Preweek 2022

PRE-WEEK LECTURE
in
COMMERCIAL LAW
Corporation Law
• Kinds of corporations including corporation sole
• Composition
• Membership in the board
• Powers, duties and prerogatives of the board and stockholders
• Articles of incorporation and by-laws
KINDS OF CORPORATION
Classes of Corporation
1. Stock vs. non-stock
Stock corporations - capital stock divided into shares and are

authorized to distribute to the holders of such shares, dividends, or
allotments of the surplus profits on the basis of the shares held.
Non-stock corporation - no part of its income is distributable as

dividends to its members, trustees, or officers.
2. Public vs. private vs. quasi-public
Public corporations - created by the State as the latter's own agency or

instrumentality to help it in carrying out its governmental functions; otherwise, it
is private.
Quasi-public corporations - private corporations that render public service, supply

public wants, or pursue other eleemosynary objectives such as utility, railroad,
warehouse, telegraph, telephone, water supply corporations and transportation
companies. It is a specie of private corporations, but the qualifying factor is the
type of service the former renders to the public: if it performs a public service,
then it becomes a quasi-public corporation.
Funa vs. Manila Economic and Cultural Office, et al., G.R. No. 193462, February 4,
2014.
• The true criterion to determine whether a corporation is public or
private is found in the totality of the relation of the corporation to the
State.
• If the corporation is created by the State as the latter's own agency or
instrumentality to help it in carrying out its governmental functions,
then that corporation is considered public; otherwise, it is private.
3. Domestic vs. foreign
Foreign corporation - one formed, organized or existing under laws

other than those of the Philippines’ and whose laws allow Filipino
citizens and corporations to do business in its own country or State.
Domestic corporation - one formed, organized or existing under

Philippine laws.
4. De jure vs. de facto
De jure corporation - one which exists by reason of full compliance by

incorporators with requirements of an existing law permitting organization
of such corporation.
De Facto corporation - one existing under color of law and in pursuance of

an effort made in good faith to organize a corporation under the statute.
Its due incorporation and its right to exercise corporate powers, shall not
be inquired into collaterally; inquiry may be made by the Solicitor General
in a quo warranto proceeding.
Requirements before one can qualify as a de facto corporation:
a. the existence of a valid law under which it may be incorporated;
b. an attempt in good faith to incorporate; and
c. assumption of corporate powers.
The filing of AoI and the issuance of the certificate of incorporation

are essential for the existence of a de facto corporation. An
organization not registered with the SEC cannot be considered a
corporation, not even as a corporation de facto.
5. Corporation by estoppel vs. prescription
The doctrine of corporation by estoppel applies when a non-existent

corporation enters into contracts or dealings with third persons. The
person who has contracted with the non-existent corporation is estopped
to deny the latter's legal existence in any action leading involving such
contract or dealing.
All persons who assume to act as a corporation knowing it to be without

authority to do so shall be liable as general partners for all debts, liabilities
and damages incurred or arising as a result thereof. Where there is no
third person involved there is no corporation by estoppel.
Classes of Corporation –
5. Corporation by estoppel vs. prescription
Corporation by prescription - body which though not lawfully
organized as a corporation, has been recognized by immemorial
usage as a corporation, with rights and duties maintainable at law, for
example, the Roman Catholic Archbishop of Manila, having antedated
the state.
6. Holding/parent vs. affiliate/subsidiary
A parent or holding company - a corporation which owns or is organized to

own a substantial portion of another company's voting shares of stock
enough to control the latter's management, policies or affairs thru election
of the latter’s BoD. It is organized and is conducting its business by
investing substantially in the equity securities of another company for the
purposes of controlling their policies and holding them in a conglomerate
or umbrella structure along with other subsidiaries.
An affiliate or subsidiary company - a corporation that is controlled by

