19 regi er (R.14.0. No. 3-2009).
Note: The tempo pry closure oft R,eitdilis m nt\shallibe for thlduration of not less
than five (5) days 'A ticl shall lift lity'lla-o • 5plia ce of *hatever requirements
prescribed by the CoirOssoct5r osure osderlIR , .115). The 5-Day VCN
shall likewise state the Orlicul the__-NI
, , a was /were violated by the
taxpayer, and for which rellif 9_13.
"m e,o' cldding payment of the required
deficiency taxes and penalties du he- M447No. 3-2009, Sec. 3.3.2).
Non-Availability of Injunction to Restrain Collection of Tax
Q: Is injunction available as a remedy to restrain the collection of taxes?
ANS: No, as a general rule. Section 218 of the NIRC provides that "no court shall have
the authority to grant an injunction to restrain the collection of any national internal
revenue tax, fee or charge. However, when in the opinion of the CTA the collection of
the tax may jeopardize the interest of the Government and/or the taxpayer, the CTA at
any stage, of the proceeding may suspend the said collection and require the taxpayer
either to deposit the amount claimed or to file a surety bond for not more than double
the amount with the CTA (R.A. No. 1125, Sec. 11, as amended).
Judicial Remedies
Q: What are the kinds of Judicial Remedies?
ANS: The judicial remedies include:
1. Ordinary civil action
2. Criminal action
964
Note: No civil or criminal action for the recovery of taxes or the enforcement or any fine,
penalty or forfeiture under the NIRC shall be filed in court without the approval of the
Commissioner of Internal Revenue (NIRC, Sec. 220).
003
Q: What is they form and mode of the judicial proceedings for the collection of
taxes?
ANS: Civil and Criminal actions and proceedings instituted in behalf of the Government
shall:
1. Be broUght in the name of the Government of the Philippines; and
2. Be conducted by legal officers of the Bureau of Internal Revenue (NIRC, Sec.
220).
Note: Section 7 of the NIRC authorizes the Commissioner to delegate the powers,
subject to certain exceptions, vested in him by the NIRC to any subordinate officials with
the rank equivalent to a division chief or higher. None of the exceptions relate to the
Commissioner's! power to approve the filing of tax collection cases (Republic v. Hizon,
G.R. No. 130430, December 13, 1999). dpM
ay/Met/on
Q: When civil action, as a tax rdrvi RIWssorted to?
ANS: A civil action is resorted tap*, lax 'ability becorn?s collectible, that is, the
9n of commissioner has
assessment becomes final andltnaPpe D.P.
become final,executory
executory 4'-'''' dshr
anan deman a e DIMAA PAQ p at 183).
Q: How is a civil actinJopthe calls0 to of taxes institute

ANS: There ard two waysol,entlrce'civil I bility through 41actions:
. ' ,
1. By•filiqg se or collectio f a sum of move wall proper regular court
(NIR ecs. 20 An 22p-or A I
2. By Mg? an ig-swer9 0 to the i-,,ii
: it,
for reviec fil xpayer with CTA
(FelideVtreurf os,l'Ingo,v. CO missiorg- ue, G.R. No. L-
,-,:A
21551 Septe,m1030, 196V.
' ,A
Q: Can the BIR file a Ilyil attionor collection pending decision of the
administrative,protesf?
I
ANS: Yes. It was hel of the TARA.. and reconsideration was in
effect consider4d deniedby ft when the latter filed a civil suit for collection
of deficiency income (C idler of Internal Revenue v. Union Shipping, G.R. No. L-
66160, May 21,11990).
t
Cr/mina/Act/on,
Q: When criminal action is resorted to? ._
ANS: The remedy of criminal action is resorted not only for collection of taxes but also
for enforcement of statutory penalties of all sorts (NIRC, Sec 221). The judgment in the
criminal case shall not only impose the penalty but shall also order the payment of the
taxes subject ot: the criminal case as finally decided by the Commissioner (NIRC, Sec.
205).
Q: What are the crimes punishable under the NIRC?

ANS: Two common crimes punishable under the NIRC are:
1. Attempt to evade or defeat tax (NIRC, Sec. 254); and
2. Failure to file return, supply correct and accurate information, pay tax, withhold
and remit tax and refund excess taxes withheld on compensation (NIRC, Sec.
255).
Note: The judgment in the criminal case shall not only impose the penalty but shall also
order the payrrient of taxes subject of the criminal case as finally decided by the
Commissioner'(NIRC, Sec. 205).
965
Q: DoeS the acquittal of the taxpayer from the criminal action affect his liability to
pay the tax?
ANS: No. The acquittal of the taxpayer from the criminal action does NOT necessarily
result in the exoneration of said taxpayer from his civil liability to pay taxes. The duty to
pay tax is imposed by statute prior to and independent of any attempt on the part of the
taxpayer to evade payment. It is neither a mere consequence of the felonious acts
charged nor is it a mere civil liability derived from a crime (Republic v. Patanao, G.R.
No. L-14142, May 30, 1961).
Q. Is the civil action filed by to question the Final Decision on Disputed

Assessment is deemed instituted with the criminal case for tax evasion?
ANS.. No, Rule 111, Section 1 (a) (44) of the Rules of Court provides that what is
deemed instituted with the criminal action is only the action to recover civil liability
arisinglfrOm the crime. Civil liability arising from a different source of obligation, such as
when the obligation is created by law, f,u ,,,cfl,ftitli!ility is not deemed instituted with the
criminal action.
Note: It is' well-settled that th9„taXiiAyer's obligartfto,p,Ay the tax is an obligation that is
created by law and does adariti,trom tne_offe i fe gf.ta?evesion, as such, the same is
not deemed instituted,Alie''critnigal„case.(Mgcarto Lim}Gaw, Jr v. Commisioner of
Internal Revenue, G.R "No. ' 2.2 0377..luly 23, 2010,'-• .,1)• 4 =
1 " Nk
.
Q: Is a previous-h-tsessmept nerss'ary before a crimma stk
action may be filed
againSt a taxpayer? i
ANS: No .Undef Sectiofis 254 and 255 of file NIRC,4 gov rOja can .file a criminal
case f6r tax ev sh- pa§ainst qnffai— ct.-9Steripho 011ffilly ttemp s manner to evade
or defed, ann ax -im osed 9 th6lax coda"driffe. pa ment *mot he crime of tax
evasion co mitten by the ere faCt.ttiat,tife-Aaxpa ,tile- taxpayer knovdrigly-ppd willfully filed a
fraudulen't retunrwith me vade afidrdeteat a pa pl of jhe tax:ilt is therefore not
required that a atxhde cie *as‘essmept ust, first isgedidne-eriminal prosecution
for tax :evasion ores er (Aca47q\ kL,i,..(1-aG,a 17„ Jry Imisi6nerbfpntemal Revenue,
G.R. No. 222837k July 28, 20 I \
Note: For criminal„proseattion to.pto eeds.tlefoyA essnrnt, therlmust be prima facie
showing of a willfur yttempfto,evadka,?s,-(Cpertml , sio br of Internal Revenue v. Court
of Appeals, G.R. NoN(19322-30 . 6":;/;-.1-Pga
Q: Is the filing of a csimlba

( p7 an
_
p by the Commissioner?
ANS: No. The filing 7:if criminal action. is implied assessment by the
Commissioner. An assessment conra.Writirbffiy a computation of tax liabilities, but also
a demand for payment within a prescribed period. It also signals the time when penalties
and interests begin to accrue against the taxpayer. To enable the taxpayer to determine
his remedies thereon, due process requires that it must be served on and received by
the taxpayer. Accordingly, an affidavit, which was executed by revenue officers stating
the_tax liabilities of a taxpayer and attached to a criminal complaint for tax-evasion,
cannot be' deemed an assessment that can -be questioned before the Court of Tax
Appeals (Commissioner of Internal Revenue v. Pascor Realty, G.R. No. 128315, June
29, 1999),
Q: What is the effect of satisfaction of the civil liability to criminal liability in tax
cases?
ANS: The subsequent satisfaction of civil liability by payment or prescription DOES NOT
extinguish the taxpayer's criminal liability (People v. Tierra, G.R. No. L-17177-80,
December 29, 1959).
966
ga":-.ct-te.:1•0;I•sz •
'
Q: Can subsidiary imprisonment be imposed on the tax which the taxpayer is

sentenced to pay?
ANS: No. In case of insolvency on the part of the taxpayer, subsidiary imprisonment
cannot be imposed as regards the tax which he is sentenced to pay. However, it may be
imposed in cases of failure to pay the fine imposed (NIRC, Sec. 280).
111. LOCAL TAXATION

[LocAL.06VERNNIENT CODE OF 1991, AS AMENDED]
A. LOCAL GOVERNMENT TAXATION
Q: Define local government taxation.
ANS: It is the,power of the Local Government Units (LGU) to impose and collect taxes
on their constituents in order to raise revenues to enable them to perform the functions
for which theyheye been organized (DOOONDON, Vol. 5 Taxation (2013), page 1).
a,
a
Fundamenta/Principles
t
:.,
7. ' . . A
Q: What are the fundamental pn9Ct`pjel ejlocal government taxation?
ANS: The following fundamental .drih4jesphaMavern therre ercise of the taxing and
other revenue4raiSing powers ofikkaelfelirrrigriPU '
1. Taxation shall beittiltrm in eectillocal govemment it;
2. Taxes, fees,44ges and ottterqippositions shall:
a.1! Be eattabre and bastitiel far as practicable iiinl he taxpayer's ability to
1,..c.
: pay
b.: ,_beneviedVdt.collected on_I'l for
A public mrposes•
c. not uniust!excessiveoppkssive and cernfisc '
da:
I • libt_to;eaontrary to lawrablic polio :ratio remic policy, or in
restrairOttfiade• -11,
.,-4,- 4,3. 'eAko}
3. The ;collectionRiggxes, fees, charges, es, and other mp•si ions shall in no case
be let to OfilieVoeRonz I
4. The revenue collecip pursuant o,thgmavisions of this Code shall inure solely
to the benefitikohtt be subjecy01 R:splOtion by, the LGU levying the tax,
fee, charge onther iryOsirciPan es provided therein;.
and , ' "' 7
5. Each LGU sha 1,,, k#,Les as practicable, evolve a progressive system of taxation
(LGC, Sec. 130):4kr4''
Q: Discuss the nature of local taxing power of the LGUs.

ANS: The natUrOf the local taxing power may be described are as follows:
1.. Diret -! the power of the LGU to impose taxes although not an inherent power
is granted by a direct mandate from the Constitution;
Note: The authority to tax of LGUs within the Autonomous Regions (ARMM
and CAR) is delegated by the Organic Act creating them which provides that
the Regional Government shall have the power to create its own sources of
revenues and to levy taxes, fees, and charges, subject to the provisions of the
ConStitytion and the Organic Act (R.A. No. 6766, Organic Act for the Cordillera
AutonoMous Region, October 23, 1989; R.A. No. 9054, Organic Act for the
Autonomous Region of Muslim Mindanao, March 31, 2001).
2. Limited,- although directly expressed by the Constitution, the power is subject
to such limitations and guidelines as the legislature may deem necessary to
imp6se;
3. Legislative in nature - the power to impose taxes is vested solely in the
legislative body in each respective LGU;
967
11 . .
4 Territorial — the same can only be exercised within the territorial jurisdiction of
the LGU (CONST., Art. X, Sec. 5).
Q: What are the sources of local taxing power of the government?

ANS: The following are the sources of local taxing power of the government:
I. Sec. 5, Article X of the 1987 Philippine Constitution — Each local government
unit shall have the power to create its own sources of revenues and to levy
taxes, fees, and charges subject to such guidelines and limitations as the
Congress may provide, consistent with the basic policy of local autonomy.
Such taxes, fees and charges shall accrue exclusively to the local
governments; and
Sec. 129, Chapter I, Title I, Book ll of R.A. No. 7160 (Local Government Code)
Each local government unit shall exercise its power to create its own sources
of revenue and to levy taxes, fees, and charges subject to the provisions
herein, consistent with the basic policy of local autonomy. Such taxes, fees,
and charges shall aco,e..nolusivelgo the local government units.
I'' --. --.- - ,.-;

-j'
Th_) 444.
Q: May Congress, undeOre ?SU C4,ituk,,obo isk the power to tax of local
governments? 1
,
ANS: ,Congress ca !rifle local goverlirkent s pb el to tax as it cannot
abrogate what is7 pra9ted-byltigyektamenta!lac!:The only authority conferred
to Congress is e t guid9line4:an cHimitaVo ootle t local government's
exercise of the weax IMAAMPAk TakPrinct lesailqf Re edies (2015), page
,.•-
132). "i-'
lid .•"`"-4
Q: What'is th scop of taxipg posiverxi ilGUs1 2,
ANS: The po er is prirrbrily h-led6il.pongr e'ver4 our jurisdictions,
it may be exe I gislativtb s, no I rely b virtue of a valid
delegation as t to dispc ?Lij ,onty y'd on 5, Article X of
the Constitutio the`----5, 00;•0 subject tc such
uidelines and on r ss-- hich, owever, must be
cmayl
onsistent with t l uto Cebuilntemational Airport
Authority V. Marco G.R. 12080Fin 6). i
Q: What is the Principlvfl tion.or. _ qtp ary Doctrine?

ANS: Pre-emption in taxation ;Vs to knAnsetarlt4,1v ,re'cl the National Government
elects to tax a particular are liedlWifithIor ' from the local government the
deleRted power to tax the same fie l'7111 c nne principally rests on the intention of
the Congress. Conversely, should the Congress allow municipal corporations to cover
fields ,of *taxation it already occupies then the doctrine of pre-emption will not
apply tyictorias Milling Co., Inc. v. Municipality of Victorias, Province_ of Negros
... _
Occidental, G.R. No. L-21183, September 27, 1968):
il .. ..
Q: When is the principle of pre-emption applicable?
ANS: the principle of pre-emption applies to the following:
1: Taxes
, levied under the NIRC;
2. Taxes imposed under the Tariff and Customs Code; and
3: Taxes under special laws (DIZON, Taxation (2006), p. 130).
Q: Who exercises the local taxing authority?

ANS: The power to impose a tax, fee, or charge or to generate revenue shall be
exercised by the Sanggunian of the LGU concerned through an appropriate ordinance
(LGC, Sec. 132).
968
Q: Who may grant local tax exemptions?
ANS: LGUs may, through ordinances duly approved, grant tax exemptions, incentives
or reliefs under such terms and conditions, as they may deem necessary (LGC, Sec.
192).
Note: While Sanggunians may grant tax exemption, tax incentive, or tax relief, such
grant shall not apply to regulatory fees which are levied under the police power of LGUs
(IRR of LGC, Att. 282).
Q: Flow is tax exemption conferred?

ANS: Tax exemptions shall be conferred through the issuance of a non-transferable tax
exemption certificate (IRR of LGC, Arts. 282 and 283).
Q: Distinguish real property tax and local business tax in terms of the power of
the LGU to grant exemptions:
ANS: For real property tax, the LGUs cannot add on to the exemptions stated in the
LGC. On the other hand, for local business
, tax, the LGUs are free to grant exemptions
(INGLES, Tax Made Less Taxing..,A0Zwer with Codals and Cases (2015), pages
532-533). I! I
Q: Prior to the enactment of the' .0"calt4fernment Code, several taxpayers enjoy

tax exemption. Are these tax exempt ,s'ii ective dfter the enactment of the
LGC? Mtpr•=e4,
ANS: No. Section 193 of th.,4C provide that, "unless ofhe se provided by the LGC,
tax exemptions or inceAtives granteslack r presently enjoy, y all persons, whether
natural or juridiCal, governtfienitwned or controle rporations are hereby
withdrawn upon the effectip(id, Janua , 1992) of thri ."
4410- ,
.1„40,,x4 imav
The grantee of legislative franchiserte,st lable to payi the lotal fr•nchise tax, unless it
is expressly rkgaPreally exempted 4m the Baer its legislative
franchise (S CommriffiationsMg., e City o 155491, July 21,
2009). The in lieq4of aft" clatiseyn a islative franc Id categorically state
that the exernptionL k both focal a d national taxes; otherwise, the exemption
claimed should be c strued aga taxpayer and liberally in favor of the
taxing authority (Id.).
Q: What entities are s 111 exemp. d from local taxes?

ANS: The fdlldwing is e exc sive list of entities which are still exempted from local
taxes (W-CoNE-Co-BooksY.
1. Local Water districts;
2. Cooperatives duly registered under R.A. No. 6938 or the Cooperative Code of
the Philippines;
3. Non-stock and non-profit hospitals and Educational institutions
4. Business Enterprises certified by BOI as pioneer or non-pioneer for a period of
six.(6);and four (4) years, respectively, from the date of registration;
5. Business entity, association, or Cooperatives registered under R.A. No. 6810
or Countryside and Barangay Business Enterprises; and
6. Printei and/or publisher of Books or other reading materials prescribed by the
Department of Education as school texts or references, insofar as receipts
from the printing and/or publishing thereof are concerned (IRR of LGC, Art.
283).
Note: Unless otherwise repealed by law, business and economic enterprises operating
within export processing zones administered by the Export Processing Zone Authority
shall continue to enjoy the tax exemption privileges and tax incentives granted in P.D.
No. 66, as amended (IRR of LGC, Art. 283).
969
Q: May the government grant tax exemption to taxpayers whose previous
exemption has been withdrawn?
ANS: Yes. Withdrawal of a tax exemption does not prohibit future grants of tax
exemptions. The grant of taxing powers to local government units under the Constitution
and the LGC does not affect the power of Congress to grant exemptions to certain
persons, pursuant to a declared national policy (Philippine Long Distance Telephone
Co. v. City of Davao, G.R. No. 143867, August 22, 2001).
Q: How often may the tax rates be adjusted?

ANS: LGUs shall have the authority to adjust the tax rates as prescribed in the LGC not
oftener than once every five (5) years, but in no case shall such adjustment exceed ten
percent (10%) of the rates fixed under the LGC' (LGC, Sec. 191).
Q: Whatis the residual taxing power of LGUs?

ANS: LGUs may exercise the power to levy taxes, fees or charges on any base or
subject, provided,the taxes, fees, schargesAriz
1. Not specifically enuperaTed in/..Gc; •
2, Not taxed undeplfe prc4ionsiofiheIN'IRC.ias Omended; and
3.'' Not taxed underothe dpp pable4aw14( GC, Beq.2i80.
the/on 1,1b • that-m-03t7b—ecompiktkAthip ,the exercise of the

Q: What are the/on
residual taxing po
ANS: The folio 'rig re the Fonditi ris tiist must be com in exercising the
residual taxing ower ofthe L U:
1.! That noiagains any of the runoarpentar nncipl spafj9ca l taxation (LGC,
Sec. a6s,
2. That t is one of the proftitft impositions under tir,coryrrion limitations on
the tla weks o kGUs (LW,:relc. 133);
3. Thatt s, fee for charges shallno e.3.1 justAaxee sive, oppressive,
confis • to contra \deClar shatio (dGC, geE 186); and
4. That ordinbnce 1 WI 468h 6Xe'M , cilSrges s)all not be enacted
withoutITy prioN ublib, irrag,c.49pduc O. or thelairpos ,-(LGC, Sec. 186).
Sr EN \.N
Q: Who has the aulhoritylsyppsc. pena h 5for lobactax. iolations?
ANS: The. Sangguniarikof-Eallpieatithorizectio prlee}ries or other penalties for
violation of tax ordinanceetptecribe;d fipek"4,,c11 e, Penalties shall in no case shall
be less than P1,000 nor more hag P5,00oincti glaVAlle imprisonment be less than one
(1) month nor more than six (6) monlfte'StittrfFie or other penalty shall be imposed at
the discretion of the court. The Saagguniang Barangay may prescribe a fine of not less
than P100 nor more than P1,000 (LGC, Sec. 516).
Specific Taxing Powers Of LGUs (Exclude Rates)

Q: What taxes, charges and fees may be levied by the province?
ANS: The 'province may only levy thefollowing taxes, charges and fees:
1.. Tax on Transfer of Real Property Ownership (LGC, Sec 135;)
2.! Tax on Business of Printing and Publication (LGC, Sec 136);
Franchise Tax (LGC, Sec 137);
4. Tax on Sand, Gravel and Other Quarry Resources (LGC, Sec 138);
5. Professional Tax (LGC, Sec 139);
6. Amusement Tax (LGC, Sec 140); and
7. Annual Fixed Tax for Every Delivery Truck or Van of Manufacturers or
Producers, Wholesalers of, Dealers, or Retailers in, Certain Products (LGC,
Sec 141).
970
Tax on Transfer of Real Property Ownership
Q: Can a province impose a tax on transfer of real property within its territory?
ANS: Yes. The province may impose a tax on the sale, donation, barter, or any other
mode of transferring ownership or title of real property (LGC, Sec. 135).
Q: What properties or entities are exempt from transfer tax levied by the
province?
ANS: The follOwing are exempted from payment of transfer tax levied by the province:
1. The sale, transfer or other disposition of real property pursuant to Republic Act
No. 6657, otherwise known as the Comprehensive Agrarian Reform Law
(LGC, Sec 135).
2. The National Housing Authority, being the primary government agency in
charge of providing housing for the underprivileged and homeless, shall be
exempted from the payment of all fees and charges of any kinds, whether local
or national, such as income,,, and real taxes (R.A. No. 7279, Urban
Development and Housing A 5041992, Sec.19).
3. Private developers partiCipati294n the development of socialized housing
projects are given the exOrinigkr the payment of the following:
a., Project-related incOhiltaxe
b., Capital gains tax On T.,411V;16ntds
Vr.""rir1;. PA:-
used
..,0,
for thesiproject;
project;
c. i' , Value-added tax.,for,t(tproompAra,.ptor co cemed;
d.' Transfer to p& both raw bampletecPajects, nd
e.' , bonor!sok for landsiceHified by the local g • vemment units to have
beentanatedtosocedigahousingpurposrNo. 7279, Sec.20).
.,A.,,,i
,4. L ., ..,--
'
ta
-
Q: What are the pfillitisc#at 5;th must be complied w' ii h by p ivate developers to
claim the tax incentives u:hatiR.A3io. Hp? ii
ANS: Upon I .. t,p_licatidgdor exemption,r ivate deve opera mus comply with the
following: 4' 4 !..
.. •, x.0',,,6!:4 %'N-,-,
'
1. A lien on thefititifahe latiiiihal e annotate • by egibter of Deeds;
2. That the'Vialgslip eousing• development plan has already been approved by
the approgreaTe govOnmerit ageCies concerned;
3. That all the sqvinggpcquired byr• ei “.'i '' h's provision shall accrue in favor of
, •••,1
the beneficiapesysubjecgoogamag eme.,:ti48uidelines to be issued by the
Housing andiPrban ,,lievelopment Coordinating Council (R.A. No. 7279,
SeC,20). . 't, . 1
Q: What lands ire covered by R.A. No. 6657?

ANS: The following lands are covered by R.A. No. 6657:
1. All alienable and disposable lands of the public domain devoted to or suitable
for agriculture;
Note: No reclassification of forest or mineral lands to agricultural lands shall be
undertaken after the approval of R.A. No. 6657 until Congress, taking into
account ecological, developmental, and equity considerations, shall have
determined by law, the specific limits of the public domain.
2. Alf lands of the public domain in excess of the specific limits as determined by
Congress in the preceding paragraph;
3. All other lands owned by the Government devoted to or suitable for agriculture;
and'
4. All private lands devoted to or suitable for agriculture regardless of the
agricultural products raised or that can be raised thereon (R.A. No. 6657, Sec.
4).
971
Q: Is the zonal value prescribed by BIR the basis of transfer tax levied by the
province?
ANS: No.. Transfer tax is based on the total consideration of the property or of the fair
market value in case the monetary consideration involved in the transfer is not
substantial, whichever is higher (LGC, Sec. 135).
Q: Who are liable for local transfer tax of real property?

ANS: The seller, donor, transferor, executor, or administrator (LGC, Sec. 135).
Q: When should the tax be paid?

ANS: The seller, donor, transferor, executor, or administrator shall pay the tax within
sixty (60)': days from the date of the execution of the deed or from the date of the
decedent's death (LGC, Sec. 135).
Tax on Business of Printing and Publication
Q: DisCuss the power of the pvinc.erialmpose tax on business of printing and

ANS:
publtion.
h province may poibv. taloj the business Hof persons engaged in the
business of printingAnd u KgtiorrarblinksZcargpc'p seers, leaflets, handbills,
certificates; receipts/parpph o Band othesimil
es ture, C, Sec. 136).
Q: What printin s I not cialVerF4

, bRhe to oesu4 u iness?
ANS: The rec pts r th printing 9fild
/d'publis tbopk or other reading
materials Ares ib d b the D partmenttbrucation (4 HED EWA) s school texts or
references sh I be mpt fr • m Osysin rbs tqx„(LGC, Sec. 1 6),-.4
Franchise To •
<41
Q: Discuss th sgoyligr of a• rose fia gra se px
ANS: The prchiecd ‘rna ose 5 sse en o ing a franchise,
notwithStanding exe pti r er s ecial la (LGC, Sec. 137).
Q: What is the diffsTrence tweeR Ne r_: _A , ite, x referred t 4n the NIRC and the
franchise tax under4he LGgsk `4
\---...IEN1.1-
__. <
ANS: In Section 131 Tnii) nkfttr4201-2a&un 'stet( efined a franchise in the
sense of a secondary oApzeid f pchisV Lig9 s4 y.Oid y confusion when the word
franchise is used in the conr-e>tVaxatio inagnITused, a franchise tax is "a tax
on the privilege of transacting business.inliaeztatnnd exercising corporate franchises
granted by the state." It is not levied on the corporation simply for existing as a
corporation, upon its property or its income, but on its exercise of the rights or privileges
granted to it by the government. Hence, a corporation need not pay franchise tax from
the time it ceased to do business and exercise its franchise. It is within this context that
the phrase "tax on businesses enjoying a franchise" in Section 137 of the LGC should
be interpreted and-understood. To stress, a franchise tax is imposed based not on the
ownership but on the exercise by the corporation of a privilege to do business. The
taxable' entity is the corporation which exercises the franchise, and not the individual
stockholders (National Power Corporation v. City of Cabanatuan, G.R. No. 149110, April
9, 2003).
Q: What are the requirements before a taxpayer may be held liable to a franchise
tax levied by the province?
ANS: The requirements before a taxpayer may be held liable to a franchise tax levied by
the province are as follows:
1. It has a "franchise" in the sense of a secondary or special franchise; and
2. It is exercising its rights or privileges under this franchise within the territory of
the LGU (National Power Corporation v. City of Cabanatuan, supra).
972
Tax on sand, grave/ and other quarry resources
Q: Discuss the power of the province to impose tax on sand, gravel, and other
quarry services.
ANS: The province may levy and collect tax on ordinary stones, sand, gravel, earth, and
other quarry resources, as defined under the NIRC, as amended, extracted from public
lands or from the beds of seas, lakes, river, streams, creeks, and other public waters
within its territorial jurisdiction (LGC, Sec. 138).
Note: The authority to impose taxes and fees for extraction of sand and gravel belongs
to the province, and not to the municipality where they are found (Municipality of San
Fernando, La 'Onion v. Sta. Romana, G.R. No. L-30159, March 31, 1987).
'I
Q: How shall the proceeds from this tax be distributed among the LGUs?
ANS: The proceeds of the tax on sand, gravel and other quarry resources shall be
distributed as follows:
1. Province — 30%;
2. Component city or municipality, ere resources extracted — 30%;
3. Barangay where resource?;' ed — 40% (LGC, Sec. 138).
Note: The proceeds of the tax Aap,sicl navel and other quarry resources in highly
urbanized cities shall be distributegaealows:
atn, .4:4.
1. Highly urbanized city — 6 %* '7.-'t
2. Barangay where resourc sr„%ef'a deP4', 001% (I I:< of LGC, Art 239).
4
Q: May the province/ loke the 110• an Doctrine to 4 nd the imposition of

taxes on sand, grave nd Dther quay, sources extrale It rom private lands?
ANS: No. The province;a ot *nvo e theiRegalian doctrine o idend the coverage of
-their ordinance toq arryftmources e acted from pr ate la •s, for taxes, being
burdens, are;119,0 o be V00-filed b_qr what the ap • lica le s P:tute expressly and
clearly dec§m1 to statute bei construe.. strictrssimi ' juris against the
government krin-Mli
► ulacamvt 9ou Appea ' '',,.‘*o ,',:t . g3 , November 27,
1998). fr --t .."-r_''..., 711_
,-0,P'
Section 151 of th
g-f
C le,Aed a tax c' all quarry resources, regardless of origin,
whether extracted fro p bi or private -4,51 s a province may not ordinarily
impose taxes on stone n gra eleR.,..,,: v--1• •g
p ..12 craw resources, as the same as
'Dt
already taxed under C. Thy stoliince can, however, impose a tax on stones, sand,
• esources extracted from public land because it is
gravel, earth and othe guar —
expressly empowered to o o under the LGC. As to stones, sand, gravel, earth and
other quarry resources extracted from private land, however, it may not do so, because
of the limitation provided by Section 133 under LGC in relation to Section 151 of the
NIRC (ProVince of Bulacan v. Court of Appeals, supra).
Professional Tax
Q: Discuss the power of the province to impose professional tax.
ANS: The province may levy an annual professional tax on each person engaged in the
exercise or practice of his profession requiring government examination at such amount
and reasonable classification as the Sangguniang Panlalawigan may determine but
shall in no case exceed P300 (LGC, Sec. 139).
Q: When shOuld the professional tax be paid?

ANS: ProfesSional tax is payable annually, on or before January 31st Any person first
beginning to practice a profession after the month of January must, however, pay the full
tax before engaging therein (LGC, Sec. 139).
973
•n
Q: Where'should the professional tax be paid?

ANS: Professional tax is payable in the province where taxpayer practices his
profession or where the principal office is located in case he practices his profession in
several places (LGC, Sec. 139(b)).
Note: The professional tax is to be paid only once. A person who has paid the
corresponding professional tax shall be entitled to practice his profession in any part of
the Philippines without being subjected to any other national or local tax, license, or fee
for the practice of such profession (LGC, Sec. 139).
Q: Is there any exemption from payment of this tax?

ANS: F,?rofessionals exclusively employed in the government shall be exempt from the
payment of professional tax (LGC, Sec. 139 (d)).
Q: Where should a professional pay his/her professional tax?

ANS: The ,Situs of the professional tax is the city where the professional practices his
profession 'or where he maintains his principaLo ice in case he practices his profession
in several.places (LGC, Sec. 1 9(b) •
0,1
Q: In case a profession f'ip en •aged.inzine.practiice.,.of4,two professions in two
different cities, an è% ats,to,drie city where Ire% aint 'Petis principle office his
professional taxfor o prifiessiorirffi aylhe.ottLer where he also practices
the same profegsi n Auk; him. tO4oay.„This proiepsidglal tax for the same
profession? Ex/lain. / r
ANS: No. Eve person legally authoriqd4 to practice his pfdasion shall pay the
professional to o 1 e$rovin "fTfittlracifEEPThislrofess now ere he maintains
his principal case e n in +era laces: Provided,
however, Tha erson ho h s Akdilheydorres onding peofe nal tax shall be
entitled to'pra prd on in an 1:41:Rof the P ipp neslwithou being subjected
to any other n , qp.,ifee pr "dtiee'so such profession
(LGC, Sec. 13 k 7,
Amusement Tau
Q: What is meantkamuse es uncler the LGC?
ANS: Amusement isNh,ple via Tefrit. It is synonymous to
relaxation, avocation, Prastme(:)}1un.
, poInclude theatres, cinemas,
concert halls, circuses anntlaa_ Paces here one seeks admission to
entertain oneself by seeing or welding performances (LGC, Sec. 131 (b)
and (c)):
What activities or places are exempt from amusement tax?

ANS: The ;holding of operas, concerts, dramas, recitals, painting and art exhibitions,
flower shows, musical programs, literary, and oratorical presentations, except pop; rock,
or similar Concerts shall be exempt from the payment of the amusement tax-(LGC, Sec.
140 (c)).
Note: It is the intent of the Legislature to not to impose VAT on persons already covered
by the amusement tax. Thus, in Commissioner of Internal Revenue v. SM Prime
Holdings, Inc. (G.R. No. 183505, February 26, 2010), the Supreme Court held that the
gross receipts derived from admission tickets in showing motion pictures, films, or
movies are subject to the amusement tax and not to VAT under the NIRC.
Q: What are the entities upon which provinces cannot impose amusement tax?
ANS: Subject to Section 133(o), LGC in relation to Sec: 125; •NIRC, the entities upon
which provinces cannot impose amusement tax are as follows:
1. Cockpits;
2. Cabarets;
974
3. Night or day clubs;
4. Boxing exhibitions;
5. Professional basketball games;
6. Jai-Alai;
7. Racetracks.
Q: Why are the above-mentioned entities not subject to amusement tax?

ANS: Under the principle of pre-emption, they are not subject to amusement tax
because they are already subject to Other Percentage Tax under Sec. 125 of the NIRC
(LGC, Sec. /33(o) in relation to NIRC, Sec. 125).
Q: Who pays for the amusement tax?

ANS: Proprietors, lessees, or operators of theatres, cinemas, concert halls, circuses,
boxing stadia, and other places of amusement (LGC, Sec. 140).
Tax on delivery truck/van

•'•
014
irfato4mpose
Q: Discuss the power of the prov..1`1‘.ty ,i .= tax on delivery truck/van.
ANS: The province may levy an# ugl d tax for every truck van, or any vehicle
used by manufacturers, producersNolesers, dealers, or retailers in the delivery or
a ,t
distribution of distilled spirits, fen+ ors oft drinks, cigars, and cigarettes, and
, , 1,
other products'as may be determip e..kpatigaia
' , Panlalawigan, to sales
outlets, or consumers, wh l eitirect or directly, WithifiAtie rovince in an amount not
exceeding P500 (LGC, pCri41). I
Note: Once taxed, theitanpfacturersoro users, wholesale's,T , alers, or retailers shall
be exempt from the to o t rs,prescrr ed elsewhere hi' t e LGC (LGC, Sec. 141).
• Powe
Taxing m.e:
o Caes 4 0._tt-P
, e4z, '>.
Q: What aregotaxesofeel, and4Chargesfithat may b le,fteili ties?
ANS: The-citytmay levy,Irp4axes,faqs, a 'at charges tilddik-p76,iliEe or municipality
may impose (LGC,,Ade:.:7: ,i 3'3, Rf
AQ
i,-g
Note: Under the Ldt J -ffre gr,a three (3) kto es of cities: Component Cities, Independent
Component Cities (lCGs) a teof Highly U gl-:.jze..%, ities (HUCs). ICCs and HUCs are
independent of the prdL in LGC Seca...±1p • 4.1 W_s_means that taxes, fees and
charges levied.; and colleted by wand va6,sotely to them (LGC, Sea 151).
Taxing Powers ofMun at/0 .
Q: What are the taxes, fees, and charges that may be levied by municipalities?
ANS: A municipality may levy hose taxes, fees, and charges not otherwise levied by
provinces (LGC, Sec. 142).
r1
Q: What are the types of businesses upon which taxes may be imposed by
municipalities?
ANS: The Municipality may impose taxes on the following businesses (M-WER-CF-PA):
1. On Manufacturers, assemblers, re-packers, processors, brewers, distillers,
rectifiers, and compounders of liquors, distilled spirits, and wines or
manufacturers of any article of commerce of whatever kind or nature;
2. On Wholesalers, distributors, or dealers in any article of commerce of
whatever kind or nature;
3. On Exporters and on manufacturers, millers, producers, wholesalers,
distributors, dealers or retailers of essential commodities enumerated in the
LGC;
4. On Retailers;
5. On Contractors and other independent contractors;
6. On banks and other Financial institutions;
975
•
IDA VOL 1.
2019
7. On Peddlers engaged in the sale of any merchandise or article of commerce;

or
8. On Any business, not otherwise specified in the preceding paragraphs, which
the Sanggunian concerned may deem proper to tax (LGC, Sec. 143).
Note: When a municipality or city has already imposed a business tax on
manufacturers, etc. of liquors, distilled spirits, wines, and any other article of commerce,
pursuant to Section 143(a) of the LGC, said municipality or city may no longer subject
the same i rnanufacturers, etc. to a business tax under Section 143(h) of the same Code.
Section 143(h) may be imposed only on businesses that are subject to excise tax, VAT,
or percentage tax under the NIRC, and that are "not otherwise specified in preceding
paragraphs (City of Manila v. Coca-Cola Bottlers PHL, Inc., G.R. No. 181845, August 4,
2009).
Q: What is meant by wholesale?

ANS: A wholesale is a sale where the purchaser buys or imports the commodities for
resale to Persons other than the end„use6regardless of the quantity of the transaction
(LGC, Sec. 131 (z)). .0,P°'*" -%
T ...
Q: What is meant by reta ?
ANS: Retail refers s 1,e,wIlgrel;7142 s , ommodity for his own
consumption, irres cti f th'e quantiffreom oal C, Sec. 131 (w)).
Q: Who is a co rac o P zai, X

ANS: Contract& inckl es p ons, natliar,r juridical not professional tax
under Sec: 13 GC, ose ac ivi fonsta s ess, ntiallo t ale of all kinds of
services fOr a etT-re ardless of Ikliffit 8 rrof pperiorman of th service calls for
the exercise r use of the •hysi etal fac 'ties of auch.1 ontractor or his
employees' (L 1
S/j
Q: Who IS de reP r.‘-':), is....
ANS: One who busi .e.i as isf) y d - dis ,goods and chattels as a
merchant. He stands mrpedi t9I e oduc r or nanufacturer and the
consume( and de ends fb his o th labor 6 bestows upon his
commodities but upck the sja a-ror 1 1 h itch w tales the market (LGC,
Sec. 131(k)). (LGC, Sac 14 )-
Q: Who isa peddler?

ANS: Any:person who, either for him I commission, travels from place to place
and sells his goods or offers to sell and deliver the same (LGC, Sec. 131 (t)).
Q: What are essential commodities?

ANS: The following are considered as essential commodities:
1. Rice and corn;
2. Wheat or cassava flour, meat, dairy products, locally manufactured, processed
or preserved food, sugar, salt and other agricultural, marine, and fresh water
products, whether in their original state or not;
3. . Cooking oil and cooking gas;
4. Laundry soap, detergents, and medicine;
5. Agricultural implements, equipment, and post-harvest facilities, fertilizers,
pesticides, insecticides, herbicides, and other farm inputs;
6. Poultry feeds and other animal feeds;
7. . School supplies; and
8. Cement (LGC, Sec. 143(c)).
976
Q: What is the coverage of the municipalities' taxing power on retailers?
ANS: The municipalities have the power to levy taxes on retailers if gross sales exceed
P30,000 (LGC, $[ ec. 143 (d)).
Note: Barangays, however, shall have the exclusive power to levy taxes on retailers if
gross sales or receipts do not exceed P50,000 in the case of cities and P30,000 in the
case of municipalities (LGC, Sec. 143 (d)).
Q: What is the!scope of the LGU's taxing authority over banks and other financial
institutions?
ANS: The LGU's taxing authority over banks and other financial institutions is limited to
the gross receipts derived from interest, commissions and discounts from lending
activities, income from financial leasing, dividends, rentals on property and profit from
exchange or sale of property, insurance premium (LGC, Sec. 143 (f)).
Note: All other income and receipts of banks and financial institutions not otherwise
enumerated above shall be excluded from the taxing authority of the LGU (IRR of LGC,
Art. 232 p.
Q: What is the maximum rate NO ay be imposed by municipalities within
Metro Manila? •
ANS: The municipalities in Metro levy taxes at rates which shall not exceed
by 50% the maximum rates prescri 43 of the GC (LGC, Sec. 144).
ffr
Q: What are the requiremmteon thefre remen oftusi s subject to taxes, fees,
and charges levied byAgfficipalitie0
ANS: A bush* subjrttogtaxes, fe charges levied ntunicipalities shall, upon
termination thereof, sbtna syo ent of its gro, s safes or receipts for the
current year. If thealeioi Wring the yea e less than Ve tdk dile on said gross sales
or receipts of ;t. t'SrrenTflar; the if nce shall be' pai• bel•re the business is
considered o a ly retire"•,ILGC, Sec."14
,,hir. kastN,
Q: How do entities pay.'' hez usige* to levied b• . a ity?
ANS: The taxesIirresoLedWider Section , LGC shall be payable for every separate
or distinct establishrif or Ice where siness subject to the tax is conducted and
one line of business does O become being conducted with some other
business for Which suc as bgea, a .business must be paid by the
person conducting theta (LG&M.
Q: How is business t*gimputed when a person operates two or more
businesses?:
ANS: In cases where a person conducts or operates two or more of the businesses
mentioned in Sec. 143 of LGC, the following rules must be complied with:
1. If bOth businesses are subject to the same rate of tax — the tax shall be
computed on the combined total gross sales or receipts of the said two or
more related businesses; or
2. If bOth businesses are subject to different rates of tax — the gross sales or
receipts of each business shall be separately reported for the purpose of
computing the tax due from each business (LGC, Sec. 146).
Q: What are the fees and charges for regulation and, licensing which a
municipality may impose?
ANS: The following are fees and charges which may be imposed by a municipality:
1. The municipality may impose and collect such reasonable fees and charges
on business and occupation except professional taxes reserved for provinces
(LGC, Sec. 147);
2. Fees for sealing and licensing of weights and measures (LGC, Sec. 148); and
3. Fishery rentals, fees and charges (LGC, Sec. 149).
977
g'':•-•Ir.4.V•01:.o471.7,0;•;••••`• • .;:•:•••••IIi • ii•••••••'..• . :••• •i•• vf,•••i 43 •4•
Q: What are the scenarios for situs of municipal taxation?

ANS: The following scenarios are:
1. With branch or sales outlet (LGC, Sec. 150 (a));
2. Where there is no branch or sales outlet (LGC, Sec. 150 (a));
3. Where there is a factory, project office, plants, or plantation in pursuit of
brusiness (LGC, Sec. 150 (b));
4. Where there are two or more factories, project offices, plants or plantations
bicated in different localities (LGC, Sec. 150 (c) & (d));
5. Sales made by route trucks, vans, or vehicles (IRR of LGC, Art. 243 (d)).
Q: What is a principal office?

ANS: A principal office is the head or main office of the business appearing in pertinent
documents` submitted to the SEC, or DTI, or other appropriate agencies, as the case
may be ORR of the LGC, Art. 243 (a) (1)).
Q: What is the duty of the ow_ip,,r,„:cepere or manager of the business after

relocation tof the principal Vic_e was iffetteFl?
ANS: In case of transfeEAhe optrjtoai. ana er of the business shall give
notice of such transf9r orNocation.to—the.gca f c ?ewe cutives of the cities or
municipalities concepTpd Wiqiih,p4'5nays after su'ehNra sfeyb elocation was effected
(IRR of thelLGC, 24 eri)
w
Q: What is'ea
in t b b anch or salds offi?,
ceA.\
..
ANS: A branc office s a fi ed place,itiAlocality w ich c'b d operations of the
business as a e rrs on of t • e princea ice o e LG& ft 3 (a) (2)).
Q: Are displar eat of the procliid‘p

." vei;
.r-ertitie classi dd-ey ranch or sales
offices? 1r
ANS: No. OffiopF useo isp ay,ar t - • . ct herd"?' o stocks or items
are stored for gale! At Doug fh~e'ttlu y be/ receK d thereat, are not
branch or sales Mims ' her &plated -.Rq) e LOC, Art. 43 (a) (2)).
Q: What is e warehouse?
ANS: A warehouse Is a build g.0 SralcgagiVN
Utz' e 59 .49 cpro" ucts for sale and from
which goods or mercilqfisre ptithdrawn4or'dery iy culiomers or dealers, or by
persons acting in behalf athe bugrss (MN ff. 243 (a) (3)).
.
Q: What is! the classification of a a e which accepts orders and/or issues
sales invoices?
ANS: A warehouse which accepts orders and/or issues sales invoices independent of a
branch with,' sales office shall be considered as a sales office (IRR of the LGC, Art. 243
(a) (2)).
Q: Discusa the situs of tax collected when there is a branch, sales office, or
warehouse.
ANS: The taxpayer shall record the sale in the branch or sales outlet making the sale or
transaction, and the tax thereon shall accrue and shall be paid to the municipality where
such branch or sales outlet is located (LGC, Sec. 150(a)).
Q: Discuss the situs of tax collected when there is no branch, sales office, or
warehouse'. •
ANS: The sale shall be duly recorded in the principal office along with the sales made
by said principal office. The taxes due shall accrue to the city or municipality where said
principal office is located (LGC, Sec. 150(a)).
•
978
VOL 1.
2019
Q: Discuss the Situs of tax collected where there is a factory, project office, or
plantation.
ANS: The following sales allocation shall apply:
1. 30%!of Ian sales recorded in the principal office — taxable by the city or
municipality where the principal office is located;
2. 70%of !all sales recorded in the principal office — taxable by the city or
muniCipality where the factory, project office, plant, or plantation is located
(LGC, Sec. 150(b));
3. If plantation is located in a locality other than that where the factory is
located the seventy percent (70%) sales allocation shall be divided as
a. 60% — city or municipality where the factory is located;

b. 40% — city or municipality where the plantation is located (LGC, Sec.
150(c)).
Note:
1. In cases: where there are two ) or more factories, project offices, plants or
plantatiOns located in differebt ocalities, the seventy percent (70%) sales
alloCation shall be proratep.,. o the localities where such factories, project
offices, plants, and plablattole„ re located in proportion to their respective
Ji I- 1. s
volumes:of production Abet enod for which the tax is due (IRR of LGC,
Sec. 240 (b)(5)). .1F
At-
2. In case:of manufacturers'. o 'age the services of an
independent dzOtor to prod ce -or manu ac ure some of their products,
these rules ogsiius of taxaSlokii,hall apply except the factory or plant and
warehoUse Orthel contrastOrufilized for the pr tiction and storage of the
manUfaCture pVclucte 671 considered s actory or plant and
wareh uSe(Of theirbeaufacturerRR
k
Q: Discussdlie situs 'of tax collecte&n sales
( of LGC, S. 2
de43
7)).
rucks, vans, or
vehicles.
ANS: The followe ruins"
rui apfihvhergoute sales a An the locality where a
manufacturer; priidtP1,4 hci_esaler,letaileur dealer
1. has:a branc or sa tes office okr0eSise - the sales are recorded in the
branchalesafice r warehougelarrOMeivex due thereon is paid to the LGU
where such biffigh;•sa!eaffibtiizf eliateetsTetcated.
2. has no brancliy salesAffice or warehouse - the sales are recorded in the
g
brabch; sales'o&ce warehouse from where the route trucks withdraw their
products for sae an the tax due on such sales is paid to the LGU where
such branch, sales office or warehouse is located (IRR of LGC, Art. 243(d)).
Taxing Poweriof Barangays

•
Q: What are the. taxes, fees, and charges that may be levied by barangays?
ANS: Barangay may levy the following taxes, fees, and charges which shall exclusively
accrue to them: r
1. Takesion small business establishments;
2. Service fees or charges;
3. Baranbay clearance; and
4. Other fees and charges (LGC, Sec. 152);
Q: Discuss the power of the barangay to impose taxes on small business
establishments.
ANS: Bamngays may levy taxes on stores or retailers with fixed business
establishments with gross sales or receipts for the preceding calendar year of P50,000
or less (for barangays in cities) and P30,000 or less (for barangays in municipalities)
(LGC, Sec. 152).
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Q: DiSCrus the power of the barangay to impose service fees or charges.