another, i.e., parent or holding company.
7. Close corporation vs….
7. Close corporation vs. publicly-listed
Close corp - one whose AOI provides that:
a. all the corporation’s issued stock of all classes, exclusive of TS,
shall be held of record by not more than 20 persons;
b. all the issued stock of all classes shall be subject to 1 or more
specified restrictions on transfer; and
c. the corporation shall not list in any stock exchange or make any
public offering of its stocks of any class.
• A corporation is not a close corp when at least 2/3 of its voting stock
or voting rights is owned or controlled by another.
• Any corporation may be incorporated as a close corporation, except:
MOSBIPEP
a. mining or oil companies
b. stock exchanges
c. banks
d. insurance companies
e. public utilities
f. educational institutions and
g. corporations declared to be vested with public interest
• In San Juan Structural and Steel Fabricators, Inc. vs. Court of Appeals,
296 SCRA 631 it was held that a narrow distribution of ownership
does not, by itself, make a close corporation. Courts must look into
the AoI to find provisions expressly stating that:
1. the number of stockholders shall not exceed 20; or
2. a preemption of shares is restricted in favor of any stockholder or
of the corporation; or
3. the listing of the corporate stocks in any stock exchange or
making a public offering of those stocks is prohibited.
• To be valid and binding on any purchaser in good faith, restrictions on
the right to transfer shares must appear in the AoI, in the bylaws, as
well as in the certificate of stock.
• Said restrictions shall not be more onerous than granting the existing
SH or the corporation the option to purchase the shares of the
transferring SH with such reasonable terms, conditions or period
stated. If, upon the expiration of said period, the existing SH or the
corporation fails to exercise the option to purchase, the transferring
SH may sell their shares to any third person.
• 8. Religious corporations - corporations sole vs religious societies
• A corporation sole - formed by the chief archbishop, bishop, priest, minister,
rabbi, or other presiding elder of such religious denomination, sect or church for
the purpose of administering and managing, as trustee, the affairs, property and
temporalities of any religious denomination, sect or church.
• Religious societies - formed by more than one person; unless forbidden by
competent authority, the Constitution, pertinent rules, regulations, or discipline
of the religious denomination, sect or church of which it is a part, any religious
society, religious order, diocese, or synod, or district organization of any religious
denomination, sect or church, may, upon written consent and/or by an
affirmative vote at a meeting called for the purpose of at least 2/3 of its
membership, incorporate for the administration of its temporalities or for the
management of its affairs, properties, and estate.
• In Roman Catholic Administrator of Davao, Inc., 102 Phil 596, the acquisition of the
church of a parcel of land was questioned as Msgr. Clovis Thibault, a Canadian citizen
hence an alien, is the actual incumbent. Bishops or archbishops are merely
administrators of the church properties that come to their possession, and which they
hold in trust for the church. Moreover, the members of the Roman Catholic Apostolic
faith within the territory of Davao are predominantly Filipino citizens hence, there would
be no constitutional violation.
• This is different from Register of Deeds of Rizal vs. Ung Sui Si Temple, G. R. No. L-6776,
May 21, 1955 where Ung Siu Si Temple was not a corporation sole but a corporation
aggregate, i.e., an unregistered organization operating through 3 trustees, all of Chinese
nationality, hence it was disallowed from acquiring realty.
• Now, when under the canon of the concerned church requires, for the sale of real
property, requires not just the consent of the Supreme Bishop but also the concurrence
of the laymen's committee, the parish priest, and the Diocesan Bishop, as sanctioned by
the Supreme Council and the same was not complied with, the sale is void. Iglesia
Filipina Independiente vs. Heirs of Taeza, G.R. No. 179597, February 3, 2014
• 9. One Person Corporation (OPC) - a corporation with a single SH.
Only a natural person, trust, or an estate may form an OPC.
• Term of existence = perpetual. However, in the case of the trust or
estate, its term of existence shall be co-terminous with the existence
of the trust or estate.
• Foreign national may put up an OPC, subject to the applicable capital
requirement and constitutional and statutory restrictions on foreign
participation in certain investment areas or activities.
• An OPC shall not be required to have a minimum authorized capital
stock except as otherwise provided by special law.
• Who Are Not Allowed to Form OPCs
• Banks and quasi-banks, preneed, trust, insurance, public and publicly-
listed companies, and non-chartered government-owned controlled