ANS: Baiangays may collect reasonable fees or charges for services rendered in
connection with the regulations or the use of barangay-owned properties or service
facilities such as palay, copra, or tobacco dryers (LGC, Sec. 152).
Q: DisCuss the power of the barangay to impose fee for the issuance of barangay
clearance.
ANS: No city or municipality may issue any license or permit for any business or activity
unlessie clearance is first obtained from the barangay where such business or activity is
located oil'conducted. For such clearance, the Sangguniang Barangay may impose a
reasonable fee (LGC, Sec. 152).
Q: What businesses or entities may the barangay charge reasonable fees and
charges?
ANS: The, barangay may levy reasonable fees and charges:
1.1, On commercial breeding of fighting cocks, cockfights and cockpits;
On places of recreationxhieeidmission fees; and
3 On billboards, si neci rds, neon s aTh'outdoor advertisements (LGC,
Sec. 152). .r.
Common Revenue. ce;In O‘rS
Q: What are theF9 o re enue Taistrvifpapers o alljlo~ai go ernment units?

ANS: All local g9Vern t un s maylimpcfsb thelfollowing:
1; Service fees d ch rges;
Publi t i harge , an .
3: Toll f es-ori harges Ld655 -- 53=V5f.
ill
Q: What are s 11 es or ch:Ed
ANS: Toll feety ge o ffirifate
i -Tf blic4 d, pier or wharf,
waterway; bridgpi er rm )1-:. nde ands 11.5 nstructed by the
mPAI, 11(104 N's
local gOvernme%nit
1'
Q: Who are exemated fro to 611-f- es..r c rges?
ANS: No such toll fa s or_cha es .re'din•
fficers an en cer of the Philippines and
Omembers of th NationakPRIi Skii6 ton;
2; Post office personn ering
3. Physically-handicapped;
4.f. Disabled citizens who are sixty-five (65) years or older (LGC, Sec. 155).
Note: Sanggunian concerned may discontinue the collection of the tolls when
public'safety and welfare so requires. Thereafter, the said facility shall be free and open
for public,'use (LGC, Sec. 155).
Community Tax
Q: What is a poll or capitation tax?
ANS: Poll or capitation tax, is a tax of a fixed amount upon all persons, or upon all
persons of a certain class, resident within a-specified territory, without regard to their
property or the occupations in which they may be engaged (Villanueva v. City of Iloilo,
G.R. No. L-26521, December 28, 1968).
Q: Who are liable for community tax?

ANS: The following are liable for community tax:
1. Individuals—
a. every inhabitant of the Philippines, 18 years of age or over and
b. who has been regularly employed for at least 30 consecutive days; or
engaged in a business or occupation; or owns a real property with an
980
aggregate value of P1,000 or more; or who is required by law to file an
income tax return (LGC, Sec. 157).
2. Corporations — whether domestic or resident foreign, engaged in or doing
business in the Philippines (LGC, Sec. 158).
Q: Who are exempt from paying community tax?

ANS: The following are exempt from paying community tax:
1. Diplomatic and consular representatives; and
2. Transient visitors when their stay in the Philippines does not exceed three (3)
months (LGC, Sec. 159).
Q. Who are the persons not subject to pay the community tax for the rest of the
current taxable year?
ANS: The following persons are not subjected to pay the community tax for the rest of
the current taxable year
1. Persons who come to reside in e Philippines on or after the first (1st) day of
July of any year;
2. Persons who reach the age teen (18) years on or after the first (1st) day
of July of any year; and 0
3. Persons who cease to bar exempt class or after the first (1st) day of
July early year (LGC, Sic.
Q: Where is community taxi id?
ANS: Community tax is iiTat the r3 g.,ce of the individual r in the place where the
principal office of the jqt:11 I entity is ed (LGC, Sec. /6/5)
Q: When is the,pay ntScignimunity ?

ANS: CommueVax accipe&h thf,1s gay of Janua o ach ear which shall be
paid before Peery 1stVch year (MC e c 161).
...rootO
Q: May the'city org altrea rer putize th asurer to collect
community taxfi
ANS: Yes. The cityfii'mu r may deputize the barangay treasurer to
collect the community tax in n *sdictions, provided, however, that said
barangay treasurer sha sing laws (LGC, Sec. 164).
Q: How are the proce community tax collected through the barangay
treasurer apportioned?
ANS: Proceeds of the comm tax collected through the barangay treasurers shall be
apportioned as follows:
1. 50% accrues to the general fund of the city or municipality concerned; and
2. 50% accrues to the barangay where the tax is collected (LGC, Sec. 164).
Note: If the community tax is directly collected by the city or municipal treasurer, it shall
accrue entirely to the general fund of the city or municipality concerned (LGC, Sec. 164).
r
Common Limitations On The Taxing Powers Of LGUS
Q: What impositions may not be exercised by the Local Government Units?

ANS: The exercise of the taxing powers of provinces, cities, municipalities, and
barangays shall not extend to the levy of the following : (IDEC-PAPi-Ex-PeT-RMEBG) •
1. Income tax, except when levied on banks and other financial institutions;
2. bocumentary stamp tax;
3. TaxeS on Estates, inheritance, gifts, legacies and other acquisitions mortis
causa, except as otherwise provided herein;
4. Customs duties, registration fees of vessel and wharfage on wharves, tonnage
dues, and all other kinds of customs fees, charges and dues except wharfage
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on wharves constructed and maintained by the local government unit

concerned;
Taxes, fees and charges and other impositions upon goods carried into or out
Of, or Passing through, the territorial jurisdictions of local government units in
the guise of charges for wharfage, tolls for bridges or otherwise, or other taxes,
fees or charges in any form whatsoever upon such goods or merchandise;
6. Taxes, fees or charges on Agricultural and aquatic products when sold by
Marginal farmers or fishermen;
Taxes on business enterprises certified to by the Board of Investments as
Pioneer or non-pioneer for a period of six (6) and four (4) years, respectively
from the date of registration;
8. Excise taxes on articles enumerated under the National Internal Revenue
Code, as amended, and taxes, fees or charges on petroleum products;
Percentage or value-added tax (VAT) on sales, barters or exchanges or similar
transactions on goods or services except as otherwise provided herein;
10. Taxes on the gross recejpts....of.lransportation contractors and persons
engaged in the trarwtraiorr of-passenders or freight by hire and common
pr, carriers by air, lf,ptf or tik,ater, e ce t#13rovIdefillthis Code;
It Taxes on pre urns "old By,way,offtemsutrande prletrocession;
12T Taxes, feesxor c agerfor the regist7itio r$6.f Kok vehicles and for the
issuance fllOti d-s f,liceVerdt-permits he
driving thereof, except
tricycles, r
13. Taxesjfees, other charges on,.,.hilippine product ctu a lz Exported, except
‘A.A
as of rovidgd herein; Or)
14. Taxe ,9es, or charges, on p an Baran atgil jness Enterprises
and ooper, fi ves diuly`ciFebitprOiitiriger R. • . No.010, d Republic Act
Num Sixty-ninehundidglirtoOlgbt (R. . No. 6938)4 erwise known as
the "peAtiv s oIle of thkEhilippines" r- Fdetivegf; and
15. Taxe , eest r c tr goverriTent, its agencies
and IA ,rife taliti locaPrg r( the • (L C, Seal 133).
Procedure For..Ipprova And ffectrvity f'To'Ocdinanges
Q: What are the requisites o VitiLLOAR'apteP".:
ANS: The requisites arkq, v4Ii4or fit ce are as IlOye:
1. If must not conirvenet9ercon4 u o oci,:tOta ute
It must not be unfaihocofpress.i2
3.'Ìt must not be partial or discrimmalm
4.: It must not prohibit but may regulate trade.
5. It must be general and consistent with public policy.
6. It, must not be unreasonable (Magtajas v. Pryce Properties Corp., Inc., G.R.
_No. 111097, July 20, 1994).
Q:: How de LGUs exercise the power to impose tax, fees, and charges or to
generate revenues? • • .1
ANS: The poWer:to'impose a tax, fee, or charge or to generate revenue under the LGC
shall be exerbled by•the Sahggunian of the local govemment unit concerned through
an appropriate-ordiriance (LGC, Sec. 132).
•
Q: What is, the procedure for the enactment of local tax ordinances and revenue
measures?
ANS: The following are the steps for the enactment of local tax ordinances and revenue
measures:
1. Filing of proposal. The proposed tax or revenue ordinance is prepared. The
sponsor explains the rationale for the enactment of the proposed ordifiance;
982
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2. Publication or posting. Within the ten (10) days from filing the same, it shall be
posted for three consecutive days in a newspaper of local circulation or shall
be posted simultaneously in at least four conspicuous places within the
territorial jurisdiction of the LGU;
3. Noiification. The Sanggunian shall cause the sending of written notices of the
proposed ordinance enclosing a copy to interested or affected parties
omating or doing business within the territorial jurisdiction of the LGU. The
notice(s) shall specify the date(s) and venue of the public hearing;
4. Mehdatory public hearing. The public hearing shall be held no less than 10
days from the time notices were sent out, posted or published. All affected or
interested parties shall be accorded an opportunity to appear and present or
express their views, comments and recommendations, and such public
hearing or hearings shall continue until all issues have been presented and
fully deliberated upon and/or consensus is obtained, whether for or against the
enactment of the proposed tax ordinance or revenue measure. The secretary
of the sanggunian concerned sh JI prepare the minutes of such public hearing
and shall attach to the migpfet he position papers, memoranda, and other
documents submitted by:Iffibtel participated;
Note: iPier ' 74.
1411141A
a. No tax ordinanc on lie ud measure shall be enacted or approved in
the absence of utibnibaaringrauly condu :ted in the manner provided
r I in this Articlei.OR
•
AGGlia?-276kr.
-9:9
b. While tlx0P/ggunians arse required to coedt public hearings prior to
I, 'the eqament of tadorpti ances and reveremeasures (LGC, Secs.
186 d' sdls '67) the Nai al Legislature, on other hand, has the
.4 disc (bpkt3ethr or not y would poncict ic hearings before the
enbc menOfttax laws (SA ABAN, Tax Lion raw review (2008), page
5. Apkgival path ordinance an venue vAessm r-•

6. Publiqation of, pp vedly:Vrdirence and rBradthi en (10) days after
their apjapar,1;tified *tot coils of all provincidlly, and municipal tax
ordinances hl revenue , easuF shall be published in full for three (3)
consecutive. days an a newspa er.. of local circulation provided that in
prOvinges, cities Vaii municipals emv e, ere are no newspapers of local
circulation, the same Ilabe pos ecki tall as two (2) conspicuous and
publicly accekble plaks; and
Note:1 .....
1. If the tax ordi ance or revenue measure contains penal provisions as
authorized in Article 280, IRR of LGC, the gist of such tax ordinance or
revenue measure shall be published in a newspaper of general
circulation within the province where the Sanggunian concerned
belongs. In the absence of any newspaper of general circulation within
the province, posting of such ordinance or measure shall be made in
accessible and conspicuous public places in all municipalities and cities
of the province to which the Sanggunian enacting the ordinance or
revenue measure belongs (IRR of LGC, Art. 276).
2. The tax ordinance will be null and void if it fails to comply with such
publication requirement (Coca-Cola Bottlers Philippines, Inc. v. City of
Manila, G.R. No. 156252, June 27, 2006). •
7. FurniShing of copies of tax ordinance and revenue measure. Copies of all
prOvincial, city, municipal, and barangay tax ordinances and revenue
measures shall be furnished the respective local treasurers concerned for
public` dissemination (IRR of LGC, Art. 276 in relation to LGC, Secs. 48-59).
983
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Q: 1.IVhen will a tax ordinance or revenue take effect?
ANS: The effectivity of the tax ordinance or revenue may be outlined as follows:
1. Unless otherwise stated in the ordinance, the same shall take effect after ten
(10) days from the date a copy thereof is posted in a bulletin board at the
entrance of the provincial capital or city, municipal, or barangay hall, as the
case may be, and in at least two (2) other conspicuous places in the local
government unit concerned;
The gist of all ordinances with penal sanctions shall be published in a
newspaper of general circulation within the province where the local legislative
body concerned belongs. In the absence of any newspaper of general
circulation within the province, posting of such ordinances shall be made in all
municipalities and cities of the province where the sanggunian of origin is
situated;
In the case of highly urbanized and independent component cities, the main
features of the ordinance or resolution duly enacted or adopted shall, in
addition to being posted, lap,publisliecl once in a local newspaper of general
circulation within the . rovidell, TO *the absence thereof the ordinance
or resolution shpll e p bpshekialar w,paer of general circulation (LGC,
Sec. 59). ..,.>;,„,,....,,,,,,..
Note: In case the ey rtf.tax ordinance ‘1‘riL'; asure falls on any date
..z.
other than the beakini uarterlFr , n ered as falling at the
19
beg nning of the " uarterhandffie ,taxes, es, rNo a g s due shall begin to
accrue therefro Art. 276 ( , A
•rA• ,--
-t..
.t .
Q: An Ordina ea pass • y iovincia :o rd of ro lir in the North,
increasing they ate/ reatfir i;aK h vreo m .006% to 1°4 f the assessed
li . .
value of the 101 prope ee — anuary 1, 20 0:-.43e idents of the
4,,,,
municipalitieiattke sal • vince p ed the Or fn on th ground that no
pub is hearin\jwas , on • 5t' 9,,y cr 6 b the rate of real
property tax is °fel the 1 i "th s iOtes fain rower. (Bar 2002)
ANS: The prote t is de 'd '..0 o • bii6' fired beore the enactment
of a local tax ordinance le R ofii
L pC, Art. 324).
Periods forAssessmentand •olle lokgkIrD es. Fees, am/ Charges
Q: What is the tax perio loPgat
ANS: Unless otherwise pro i LG to of all local taxes, fees, and
charbes shall be the calendar yea 6G.C,e5ss,46
Q: How'may taxes be paid?

ANS. Such taxes, fees and charges may be paid in quarterly installments as may be
provided in the tax ordinance (1RR of LGC, Art. 253).
Q: When do local taxes accrue?

ANS All local taxes, fees, and charges shall accrue on the first (1st) day of January of
each year (LGC, Sec. 166).
Note. In case of new taxes, fees or charges, or changes in the rate thereof, the same
shall accrue on the first (1st) day of the quarter next following the effectivity of the
ordinance imposing such new levies or rates (LGC, Sec. 166).
Q: When should local taxes be paid?

ANS: Unless otherwise provided in the LGC, all local taxes, fees, and charges shall be
made:within the first twenty (20) days of January or of each subsequent quarter, as the
case may be (LGC, Sec. 167).
984
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Q: Is the time for payment extendible?

ANS: Yes. The Sanggunian concerned may, for a justifiable reason or cause, extend
the time for payment of such taxes, fees, or charges without surcharges or penalties, but
only for a period not exceeding six (6) months (LGC, Sec. 167).
Q: What penalties may be imposed on unpaid taxes, fees, or charges?

ANS: The Sanggunian may impose:
1. Surcharge — not exceeding 25% of the amount of taxes, fees or charges not
paid on time; and
2. Interest — not exceeding 2% per month of the unpaid taxes, fees or charges
including surcharges, until such amount is fully paid.
Note: In no case shall the total interest on the unpaid amount or portion thereof exceed
thirty-six (36) months (LGC, Sec. 168).
Q: Who has the authority to collect local taxes, fees, and charges?
ANS: All local taxes, fees, and charges shell be collected by:
1. The provincial, city, municippy4arangay treasurer; or
2. Their duly authorized deppiKAG,C, Sec. 170).
Note: The 'provincial, city, or murltiklagurer may designate the barangay treasurer
as his dep6ty to collect local taxe4r6,610arges (LGC, Sec 170).
Q: Who may inspect or examine the w.,OR s,o peedris.fs 1.5 ct to local taxes?
ANS: The provincial, citybffigicipal, or b rangay treasurer any, by himself or through
any of his deputies duirtaithorizedring,
J examine the oks, accounts, and other
pertinent records of arerton
- partriers corporation, o association subject to local
taxes, fees;andharge 40CuSec. 171).
,"
Q: What are the`requisites
,14 for a valid,exa ination of • ook ?
ANS: The ford) nasIg.,thearequiVes:
1. The xaminatioff f bookTAis ssary in awl, assess, and
collectlhe corr.L4amount aithe x, fee, or chase;
2. During gatlailffuitess ho6rs;
WI
3. Only once4fortfverygr period;
4. Shall be certiVoloy the exammag, .o crtzend
5. Such certificate shall be ifircrego riAig books of accounts of the
it
taxpayer exa f4.ed (L Sec. 171).
Taxpayer's Remedies f
Q: What are the remedies available to taxpayers?
ANS: In !coal taxation, the taxpayer's remedies are as follows:
1. To question the constitutionality or legality of tax ordinances or revenue
measures (LGC, Sec. 187);
2. Protest against an assessment (LGC, Sec. 195);
3. Claim for refund or tax credit (LGC, Sec. 196).
Q: What is the procedure to be followed in questioning the constitutionality of an

ordinance?
ANS: The' procedure in questioning the constitutionality or legality of a tax ordinance
may be outlined as follows:
1. Appeal to the Secretary of Justice within 30 days from the effectivity of such
ordinance or revenue measure;
2. The Secretary of Justice shall render a decision within 60 days from the date
of the receipt of the appeal;
3. Within thirty (30) days after the receipt of the decision or after the lapse of the
60-day period without the Secretary of Justice acting upon the appeal, the
985
•••
aggrieved party may file appropriate proceedings with a court of competent

i jurisdiction (LGC, Sec. 187).
Note: Court of competent jurisdiction refers to the Regional Trial Court (RTC) when
case is resolved to determine any question or construction or validity of a tax law and for
the declaration of the taxpayer's liability thereunder (V/TUG & ACOSTA, Tax Law and
Juri4pruclence (2014 Edition), p. 490; Rules of Court, Rule 63, Sec. 1). The method of
judicial recourse has not been specified in the LGC, although it might be said that such
proceedings could include, but certainly will not exclude, the special civil actions of
certiorari, mandamus, or prohibition (VITUG & ACOSTA, supra at 489).
Q: May the appeal made to the Secretary of Justice suspend the effectivity of the
ordinance in question?
ANS: No. The appeal made to the Secretary of Justice shall not have the effect of
suspending the effectivity of the ordinance and the accrual and payment of the tax, fee,
charge levied therein (Sec. 187, LGC).
Q: What is the prescriptive periolforiasse sstmffitqlocal taxes, fees, or charges?

ANS: 'Local taxes, fees, bsicliargkshalltejalisqsse?iwiihin five (5) years from the date
they became due. Howells( W qn t4gre.is-frauc14- idtent tpAade the payment of taxes,
fees pr charges, the 9. beIssessed withiiikte 1(10),,O'Nr, from discovery of the
fraud or intent to evades ent-(1..-GC;rS'etr-1,94) .rx
Q: What is the prescriptive period forTMi7collection of local a es?

ANS. Local tax s, feels.,` or charges maytbftollected vklIthin figs from the date
of adsessmentibyegdyninistr4fivs or Judicql—atiliTiThTd such 7,19A hall be instituted
after the expiraliOn-ofsuch pe iod YLOC,::.§Pi!ce §74)?"/
Q: What are he roundrik the stiVgiVon of S mr)71 he prescriptive

periods?
ANS: The folio rou ,sustipndiotib the unnin of the prescriptive
periods: (PRO)
1. The treasurer he " asses ment o collection of the tax;
.<
2. The taxpyer
' requests (t96à- p iga)on ark executes a waiver in writing
before thebriratiojitif, ithin whia% ttpape(s or collect-and-
3. The taxpayer Country.prodflre rfOt be located (LGC, Sec.
194).
Protest of Assessment -
Q: What is the procedure in case of protesting an assessment?

ANS:
1. Within sixty (60) days from the receipt of the notice of assessment, the
taxpayer may file a written protest with the local treasurer contesting the
assessment; otherwise, the assessment shall become final and executory.
2, The treasurer has to decide within 60 days from the time of its filing. If the
treasurer finds the protest meritorious, he will cancel the assessment; if not, he
I will deny the protest. _ - -• •
31 The taxpayer shall have thirty (30) days from the receipt of the denial of the
protest or from the lapse of the 60-day period within which to appeal with the
t court of competent jurisdiction, otherwise the assessment becomes conclusive
and unappealable (LGC, Sec. 195).
Note: If appeal is denied, the taxpayer may file a Petition for review to the CTA Division
under Rule 42 (appeal from RTC acting in its original jurisdiction) or Petition for review
to the CTA En Banc under Rule 43 (appeal from RTC acting in its appellate jurisdiction)
(INGLES, Tax Made Less Taxing: A Reviewer with Codals and Cases (2015), p. 539).
986
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Q: Can injunctions be issued in the case of local taxes?
' VOL 1.
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ANS: Yes. The prohibition on the issuance of a writ of injunction to enjoin the collection
of taxes applies only to national internal revenue taxes, and not to local taxes. There is
no expresslprovision in the LGC prohibiting courts from issuing an injunction to restrain
local governments from collecting taxes (Angeles City v. Angeles Electric Corp., G.R.
No. 166134, June 29, 2010).
Claim for Refund of Tax Credit for Erroneously or illegally Collected Taxes, Fees, or
Charges
I ,
Q: When may erroneously or illegally collected tax, fee or charge be claimed for
refund or credit?
ANS: The tpxpayer entitled to a refund or tax credit shall file with the local treasurer a
claim in writing duly supported by evidence of payment (e.g., official receipts, tax
clearance, ;and 'such other proof evidencing overpayment within two (2) years from
payment ofthe tax, fee, or charge (IRR of GC, Sec. 286).
,401
Q: If the tax credit is granted, is qr103f ayer entitled to a cash refund?
ANS: The tax credit granted a taxtge haAnot be refundable in cash but shall only be
applied to future tax obligationsVo'f5,q4aTe taxpayer for the same business. If a
taxpayer has paid in full the tax ertellstir ear and e shall have no other tax
obligation payable to the LGU cq,rihear41 • urin at eyeartits ax credits, if any, shall be
applied in full during the first carter otah next ca en argea on the tax due from him
for the same business OA calendqwe (Sec. 252, LGC)
Exception:; Any unacklied,•balance ifat tax credit stiall funded in cash in the
event that he terminatls'"0 ration of the b siness involve hi the locality (Sec. 145,
isp•
LGC).
4.
Remedies ofit eLGUsl'or‘Collection of Re
' ienues
Local Govern'ment's Lien for Definquentnxes. FeeorACtiarkes
t#70, r'fil
Q: What is the n'Thre,oigorrnment's I en for delinquent taxes?
ANS: Local taxes, Ve;,̀ chk§es, and ot r revenues constitute a lien, superior to all
liens, charges, or encuktmips in favor LaS es , enforceable by any appropriate
administrative or judictaction, 94,201.40' ,au z ,or rights therein which may
p
be subject the lien but also upon property used in business, occupation, practice of
profession or calling, o erc se f privilege with respect to which the lien is imposed .
(LGC, Sec.I173).
1
Q: How is the lien extinguished?
.ANS: The lien may only be extinguished upon full payment of the delinquent local taxes,
fees, and charges, including related surcharges and interest (LGC, Sec. 173).
Q: What ace the civil remedies available to the LGU for collection of revenues?
ANS: The remedies available to the LGU are:
1. Administrative action:
a. Distraint of personal property;
b. Levy upon real property (LGC, Sec. 174);
c. Compromise (LGC, Sec. 148(6) in relation to Sec. 142); and
2. Judicial action (LGC, Sec. 174).
Administrative Action
Q: How is the administrative remedy of distraint or levy exercised?
ANS: By administrative action through distraint of goods, chattels, or effects, and other
personal property of whatever character, including stocks and other securities, debts,
987
credits, bank accounts, and interest in and rights to personal property, and by levy upon
rea0property and interest in or rights to real property (LGC, Sec. 174).
Q: May the LGU purchase real property advertised for sale?

ANS: Yes. The LGU may purchase the real property when:
cl.
M , There is no bidder; or
2. The highest bid is for an amount insufficient to pay the real property tax, fees,
charges, surcharges, interests or penalties (LGC, Sec. 181).
1
Q: Is the remedy of distraint or levy available only once?
ANS: ,No. The remedies of distraint and levy may be repeated if necessary until the full
amount due including all expenses is collected (LGC, Sec. 184).
Q: Are the remedies of distraint and levy applicable to all properties of a

delinquent taxpayer?
ANS: No. The following properties ara„exempt,fw distraint or levy:
1 Tools and implemer tshrfecessarilylusad 'the delinquent taxpayer in his trade
or employmenti,- t Jfk ',•'N,,,
1 k ‘.
Z 'One (1) horser4, a atiao,mr-othK,b a$t of buragn, such as the delinquent
taxpayer m*spleat,antrnecessarily Uaat iffinurrk• -).• lis,ordinary occupation;
3. His necesgaNidtpihg,„andlhlrOrall'his.fami
,i, yi4\::>•
' '
4. Househpid urnere nd utensilszfor-housek epihgNa5g4 sed for that purpose
' by thellelin 4T-it to payernuchlaszife may elgt pf a 'slue not exceeding
P10,00 .h.. •j )
5. Provi ions, i(cludin crops, actUall
suffice
r./"--7:•rovl
for four m ptQf'Z',•'''.zs Oil e:\ : 01 j
'— r --,
ed for n id al 'or family use
1
6. The Orofesbi nal librbries Ofifoc,piripebbinee lawye gran udges;
Notes ertilkither,R, of Cotrtf(Rd/0 39, Se t g)) • rofe s onal libraries and
equip7rit-lof pi06 Iona s a 1 pfemp ro e audio not exceeding
P300, 0'. ' .'
s) \I
,i''./
7. One fishing b at an No e?ccetcr gS,t tot value f P10,000, by the
• lawful li1,1 of wh h a s a "art.‘ e:arng KJ' eliho ; and
8. Any mat al or a cle o. o e or im rovement of any real
t>"a
property (L O, Sec- 85).
.<91 ,1 1
Summary of Procedure foKik,.. eainfof Peiuiftrcp,p
DELINQUENCY OF TAXPAYER
ASSESSMENT
Assessment within 5/10 years from the date the taxes, feesLor charges became due
(LGC, Sec. 194).
SEIZURE
a. The local treasurer or his deputy shall issue a duly authenticated certificate
(serves as a warrant) showing the fact of delinquency and the amounts of the tax,
fee, or charge and penalty due;
b. The local treasurer or his deputy may, upon written notice, seize or confiscate any
personal property belonging to that person or any personal property subject to the
lien in sufficient quantity to satisfy the tax (LGC, Sec. 175(a)).
988
yS
•• ED 1
1•';:7-ef,:s.'1:-..4•14'..tto7
O
TO K
ACCOUNTING OF DISTRAINED GOODS

a. The Officer executing the distraint shall make or cause to be made an account of
the Oods, chattels, or effects distrained;
b. A Gorily of which signed by himself shall be left either:
1. with the owner; or •
2. person from whose possession the goods, chattels, or effects are taken; or
3. at; the dwelling or place or business of that person and with someone of
suitable age and discretion;
c. to wych list shall be added a statement of the sum demanded and a note of the
time and place of sale (LGC, Sec. 175(b)).
PUBLICATION AND POSTING OF NOTICE OF SALE OF DISTRAINED GOODS

I. . , 14 ..,A.A .
The officerShall forthwith causgadyftcaon to be exhibited in not less than three
(3) publip'and conspicuous placts15 h'territory of the local government unit where
the distraint is made, specifyingh qoa • d place sale, and the articles
4. tk 4
distrained. ;r; -
.i.,
I
. •-• .
The time of sale sh It tige less than .enty (20) days a pte notice to the owner
••;..,:qtgl
or posseSsor of the prql_p‘rty as ab9yes ecified and the A 'dation or posting of the
notice. 1 ev,
One plaCe fop e postin&orge notioe s all be at the o ice f th 4chief executive of
the loca goimmentSV which the prs)berty is distrtined1/..q&te2 175(c)).
SALE AT PUBLIC AUCTION
At any time p rior o; the consummation igth sale, the taxpayer may pay the proper
chargesl(LGC, Sec. 1( ,5(difF
Should the property istraintk a not disposed of within 120 days, the same shall be
Considered as sold to G concerned for the amount of the assessment made
thereontby the Committee or?Appraisal and to the extent of the same amount, the
tax delinquencies shall be cancelled (LGC, Sec. 175(e)).
REPORT TO THE LOCAL CHIEF EXECUTIVE

Within five (5) days after the sale, the local treasurer shall make a report of the
proceedingsin writing to the local chief executive concerned (LGC, Sec. 175(e)).
11
DISPOSITION OF PROCEEDS
I '
The prolbeeds of the sale shall be applied to satisfy the tax, including the surcharged,
interest: and other penalties incident to delinquency, and ,.t.he exp.erised.:911.1he
distrain(and sale. The balance over and above what is recitiired4O:liaV'the'
claim shall be returned to the owner of the property sold (LGC, Sec. 175(f)).
(LGC, Sec. 175)
989
;44.
11,
3 if47a;514'*V31
111
,6 11t:f.0 : Wf'+)WY
.0“
/.
Summary of Procedure for Levy of Real Property
DELINQUENCY OF TAXPAYER
ii
ASSESSMENT
Aesessmenrwithin 5/10 years from the date the taxes, fees or charges became due
(LOC,1Sec. 194).
LEVY
a. The treasurer shall prepare a duly authenticated certificate showing the name of
The taxpayer and the amount of the tax, fee, or charge, and penalty due from him.
Said certificate shall operate with the force of a legal execution throughout the
Philippines.
,p4.00s1. 1 ,.
b. ,Levy
. shall be effecte,pby Ar,vriting:lupon /paid certificate the description of the
property upon.hicylevy,ts rrOide: :- , , ,,.. ',.
V jt i
, . i, , ' 11., • ..,,,.• • -...„,t,z, , s N.,....
C. At the same time;'Written'tiotice of leyy shall be made` to-,'"t: 51/4
...e ,...-
! c.1 Assesstir antthe , Registe?
. Deelre'Who,shIll
, apnotare the levy on the
1 tax declafaticirrend certificate;pf title of the propertyi arrst)
. s' -.. , .4) e 1 4
; 62 Delitiquent/taxpayer or adent.d0heThanager of t dbusiri ss or occupant
e
l' . Of the pi-ppertgn question
ti '
(LGC,"Soc. 176). CP
I,..., ••+-4.,;:;,- • ...• I
ADVERTISEMENT .
I IIC..") 1 - R. . •
.
AdvertiSeme t of:Iskle if-,.p}.1‘h-postili9 rikpublieap,99 of nojice7(within thirty (30)
days after th 164.And forp,a,Orlod of:po de"A„., ii/gc:" I
,: ‘ <sr .„..):/;‘k'7' i
The adVertisemrt shaltson iri ttz.t.amotunt,ofetpxeS, fee5,or char es, and penalties
due thereon, and,the time and Gsge.31'sble:,..the:''Ame9flhe taxpayer against whom
the taxes, fees, b'kcharges‘a e leXer'frepd:',4kport.,;Idscriptiory8f the property to be
sold (LGC, Sec. 171) in f,„.1,,
PUBLIC SALE
At any' , time before the date fixed for the sale, the taxpayer may stay they
proceedings by paying the taxes, fees, charges, penalties and interests.
If he fails to do so, the sale shall proceed and shall be held either at the main
10
....entrance of the provincial, city or municipal building, or on the property to be sold, or
r:at,.any other place as determined by the local treasurer conducting the sale and
s*ifieei in the notice of sale (LGC, Sec. 178).
The owner shall not, however, be deprived of the possession of said property
(f ie entitled to the rentals and other income thereof until the expiration of
Mm Ie~Ein 'stowed for its redemption (LGC, Sec. 179).
IS
REPORT:TO THE SANGGUNIAN.:
Within thirty. (30Rayg-after the sale, the local treasurer or his deputy shall make a
-- report -of-thesale -to -the-Sanggunian concerned, and which shall form part of his
records.
990
DELIVERY TO THE PURCHASER OF THE CERTIFICATE OF SALE
11
DISPOSITION OF PROCEEDS
Any excess in the proceeds of the sale over the claim and cost of sales shall be
turned oi),er to; the owner of the property (LGC, Sec. 178).
FINAL DEED OF PURCHASE,

In case the taxpayer fails to redeem the property within one (1) year from the date of
sale, the;local treasurer shall execute a deed conveying to the purchaser so much of
the property as has been sold, free from liens of any taxes, fees, charges, related
surcharges, interests, and penalties (LGC, Sec. 180).
(LGC, Seca. 476-180).
I
Compromise
pi
Q: What offense(s) may be cornprolM9OR
ANS: Thel Sa0guniang bayan corlOARAkmaftuthoriz 'the municipal treasurer to
settle an offense not involving The cofriMissikgrfar beforgre case therefore is filed in
court, upon payment bT,,j-compromiqe penalty of not less .t an Two Hundred Pesos
(P200) (LGC, Sec. 148,;(1$)).
Judicia/Aition
Q: How is thepmedy of judicial action eXercised?
ANS: The ...qalkspriceriplimay enforce t ollection delinquent taxes, fees, charges
or other revenues liniviVkC;tion cc:: of compqsz within five years
from the date taxes,. fers!ka,chatdes7bedb e due (LGT04Sebablig3 in relation to Sec.
194). ! ', op' .14
Note: The1Ocei government%ay file an or, ina suit for the collection of sum of money
before the MTC, RTC, torel Cepending nArikjsglictional.amount (LGC, Sea 183
in relation 0, Sec. 194)#ither olAteRrentetliaabroAratIminisfrative action or judicial
action or all may be pu_ped cor4irrently or simultaneously at the discretion of the local
government unit conceffedt(La,Sec. 174).
4
111A4*
Q: Which court has jurisdiction over the action filed?
ANS: The court having jurisdiction over the action filed shall be:
If principal amount 'of taxes, fees, exclusive of charges and

Original
penalties does not exceed P300,000 or P400,000 in Metro Manila
If principal amount of taxes, fees, exclusive of charges and

penalties exceeds P300,000 or P400,000 in Metro Manila
Provided: The amount is less than P1,000,000
The RTC shall exercise appellate jurisdiction over all cases decided
by MeTCs, MTCs, and MCTCs in their respective territorial
jurisdiction
991
•
)VOL
2 019
CTA Division
If principal amount of taxes, fees, exclusive of charges and

penalties is P1,000,000 or above
Over appeals from judgments, resolutions or orders of the RTCs in

Appellate tax collection cases originally decided by them in their respective
jurisdiction
1. Decisions or resolutions over petitions for review of the CTA

Division in theJ.xercise,.ofats appellate jurisdiction over local
taxes decided by the ,RTC esezercise of their original
juriscligionrAV 1\1
Appellate 2. OffeK,Pelitio.r,Vapreview.ofihdjud:ggients, resolutions or orders
,6fAbegTps in the exercise oillNirappelOte jurisdiction over tax
c:blIgeficinsaseroltyplirdeckled'We NI&s, FMTCs, and
y ~C s,fi
n theirgsPfctivc, territoValltrisdiaidg
B. RE.1L. IROPE:A7*TifIXAT ON
i i • c•i:•-- „•
Q: Define rea property taxes. t„...,....
ANS A real e tate* isca-direct tax Irp.it e!. wnersymnf Ian uildings or other
v.”,
imprOvernentsther,e,tk, not-aecially-,e3fetite f ,ciran yalg ej.eg fdless of whether
the property is ,tEl . kiot,-Aargh thglv lie-#4,ge rcr.;.in acdordAq with such factor.
It is a fixed pioportiekof tIK-Msete'd VeliI5,,, ql, property t ed, and requires,
therefore, the inkrventick of as.7,sors. I Vejjed oayable t appointed times,
and it constitutes a supent) lien
3 011,, al'ik:enfpitCeable against the property subject to
such taxation, andligt by i *sorinfz0fNitigoirv,r4 City of Iloilo, G.R.
No. L-26521, Decembec28 e91:,,,,,„„,,...,„,,,,
1 .)
Q: What are the kinds of rialxpzopertycla,ipt .„,....0' ..,a
ANS: Real property tax may be craSsifie atp.
1. Basic Real Property Tax (LGC, Sec. 232); and
2. Special Levies
I a. for Special Education Fund (LGC, Sec. 235);
i b. on Idle Lands (LGC, Sec. 236); and
c. by LGUs (LGC, Sec. 240).. _
.
Q: What is real property?
ANS:I, The LGC does not carry a definition of "real property". The Supreme Court,
however in several decisions, suggested that in understanding what "real property" is,
reference 'pay be made to Art. 415 of the Civil Code (ABAN, Law of Basic Taxation in
the Philippines (Revised 2001 Edition), pages 444-445). Art. 415 of the Civil Code
provides:
The follow ng are immovable property:
1, Land, buildings, roads and constructions of all kinds adhered to the soil; •
2 Trees, plants, and growing fruits, while they are attached to the land or form an
integral part of an immovable;
992
dr
VOL 1.
AN RED.: 2019
i
3. EvetrythingI attached to an immovable in a fixed manner, in such a way that it
cannot be separated therefrom without breaking the material or deterioration of
the Object;
4. Statues;, reliefs, paintings or other objects for use or ornamentation, placed in
building's or on lands by the owner of the immovable in such a manner that it
reveals the intention to attach them permanently to the tenements;
5. Maohinery, receptacles, instruments or implements intended by the owner of
the ,'tenement for an industry or works which may be carried on in a building or
on a piece of land, and which tend directly to meet the needs of the said
industry or works;
6. Animal houses, pigeon-houses, beehives, fish ponds or breeding places of
similar nature, in case their owner has placed them or preserves them with the
intention to have them permanently attached to the land, and forming a
pednanent part of it; the animals in these places are included;
7. FOilizer actually used on a piece of land;
8. Miaes, quarries, and slag dumps while the matter thereof forms part of the
bed, and waters either runniOgOO stagnant;
9. DoCks and structures wh@liTho, h floating, are intended by their nature and
object to remain at a fixel,i§ ei river, lake, or coast;
10. COtraCts for public Worl(0. 4 ky servitudes and other real rights over
immovable property. ;
, .',,.
Q: May personal prgegties be CiSstified as rea property for purposes of
taxation? i' tr I:
.04
ANS: Yes. It is, 'a farnAtariphenorr_terro st see things ss as real property for
Psid
• red personal property
purposes of It Oflic 'Ortgeneral
-,. pareiple might be
(Standard Oil Co,10,0ew • IltageJamarillr .R. No. 203 16, 1923).
For example*lachinemiid equipmN c nsisting of urr rgr and anks, elevated tank,
4
elevated watefffefilss w.arei tanks gasolih umps, coN j 6 ,gsaater pumps, car
. 4.1.7:v - uz-- hoists, at_,
r, ploppr ors andTe Mrtenances to the
gas station building or-Wly.vnet1 by Ca (as to which s 1.1 s Act to realty tax) and
which fixtures areRee'esark the 9perat a of the gas station, for without them the gas
station would be useless, ang4which hay seert ached or affixed permanently to the
gas station site or emti3OclgedJtherein, ar gmments and machinery within
the meaning of the -A'S-sessmer1011 n RealeRroperty Tax Code (Caltex
(Philippines), Inc,v. Ce4i-al BORof Assessment Appeals, G.R. No. L-50466, May 31,
1982). '
Q: What LG,Ils are responsible for the administration of real property tax?
ANS: The LGUs primarily responsible for the proper, efficient, and effective
administratien of real property tax are:
1. PrOvinces;
2. Cities; 'and
3. MUniciPalities within Metro Manila (LGC, Sec. 200).
Fundamental Principles
r -
Q: What are`. thefundamental principles of real property taxation?
ANS: The appraisal, assessment, levy, and, collection of real property tax shall be
guided by the following fundamental principles (ACUPE):
1. Real property shall be Appraised at its current and fair market value;
2. Real property shall be Classified for assessmeht purposes on the basis of its
actual fuse;
3. Real property shall be assessed on the basis of a Uniform classification within
each local government unit;
993
...!••2.••• •
The appraisal, assessment, levy and collection of real property tax shall not be
let to any Private person; and
The appraisal and assessment of real property shall be Equitable (LGC, Sec.
198).
Q: What are the characteristics of real property tax?

ANS: Real property tax is a(n):
1 Direct tax on the ownership of real property where the impact and incidence of
taxation devolves on the same person;
al It creates a single, indivisible obligation;
3.1 Ad valorem tax where the value of the property is the tax base;
44 Local tax;
5; It Is proportionate because the tax is calculated on the basis of a certain
percentage of the value assessed (ABAN, Law of Basic Taxation in the
Philippines, supra at 436-437);
4 1 ..,,,_....•....,,t,,,,,
Q: Who may levy real proppylli c? 1 I •
ANS: A province, city, or unicT lity 4ithin t 4troi:Mapila may levy an annual ad
valorem tax on real pr soh agriandrbuil ingtmach,inery, and other improvement
not specifically exem eti,(L S.g232). f p,"
Note: ,MuniCipalitieio sffle ejr.o.Matillplid-bardayslre devoid of power to levy
real prOperty tax ".,( ' eci232 inglarO k n to+Sec. 200 ) %f,
IL 1/0. ,/,%.,.. ,,,
l•
Q: What lithe gent f the' i poW6A or)
\
ANS: The LG sTrY,n only INTelliwr 3646.„ Fro- evy. re I estatklax ut they may also
fix real testatefrat . How verNlytiagri•tinifieal state t rat does not extend
to municipalities o thlie Metr ManildiziktWonly oval bo ies-apporized to fix tax
rates are the I Bp" Q the cfat'se_aprovince rid' 1 Coun I in the case of a
city (ABAN,' La is 11,, 8sitAPi ipp,ines 3'
I ; NrA .-t.",0 .1
,
\,•,(\
Q: A city hire a private enkty „sake clid• ciiIlectiop of real property
taxes on the gr and thattlx), *Qatese , _yak e Tore capible of the efficient
and sound colletion. Is itk? manceXhht dye effe • to this procedure
valid? Expiain. 1.\11."
ANS: No. A city ordin ccit
taxes tO'a private entity i
ffitle tres.the-i
t WO. It viplates\t
'V ollection of real property
undarriental principles laid down in
Section198 'of the Local Gove rikettCodlqvhich terihat the appraisal, assessment,
levy and collection of real property tax snlrefar e let to any private person.
Q: What are the rates of basic real property tax?

ANS: The rates for basic real property tax are the following:
1. i Province - Not exceeding 1% of assessed value;
2. City - Not exceeding 2% of assessed value; and
3. Municipality within Metro Manila - Not exceeding 2% of assessed value
(LGC, Sec. 233).
1
Q: What are special levies on real property?
ANS: The following are special levies: •
1. l Special Education Fund (SEF) - 1% on assessed value in addition to the basic
RPT to finance the special education fund (LGC, Sec. 235);
2. Additional Ad Valorem on Idle Lands - not exceeding 5% of the assessed
' value of the property which shall be in addition to the basic RPT (LGC, Sec.
236);
994
DAN BRED BOOaK AlVOL 1.
2019
;
3. Speciaf Assessments (for public works) — on lands specially benefited by
public works, projects or improvements funded by the local government unit
(LGC, Sec. 240).
Note: Special leVy by LGUs shall not exceed 60% of the actual cost of such projects
and improverhents, including the costs of acquiring land and such other real property in
connection therewith (LGC, Sec. 240).
Q: What lands are considered idle?

ANS: For purposes of real property taxation, idle lands shall include the following:
1. Agricultural lands more than 1 hectare in area if more than % of which remain
undultivated or unimproved by the owner of the property or person having legal
inte'rest,therein;
2. Non-Agricultural Lands more than 1,000 sq. m. in area if more than % of which
remain unutilized or unimproved by the owner of the property or person having
le6l-interest therein; and
3. Residential lots in subdivisiorl,Aly approved by proper authorities regardless
of area. If ownership is transferee", the individual owners shall be liable for the
tax OR the other hand, if I- podlthip of individual lots is not transferred, the
subdiviSion owner or opeSat0004)e liable (LGC, Sea 237).
Note: The following are not considered' lb lands:
1. Agricultural lands planteti AM 6 anent perenfilal crops with at least 50
trees to' a hectare; agd.:
2. Lands actually usetifor grazing p„ rposes (LGC,-Set4237).
I '
Q: When may idle landpe exempp 1 fr m tax?
ANS: The LGUs mayiemakidldlands fr the additional'eu b reason of:
1. For'pe riojetre;
2. Civil;tlarbance
3. NattVCalarnity704;
4. Any` use whNhiphysicay or ally prev ef the property or
personApvirepgdl,interestheir from improvihing or cultivating the
same (LG`011'Sdb..28). 1 1
14‘
Q: May local governmopirmpose an an [Wax in addition to the basic real

property tax on; ,idle qracantdidiefoc tere tirgal subdivisions within their
respective territorial jupsdictik?
ANS: Only provinces, ;fie's, gnd municipalities within Metro Manila area may levy an
annual tax on idle lands 'htlife rate not exceeding five percent (5%) of the assessed
value of the property which shall be in addition to the basic real property tax (LGC, Sec.
236).
-..
Q: What real properties are exempt from'spe ci al levy by LGUs?
ANS: The sPecial levy shWI not apply to lands exempt from basic real property tax and
the remainder of the land portions donated to the local government unit concerned for
the construction of said projects (LGC, Sec. 240).
1
Q: What are the conditions for the validity of a tax ordinance imposing special
levy for public works?
ANS: The following are the conditions:
1. The ordinance shall describe the nature, extent, and location of the project,
state estimated cost, and specify metes and bounds by monuments and lines
(LGC, Sec. 241);
2. It Must state the number of annual instalments, not less than five (5) years nor
more than ten (10) years (LGC, Sec. 241); and
3. Notice ,'to the owners and public hearing (LGC, Sec. 242).
995
Note: The owner of real property affected by a special levy or any person having a legal interest therein may, upon
receipt of the written notice of assessment of the special levy, appeal to the Local Board of Assessment Appeals and
the Central Board of Assessment Appeals (LGC. Sec. 244)
Exemption from Real Property Tax
Q. What properties are exempt from real property tax? (RCW- CP)
ANS: The following are exempt from payment of the real property tax:
1. Real property owned by the Republic of the Philippines or any of its political subdivisions except when
the beneficial use thereof has been granted, for considerations or otherwise to a taxable person.
2. Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, non-profit or
religious cemeteries and all lands, buildings, and improvements actually, directly and exclusively used for
religious, charitable or educational purposes.
3. All machineries and equipment that actually, directly and exclusively used by local Water utilities and
government-owned or controlled corporations engages in the supply and distribution of water and/ or
generation and transmission of electric power
4. All real property owned by duly registered Cooperatives as provided under RA No. 6938
5. Machinery and equipment used for Pollution control and environment protection (LGC, Sec. 234)
Note: The justification for this restricted exemption in Section 234 (a) seems obvious; to limit further tax exemption
privileges, especially in light of the general provision on withdrawal of tax exemption privileges in Section 193 and the
special provision on withdrawal of exemption from payment of real property taxes in the last paragraph of Section 234.
These policy considerations are consistent with the State policy to ensure autonomy to local governments and the
objective of the LGC that they enjoy genuine and meaningful local autonomy to enable them to attain their fullest
development as self0 reliant communities and make them effective partners in the attainment of national goals (Mactan
Cebu Int’l, Airport Authority v. Marcos, supra)
Q: May the local government impose taxes on the national government?
ANS: No, Local governments have no power to tax the national government, its agencies, and instrumentalities, except
as otherwise provided in the LGC pursuant to the saving clause in Sec. 133 of the LGC stating “unless otherwise
provided in this Code”. Section 234 (a) of the Local Gvernment Code states that real property owned by the Republic
loses its tax exemption only if the “beneficial use thereof has been granted, for consideration or otherwise, to a taxable
person (Manila International Airport Authority v. CA, GR No. 155650, July 20, 2006).
Collection of Real Property Taxes
Date of Accrual of Real Property Tax and Special Levies
Q: When does real property tax accrue?
ANS: The real property tax for ant year shall accrue on the 1st day of January of every year and vrom that date it shall
constitute a lien on the property which shall be superior to any other lien, mortgage or encumbrance of any kind
whatsoever, and shall be extinguished only upon the payment of the delinquent tax (LGC, Sec. 246)
Q: When does special levy accrue?
ANS: The special day shall accrue on the first day of the quarter next following the effectivity of the ordinance imposing
such levy (LGC, Sec. 245)
996
Q: How is real property appraised?
ANS: All real property, whether taxable or exempt, shall be appraised at the current and
fair market value prevailing in the locality where the property is situated (LGC, Sec.
201).
Q: What is fair market value in relation to real property tax?