corporations may not incorporate as OPC. Neither may a natural
person who is licensed to exercise a profession organize as an OPC for
the purpose of exercising such profession except as otherwise
provided under special laws.
• The single stockholder shall be the sole director and president of the
OPC.
• The single stockholder may not be appointed as the corporate
secretary, but may assume the role of a Treasurer. The
stockholder/treasurer shall give a bond to the SEC.
• Bond is a continuing requirement for so long as the single stockholder
is the self-appointed treasurer of the OPC.
COMPOSITION OF CORPORATION
(Incorporators/Stockholders/Members
BOD/BOT/
Officers)
Incorporators
• Incorporators - stockholders or members mentioned in the AoI as originally
forming and composing the corporation and who are signatories thereof.
• Qualifications:
1. Any person, partnership, association or corporation, singly or jointly
with others
2. Not more than fifteen (15) in number; a corporation with a single
stockholder is considered OPC
3. Incorporators who are natural persons must be of legal age
4. Each incorporator of a stock corporation must own or be a subscriber
to at least one (1) share of the capital stock.
Incorporators
• Natural persons who are licensed to practice a profession,
partnerships or associations organized for the purpose of practicing a
profession, shall not be allowed to organize as a corporation unless
otherwise provided under special laws.
• The new law deleted the requirement of natural persons, the
minimum number of 5 incorporators as well as Philippine residency of
the majority of the incorporators.
BOD/BOT
• The BoD/BoT shall exercise the corporate powers, conduct all business, and
control all properties of the corporation.
• Directors shall be elected for a term of 1 year from among the holders of
stocks registered in the corporation’s books, while trustees shall be elected
for a term not exceeding 3 years (1 year old law) from among the members
of the corporation.
• Each director and trustee shall hold office until the successor is elected and
qualified. (Holdover Doctrine)
• A director who ceases to own at least one (1) share of stock or a trustee
who ceases to be a member of the corporation shall cease to be such.
What is material is the legal title to, not beneficial ownership of, the stock
as appearing on the books of the corporation. Lee vs. Court of Appeals,
G.R. No. 93695, February 4, 1992.
Independent directors
• Independent directors in corporations vested with public interest = at
least 20% of the board.
• An independent director is a person who, apart from shareholdings
and fees received from the corporation, is independent of
management and free from any business or other relationship which
could, or could reasonably be perceived to materially interfere with
the exercise of independent judgment in carrying out the
responsibilities as a director.
• These corporations are:
1. Corporations covered by Section 17.2 of Republic Act No. 8799,
otherwise known as “The Securities Regulation Code” - those whose
securities are registered with the SEC, corporations listed with an exchange
or with assets of at least P50M and having 200 or more holders of shares,
each holding at least 100 shares of a class of its equity shares;
2. Banks and quasi-banks, NSSLAs, pawnshops, corporations
engaged in money service business, preneed, trust and insurance companies,
and other financial intermediaries; and
3. Other corporations engaged in businesses vested with public
interest similar to the above, as may be determined by the SEC
• Independent directors must be elected by the shareholders present
or entitled to vote in absentia during the election of directors.
• Presence of independent directors in the Board is to ensure the
exercise of independent judgment on corporate affairs and proper
oversight of managerial performance, including prevention of conflict
of interests and balancing of competing demands of the corporation.
• 3-year employment ban; relationship ban; max 9 year term; must not
own more than 2% of the outstanding shares
Corporate officers – 2010 Bar
• The officers shall manage the corporation and perform such duties as
may be provided in the bylaws and/or as resolved by the BoD. The
minimum officers provided for are:
a. a president, who must be a director;
b. a treasurer, who must be a resident (NEW);
c. a secretary, who must be a citizen and resident of the
Philippines; and
d. such other officers as may be provided in the bylaws
e. a compliance officer (NEW), if the corporation is vested
with public interest
Corporate officers – 2010 Bar
• Treasurer - tasked with safekeeping of the corporate funds.
• Secretary - proper custodian of the books, minutes and official
records of a corporation
• The same person may hold 2 or more positions concurrently, except
that no one shall act as president and secretary or as president and
treasurer at the same time, unless otherwise allowed in this Code.
Compliance officer
• Compliance Officer - member of the company's management team in