ANS: Fair m:arket value is the price at which a property may be sold by a seller who is
not compelled to sell and bought by a buyer who is not compelled to buy (LGC, Sec.
199 (I)).
Q: Who has,the4uty to declare real property?

ANS: It shall be the duty of all persons, natural or juridical, owning or administering real
property, including the improvements therein, within a city or municipality, or their duly
authorized representative, to prepare, or cause to be prepared, and file with the
provincial, city or municipal assessor, a sworn statement declaring the true value of their
property, whether previously declared or Qdeclared, taxable or exempt, which shall be
the current and fair market value of thft perty, as determined by the declarant (LGC,
Sec. 202.) j irV •
.
ad
Note: The sworn declaration sh pe once every three years from January 1 to
June 30 commencing with the caleneare 992 (LGC, Sec. 202).
Q: What is ,thelduty of a pe, n act, I eao rirtir

•-.5 making improvement
thereon? xF
ANS: Any person, or, s authorize • .>•i sentative, acquig tat any time or making
improvement thereon Ile a sw
,dhn s ement containisig hb fair market value and
description of the prip,,rty rthattie ssess within 60 days ailerlpe acquisition of such
property or upon tOrripleti Aoccupanc f the improve en wh hever comes earlier
(LGC, Sec.
Q: When may e Provincial/City al Asses ec are the property

for tax purpiose'sk
ANS: When any son, Or rural ouridi I, by whom real property is required to be
declared under Seal° 202 LGC refus: , ais to make a declaration within the
prescribed time the ro • dal, city or• g ri i.as essor shall himself declare the
property in the name o e defautiljT6Wher; •nainst an unknown owner, as
the case may be, and s II assts the property for taxation (LGC, Sec 204).
by
Note: No oath the as ko s required (LGC, Sec. 204).
Q: Discuss; how real property is listed in the assessment rolls.

ANS: The listing, of real property in the assessment rolls may be outlined as follows:
1. 1:29al property shall be liSted, valued and assessed in the name of the owner,
—• administrator, or anyone having legal interest in the property. The exceptions
are:
a. 'Undivided real property of a deceased person— in the name of the
lestate or heirs or devisees without designating them individually;
b. In case of undivided real property other than that owned by a
deceased — in the name of one or more co-owners;
c. Corporation, partnership, and association — same as individuals;
and
d. Owned by Republic of the Philippines, its instrumentalities,
political subdivision, beneficial use is transferred to a taxable
person — in the name of the possessor, grantee or of the public entity if
such property has been acquired or held for resale or lease (LGC, Sec.
205).
997
2. All declarations shall be kept and filed under a uniform classification system to
be established by the provincial, city or municipal assessor (LGC, Sec. 207).
Q: When is the schedule of fair market values prepared?

ANS: A schedule of fair market value shall be prepared before any general revision of
property assessment is made (LGC, Sec. 212).
Q: Who prepares the schedule of fair market values?

ANS:I The, provincial, city and the municipal assessors of the municipalities within Metro
Manila area prepares the schedule of FMV for the different classes of real property
situated in their respective local government units for enactment by ordinance of the
Sanggunian concerned (LGC, Sec. 212).
Note: The said schedule shall be published in a newspaper of general circulation in the
province, city or municipality concerned, or in the absence thereof, shall be posted in the
provincial capitol, city or municipal hall and in two other conspicuous public places
therein (LGC, Sec. 212). _,,,,,,.„.,.-.......,.,,_
.
,o,- 11
Q: Discuss the authorit
/ 9of thOsses Rs °flse X NI Old ce.
ANS: The 'assessor of eqiroVinca-- ' • 'NpOlity it deputy may summon the
owners of ;the prop es tkli ected or perso sh '4.t> vinVa'gal interest therein and
witnedses, admini5ter b ketarptitin- cerntn., g.. e›pc9perty, its ownership,
amou9t, nature, an, he pu ostlif o tainin ink) nlatliklion which to base the
marketvalue of A y r rty (L , S/4, 2 ). 1 r \
, i 4ls '
Q: When may e?a ggumpn amen ie sc e 4 f fair OA alues?
ANS: , Upon the mmenclatiolijhprigircial, ity or uni I assessor, the
Sanggunian cn,pied shall, by ordirfaqc, ,,coirebt errprs in va 'atio the schedule of
fair market vale sitf in dajOrlecelpt thrR9 GC, S?. 214).
Q: Wliat are thOses ozop,pl y ickrfq

a in rpose ?
\i
ANS: Real prop shal be c Is 4,-?6-( ti e
1. Reside
22 Agricultu
. 3., Commercia
4.' Industrial,
5. Mineral,
6. Timbffarld or
74 Special (LGC, Sec. 21%.
Note: The city or municipality within the Metro Manila Area, through their respective
Sanggunian, shall have the power to classify lands as residential, agricultural,
commercial, industrial, mineral, timberland, or special in accordance with their zoning
ordinances (LGC, Sec. 215).
Q: What are classified as special classes of real property?

ANS: All lands, buildings, and other improvements thereon
1.i Actually, directly and exclusively used for . hospitals, cultural, or scientific
t. purposes, and
2.; • Those owned and used by local water districts, and GOCCs rendering
' essential public services in the supply and distribution of water and/or
generation and transmission of electric power (LGC, Sec. 216).
Q: VV.hat is meant by actual use? . .

ANS: Actual use refers to the purpose for which: the property is principally or
predominantly utilized by the person in possession thereof (LGC, Sec. 199 (b)).
998
VOL 1.
DAN: 2019
Note: Real !property shall be classified, valued and assessed on the basis of its actual
use regardless of where located, whoever owns it, and whoever uses it (LGC, Sec.
217).
Q: How are lands located in areas of mixed land uses classified?

ANS: For', lands located in areas of mixed land uses, such as residential with
commercial or industrial, the predominant use of the lands in that area shall govern the
classification, valuation, and assessment thereof. If the predominant use is residential,
all lands in that area shall be assessed as residential; if the predominant use is
commercial, or industrial, all lands in that area shall be assessed as such (Manual on
Real Property Appraisal and Assessment Operations by the DOF Bureau of Local
Government Finance, January 2006, p. 138).
Q: What is the classification of a land occupied by a building and used for a

purpose different from which it is classified?
ANS: A lot or .parcel of land classifigdpnd appraised as commercial or industrial
occupied by the.building used for 130000I dential and commercial or industrial purposes
shall be assessed on the basis of.tiO"trike: 6minant use of the building or buildings. If the
predominant use of the building WI p''' Sal, the assessment level fixed thereon for
residential land shall be applied db 00t value of the lot or parcel determined on
the basis of the schedule of bAe, IttoOue%if indtrial.or commercial; the
' lsr Am* iweE.
assessment leyel for industriWOr ttri ems, .'steal -119,42ied on the basis of the
schedule of. the base= valugs Manual on Realgroperty Appraisal and
Assessmeht OperatiohgAy the DOM.? au of Local Go *Vent Finance, January
2006, p. 138).
!! !
proportion fifieb
1,„0
as
la,-
Q: Define asse,ment. '',rikw.
. ,
10. !'
.43Pj
r
ANS: Assessm6nt is ge act or process of determini g the vale of a property, or
40,1 ,pubjeo tax, includib the discdveryiistin Xclassification, and
.. -r-V- --r
appraisal of properties (LOOSec.1,99(f)).
.14,1 .11"-q
"l''L4';4— -1.214 ;"'
Q: Define assess I e
ANS: Assesiment Evel is thlpercentagekaRlieskto the fair market value to determine
the taxable value (asse's,peOalue) of the,paktypg§2c. 199 (g)).
Note: The, assessmetrievels40611656Wxela 7i-2irrdrances of the Sangguniang
Panlalawigan,anggufildng POILlngsod or Sangguniang Bayan of a municipality within
theMetro Manila Area (L V,,„ec. 218).
Q: How is the assessed value determined?

ANS: The folloWing are the steps in determining the assessed value:
1. '6Ice the schedule of FMV; and then
2. Multiply the FMV by the assessment level to get the assessed value
(LGC, Sec. 199(h)).
Assessment Levels
On Lands:
Class i Assessment Levels
Residential 20%
Agricultural 40%
Commercial' 50%
Industrial i ' 50%
Mineral . 50%
Timberland 20%
Example: Residential Land with FMV of P100,000
P100,000 (FMV) x 20% (Assessment Level) = P20,000 (Assessed Value)
999
Q: What are the instances where the assessor shall make a valuation of real
property?
ANS: The, provincial, city or municipal assessor or his duly authorized deputy shall make
a clasification, appraisal and assessment of the real property listed and described in
the declaration irrespective of any previous assessment or taxpayer's valuation thereon
in cases where:
1. The real property is declared and listed for taxation purposes for the first time;
2. There is an ongoing general revision of property classification and
assessment; or
3. A request is made by the person in whose name the property is declared
(LGC, Sec. 220).
Q: When shall general revision of real property assessment takes place?
ANS: The provincial, city or municipal assessor shall undertake a general revision of
real property assessments within two (2) years after the effectivity of the LGC and every
three ,(3) years thereafter (LGC, Sec. )..,
Q: What are the purposes1 of )
ANS:1The following ary.gefilp seg,pfm=geneta re,Stisigby
1'. Equalizes an atisAratations;
2. Brings to igh disc• verraTinrOpertias that een "lost" from the tax
1 "i7.1
roll; an
a`z?(7
3,, Enabl th sse sor to pump horn hi sment roll the double
assescnent d as essment •s 'roperties th e'fa estroyed that has
accu ul ed throu• 146, citing J.G.
Cast! I s-R port to on Property Tax
Admi 1.,setti8n in the
Q: How often i yit111 a a‘:1?

ANS: The iasses .meny ased ofteetef than once every
three (3) years, e' xcept' ca ubstktially i/creasing the value
of said property, N.,ny ch 20).
Q: Define reassess enty

ANS: Reassessment ed values to property,
particularly, real estate, as findividual reappraisal of the
property (LGC, Sec. 199 (q)).
Q: When shall assessments or reassessments take effect?

ANS: All assessments or reassessments made after the first day of January of any year
shall take effect on the first day of January of the succeeding year. Reassessments shall
take effect at the beginning of the quarter next following the reassessment if made due
to:
1. Its partial or total destruction;
2. Major change in its actual use;
3. Great and sudden inflation or deflation of real property values;
4. Gross illegality of the assessment; and
5. Any other abnormal cause (LGC, Sec. 221).
Note: Section 221 of the LGC merely lays down the general rule that assessments are
to be given prospective application. It cannot be construed in such a manner as to
eliminate the imposition of back taxes (Sesbrelio v. Central Board of Assessment
Appeals, GR. No. 106588, March 24, 1997).
1000
'VOL 1.
2019
Q: When the assessment of property subject to back taxes made?

ANS: Real property declared for the first time shall be assessed for taxes (back taxes)
for the period during which it would have been liable but in no case of more than ten 10
years prior to the date of initial assessment: Provided, however, that such taxes shall be
computed on the basis of the applicable schedule of values in force during the
corresponding period (LGC, Sec. 222).
Note: If such taxes are paid on or before the end of the quarter following the date the
notice of assessment was received by the owner, no interest for delinquency shall be
imposed thereon; otherwise, taxes shall be subject to interest at the rate of two percent
(2%) per month or a fraction thereof from the date of the receipt of the assessment until
such taxes are fully paid (LGC, Sec. 222).
Q: When should the assessor give notice of new or revised assessment?

ANS: When real property is assessed for the first time or when an existing assessment
is increased or decreased, the provincial, city or municipal assessor shall within thirty
(30) days give written notice of such newsy revised assessment to the person in whose
name the property is declared (LGc 066. 23).
•
Collection O f Teixes
Q: Who collectS real property tdilepf ,
ANS: The 9olle9tion of the real Volpe la). ,.Mtlf, teresghabn and related expenses,
and the enforcement of th,,e rofriediegproej , ed by th-ellteiir ny applicable laws, shall
be the responsibility of Wfty or murfaio "itreasurer concern, • (LGC, Sec. 247).
114
er
Q: May a barangay tress ter coiled roperty taxes? $.
ANS: Generally,VrovLeter_the_bara ay treasurer corliect all taxes on real
property locaten the ba- rabgiy oily a he is dep,,,tize ' by tir city or municipal
treasurer ande)s prcfegy bonded for s purpose. he p emium on the bond shall
be paid by thCcity orritnictc; al g oncern • .
Note: Provinciktreasvemte obylo 'eyed of the ci,dollect real property
tax. However, it gi3pea540Wsuch o issi s only a typographical error:
1. Section 17,9 of the LGC provides that all local taxes, fees, and charges shall
be collected by the provincial, c barangay treasurer or their duly
aUthorized depN`ds;
2. Section 470 (6) of e eGC provides that the provincial treasurer shall
exercise tech kcal s drvision over all treasury officials of component cities
and municipala.'sj
3. Real property tax is a shared tax where the proceeds thereof are distributed:
35% to the province which shall accrue to the geheral fund; 40% to the general
fund of the municipality where the property is located; and 25% to the
brangay where the property is located (Cabaluna, Jr., (2002), pp. 245-246).
4. Property owners, however, at their option or convenience, may pay their real
property taxes to the provincial treasurer of the province to which the
municipality where the subject property is located belongs (IRR of the LGC,
Art 338).
1
Q: Who has the obligation to pay real property taxes?
ANS: For purposes of real property taxation, the registered owner of the property is
deemed the taxpayer (Spouses Hu v. Spouses Unico, G.R. No. 146534, September 18,
2009).
1001
Q: Who submits the assessment rolls to the local treasurer?
ANS: The provincial, city or municipal assessor shall prepare and submit to the
treasurer of the local government unit, on or before the thirty-first (31st) day of
December each year, an assessment roll containing a list of all persons whose real
properties have been newly assessed or reassessed and the values of such properties
(LGC, 'Sec. 248).
Q: How is notice of time for collection of real property taxes made?

ANS: The notice of the dates when the tax may be paid without interest shall:
1•t Be posted by the city or municipal treasurer in conspicuous and publicly
accessible place at the city of municipal hall
a. On or before the thirty-first (31st) day of January each year, in the case
of the basic real property tax and the additional tax for the SEF, or
b. On any other date to be prescribed by the Sanggunian concerned in
the case of any other tax levied upon; and
2. Published in a newspaper oLgeneral4culation in the locality for once a week
for two (2) consecutly,e4easILGC, Se'?:249).
Q: When are real propaltira'sfeNd.specral " ‘44.

k iesI d
ANS: The city or mu kip Il tfg post and'publish Otice of the dates when the
reasshall
tax maybe paid without cle ersyLG0,-Sg7249):-...,
T TT
Q: What is the press tve penod for collection of real pkopeaxes?
ANS: The basi real prbpert /tax and any other tax leJ'ed r be
d collected within five
(5) years from heAate theybecame due.Then Cher is frabd914n .e ent to evade the
y
payment of to es7-sucn actiort maVQ•insRutelflerfthe collect! n of t same within ten
(10) years fro disco ery of te fraualar.,Issintpe•evad the pa ent LGC, Sec. 270).
Note: No acti 'oil c i i of the tax,fiether atirjiffstra ive or1judicial, shall be
instituted after Tux? atio ch p rio .0p, Se 2t ).
_ Q: When is the pr for of real property taxes

suspended?
ANS: The period prescnp spended for the time
during which: (PRO)
1. The local treasure revented ro cpjlpc ing the tax;
2. l The owner of theNproirerty or thp ppgrl'"h ing,,leSal interest therein requests
for Reinvestigationd.kecuteli bfivai0' irwriting before the expiration of
the period within which to 7c1
)
3. The owner of the property or the persori having legal interest therein is Out of
the country or otherwise cannot be located (LGC, See. 270).
Q: May real property taxes be paid in installment?

ANS: Yes. Basic real property tax and additional tax for SEF due may be paid in four
equal installments (on or before March 31/June 30/September 30/December 31) without
interest thereon (LGC, Sec. 250).
Note: Other special levies and any other real property tax are governed by ordinance
passed by the Sanggunian concerned (LGC, Sec. 250).
r.
Q: How is payment of real property taxes applied? .
ANS: Payments of real property taxes shall first be applied to prior years' delinquencies,
interests, and penalties, if any, and only after said delinquencies are settled may tax
payments be credited for the current period (LGC, Sec. 250).
1002
AN RED BOOT
Q: Is there any discount for advanced or prompt payment?
ANS: Yes. If the basic real property tax and the additional tax accruing to the SEF are
paid in advance, the Sanggunian may grant a discount not exceeding twenty percent
(20%) of the annual tax due (LGC, Sec. 251).
Note: For prompt payment, a discount not exceeding 10% of annual tax due may be
granted (IRR of the LGC, Art. 342).
Q: What is the interest rate on unpaid real property tax?

ANS: In case of failure to pay the basic real property tax or any other tax levied upon
the expiration of the periods provided, or when due, as the case may be, shall subject
the taxpayer to the payment of interest at the rate of two percent (2%) per month on the
unpaid amount or a fraction thereof, until the delinquent tax shall have been fully paid.
Note: In no case shall the total interest on the unpaid tax or portion thereof exceed
thirty-six (36) months (LGC, Sec. 255).
Q: May real property tax condoned orisOuced?

ANS: Yes. The Sanggunian concegiaA., ordinance passed prior to the first (1st) day
of January of any year and uportrago4ritendation of the Local Disaster Coordinating
Council, may condone or reduce,: b rikr partially, the taxes or interest for the
succeeding years in the city or milOiepeli ected in cases of:
1. General failure of crop:" j4,-.+.1
2. Substantial decrease/th4, .:, Tgric t ri-based product% or
3. Calamity in anyn;hince, city unicipality (C 3C, gec. 276).
Q: In what instance
(i
ma ..the PresVen condone or reduse eel property tax?
ANS: The Presidenc,thdbiliffpines ma , when publicinte est,so requires, condone
or reduce the r al rope -talc,,,and- irate At for any ye;er in any rovince or city or a
municipality within the ,,,Metro Manila Area. C, Sec. 271).
a.
Taxpayer's Remedies
Q: What are the remedi the ta,„ pay in real property taxation?
ANS: The rernedie4 the tax ayerfn rela on to real property taxation are:
1. Administrativk
a. Prates C, S5L25211,
C,
b. Claim refun, thd credit LGC, Sec. 253); or
c. Redem n of4A1 property (LGC, Sec. 261).
2. Judicial: ,
a Question legality of a tax ordinance (LGC, Sec. 187);
b. Court action; or
c, Suit assailing validity of the tax sale (LGC, Sec. 267).
Contesting an assessment
File Protest with Local Treasurer
Q: When is protest made?
ANS: The protest in writing must be filed within thirty (30) days from payment of the tax
to the provincial, city treasurer or municipal treasurer, in the case of a municipality within
Metro Manila Area, who shall decide the protest within sixty (60) days from receipt
(LGC, Sec. 252).
Note: Protest is required where there is a question of reasonableness of the amount
assessed, not when the question raised is on the very authority and power of the
assessor to impose the assessment and of the treasurer to collect the tax (Ty v.
Trampe, G.R. No. 117577, December 1, 1995).
1003
Q: Is the taxpayer required to pay the tax first before protest is entertained?
ANS: Yes. Sec. 252 of the LGC requires that the taxpayer first pays the tax. This is
referred to as "payment under protest". The protest may only be filed within 30 days
from the payment of the tax. Thereafter, the words "paid under protest" shall be
annotated on the tax receipt. The tax or a portion thereof paid under protest, shall be
held in trust by the treasurer concerned.
Q: What happens when the protest is decided in favor of the taxpayer?

ANS: In the event that the protest is finally decided in favor of the taxpayer, the amount
or portion of the tax protested shall be refunded to the protestant, or applied as tax
credit against his existing or future tax liability (LGC, Sec. 252).
Q: When may the taxpayer appeal to the LBAA?

ANS: In case of denial of the protest, or upon the lapse of the 60-day period for the
treasurer to decide, the taxpayer may appeal to the LBAA within sixty (60) days from
receipt, who shall decide the appeal fibia,o1341rdred twenty (120) days from receipt
(LGC, Sec. 252(d)).
Q: When may the taxp y r a ,e.?:00,the.OB

ga
ANS: If the taxpayer 's t pti fled with the decirhp e , he may appeal to the
CBAA within thirty 0 aof's o receircifFetisie otth BAA !GC, Sec. 229).
il.a
Q: When may t e tax p(e'r appeal Eith,.., TWen ba c?
ANS: If CBAA lects Votest owner m4y4ppeal to C e 't in thirty (30) days
from receipt of Eck (R.A. o. 2t12 Aru, c pan g the us ic on of the Court of
Tax Appeals, F^-17i( )(5), in litilorriV41Y8 Rqr stif C urt, Rue43)..
Q: When may t e'er aygli eal to I'll dpreme u

ANS: Any acivir isip c mq m, pe e Supreme Court
within fifteen ( 4 fromc i t o e si:o.)-(y':,_. 92232 All ct Expanding the
Jurisdiction of tit Cou of Te ppe , C.•=- tion o the les of Court, Rule
45). N... •
Tzt,
Contesting theAssassmen loh!.oflZ 'ro .Tax
"k. .4f -,( V X..
Q: Outline the steps iMprotig ease in o vi y 'essment or collection of
real property tax.
ANS: The protest on assessment/ eal property tax may involve the
following steps .
1. The local assessor submits an assessment roll to the local treasurer;
2. The local treasurer informs the public when the tax shall be paid by posting of
notice at conspicuous place and publication in a newspaper of general
circulation in the locality once a week for two (2) consecutive weeks;
3. The local treasurer assesses and collects the real property tax starting
January 1;
4. The aggrieved taxpayer pays the tax under protest;
5. The aggrieved taxpayer may file a written protest within 30 days from the date
of payment before the local treasurer
6. The local treasurer decides the case within 60 days from filing of the protest;
7. In the even the local treasurer denies the protest of fails to act within 60-day
periOd, the aggrieved taxpayer may appeal the denial within 60 days from the
receipt thereof or from the lapse of the 60-day period in case or inaction to the
Local Board of Assessment Appeals (LBAA);
8. The LBAA decides the case 120 days from the filing thereof;
1004
9. If LBAA's decision is adverse; the real property owner may appeal to the
Central Board of Assessment Appeals (CBAA) within 30 days from the receipt
of the adverse decision;
10. If CBAA decision is adverse, the real property owner may file a petition for
review before the Court of Tax Appeals (CTA) en banc within 30 days from the
receipt thereof;
11. If the CTA en banc decision is adverse, the real property owner may file a
motion for reconsideration or new trial within 15 days from the receipt thereof;
and
12. Thei real property owner adversely affected by the decision or resolution, as
the case may be, of the CTA en banc may file a petition for review on certiorari
before the Supreme Court within 15 days from the receipt thereof (LGC, Sec.
252 in relation to Secs. 226, 229, 230, 246, 247,248, 249; R.A. No. 9282,
Sec'.7 and 11; Revised Rules of CTA, Rules 4 and 16; Rules of Court, Rules
43 and 45).
Note: Remember that there are two difkrer procedures for contesting the assessment
or collection of the real property ta)&atdrle contesting the assessment of the VALUE of
the property for real property tax perasp
•
Contesting theAssessmentof • ueoP. ealPropertv
Q: Outline the steps in protest) ag.es j he.. sitsment of land value for
real property tax ?,.
ANS: The protest onpiessment value for real pry ! rty tax may involve the
following steps
1. The local a praisal on the I operty based on the
current ma
2. The lo operty accor ctual use;
3. Th essment le fixes he assessed value
oft ,e4ra-Auit*:t.str.-
4. The gal avess ,giveszTptice assessme - -on in whose name
the rearillm is Aeclaret
5. The real property owper wfio is grieved by the assessment may protest the
assessment _'thin -M.0 days fro &. t thereof to the Local Board of
Assessment a s (LB .1.16a3r
6. The LBAA de es the, a 120 days from the filing of the protest;
7. If LBAA's de si n i Averse, the real property owner may appeal to the
Central Board of1/404 sment Appeals (CBAA) within 30 days from the receipt
of the adverse decision;
8. If .CBAA decision is adverse, the real property owner may file a petition for
review before the Court of Tax Appeals (CTA) en banc within 30 days from the
receipt thereof;
9. If the CTA en banc decision is adverse, the real property owner may file a
motion for reconsideration or new trial within 15 days from the receipt thereof;
and
10. The real property owner adversely affected by the decision or resolution, as
the case may be, of the CTA en banc may file a petition for review on certiorari
before the Supreme Court within 15 days from the receipt thereof (LGC, Sec.
212 in, relation to Secs. 217,218, 219, 223 226,229 and 230; R.A No. 9282,
Sec.7 and 11; Revised Rules of CTA, Rules 4 and 16; Rules of Court, Rules
43 and 45).
1005
Q: X made a sworn declaration that the value of his real property is P5000 per
square meter. The City Assessor assessed the said property at P2000 per square
meter. What is the remedy of X if we would like to maintain his declared value?
Explain.
ANS: X may protest the assessment within 60 days from the receipt of the written notice
to the Local Board of Assessment Appeals (LBAA), which is given 120 days to decide
on the protest. If LBAA's decision is adverse, X may appeal to the Central Board of
Assessment Appeals (CBAA) within 30 days from the receipt of the notice of denial. If
CBAA decision is adverse, X may file a petition for review before the Court of Tax
Appeals (CTA) en banc within 30 days from the receipt thereof. If the CTA en banc
decision is adverse, the real property owner may file a motion for reconsideration or new
trial within 15 days from the receipt thereof, or X may file a petition for review on
certiorari before the Supreme Court within 15 days from the receipt thereof (LGC, Secs.
226 and 230; Revised Rules CTA, Rules 4 and 16).
Effect ofpayment of tax p;.:

r ., ,ie
:s,
ini
‘ ,uv....
Q: What is the remedy of the ax,. a ‘ icc sivee collections?
ANS: When an assessmerit-o asic real tax, Is r , riy other tax levied, is found
to be illegal or erron2,9sIzi theAaris according* refluce Col adjusted, the taxpayer
may file a written.cialm,tor re clici or credit4alwsIn iptepit with the provincial or
city treasurer withip/tv/2 (2) eirslrom thejdate thelax dr-is eAti ‘d to such reduction
or adjustment (LGQkSeci253 . ip) A x r -.1`
Note: The treas6rer slidil decide the clal.0.„oriax refu ryitiiin sixty (60) days
from receipt tlirec& ' cas4of-denialAte , ltaxpayer- ay a ealIe:(1the LBAA (as in
protest cases) ' pp.c134
' e CB if4BAA..giVe.artpdverse decisjonl A Sec. 253).
P-\,-1,
____, '
Remedies of AGIej s f- r Calle ion offfeetPiropertyTa
.....„.__:;.„ ,.,/,,.-0
Q: What are t eemedie J 'ate 's.. LGU/oe
-+ .1., cgffpctioil,ofleal rieopell-t/ tax?
. \ 1
ANS: The LGUbracer ed m ( Ilect V a progenyigx.0 by.
,/ ‘.../
1. 'Ad min I trative ctio & - ,:\"\j,
a. Distraint okper offal., (L4(Sec.;54);
b. Lih on propk, argG 257);
c. Levhon rearop..,e IR fl..-GL,Art. o
. 2. Judicial actio.6" r4 Seck`266.and.270). \)-11-
,...rest
issuance of Notice of Delinquencylz 1?Dcflif O axPayment
Q: When is notice of delinquency issued?
ANS: When the real property tax or any _other tax becomes delinquent, the provincial,
city or municipal treasurer shall immediately cause a notice of delinquency (LGC, Sec.
254).
Q: How is notice of delinquency given?

ANS: The treasurer concerned will cause a notice of delinquency:
1. Posted at the main entrance of the provincial capitol, or city or municipal hall
_ ._ and in a publicly accessible and conspicuous place in each barangay of the
local government unit concerned; and
2 Published once a week for two (2) consecutive weeks, in a newspaper of
general circulation in the province, city, or municipality (LGC, Sec. 254).
Note: Formal demand for the payment of the delinquent taxes and penalties due is not a
pre-requisite to avail of administrative and judicial remedies. The notice of delinquency
shall be sufficient for the purpose (IRR of LGC, Art. 347).
1006
em-, 4'.14;f:iP,••,7.4,•• •
Q: What should be contained in the notice of delinquency?

ANS: The notice of delinquency shall specify:
1. The date upon which the tax became delinquent;
2. That personal property may be distrained to effect payment;
3. That at any time before the distraint of personal property, payment of the tax
with surcharges, interests and penalties may be made; and
4. Unless the tax, surcharges and penalties are paid before the expiration of the
year for which the tax is due (except when the notice of assessment or special
levy is contested administratively or judicially), the delinquent real property will
be sold at public auction, and the title to the property will be vested in the
purchaser subject, however, to the right of redemption within one year from the
date of sale (LGC, Sec. 254).
Note: The owner shall not be deprived of possession and to rentals/income thereof until
the expiration of the time allowed for its redemption (LGC, Sec. 261).
Local Government's Lien
Q: Define local government's lien ,.“0
ANS: It is a legal claim on the pro .7". ir ., 'Lib
-IV
ect of the real property tax as security for the
payment of the tax obligation. It 0...4s to any lien, mortgage, or encumbrance of
any kind whatsoever in favor ofg.fin‘ on, irrespective of the owner or possessor
thereof (LGC, Sec. 257). 1'
,•,''
Levy on Rea/ Property,4,09
V'
Q: When is there levtiv Oa! proitrti?
ANS: After the expiratiah o theArree wit which the tax evwdvshall be paid, the real
tlg,, .42"
property subject to.t aLmay, be levied on (LGC, Sec . 25 - 262).
I s.
a -,
•4:147
V "46•••
'6
Procedure foe!, on 54.1prop?rty
.4-"Atf
pmvernmcBt's
.~tw- " Ms- I
Time for pEme of real prodlaxpires (LGC, Sec. 258).
kr,tr
Warrant of try isigeo oy Local Treasurer (LT) (LGC, Sec. 258).
Warrant mailed to or served upon the delinquent owner. Written notice of levy and
warrant is mailed/served upon the assessor and the Register of Deeds of the LGU
(LGC, Sec. 258).
11
30 days from service of warrant, LT shall advertise sale of property by (a) posting
notice at main entrance of LGU hall/ building and in a conspicuous place in the
barangay where the property is located; AND (b) publication once a week for two
weeks (LGC, Sec. 260).
J1
Before the date of sale the owner may stay the proceedings by paying the delinquent
tax, interest, and expenses of sale (LGC, Sec. 260).
Sale is held (a) at the. main entrance of the LGU building, OR (b) on the property to
be sold, OR (c) any other place specified in. the notice (LGC, Sec. 260).
1007
If there is a bidder and the highest bid is sufficient to pay real property tax and related
interests and costs, bidder pays and treasurer reports sale to Sanggunian 30 days
after the sale. The LT will deliver to purchaser the certificate of sale. Proceeds of sale
in excess of delinquent tax, interest, expenses of sale remitted to owner (LGC, Sec.
260).
Within one year from sale, owner may redeem upon payment of the delinquent tax,
interest due, expenses of sale (from date of delinquency to date of sale), and
additional interest of 2% per month on the purchase price from date of sale to date of
redemption. Delinquent owner retains possession and right to the fruits. Price paid
plus interest of 2% per month shall be returned to the buyer (LGC, Sec. 261).
If not redeemed, deed of conveyance shall be issued to the purchaser (LGC, Sec.
262).
1,
If there is no bidder OR, esNd is kstiffilleiVpaN property tax and related
interests and costs, peL alsmrchMeltiel) rty iyb If of the LGU. Registrar
of Deeds shall t r t itre of forfeited • roperty hout need of court
o der.
Within onf (1) ye r fro forfeitl re, On

, eflihay re eem o by paying to
Treasurer full1 oun
.. of to interest costs of sale of erwis hip shall vest to
LGU L G Sec, 2 3).
Sanggunianr ed by oftig., npe I appr. - d an ice of not less

than 20 day , sell/ vt, . . • a • • 1111 - 7 ailed rfeiture (LGC,
,e
X .".<1.\S*4 74' 4).'
Levy may be epeaA, ntil din expegses, is collected

• ..ti'Vg 5)
OFEs 7
9n,
Q: To whom should the notte-OVsale 44:IAt?
ANS: In determining to whom'ffi ticetbf al h d have been sent, settled is the
rule that, for purposes of real property axa ion, the registered owner of the property is
deemed the taxpayer. Thus, in identifying the real delinquent taxpayer, a local treasurer
cannot rely solely on the tax declaration but must verify with the Register of Deeds who
the registered owner of the particular property is (Spouses Hu v. Spouses Unico, G.R.
No. 146534, September 18, 2009).
Q: Is notice and publication of sale mandatory?

ANS: Yes. Notices and publication for sale, as well as the legal requirements for a tax
delinquency sale, are mandatory, and the failure to comply therewith can invalidate the
sale. The prescribed notices must be sent to comply with the requirements of due
process (De Knecht v. Court of Appeals, G.R. No. 108015, May 20, 1998; De Knecht v.
Sayo, G.R. No. 109234, May 20, 1998).
Q: May levy be repeated?

ANS: Yes. Levy may be repeated if necessary, until the full amount due, including all
expenses, is collected (LGC, Sec. 265).
1008
DAN ,';RE I
Q: When may the Sanggunian dispose of the real property acquired?
ANS: The Sanggunian concerned may sell and dispose of the real property acquired by
the LGU at public auction provided it is made by ordinance duly approved, and upon
notice of not less than twenty (20) days.
Note: The proceeds of the sale shall accrue to the general fund of the local government
unit concerned (LGC, Sec. 264).
JudicicilAction
Q: Discuss the remedy of civil action for collection of real property tax.
ANS: The civil action for the collection of basic real property tax and any other tax levied
under LGC on real property shall be filed by the local treasurer in any court of
competent jurisdiction within 5 years or 10 years in case of fraud wherein real property
taxes may be collected (LGC, Sec. 266 in relation to Sec. 270).
mg
4iew,
24.341kG....- .,,," I 70
A. COURT OF TAX APPE.411.5 (CTA)
,
. •
Q: Which rule of ttr.bee u r govern ac ns filed befo e the C A?
s
ANS: Actions( ie before e T - A are g timed by th evised ules of the Court of

Tax Appeals kR,CTA).5 M. No. 05, 11 CTA whit effe on December 15,
2005. The Ru eyoteourt erf ly otilpsuppl ily.
.,, 6-441rM .
Q: What is the can't ositio Hof the TA

ANS: )
1. The CTA cortsteS 'a Presiding u I eight (8) Associate Justices
a: Each &Om appotqadb. -;~ sieen -lord
b. Upon iforninatiky the udicial and Bar Council;
2. It may sit en ram o n hree (3) Divisions, each Division composed of three
(3) Justices; and
3. The Presiding Justice and the two (2) most Senior Associate Justices shall
serve as Chairpersons of the three (3) Divisions (R.A. No. 9503, Sec. 1).
Q: Discuss the rules on quorum and voting of the CTA.

ANS: The following constitutes quorum:
En banc: The affirmative votes of five (5) members of the court en banc shall be
necessary to reverse a decision of a division; and only a simple majority of the justices
present is needed to promulgate a resolution or decisions in all other cases (R.A. No.
9503, Sec. 2).
1009
The Court shall sit en banc in the exercise of administrative, ceremonial and non-
adjudicative functions (RRCTA, Rule 2, Sec. 2).
Division: When the required quorum cannot be constituted due to any vacancy,
disqualification, inhibition, disability, or any other lawful cause, the Presiding Justice
shall designate any Justice of other Divisions to sit temporarily therein (R.A. No. 9503,
Sec. 2).
Where the necessary majority vote cannot be had, the petition shall be dismissed; in
appealed cases, the judgement or order appealed from shall stand affirmed; and on all
incidental matters, the petition or motion shall be denied (RRCTA, Rule 2, Sec. 3).
Q: What are the powers of the CTA?

ANS: The following are the powers of the CTA: (PCS2O2-RED2)
1. Required the Production of papers or documents by subpoena duces tecum
(R.A. No. 1125, as amended, Sec. 10);
2. To punish Contempt (R.A. No. 1125, as amended, Sec. 10);
3: To Summon witnesses by subpoenalti.A. No. 1125, as amended, Sec. 10);
era e-a7pTiing,pppeal (RRCTA, Rule 10, Sec.
tti To Suspend the col eti?
I); • I Jr"..'N
5. To issue Order ain „s4f .person31 p operty and levy of real
property; .,..":"/,, P
6. To admirysteek0A ,,Nor/ , 5ras-am2nd‘d ,, );
7. To pronAet9 Vie and rripula kinktor thOcon s business (R.A. No.
1125, Id's. arneVed, ec. 8);r 4 ,
8. To receive Etdenc (RRCTA,Sqle,12, Sec. \
9: To asskalamage agains aptiellalirif appeal to C is fol
6); an :,„,..1 nd to be frivolous
, or dilepar);-( A. No. 112574ra 110hcteleSbc.
10. To r nder cisions n case"- ,r3efore t (RRC A-Ral 14, Sec. 1).
,:,_--,:z: .1 i
Q: In what canes rya the •-c rrreuehte-evIde
ANS: The courVapr eiv erica filt1-01 (tqwino \s, i
1. In all vases filling Ititkeit i-ijfrxo
th of th Court in Division
pursuant to Sec ion .0:..._4 of _,...).., V ules 9 the Court of Tax
Appeals; rid 1
2. In .appealet both, VI trli€ft eckthegourt grants a new trial
pursuant to SeVign 0 e.53,antt,Se kV, tfire,e124 of the Rules of Court
(R.R. C.T.A., RD! /2, 5I. 2). x \:\I
Q: Who are authorized to take evidenc,e2
ANS: The following are authorized to take evidence:
1. Any Justice of the court when ._
a. the determination of a question of fact arises at any stage of the
proceedings, or
b. the taking of an account is necessary, or
c. the determination of an issue of fact requires the examination of along
account; and
. Any court official for the sole purpose of marking comparison with the original
... and -identification by witnesses of the received documentary evidence (R.R.
C.TA., Rule 12, Secs. 3 and 4).
Exclusive Original and Appellate Jurisdiction over civil Cases

Q: What are the civil cases within the exclusive original jurisdiction of the CTA
Division?
ANS: The Court in Divisions shall exercise exclusive original jurisdiction over tax
collection cases involving final and executory assessments for taxes, fees, charges and
penalties, where the principal amount of taxes and fees, exclusive of charges and
1010
penalties, claimed is one million pesos (Php. 1,000,000.00) or more (RRCTA, Rule 4,
Sec. 3(c)).
Q: What are the civil cases within the exclusive appellate jurisdiction of the CTA
Division?
ANS: The Court in Divisions shall exercise exclusive appellate jurisdiction over:
1. Decisions of the CIR
a. in cases involving disputed assessments, refunds of internal revenue
taxes, fees or other charges, penalties in relation thereto; or
b. other matters arising under the NIRC or other laws administered by the
BIR;
2. Inaction by the CIR where the NIRC provides a specific period of action
a. in cases involving disputed assessments, refunds of internal revenue
taxes, fees or other charges, penalties in relation thereto; or
b. other matters arising under the NIRC or other laws administered by the
BIR;
3. Decisions, orders or resolutton
resolution of the RTCs in local tax cases decided or
resolved by them in the.Wasepitheir original jurisdiction;
4. Decisions of the Commipitiffeeustoms
a. in cases involving hatifimfor custom duties, fees or other money
charges, seizurffl tialeal'tatope ease %property affected, fines,
forfeitures of pother p a t pAlre a CI or
.52
b. other otters arisi nder the us of s Law or other laws
admi issi red by thel) ire u of Customs;
5. Decisions of efiSecreta nance on custo bases elevated to him
.
automaticap or rev VP from de ions of the Co mpsioper of Customs which
are ad ers o th";Goy,ernment er Section q15 f taTariff Code;
6. Dec' ecretaryikth se of non-bgric Itura roduct, commodity
Or Nmzth pA Secretary „the cas osluct, commodity
or ar le, involVin dumpilb,an.• .untervailin ections 301 and
302 ofikApOiTaf Code, and feguard measu nder the Safeguard
Measures e R.1; 81900) Caere either party may appeal the decision to
impose or o to impbse said du wfr.- C.T.A., Rule 4, Sec. 3 (A)).
7. Over appealsif p Afie judgnneri do or orders of the Regional Trial
Courts in tax 9 lectiorvast'sVibt y ì7ecr t*
Il C1 • them within their respective
territorial juris'dttion R,CTA, Rule 4, Sec. 3(c)).
Q: What are the civil cas =s ithin the exclusive appellate jurisdiction of the CTA
en banc?
ANS: The Court en banc shall exercise exclusive appellate jurisdiction over:
1. Decisions or resolutions on motions for reconsideration or new trial of the
Court in Divisions in the exercise of its exclusive appellate jurisdiction over:
a. Cases arising from administrative agencies — Bureau of Internal
Revenue, Bureau of Customs, Department of Finance, Department of
Trade and Industry, Department of Agriculture;
b Local tax cases decided by the Regional Trial Courts in the exercise of
their original jurisdiction; and
c. Tax collection cases decided by the Regional Trial Courts in the
exercise of their original jurisdiction involving final and executory
assessments for taxes, fees, charges and penalties, where the
principal amount of taxes and penalties claimed is less than one million
pesos;
2. Decisions, resolutions or orders of the Regional Trial Courts in local tax cases
decided or resolved by them in the exercise of their appellate jurisdiction;
1011
SEDAN=RED BOON
3. Decisions, resolutions or orders of the Regional Trial Courts in tax collection
cases decided or resolved by them in the exercise of their appellate
jurisdiction;
4. Decisions, resolutions or orders on motions for reconsideration or new trial of
the Court in Division in the exercise of its exclusive original jurisdiction over tax
collection cases; and
5 Decisions of the Central Board of Assessment Appeals (CBAA) in the exercise
of its appellate jurisdiction over cases involving the assessment and taxation of
real property originally decided by the provincial or city board of assessment
appeals (RRCTA., Rule 4, Sec. 2(a to e)).
Q: Does the CTA have jurisdiction over cases asking for the cancellation and
withdrawal of a warrant of distraint and/or levy?
ANS: Yes. Section 7 of R.A. No. 9282 provides that the CTA has jurisdiction over other
matters arising under the National Internal Revenue Code or other laws administered by
the Bureau of Internal Revenue (Qp_mmissipner of Internal Revenue v. Bank of the
Philippine Islands, G.R. No.2432i Ju I abl
t 1
11.
1 1
Q: Does the CTA haveegragye juris mho to4ietrTinche constitutionality or
validity of tax lawaules*Aaricloredillations, and'-other ader istrative issuances of
the CIR? ' .1
ANS: Yes. The
1,iusiveouns,dictip,p
--"r--7-7_7"-- ; \
to ete'r 'b constitutionality or
. t .
validity of tax lAs, mil regutaiion4anitotherad trative issuances of the
Commissipner f Inte al Re enue. Tha,,, yik has not only ju to pass upon the
constitutionalitity of tart ii 0 tatratrw en rat e taxpayer as a
defense in di ng or conitestinTan. ,isalbitant r clai efund, but also
jurisdiction to tali:44 ii gnizance of irc(ketiqucifirpctly ch Ilengin nstitutionality or
validity of a to 'Thkio r Ion or ad ittjative is ice ( orders, revenue
memorandum rya rarrgs e law IpAagists UV to I) si lusive jurisdiction
to resolve all to loco orpatr le.V4(3u a Cu toms Bureau of Internal
Revenue, G.R. o. 220 li',1 bUY .,..„.
\-csC
Exclusive Onylnd A ellat Jteis i io ove Cri 'micas

Q: What are the criminal Zases4 w1 . __.. pclug!„v
Tort Ilia/ jurisdiction of the
CTA Division? YY
.77
ANS: The CTA shall exercibe,.e "ci over all criminal cases where
the principal amount involvalrbf ole claimed is P1,000,000 or more,
exclusive of charges and penalties, arising from violations of:
1. . NIRC;
2. Tariff Code;
3. Other laws administered by the BOC or the BIR.
Note: The regular courts shall have original jurisdiction in offenses or felonies where:
1. The principal amount of taxes and fees, exclusive of charges and penalties
claimed, is less than P1,000,000; or
2. No specified amount is claimed (as to which court shall exercise jurisdiction —
follow the rules on jurisdiction of criminal cases) (RRCTA, Rule 4, Sec. 3(b)).
Q: What are the criminal cases within the exclusive appellate jurisdiction of the
CTA Division?
ANS: The Court in Divisions shall exercise exclusive appellate jurisdiction over appeals
from the judgments, resolutions or orders of the Regional Trial Courts in their original
jurisdiction in criminal offenses arising from violations of the National Internal Revenue
Code or Tariff and Customs Code and other laws administered by the Bureau of Internal
Revenue or Bureau of Customs, where the principal amount of taxes and fees,
1012
exclusive of charges and penalties, claimed is less than one million pesos or where
there is no specified amount claimed RRCTA, Rule 4, Sec. 3(b)).
Q: What are the criminal cases within the exclusive appellate jurisdiction of the
CTA en banc?
ANS: The Court en banc shall exercise exclusive appellate jurisdiction over:
the Court in Division in the exercise of its exclusive original jurisdiction over
cases involving criminal offenses arising from violations of the National Internal
Revenue Code or the Tariff and Customs Code and other laws administered
by the Bureau of Internal Revenue or Bureau of Customs;
the Court in Division in the exercise of its exclusive appellate jurisdiction over
criminal offenses mentioned in the preceding subparagraph; and
3. Decisions, resolutions or orders of the Regional trial Courts in the exercise of
their appellate jurisdiction ov- i,criminal offenses mentioned in number 1
(RRCTA., Rule 4, Sec. 2(f toll
B. PROCEDURES
Filing of an Action For Collection ofMre
Internal Revenue Taxes
Q: How may the Goya ent enforde Ilection of intern evenue taxes through
judicial action?
ANS: The Govemme axes by:
1. Civil action
a. 4By filing civi case for lection of a um f m ney with the proper
regular urt (NtC, Sec 03 and 22 , or
b g n nswea9 th tition fo payer with CTA
;(Femand "s, I v. Commis to on mal Revenue, G.R.
riaWf65 Septe ber , 1969);
2. Criminal action.
Note: The judgment in inal case s mpose the penalty but shall also
order the payment of s subject-of as finally decided by the
Commissioner (NIRC, Sic. 205,'
Q: What is the prescripti.pgiGiod for the assessment of national tax?