charge of the compliance function. He is primarily liable to the corporation
and its shareholders, and not to the Chairman or President of the company.
• Primary responsibilities include:
• proper on boarding of new directors (i.e., orientation on the company's business,
charter, AoI and by-laws, etc);
• monitors, reviews, evaluates and ensures the compliance by the corporation, its
officers and directors with the relevant laws, rules and regulations and all
governance issuances of regulatory agencies
The doctrine of apparent authority – 2015
Bar
• Doctrine of apparent authority "holding out" theory, or the doctrine of

ostensible agency - a corporation will be estopped from denying the
agent's authority if it knowingly permits one of its officers or any other
agent to act within the scope of an apparent authority, and it holds him out
to the public as possessing the power to do those acts.
• Its existence may be ascertained through:
1. the general manner in which the corporation holds out an officer or
agent as having the power to act; or
2. the acquiescence in his acts of a particular nature, with actual or
constructive knowledge thereof, whether within or beyond the scope of his
ordinary powers.
The doctrine of apparent authority – 2015
Bar
• It requires presentation of evidence of similar acts executed either in

its favor or in favor of other parties. It is not the quantity of similar
acts which establishes apparent authority, but the vesting of a
corporate officer with the power to bind the corporation.
• The doctrine does not apply, however, if the principal did not commit
any act or conduct which a third party knew and relied upon in good
faith as a result of the exercise of reasonable prudence.
• Sargasso Construction & Development Corporation/Pick & Shovel,
Inc./Atlantic Erectors, Inc. (Joint Venture) vs. Philippine Ports
Authority, 623 SCRA 260.
The doctrine of apparent authority –
2015 Bar
• Illustrations:
1. Contract entered into by the corporation's officer without a
board resolution held to be binding upon the corporation because it
previously allowed the officer to contract on its behalf despite the lack
of board resolution
People's Aircargo and Warehousing Co., Inc. vs. Court of Appeals, G.R.
No. 181068, May 10, 2010
2015 Bar
• Illustrations:
2. Francisco's proposal for redemption of property was accepted by
and binding upon the GSIS, notwithstanding the fact that it was the
Board Secretary and not the General Manager who sent Francisco
the acceptance telegram. The GSIS’ failure to disown the telegram
sent by the Board Secretary and its silence while it accepted all
payments made by Francisco for the redemption of property
estopped it from denying the lack of authority;
Francisco vs. GSIS, 117 Phil. 586.
2015 Bar
• Illustrations:
3. Loan contract entered into by the former president of Ricarcen
which was not supported by any board resolution, is a valid loan.
The broad authority given to the former president can be seen with
how the corporate secretary entrusted her with blank yet signed
sheets of paper to be used at her discretion. She also had
possession of the owner's duplicate copy of the land title covering
the property mortgaged to Calubad, further proving her authority
from Ricarcen.
Calubad vs. Ricarcen Development Corp., G.R. No. 202364, August 30,
2017.
2015 Bar
4. The corporation is liable for the unpaid airline tickets taken by Sr.
Medalle for the Grand Chorale and Dance Company which she
formed. She had been giving financial support to the Group, in her
capacity as President of Holy Trinity College. The BOT never
questioned the existence and activities of the Group.
Georg vs. Holy Trinity College, Inc., G.R. No. 190408, July 20, 2016.
2015 Bar
5. Arma Traders is liable to pay the loans even when there is no board
resolution authorizing Tan and Uy to obtain the loans. Arma
Traders’ AOI provides that the corporation may borrow or raise
money to meet the financial requirements of its business by the
issuance of bonds, promissory notes and other evidence of
indebtedness. Tan and Uy are not just ordinary corporate officers
and authorized bank signatories because they are also Arma
Traders' incorporators. Furthermore, the sole management of Arma
Traders was left to Tan and Uy and the other officers never dealt
with the business and management of Arma Traders for 14 years.
Advance Paper Corporation vs. Arma Traders Corporation, 712 SCRA
313.
Disqualification of DTO
• Under Section 26, a person shall be disqualified from being a director, trustee or officer
of any corporation if, within 5 years prior to the election or appointment as such, the
person was:
a. Convicted by final judgment:
1. Of an offense punishable by imprisonment for a period exceeding six (6)
years;
2. For violating this Code; and
3. For violating Republic Act No. 8799 (Securities Regulation Code) (NEW)
b. Found administratively liable for any offense involving fraudulent acts (NEW); and
c. By a foreign court or equivalent foreign regulatory authority for acts, violations or
misconduct similar to those enumerated in paragraphs (a) and (b) above. (NEW)
• This is without prejudice to qualifications or other disqualifications, which the SEC or the
PCC may impose in its promotion of good corporate governance or as a sanction in its
administrative proceedings.
Disqualification of DTO
• Gokongwei vs. SEC, 97 SCRA 78
• Amendment of the by-laws which renders a stockholder ineligible to
be director, if he be also director in a corporation whose business is in
competition with that of the other corporation, is valid.
• CFC-Robina group, owned by Gokongwei, was in direct competition
with San Miguel Corporation. Access by a competitor to confidential
information on marketing strategies and pricing policies of San Miguel
Corporation would enable said competitor to utilize such knowledge
to his advantage.
Removal of BOD/BOT
• Under Section 27, any director or trustee of a corporation may be removed
from office:
1. by 2/3 vote of the stockholders or members
2. removal shall take place either at a regular meeting or at a special
meeting called for the purpose
3. previous notice to stockholders or members
If there is no secretary, or if the secretary despite demand, fails or refuses to
call the special meeting or to give notice thereof, the stockholder or member
of the corporation signing the demand may call for the meeting by directly
addressing the stockholders or members. Notice of the time and place of
such meeting, as well as of the intention to propose such removal, must be
given by publication or by written notice.
Removal of BOD/BOT
• Removal of a director or trustee before his term is over is one way by which
the stockholders or members may protect themselves from fraud,
incompetence or abuse of those in charge of management.
• Removal may be with or without cause: Provided, That removal without
cause may not be used to deprive minority stockholders or members of the
right of representation thru the use of cumulative voting.
• The SEC shall, motu proprio or upon verified complaint, and after due
notice and hearing, order the removal of a director or trustee elected
despite the disqualification, or whose disqualification arose or is
discovered subsequent to an election. The removal of a disqualified
director shall be without prejudice to other sanctions that the SEC may
impose on the BOD/BOT, with knowledge of the disqualification, failed to
remove such director or trustee. (NEW)
Removal of BOD/BOT
• The Makati Sports Club Oversight Committee called for a Special
Stockholders' Meeting for the removal of the Bernas Group, as well as
the election of the Cinco Group. Can this be done?
• VOID. The Oversight Committee is not authorized to step in wherever
there is breach of fiduciary duty and call a special meeting for the
purpose of removing the existing officers and electing their
replacements even if such call was made upon the request of
shareholders. Subsequent ratification made by the stockholders did
not cure the substantive infirmity. The defect goes into the very
authority of the persons who made the call for the meeting.
• Bernas vs. Cinco, G.R. Nos. 163356-57, 163368-69, July 1, 2015
Vacancies in the office of BOD/BOT
• Who can fill-up the vacancies? Under Section 28, the following are the rules:
1. Vote of majority of the D/T, if still constituting a quorum - if cause of the
vacancy is for causes other than removal or by expiration of term (e.g. RIP)
2. Stockholders/members in a regular/special meeting called for that purpose
– if cause of the vacancy is for causes other than removal or by expiration of term
and there is no quorum on the remaining D/T
– if cause is removal or by expiration of term
When the vacancy arises as a result of removal by the stockholders or members,
the election may be held on the same day of the meeting authorizing the removal
and this fact must be so stated in the agenda and notice of said meeting.
– if filling-up is by reason of an increase in the number of D/T
• Scenarios:
1. There are 5 BODs, 1 resigned/migrated, 1 RIP. Who can fill-up 2
vacancies?
• Scenarios:
As the cause of the vacancy is other than removal or expiration, the
vacancy could have been filled by the majority of the BOD if there was
a quorum. But since there was none, this requires stockholder action.
• Scenarios:
• There are 5 BODs. 2 were removed for disloyalty. Who can fill-up the
vacancies?
• Scenarios:
• As the ground is removal, only stockholders can fill it up.
• A D/T elected to fill a vacancy shall serve only for the unexpired term
of the predecessor in office.
• Trustees may fill vacancies in the board, provided that those
remaining still constitute a quorum. The phrase "may be filled" is
merely permissive, not mandatory. Corporations, thus may choose
how vacancies in their respective boards may be filled up.
• A hold-over director resigns. Can the remaining directors of the
board, still constituting a quorum, elect another director to fill in a
vacancy caused by the resignation of a hold-over director?
• NO. The holdover period is not part of the term of office of a member
of the BOD. The term of office is not affected by the holdover. The
term is fixed by statute and it does not change simply because the
office may have become vacant, nor because the incumbent holds
over in office beyond the end of the term due to the fact that a
successor has not been elected and has failed to qualify.
Emergency Board (NEW)
• When the vacancy prevents the remaining directors from constituting
a quorum and emergency action is required to prevent grave,
substantial, and irreparable loss or damage to the corporation
• Vacancy may be temporarily filled from among the officers of the
corporation by unanimous vote of the remaining directors or trustees.
• The action by the designated director or trustee shall be limited to
the emergency action necessary, and the term shall cease within a
reasonable time from the termination of the emergency or upon
election of the replacement director or trustee, whichever comes
earlier.
The Executive Committee
• If the by-laws provide, the board may create an ExeCom composed of at least 3 directors.
The ExeCom may act, by majority vote of all its members, on such specific matters within
the competence of the board, as may be delegated to it in the bylaws or by majority vote
of the board, except with respect to the following: AFA2D
1. approval of any action for which shareholders’ approval is also required;
2. filling of vacancies in the board;
3. amendment or repeal of bylaws or the adoption of new bylaws;
4. amendment or repeal of any resolution of the board which by its express terms is
not amendable or repealable; and
5. distribution of cash dividends to the shareholders
• The BOD may create special committees of temporary or permanent nature and
determine the members’ term, composition, compensation, powers, and responsibilities.
(NEW)
Compensation of BOD/BOT
• The directors of a corporation shall not receive any compensation for being
members of the BOD, except for reasonable per diems. The instances
where the directors are to be entitled to compensation shall be:
1. when it is fixed by the corporation's by-laws or
2. when the stockholders, representing at least a majority of the OCS,
vote to grant the same at a regular or special stockholder's meeting
• However:
1. the total yearly compensation of directors shall not exceed 10%
percent of the NIBIT of the corporation during the preceding year
2. directors or trustees shall not participate in the determination of their
own per diems or compensation
Compensation of BOD/BOT
• Corporations vested with public interest shall submit to their
shareholders and the SEC, an annual report of the total compensation
of each of their DT (NEW)
• DT are not entitled to salary or other compensation when they
perform the usual and ordinary duties of their office. DT render
service gratuitously, and the return upon their shares adequately
furnishes the motives for service, without compensation. But when
they render services to the corporation in a capacity other than as DT,
e.g. officers of the corporation (Chairman, Vice-Chairman, Treasurer
and Secretary), they may receive compensation, in addition to
reasonable per diems.
Liability of BOD/BOT, officers
• DTO shall be liable jointly and severally for all damages suffered by the
corporation, its stockholders or members and other persons in any of the
following instances:
1. willfully and knowingly vote for or assent to patently unlawful acts of
the corporation