ANS: As a General Rule, the period for assessment prescribes within three (3) years:
1. After the last day prescribed by law for the filing of the retum; or
2. After the day the return was filed, if the return was filed beyond the period
prescribed by law, whichever is later.
Exceptions:
1. False, fraudulent return with intent to evade taxes: within 10 years from date of
discovery of the falsity or fraud; and
2. Failure to file a return, at any time within ten (10) years after the discovery of
the omission of the return (NIRC, Sec. 222 (a)).
Note: A return filed before the last day prescribed by law for the filing thereof shall be
considered as filed on such last day (NIRC, Sec. 203).
Before the expiration of the 3-year prescriptive period, both the Commissioner and the
taxpayer may agree in writing to extend the period of assessment. The period so agreed
upon may be further extended by subsequent written agreement made before the
expiration of the period previously agreed upon (NIRC, Sec. 222 (b)).
1013
For the 10-year prescriptive period to apply based on fraud, such must be proved as a
fact by BIR (ABAN, supra at 274).
Refer to the discussion on assessment and collection under Il-F (Tax Remedies under
the NIRC) for a detailed discussion.
Loca/ Taxes
Q: How does the LGU concerned enforce the collection of local taxes through
judicial action?
ANS: The LGU concerned may enforce the collection of delinquent taxes, fees, charges
or other revenues by civil action in any court of competent jurisdiction within five years
from the date taxes, fees or charges become due (LGC, Sec. 183 in relation to Sec.
194).
Note: The local government may file an ordinary suit for the collection of sum of money
before the MTC, RTC, or CA depending upon the jurisdictional amount (LGC, Sec. 183
in relation to Sec. 194). Either °father e'reethro, gh administrative action or judicial
action or all may be pursued)ebn, urrentl ot si ulteneousiv at the discretion of the local
government unit concerpecIL9 , $ec. V
A.
Q: What is the prepcnAti ernod for assessmettt Fffi9cal tax?
ANS: The assess nt‘q jocakterifiallfgrescn ithirkivee‘q years from the date
taxes, fees, or Oa ssib. .erconfe due1,171Gq\SeW/94 (V). o?ver, in fraud or intent to
evade the paynlent oFtaxes, fees, ch.4;geS1,:the sa sessed within ten
(10) years fro Rh datg of th _Atwater/M*1k( ec. 1 4,( )).
Q: What is thq pre-sbnptive ericid;riii:14.661:14iion Lf loca
ANS: The colCeggrsi 1)floc l.lax 7 -1,4splifFewithi ive (5) from the date of
assessment
. (4.G , ep. 194 0).
Note: Refer tollteppuse rt nder III-A5 to A7
fora detailed disprfssio‘
Civil Cases c,
Who may Appeal. ode o ,A,plANOlgrercl.q.Opea
Q: Who can file an afilatali4Zt:FAa--- -k•c
ANS: The following maydOpelf,teqhe MLA j111:40piOnl-
1. Any party adversely affect ed bylikfecIstrtifing or inaction of:
a. The Commissionenrifftertraltevenue on disputes, assessments, or
claims for refund Of internal revenue taxes erroneously or illegally
collected;
b. The Commissioner of Customs;
c. The Secretary of Finance;
d. The Secretary of Trade and Industry;
e. The Secretary of Agriculture; and
f. The Regional Trial Courts, in the exercise of their original jurisdiction
within thirty (30) days after receipt of such decision or ruling or after the
expiration of the period fixed by law for action referred to (DIMAAMPAO
(2015), supra at 250).
The following may appeal to the CTA in Division:
Any party adversely affected by a decision or ruling of:
a. The CTA in Division in a motion for reconsideration or new trial; •
b. Central Board of Assessment Appeals (CBAA); and
c. Regional Trial Court, in the exercise of their appellate jurisdiction within
thirty (30) days from receipt of a copy of the questioned decision or
ruling (R.R. C.T.A., Rule 8, Sec. 4).
1014
•
-5•::•itd•
Note: The right to appeal under Sec. 11 of R.A. No. 1125 is impliedly denied to the
government or any of its agencies, instrumentalities or officials (Collector of Customs v.
Court of Tax Appeals, G.R. No. L-8811, October 31, 1957). When a situation arises
where the taxpayer neither pays the tax assessed against him nor contests its validity
before the CTA, the only remedy left to the government, aside from distraint and levy, is
to enforce the collection by judicial action in the ordinary courts of justice (Republic v. Dy
Chay, G.R. No. L-15705, April 15, 1961) or the CTA, as the case may be (R.R. C.T.A.,
Rule 4, Sec. 3 (C)).
Q: What are the different modes of appeal?

ANS: An appeal.May be made by:
1. Filing a petition for review under Rule 42 of the 1997 Rules of Court, with
respect to a decision, ruling, or inaction of the:
a. • Commissioner of Internal Revenue;
b. Commissioner of Customs;
c: Secretary of Finance; •
d. Secretary of TradernVustry; or
e. Secretary of Agrictilteeaprk
f. RTCs in the exerp10„Welrioriginal jurisdiction.
Note: This appeal shall brkgdaa Division of the CTA.
2. Filing a petition for reVieW' GrpaiterpRittle143 of th:et1997 Rules of Court with
respect to the decisteor
a. The CTVDivision in:a o M tion for reconsi ,ation or new trial;
b.: CBAVErr
c; RTC4thd exercise f t eir appellate juris„didtio
.
Note: This allpee b Ae-hear y the CTA en can9.
3. Filing a43el ikiontorkpriew on mtiorari and :Rule 455of the 1997 Rules of
Court rew..0 . to a decigiqn uling of the= TA en balic.
Nofeltiejupret, Co rt shall oe • on the p,ppe41 ,A, Rule 8, Sec 4
r- •
and Rule 16, Sec. ).
:017c
Suspension of colono tax
Q: Doet the perfectio‘of an appeal sus Fifie collection of taxes?
ANS: As a general ruNgtgr colleaga, 'Utrl turing
. appeal. However, the
CTA is 'empowered top.uspen,dflpe collection of internal revenue taxes and custom
duties or grant injunctio M.Wth 05-11-07-CTA, Rule 10, Sec. 1).
Injunction not available to restrain collection

Q: May the collection of taxes be enjoined?
ANS: As a general rule, no court shall have the authority to grant injunction to restrain
the collection of any national internal revenue tax, fee, or charge (NIRC, Sec. 218).
However, the no injunction rule does not apply to the CTA when in its opinion the
collection of tax by the BIR may jeopardize the interest of the government and/or the
taxpayer (R.A. No. 1125, Sec. 11).
Q: What are the' requisites for the suspension of collection of taxes?

1. When there is an appeal to the CTA from a decision of the CIR;
2. In the opinion of the CTA, the collection may jeopardize the interest of the
Government and/or the taxpayer, and
3. The taxpayer may be required to deposit the amount claimed or to file a surety
bond for not more than double the amount with the Court (R.A. No. 1125, Sec.
11).
1015
Criminal Cases
Institution andprosecution of criminal actions
Q: How are criminal actions instituted?
ANS: All criminal actions before the Court in Division in the exercise of its original
jurisdiction shall be instituted by the filing of an information in the name of the People of
the Philippines. The institution of the criminal action shall interrupt the running of the
period of prescription (R.R.C.T.A., Rule 9, Sec. 2).
Note: In criminal actions involving violations of the NIRC and other laws enforced by the
BIR, the CIR must approve their filing. Those that involve violations of the Tariff Code
and other laws enforced by the BOC, the Commissioner of Customs must approve their
filing (R.R.C.T.A., Rule 9, Sec. 2).
Institution of civil action in criminal action
Q: What is the rule on inclusion of civil action in criminal action?
ANS: The criminal action and the wasp= civil action for the recovery of civil
liability for taxes and penalti,efrs be 0e-- tituted in the same proceeding.
The filing of the criminal 3ction s ell neoles 'tar fi the filing of the civil action.
No right to reserve th5,,filinco c . vil.actiomse ratel rtm the criminal action shall
be allowed or recogy et1(R‘l OF COURT, R 1, Sec. (a)(1))•
Period to appeal/40,1
Q: What are th rule)/9 ap • eal of ri 'ases?
ANS: An appe be mad b filin • ef''N 1' 41
1. Notic eal thin)fte,tn l5)s1,942 fro the eiceipt f a copy of the
deci nal ord r — plae.anrodi\prfftfinal ases d cide y the RTC in the
exec juristh-4 %-t0.10.T.A le 9, a)).
Note T 11 • 1 e. . • 1 I R.C.J ., Rule 9, Sec. 9
(a)).
2. Petitio 'for reiew within fifteen (15)
days from thegceip om with respect to
criminal Lases depide al cases decided by
the RTCs the eicer .R.CT.A., Rule 9, Sec.
9 (b)).
Note: The Co -10,9 .R.C.T.A., Rule 9, Sec. 9
(b)).
Motion for Reconsideration or New na
Q: Who may file a motion for reconsideration or new trial?
ANS: Any aggrieved party may seek a reconsideration or new trial of any decision,
resolution or order of the court (R.R. C.T.A., Rule 15, Sec. 1).
Q: What are the grounds for filing a motion for reconsideration or new trial?
ANS: The grounds are as follows:
1. Fraud, Accident, Mistake, or Excusable negligence (FAME) which ordinary
prudence could not have guarded against and by reason of which such
aggrieved party has probably been impaired in his rights; or
2 Newly discovered evidence, which he could not, with reasonable diligence,
have discovered and produced at the trial and which, if presented, would
probably alter the result (R.R. C.TA., Rule 15, Sec. 5).
Q: To which courts may a motion for reconsideration or new trial be filed?

ANS: A party adversely affected by a ruling, order or decision of a Division of the CTA
may file a motion for reconsideration or new trial before the same Division of the CTA
1016
(R.A. No. 1125, Sec. 11 (3). A motion for reconsideration or new trial can also be filed
before the CTA en banc (R.R. C.T.A., Rule 16, Sec. 1).
Q: When shall the motion be filed?

ANS: The aggrieved party shall file a motion for reconsideration or new trial within
fifteen (15) days from the date he received notice of the decision, resolution or order of
the court in question (R.R. C.T.A., Rule 15, Sec. 1).
Q: What is the effect of filing the motion?

ANS: The filing of a motion for reconsideration or new trial shall suspend the running of
the period within which an appeal may be perfected (R.R. C.T.A., Rule 15, Sec. 4).
Appeal to the CTA En Banc

Q: Who may file appeal to the CTA en banc and what is the mode of appeal?
ANS: A party, adversely affected by a decision or resolution of a Division of the Court on
a motion for reconsideration or new trialfay appeal to the CTA en banc by filing before
it a petition for review under Rule440111ffin fifteen days from receipt of a copy of the
questioned decision or resolution (AtC1., Rule 8, Secs. 3 and 4 (B)).
.4-41,t& 3t4'' •
1
Q: May a decision or order of a Diets on of the CTA 13_,_ e directly appealed to the
CTA en banC in the exercise cliifs kV*,Agligplefe tfigdiction?
ANS: No. The petition for reyjeiiii of al6deCiT(in or reMitt f he Court in Division must
be preceded by the filing (timely m9tio for reconsideratio
Rule 8, Sec. 1). The figg ccif a motiVii reconsideration
Division is
t new trial (R.R. C.T.A.,
w trial before the CTA
indispenaebleeeqyirernent or filing an appeal ef9re the CTA En Banc.
Failure to file such ,ttibritrieconsidera on or new tri is gauk for dismissal of the
appeal before TA EllBarc (City of anila v. Cos os bottling Corporation, G.R.
No. 196681, ne-27, 234p
AkVzh
Q: Who shall act as veRE,Oentativeof People a o emment?
ANS: The 8olieitaGoiiaral shal rep vent the People of the Philippines and
government officialqW1inl'ieir official capacity in all cases brought to the Court in the
exercise of its appefiatelurisjotion Sec 10).
„le
Petition for Review om'L.ertforct.gfge
"
15r&
Q: Who may file a Petition forI" Review on Certiorari to the Supreme Court in Civil
Cases? , VA"all
ANS: Any party adversely affected by a decision or ruling of the CTA en banc may file
with the Supreme Court a verified petition for review on certiorari within fifteen (15) days
from receipt thereof pursuant to Rule 45 of the 1997 Rules of Court (R.R. C.T.A., Rule
16, Sec. 1).
Q: Who may file a Petition for Review on Certiorari to the Supreme Court in --in44
Criminal Cases?
ANS: A party adversely affected by a decision or ruling of the Court en banc may appeal
therefrom by filing with the Supreme Court a verified petition for review on certiorari
within fifteen (15) days from receipt of a copy of the decision or resolution, as provided
in Rule 45 of the Rules of Court. If such party has filed a motion for reconsideration or
for new trial, the period herein fixed shall run from the party's receipt of a copy of the
resolution denying the motion for reconsideration or for new trial (R.R. C.T.A., Rule 16,
Sec. 1).
1017
APPENDICES
APPENDIX A
Syllabus for the 2019 Bar Examinations: Political and International Law
APPENDIX B
Syllabus for the 2019 Bar Examinations: Labor Law and Social Legislation
APPENDIX C
Syllabus for the 2019 Bar Examinations: Civil Law
APPENDIX D
Syllabus for the 2019 Bar Examinations: Taxation Law
BIBLIOGRAPHY
APPENDIX "A"
SYLLABUS FOR THE 2919 I3AR EXAMINATIONS
NOTE: This syllabus is an outline of the key topics that fall under the core subject "Political
and International Law". Accordingly, all Bar candidates should be guided that only laws,
rules, issuances, and jurisprudence pertinent to these topics as of June 30, 2018 are
examinable materials within the coverage of the 2019 Bar Examinations.
I. PRELIMINARY PROVISIONS AND BASIC CONCEPTS

A. National territory
B. Declaration of principles and Salt policies
C. Separation of powers
D. Checks and balances
E. State immunity
II. LEGISLATIVE DEPARTMENT/ ,

A. Legislative power 4
,and
1. ScopOndlimitations
2. Pritpleif non-delgaiility; exceptions
B. Houses of Congres 't,,,s;compositiokand
_ ...-t'
qualification o Ambers
.1. Sanate ti,
2,011louse if itapresegtab ,
ao;;+Apistrict repaserptives and questio s of apportionment
,,trty-li-p,t..syste P
C. Privi eges, intiltths, ands squaL
D. DiscipliheOrnerrifers ri4,-
E. Process kragmaltigg '4".
41
F. Quorum arid yRting)bajorities 1,SSI.. .3",.....TOi
G. Appropriationappfealigqmenp .
H. Legislative inOres anOraraig futidticiri
I. Power of impekchav
J.. Electoral Tribunat .4
K. Commission on Appointments
L. Initiative and referendum
III. EXECUTIVE DEPARTMENT

A. Qualifications, election, and term of the President and Vice-President
B. Privileges, inhibitions, and disqualifications
C. Powers of the President
1. Executive and administrative powers in general
2. Power of appointment
a. Confirmation and by-passed appointments
b. Midnight and ad interim appointments
c. Power of removal
3 Power of control and supervision
a. Doctrine of qualified political agency
b. Executive departments and officers
c. Local Government Units
1019
4. Military powers
a. Calling out power
b. Declaration of Martial Law and suspension of the privilege of the
writ of habeas corpus; requisites and parameters of extension
5. Executive clemency
6. Powers pertinent to foreign relations
D. Rules of succession
IV. JUDICIAL DEPARTMENT

A. Judicial power
B. Judicial review
1. Requisites
2. Political question doctrine
3. Moot questions
4. Operative fact doctrine
O. Safeguards of judicial inde,Aridence.,,,,
' 1. Judicial nd,43
a, r oupci .
a. 406mp s' lion
3
2. Fig' auto y -'''',,,,„,,,
D. Qualifications f ' embers-ofttreTpliiciary.,,. \
E. Workin 4-.6 Supreme gpeprtt .%-c7 '‘‘ V
1. E nc a • d divisibn casesA
Pro dura rule-makipC .,$)--..
ilministr we superveTlowe
inal ad
n\aire)lbje AnsiliC4itiri
,44'4
V. COnSTITU1 luN4 CO SSIONS
A. Com radyisi6
B. Powe
C. Composition a
D. Prohibit d officekand 114
E. Review oT inal oree s *-ripp Ede isi
VI. BILL OF RIGHTS

A. Fundamental po
1:9 te State if h
1. Police power
2. Eminent domain
3. Taxation
B. Private acts and the Bill of Rights
C. Rights to life, liberty, and property
1. Procedural and substantive due process
2. Void-for-vagueness doctrine
3. Hierarchy of rights
D. Equal protection
1. Requisites for valid classification
2. Rational basis, strict scrutiny, and intermediate scrutiny tests
Searches and seizures
1. Requisites for a valid warrant
2. Warrantless searches and seizures
3. Administrative arrests
4. Evidence obtained through purely mechanical acts
F. Privacy of communications and correspondence
1. Private and public communications
2. Intrusion, when allowed; exclusionary rule
1020
G. Freedom of speech and expression
1. Prior restraint and subsequent punishment
2. Content-based and content-neutral regulations
3. Facial challenges and the overbreadth doctrine
4. Dangerous tendency, balancing of interests, and clear and present
danger tests
5. State regulation of different types of mass media
6. Commercial speech
7. Unprotected speech
H. Freedom of religion
1. Non-establishment and free-exercise clauses
2. Benevolent neutrality and conscientious objectors
3. Lemon and compelling state interest tests
I. Liberty of abode and right to travel
1. Scope and limitations
2. Watch-list and hold departure orders
J. Right to information
A
6,1' 1
1. Scope and limit*
2. Publication oflos OrlOgulations--S,
K. Right of association 'V
L. Eminent Domain
.4Y. „c0
1. Concept °Tip lic,,uke) 73
-
2. Just Forriigensationll
3. Exietlation by totat overnment units
M. Non-impairmipfcontrac
N. Free acces.o,cdri , ris.tand adequ
0. CustoleyiKestigTelionffights
P. Rights,bf the accused ''4%
Q. Rig folkezaekdisoosition o -,,,
R. Righ againstle3focrimi
S. Right againstitM,.6 jeo
T. Involunk?giritti%
U. Right agairistipxcekie fines, a d inhuman punishments
V. Non-imprisonRienticir debts
W. Ex post facto s and bilieV-a .in e
X. Writs of habea`corp ui l4 alikasan, habeas data, and amparo
Nn
VII. CITIZENSHIP
A. Who are Filipino citizens
B. Modes of acquiring citizenship
C. Loss and re-acquisition of Philippine citizenship
D. Dual citizenship and dual allegiance
E. Foundlings
VIII. LAW ON PUBLIC OFFICERS

A. General principles
B. Modes of acquiring title to public office
• C. Kinds of appointment
D. Eligibility and qualification requirements
E. Disabilities and inhibitions of public officers
F. Rights and liabilities of public officers
G. De facto vs. de jure officers
H. Termination of official relation
I. The Civil Service
J. Personnel actions
1021
K. Accountability of public officers
1. Discipline
a. Grounds
b. Jurisdiction
c. Dismissal, preventive suspension, reinstatement and back
salaries
d. Condonation doctrine
2. Impeachment
li
3. The Ombudsman
a. Functions
b. Judicial review in administrative proceedings
c. Judicial review in penal proceedings
4. Office of the Special Prosecutor
5. The Sandiganbayan
IX.ADMINISTRATIVE LAW
All General principles 1
B11 Powers of adminiSifati4sagenc15 1•47.t,
1. Quae-161111.
.i- 5
vti(Eule-makingLeciwer ti,";
ipds,. administrative rules ofd r rations
qiiiAites-forrapi
dip' (adVic4irli)<>riower
Adirinistrative die pfacess
Adipinistrativ0prl and re iew (SI
Adinistrative r judica a
t-findin , in'IrePaatW-Arding, and rate- ming owers
C. Doct prima Vrisdiattiaail kdixtiausti i n of adtinistea 'ye remedies
i
—
X. ELECTION 1 %.111 i A;C-i
A. Suffra 4.45.7./
1. Qua qcati alifit* 0
2. Regisrrttion d- eactitatierr`K
3. Inclusiorilandc Kkisii tpd
' i gs
4. Llical anqraYeo.,,,,,z2,:t.0000in
5. Del'ain<?na
B. Candidacy
ul Mf A14
1. Qualifications, d disq a i icati s-S"f candidates
2. Filing of certificates o ii acy
a. Effect of filing
b. Substitution and withdrawal of candidates
c. Nuisance candidates
d. Duties of the COMELEC
C. Remedies and jurisdiction
1. Petition to deny due course or cancel a certificate of candidacy
2. Petition for disqualification
3. Failure of election, call of special election
4. Pre-proclamation controversy
5. Election protest
6. Quo warranto
Xl. LOCAL GOVERNMENTS

A. Principles of local autonomy
B. Autonomous regions and their relation to the national government
C. Local government units
1022
DAN RED El
Powers
a. Police power (general welfare clause)
b. Eminent domain
c. Taxing power
d. Legislative power
i. Requisites for valid ordinance
ii. Local initiative and referendum
e. Ultra vires acts
Liability
3. Settlement of boundary disputes
4. Vacancies and succession
6- Recall
6. Term limits
XII. NATIONAL ECONOMY AND PATRIMONY

A. Regalian doctrine
-4
B. NatiObalist and citizenshAtit ment provisions
C. ExplOration, development* ,illi ization of natural resources
D. Franchises, authority, anheai i tes for public utilities
E. Acquisition, ownership an ' ' - of' public and private lands
F. Practice of professions
G. Organization and repplationaolp o lidno.ph-Srattapd public
H. MonOpolies, restraint of trade, aqd unfair competino
11 •
XIII. SOCIAL JUSTIC D HUM/j i'RIGt TS
A. Concept
B. Econo 'ersocia ncLeultural ri
C. Co ssion g uman Riets
fir' va '
XIV. EDUCATION; SCIE 0 , TEC , NOLOGY, ARTS, 0.,UOTTURIA
„ Nu SPORTS
A. Academic al.
XV. THE FAMILY
A. Right's
XVI. AMENDMENTS 0 REMa NS OF THE CONSTITUTION