2. guilty of gross negligence or BF in directing the affairs of the
corporation
3. acquire any personal or pecuniary interest in conflict with their duty
thus DTO shall be liable as a trustee for the corporation and must account for
the profits which otherwise would have accrued to the corporation
• However, in so far as directors are concerned who acquires a business
opportunity which should belong to the corporation, the act can be ratified
by a vote of the stockholders owning 2/3 of the OCS.
• Doctrine of Corporate Opportunity - if there is presented to a
corporate officer or director a business opportunity which the
corporation is financially able to undertake, in the line of the
corporation's business and is of practical advantage to it, is one in
which the corporation has an interest or a reasonable expectancy,
and by embracing the opportunity, the self-interest of the officer or
director will be brought into conflict with that of his corporation, the
law will not permit him to seize the opportunity for himself.
• Schildberg Rock Products Co. v. Brooks, 140 NW 2d 132.
• Business Judgment Rule - questions of policy and management are
left to the honest decision of the officers and directors of a
corporation
• Courts are without authority to substitute their judgment for that of
the board unless said judgment had been attended with BF. Courts
are not in the business of business, and the laissez faire rule or the
free enterprise system says that it is better for the State to leave
business to the businessmen; especially so, when courts are ill-
equipped to make business decisions.
• To hold a director or officer personally liable for corporate obligation:
1. It must be alleged in the complaint that the director or officer
assented to patently unlawful acts of the corporation or that the officer
was guilty of gross negligence or BF; and
2. There must be proof that the officer acted in BF. The BF or
wrongdoing of the director must be established clearly and
convincingly and not presumed. BF does not connote bad judgment or
negligence. BF imports a dishonest purpose; breach of a known duty
through some ill motive or interest. BF partakes of the nature of fraud.
Ong Yong vs. Tiu, 375 SCRA 614.
Dealings of BOD/BOT, officers with the
corporation
• A contract of the corporation with its DTO is voidable, at the option of such
corporation, unless all the following conditions are present:
1. Presence of such DT in the board meeting in which the contract was
approved was not necessary to constitute a quorum;
2. Vote of such DT was not necessary for the approval of the contract;
3. Contract is fair and reasonable; and
4. In case of corporations vested with public interest, material contracts
are approved by at least 2/3 of the entire membership of the board with at
least a majority of the independent directors voting to approve the material
contract (NEW); and
5. In case of an officer, the contract has been previously authorized by
the BOD.
corporation
• Where any of the first 3 conditions set forth in the preceding
paragraph is absent, in the case of a contract with a DT, such contract
may be ratified by 2/3 vote of the stockholders/members: Provided,
That full disclosure of the adverse interest of the DT involved is made
at such meeting and the contract is fair and reasonable under the
circumstances.
corporation
• The DTO of a corporation occupy a fiduciary relation towards it, and
cannot be allowed to contract with the corporation, directly or
indirectly, or to sell property to it, or purchase property from it,
where they act both for the corporation and for themselves as DTO
may gain undue advantage. He then becomes “self-dealing director”
should he contract with the corporation.
corporation
• In the following cases, the contracts were NOT fair and reasonable:
1. Agdao Landless Residents Association, Inc. (ALRAI) vs. Maramion,
G.R. Nos. 188642, 189425, 188888-89, October 17, 2016, where
transfers of ALRAI's corporate properties to the directors are void for
want of full disclosure;
2. Prime White Cement Corp. vs. Intermediate Appellate Court, 220
SCRA 103, where the dealership agreement was neither fair nor
reasonable as Prime White Cement was to sell and supply to a director
20,000 bags of white cement per month, for 5 years. The director is a
businessman himself and must have known that prices of commodities
were not stable and were expected to rise.
Contracts between corporations with
interlocking directors
• Interlocking directors = seats on BOD of several different corporations are filled by the same persons.