A. Procedure to a e dej revise the Constitution
XVII.PUBLIC INTERNATIONAL LAW

A. Concepts
1. Obligations erga omnes
2. Jus cogens
3. Ex aequo et bono
B. Relat onship between international and national law
C. SourCes of obligations in international law
D. Subjects
1. States
2. International organizations
3. Individuals
E. Jurisdiction of states
1. Basis of jurisdiction
a. Territoriality principle
b. Nationality principle and statelessness
c. Protective principle
1023
d. Universality principle
e. Passive personality principle
2. Exemptions from jurisdiction
a. Act of State doctrine
b. International organizations and its officers
F General principles of treaty law
G. Doctrine of state responsibility
I. Refugees
J. Extradition
K' Basic principles of International Human Rights Law
L. Basic principles of International Humanitarian Law
M Law of the sea
1. Baselines
2. Archipelagic states
3. Internal waters
4. Territorial sea
5. Contiguous,2•ne
6. Exclusiveecomic
7. Coyiae to stelf- .exten nie t helf
8. Irltgrti ti fibunal for the La eS
NJ Basic pri 6icire pat meats a
1024
APPENDIX "B"
symApusFoR.IH4.019..BARig CATIONS
-040oR LAW AND4 •
NOTE: This syllabus is an outline of the key topics that fall under the core subject "Labor
Law and Social Legislation". Accordingly, all Bar candidates should be guided that only
laws, rules, issuances, and jurisprudence pertinent to these topics as of June 30, 2018 are
I. GENERAL PROVISIONS
A. Basic policy on labor
B. Construction in favor of labor .F :
C. Constitutional and Civil Co.de;ip isions relating to Labor Law
II. PRE-EMPLOYMENT
A. Recruitment and placement?o, F o and migrant workers (Labor Code and RA
8042, as amended by 13A ;1P
1. Illegal recruibyeht wrap
a WI-lints
b.
A
yus of illegalre.
c. Regal recruitment
Lability oMrrecruitm ployer
a. Sadaryliabilgy
b.fIlvory otimptite
3. efiniiiatierPof contact o or valid cause
4. iRRI) offer hirin
B. Employm'eb-W incfrtsidept alien
III. LABOR STANDARIO

A. Conditions ofOnploymen
1. Coverage
2. Hours otwocA
a. IV6rrai Hours of work; hours worked
b. Meal periods
c. Night-shift differential
d. Overtime work
e. Computation of additional compensation (rates only); facilities
vs. supplements
3. Weekly rest periods
4. Holidays
5. Service incentive leaves
6. Service charges
7. 13th month pay
B. Wages
1. Payment of wages
2. Prohibitions regarding wages
3. Wage distortion; concept
4. Non-diminution of benefits
C. Leaves
1. Service incentive leave
2. Maternity leave
1025
3. Paternity leave
4. Solo parent leave
5. Leave benefits for women workers under RA 9710 and RA 9262
D. Special groups of employees
1. Women
a. Discrimination
b. Stipulation against marriage
c. Prohibited acts
d. Sexual harassment (RA 7877)
2. Minors (RA 7610, as amended by RA 9231)
3. Kasambahay (RA 10361)
4. Homeworkers
5. Night workers
6. Apprentices and learners
7. Persons with Disabilities
a. Discrimina
b. Ince tiv for eplcIye.4
r""N.
V I IN
IV. SOCIAL WELFA LEGI L TION
A. SSS Law 28
,1.
2.
44.
4ndberici
<\'ep
'
3.eneis
B. GSIS Cf.)
1. fl
ge an. expjysiog
2. ndIA-tiefiti
3. bit
C. Disa efit
1.
2.
V. LABOR RELA ONS

A..'Right to s lft-organi
1. Coverve
2. . ggena ee supervisory employees
3. Effect of inc or/as d of the bargaining unit
4. Non-abridgement
B. Bargaining unit
C. Bargaining representative
D. Rights of labor organizations
1. Check off, assessments, and agency fees
2. Collective bargaining
E. Unfair Labor Practices
1. Nature, aspects
2. By employers
3. By labor organizations
F Peaceful concerted activities
1. Strikes
2. Picketing
3. Lockouts
4. Assumption of jurisdiction by the DOLE Secretary
5. Injunctions
1026
VI. POST-EMPLOYMENT
A. Employer-employee relationship
1. Tests to determine existence
2. Kinds of employment
a. Regular
b. Casual
c. Probationary
d. Project
e. Seasonal
f. Fixed-term
g. Security guards
h. Floating status
3. Legitimate subcontracting vs. labor-only contracting
a. Elements
b. Trilateral relations
c. Solidary lia
B. Termination by employe
1. Just causes
2. Authorized caused
3. Due process r,e,,q etz.
a. Wotice re • uirement
b. Og
C. Termination bli eqbloyee
1. ResiggptiWrglis const ctive dismissal
D. Preventivausp,psion
E. Reltpfronn ille al dismissal\
F. MogVlaim liting from emplayaremplo
G. Rehr:wen.
Nt,
VII. MANAGEMEOP ERCV A TIVF
A. Discipline
B. Transfer of e _pees
C. Productivity standard
D. Bonus t:4
E. Change of wor n hours
F. Bona Fide Occu atonal Qualifications
G. Post-employment restrictions
VIII. JURISDICTION AND RELIEFS

A. Labor Arbiter
B. National Labor Relations Commission
C. Judicial review of labor rulings
D. Bureau of Labor Relations
E. National Conciliation and Mediation Board
F. DOLE Regional Directors
G. DOLE Secretary
H. Grievance machinery
I. Voluntary arbitration
J. Prescription of actions
1. Money claims
2. Illegal dismissal
3. Unfair labor practice
4. Offenses under the Labor Code
5. Illegal recruitment
1027
KN RED: OOK
APPENDIX "C"
SYLLABUS:FOR. THE 2019 .1E1A112E-.'
CIVIL LAW
NOTE: This syllabus is an outline of the key topics that fall under the core subject "Civil
Law". Accordingly, all Bar candidates should be guided that only laws, rules, issuances,
and jurisprudence pertinent to these topics as of June 30, 2018 are examinable materials
within the coverage of the 2019 Bar Examinations.
A. Effect and application of laws
B. Conflict of laws (Private IntgrnationaLLkt.
C. Human relations (Artiol s 19-22)
II. PERSONS AND F

A. Persons ,e
1. civd per,sAndii
2. If fps Ma es r
3. Antri -s CivilICRegistrydand Clerics error haw (RA 9048, as
men d) e r‘
4. A ce
Civil code r9vcsioi
Presu ptive:dtat clafirsant s Family Code
B Marr
1. 'mite pf^ arriagetA
2. ern ion ,ticeRtr9qtfir4019
3. arriag s sdlectriiiizetlb a\d'arr
4. oid an oidabe
C. Legal se ration
D. Rights and tojigati9We liziran
E. Property relationstio#eppusband ff
1. General ritovisfoni
2. Donations byleasau)f mIrri
3. Absolute CommunitR"rose y
4. Conjugal Partnership of Gains
5. Separation of property and administration of common property by one
spouse during the marriage
6. Regime of separation of property
7. Property regime of unions without marriage
F. Family home
G. Paternity and filiation
1. Legitimate children
2. Proof of filiation
3. Illegitimate children
4: Legitimated children
H. Adoption
1. Domestic adoption (RA 8552)
a. Who may adopt
b. Who may be adopted
c. Rights of an adopted child
d. Instances and effects of rescission
1028
2. Inter-country adoption (RA 8043, as amended)
a. When allowed
b. Who may adopt
c. Who may be adopted
I. Support
J. Parental authority
K. Emancipation
L. Retroactivity of the Family Code
III. PROPERTY
A. Classification of property
B. Ownership
1. In general
2. Rules on accession
3. ' Quieting of title
C. Co-ownership
D. Possession
1. Kinds of possess
2. Acquisition of po
3. Effects of posse
E. Usufruct
1. In general
2. Rights
3. Extin s
3.
F. Easements
1. Mode inlig ease
2. ts a Mations dominant and servient
st,1/4
o ing 'shment
unta se
I ea
elatii3g to eaters
Righf way
h ffnd view
G. Nuisance
H. Modes of acq ing oKnership
1. Occupatidb
2. Donation
a. Nature
b. Persons who may give or receive a donation
c. Effects and limitations of donation
d. Revocation and reduction
Prescription
a. General provisions
b. Prescription of ownership and other real rights
c. Prescription of actions
IV. SUCCESSION
A. General provisions
B. Testamentary succession
1. Wills
2. Institution of heirs
3. Substitution of heirs
4. Conditional testamentary dispositions and those with a term
5.. Legitime
1029
DAN RED BO
6. Disinheritance
7. Legacies and devises
C. Legal or intestate succession
1. General provisions; relationship and right of representation
2. Order of intestate succession
D. Provisions common to testate and intestate succession
1. Right of accretion
2. Capacity to succeed by will or by intestacy
3. Acceptance and repudiation of inheritance
4. Partition and distribution of the estate
V. OBLIGATIONS AND CONTRACTS

A. Obligations
1. General provisions
2. Nature and effect
3. Kinds
4. Extinguishme
B. Contracts
1. Gene
Essefitial r
3. R orm
4. I
5.
6.
7.
8.
C. Natu
D. Esto
E. Trust
VI. SALES
A. Nature and form
1. gs.ential r
2. Pert ction
3. Contr ors
B. Capacity to buy
C. Effects of the contrac
D. Obligations of the vendor
E. Obligations of the vendee
F. Breach of contract
1. Remedies
2. Recto Law and Maceda Law
G. Extinguishment
1. In general
2. Pacto de retro sale
3: Equitable mortgage
H. Assignment of credits
VII. LEASE
B. Rights and obligations of lessor
C. Rights and obligations of lessee
1030
VIII. PARTNERSHIP
B. Obligations of the partners
C. Dissolution and winding up
D. Limited partnership
IX. AGENCY
A. Nature, form, and kinds
B. Obligations of the agent
C. Obligations of the principal
D. Modes of extinguishment
X. CREDIT TRANSACTIONS
A. Loan
B. Deposit
C. Guaranty and Suretyship
D. Antichresis
E. Real estate mortgage
XI. LAND TITLES AND DEEDS

A. Torrens system; generaLorifeip
es- v re-
B. Original registration
1. , Ordinaryogistration ,
a. 4Vho may apft..
b. tpeofee of reistratRn
c.1-,
;,,A4,-0A decree registration; 7o urchaser for value
C. CertificIplatitler-
D. SubAuent r2gis ration 'N, a \
1'r. 9ja, faraealings; gene . . — -
2. Involu_ ntgyaealint W
r. %.
,„._se c airp
Nri,4@. l'AM
allotin of lispend
E. Assuran fund el.
• 1. Actionkol , mpensation.,,.f
2. ' LiinitapA: of actiofiegg4,
i.'
.
XII. TORTS AND DAMAGE

A. Torts]
1. Elements
2. I Culpa aquiliana vs. culpa contractual vs. culpa criminal
3. Vicarious liability
4. i Res ipsa loquitur
5. Last clear chance
6. Damnum absque injuria
B. Proximate cause
C. Negligence
1. Standard of care
2. Presumptions
D. Damages
1. General provisions
2. Kinds of damages
3. ' In case of death
- NOTHING FOLLOWS -
1031
APPENDIX "D"
NOTE: This syllabus is an outline of the key topics that fall under the core subject
"Taxation Law". Accordingly, all Bar candidates should be guided that only laws, rules,
issuances, and jurisprudence pertinent to these topics as of June 30, 2018 are
A. Power of taxation as distinguished from Police Power and Eminent Domain
B Inherent and constitutions 'rnitations.alaxation
Cl Requisites of a valisLta
DJ Tax as distinguish fro othekto m o e
Ei. Kinds of tay
F. Doctrines i ttcati ;\
1. Consar ib a 'ntellpeta
(4.4 ir on t nd regulations
2. ity f tax Is w
3. mpr ptibi ity of ti xes,,
-'4,,,i,, ,ze%,
4. oubl taxat on ';-'t,
'4\
5. e from taxation
- a( Shifti of rajc 15-11
''e--
Tax oidarta--
T x sion \--- "tw
io 0 axation
7. %Eduftable r
8. rohibif9gn o
9. 00mprothise a
RA 10963 or the Tax Refo priATaseleratioW111

A. Taxing authority
0,,
II. NATIONAL TAXA ON (got nterallanTfrC0de9 1997, as amended by
ofi Law)
1. Jurisdiction, p L'e 41x4t oferCommissioner of Internal

Revenue
a. Interpreting tax laws and deciding tax cases
b. Non-retroactivity of rulings
2. Rule-making authority of the Secretary of Finance
B Income tax
1. Definition, nature, and general principles
a. Criteria in imposing Philippine income tax
b. Types of Philippine income taxes
c. Taxable period
d. Kinds of taxpayers
2 Income
a. Definition and nature
b. When income is taxable
i. Existence of income
ii. Realization and recognition of income
c. Tests in determining whether income is earned for tax purposes
i. Realization test
ii. Economic benefit test, doctrine of proprietary interest
1032
iii. Severance test
d. Tax-free exchanges
e. Situs of income taxation
3. Gross income
a. Definition
b. Concept of income from whatever source derived
c. Gross income vs. net income vs. taxable income
d. Classification of income subject to tax
i. Compensation income
ii. Fringe benefits
iii. Professional income
iv. Income from business
v. Income from dealings in property
vi. Passive investment income
vii. Annuities, proceeds from life insurance or other types of
insurance.T*
viii. Prizsititawards
ix. Pe fijigittirement benefit or separation pay
x. IncotaltAny source
e. Exclusions Viclore ego ons
i. Ratio
H. Taxpa e 6-1may,:agaifft,'
1WDistingiiish=d from deductions nd tax credits
4. Deductions from grossak e
a. b'ZricOpt as rePti% capital
b. ilterniTechaduction s. Optional SI dap Deduction
c. ftemlUdeductibl
ncometax on individalp
ent ciLzens, n a residenkcitge ident aliens
Inc Tions exclusions44,i_p 4Vcompensation
inco
Taxapon o siness income/income from practice of
profession 4 st:,lf,w,g,„
axation TAT,
iv. Taatiorpo o= o tfal a tingeeio
v. ital asset vs. ordinary asset
b. In the tax on non-resident aliens engaged in trade or business
c. In dm tax on non-resident aliens not engaged in trade or
business
d. Individual taxpayers exempt from income tax
i. Senior citizens
ii. Minimum wage earners
iii. Exemptions granted under international agreements
6. Income tax on corporations
a. Income tax on domestic corporations and resident foreign
corporations
i. Minimum Corporate Income Tax
ii. Branch Profit Remittance Tax
iii. Itemized deductions vs. Optional Standard Deductions
iv. Taxation of passive income
v. Taxation of capital gains
b. Income tax on non-resident foreign corporations
c. Income tax on special corporations
i. Proprietary educational institutions and hospitals
ii. Non-profit hospitals
1033
'VOL 7.
2019
iii. Government-owned or controlled corporations, agencies,

or instrumentalities
iv. Domestic depository banks (foreign currency deposit
units)
v. International carriers doing business in the Philippines
vi. Off-shore banking units
vii. Resident foreign depository banks (foreign currency
deposit units)
viii. Regional or area headquarters and regional operating
headquarters of multinational companies
d. Improperly Accumulated Earnings Tax °AEI)
e. Exemptions from tax on corporations
f. Tax on other business entities: general partnerships, general
professional partnerships, co-ownerships, joint ventures, and
consortia
7. Filing of returns and pay.men
a. Period„within whtchjolle inCorne tax return of individuals and
co ciratipisi
b. uoilitpted Frig
c 4 eFailtireitoli e returns
, ,
C ficept 'p
/ b. edi ble vs.( withQ, Idifig taxe
c. of a wit* • * • agent
C. Tren
11. 'Este tax
Basic ,epikiand efinition
tion —d'ent .;•;.0
De e ation ostr es te
De. stak.
. -xeml e 66 anpx
f,p.eitain s andtrans issions
iodtP" d`t§at,e16 rns
. DOpor's ta v),
Basio.rries'reoricep
b. •Recjiij e3ftwalid.d
c. Tansfe hich rtayib n td as donation
I. sfer of pirble • nsufficient consideration
Con'aaff'atititil e Ission of debt
iii. Bona fide arms-length transfers
d. Determination of gross gift
e. Exemption of gifts from donor's tax
D. Value-Added Tax (VAT)
1. Concept and elements of VATable transactions
2. Impact and incidence of tax
3. Destination Principle; Cross-Border Doctrine
4. Imposition of VAT on transfer of goods by tax exempt persons
5. ; Transactions deemed sale subject to VAT
6. Zero-rated and effectively zero-rated sales of goods or properties
7. VAT-exempt transactions
8. Input and output tax
9. , Tax refund or tax credit
a. San Roque doctrine
b. Enhanced VAT refund system
10., Filing of returns and payment
1034
)VOL 1.
2019
E. Tax remedies under the NIRC

1. G'eneral concepts
la. Requisites of a valid assessment
•; b. Tax delinquency vs. tax deficiency
c. Prescriptive period for assessment
i. False returns vs. fraudulent returns vs. non-filing of returns
ii. Suspension of the running of statute of limitations
2. Civil penalties
j a. New rule on delinquency interest and deficiency interest
lb. Surcharge
c. Compromise penalty
3 Assessment process and reglementary periods a. Letter of Authority
b. Notice of Informal Conference
c. Issuance of Preliminary Assessment Notice
d. Issuance of Formal Letter of Demand/ Final Assessment Notice
Disputed assessnientl
4 Collection
a. Requisites Air.,
; b. PreScriptiveipem
F. Taxpayers remedies
1., Protesting an asseanign
•a. Period to.416pro‘§,
Sulgpston of supp ng documen
c. Effp of failureojtei * protest
d. DegOn of the,omossioner on the pro est filed
44,.
tP,erio'd to act on or decide Q'i !note t filed
Vligrnedies of lite taxpayer in caserthecommissioner
" tffkprrst or fails to:tact o the protest
denies
Effecl of failu o appeal .
2. Compromise d atiternen taxes
3. Recover fak errOngijusl :ter illegally toileet
+4" it
irounasi requIsites, nd period for filing a claim for refund or
at issuancsof a tax crace lfLcate
b. PcooeOparty to file c ai 90/4fu. d or tax credit
..tmakt-
G. Governiiient remedies
1. Kinds k
Z Judicial r
III. LOCAL TAXATION (Local Government Code of 1991 [RA 7160], as amended)
A. Local government taxation
1. Fundamental principles
2. Specific taxing powers of Local Government Units (exclude rates)
3. Common limitations on the taxing powers of LGUs
4. Procedure for approval and effectivity of tax ordinances
5". Periods of assessment and collection of local taxes, fees, or charges
6. Taxpayer's remedies
a. Protest of assessment
b. Claim for refund of tax credit for erroneously or illegally
collected taxes, fees, or charges
7. Remedies of the LGUs for collection of revenues
a. Administrative action
b. Judicial action
B Real property taxation
1. Fundamental principles
2. Exemption from real property taxes
1035
r: g
ir 2019
VOL 1.
Collection of real property tax

a. Date of accrual of real property taxes and special levies
b. Collection of taxes
c. Periods within which to collect real property taxes
4. Taxpayer's remedies
a. Contesting an assessment
i. Payment under protest
ii. File protest with treasurer
iii. Refunds or credits of real property taxes
b. Contesting a valuation of real property
i. Appeal to the Local Board of Assessment Appeals
(LBAA)
ii. Appeal to the Central Board of Assessment Appeals
(CBAA)
iii. Effect of payment of tam
5. Remedies of LGiislorzollection of r wty taxes
IV.
TI
JUDICIAL REMEDIEfrrA 1125, assne.A4as evised Rules of the
Court Of Tax Appeals .1-1
-,.....,-......, .,,,
A. Court ofArxp,pilejsriCTA)
1. ExatCi e,triginal-affraTifidllate41 ovekcivil cases
2. Ei5cly lie offginal.and Vpeliate j rtriminal cases
B. Pro dabs ir ,..,\, A
alf
Filin of a action forAfelection
f Int ma revenue;) axes '
Lodal tiirc-.4 In r--`7 $. V'
rart-'---Bri --N-1
it cases
8N of appeal
may app_ealAq de of a
ension p ' ljaption o
A Inj nde_ 44.1 Ilectidn'Y
Crime EL.-1 '....:.
a. lost!t 15 q:?t
os .f cinal.actions
'ore
b. IrisktuttzkIrlsOcnrbinal actiorf
c., P9ri3 o'app
• Aprie0461.41 m•ban
• Petitiortf r r _vie on MoNrIc;\e
- NOTHING FOLLOWS -
1036
SAN RED BOOK
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-9111.10111.1111.1W 1 -

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SAN BEDA UNIVERSITY

POLITICAL AND INTERNATIONAL LAW

A Reviewer based on the 2019 Supreme Court Bar Exam Syllabus

Roger P. Cuaresma Camille Victoria D. Dela Cruz

Dean Atty. Marciano G. Delson

UT IN OMNIBUS GLORIFICETUR DEUS

SAN BEDA LAW

THIS IS THE INTELLECTUAL PROPERTY OF THE

POLITICAL AND INTERNATIONAL LAW

I. Preliminary Provisions and Basic Concepts 2

I. General Principles 374

I. General Principles 738

Appendix A: Syllabus for the 2019 Bar Examinations: 1019

CHARLO 1'1'hVINA S. CASINILLO

Constitution Law I CHRISTIAN S. TADURAN

AARON FRANZ SP. AURELIO REGINA PURITA B. LAVARIAS

Atty. ADONIS V. GABRIEL Atty. ROWELL D. ILAGAN

Q: What is the archipelagooctane?

Q: By dropping the phi*e 11i&io hippines by hig oric right or legal

B. DECLARATION OF PRINCIPLES AND STATE POLICIES

Q: What is the policy of the State on human rights?

Q: Does the Constitution allow abortion?

Q: Is there a constitutionslmg t to a balanced and healthful ecology?

Q: What is the policy of the State on access to public service?

Q: What is the policy of the State on disclosure of matters of public interest?

Q: When is there a violation of separation of powers?

Q: What is the principle of the blending of powers?

Q: May this principle be invoked by other states?

Q: What determines if the suit is against the state?

Q: May there be a waiver of state immunity? Explain.

Q: How may the State give its express consent to be sued?

Q: How may the State give its implied consent to be sued?

Q: Do government-owned or -controlled corporations also enjoy the immunity of

Q: Are government agencies entitled to immunity?

On the other hand, if it is unincorporated, then it has no separate juridical personality.

Q: Is there an exception to the rule on prohibition of garnishment of public funds?

Q: What are the limitations of legislative power?

Q: What are some of the substantive limitations?

Q: What are the rules in the apportionment of legislative districts?

Q: What is the purpose of the Party-list System?

Q: What is a political party?

6. The nominees of sectoral parties or organizations that represent the

Q: What are the qualifications for a person to become a party-list nominee?

Q: Discuss the constitutionality of the two-percent (2%) threshold prescribed

Q: What is the effect of a change in affiliation of any elected party-list

Q: What is the rule on vacancies in the seats of party-list representatives?

C. PRIVILEGES, INHIBITIONS, AND DISQUALIFICATIONS

Q: What are the immunities granted to members of Congress?

Q: May a member of Congress who holds a business interest in a corporation

Q: May Members oftr tiicctgress,practiRe their professioras‘

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Q: Discuss the process of enacting laws.

Q: Are the requirements of three readings on separate days and distribution of

Q: What is the basis in determining the existence of a quorum in the Senate?

Q: How many votes constitute a "majority of ALL members"?

Q: How many votes constitute "a majority of the house"?

G. APPROPRIAT/0 ND RE- 8 11,1E

Q: What is an appropriation law?

Q: Give the two (2) classifications of Appropriation Laws.

Q: What are the limitations on the power to appropriate?

Q: What are the requisites of a valid transfer of appropriations?

Q: What is a "pork barrel"?

Q: What is Pork Barrel System?