• Except in cases of fraud, and provided the contract is fair and reasonable under the circumstances, a
contract between 2 or more corporations having interlocking directors shall not be invalidated on that
ground alone, provided:
1. that if the interest of the interlocking director in 1 corporation is substantial and the interest in the
other corporation is merely nominal. Stockholdings exceeding 20% OCS = substantial.
2. the contract shall be subject to the provisions of Section 31, meaning:
a. The presence of such DT in the board meeting in which the contract was approved was not necessary
to constitute a quorum;
b. The vote of such DT was not necessary for the approval of the contract;
c. The contract is fair and reasonable under the circumstances; and
d. In case of corporations vested with public interest, material contracts are approved by at least 2/3 of
the entire membership of the board with at least a majority of the independent directors voting to approve the
material contract; and
e. In case of an officer, the contract has been previously authorized by the BOD.
Contracts between corporations with
interlocking directors – 2011 Bar
• Where any of the first 3 conditions set forth in the preceding
paragraph is absent, in the case of a contract with a DT, such contract
may be ratified by 2/3 vote of the stockholders/members: Provided,
That full disclosure of the adverse interest of the DT involved is made
at such meeting and the contract is fair and reasonable under the
circumstances.
Liability of directors for watered stocks
• Watered stocks - stocks issued for a consideration less than its par or
issued value or for a consideration other than cash, valued in excess
of its fair value.
• Any director or officer who consents to the issuance of watered
stocks or having knowledge of the insufficient consideration, does not
file a written objection with the corporate secretary, shall be liable to
the corporation or its creditors, solidarily with the stockholder
concerned for the difference between the value received at the time
of issuance of the stock its par or issued value.
Liability of directors for watered stocks
• Evils of stock watering: It injures:
• corporation because it is deprived of needed capital and of the
opportunity to sell its securities at more advantageous prices;
• other stockholders because it dilutes their proportionate interest in
the corporation;
• creditors because it reduces the value of the corporate assets which
stand as substitute for the stockholders’ personal liability to them.
POWERS, DUTIES AND PREROGATIVES OF THE
BOARD AND STOCKHOLDERS
General powers
• The powers of a corporation are categorized into three:
1. General powers;
2. Specific powers; and
3. Implied powers
General powers
a. To sue and be sued in its corporate name
b. To have perpetual existence unless the certificate of
incorporation provides otherwise; (NEW)
c. To adopt and use a corporate seal;
d. To amend its AOI;
e. To adopt bylaws, not contrary to law, morals, or public policy,
and to amend or repeal it;
f. In case of stock corporations, to issue or sell stocks to subscribers
and to sell treasury stocks; and to admit members to the corporation if
it be a non-stock corporation;
General powers
g. To purchase, receive, take or grant, hold, convey, sell, lease, pledge,
mortgage and otherwise deal with such real and personal property, including
securities and bonds of other corporations, as the transaction of the lawful
business of the corporation may reasonably and necessarily require;
h. To enter into a partnership, joint venture, merger, consolidation, or any
other commercial agreement with natural and juridical persons (NEW)
i. To make reasonable donations, including those for the public welfare or for
hospital, charitable, cultural, scientific, civic, or similar purposes: Provided, That no
foreign corporation shall give donations in aid of any political party or candidate or
for purposes of partisan political activity;
j. To establish pension, retirement, and other plans for the benefit of its DTO
and employees; and
k. To exercise such other powers as may be essential or necessary to carry out
its purpose or purposes as stated in the AOI.
Specific powers
A. Power to Extend or Shorten Corporate Term
• Voting requirement: majority vote of the BOD/BOT + 2/3 of the SH
• Appraisal right: Present
• Notification requirement: Written notice sent to stockholders/members
either by mail, served personally, or when allowed in the bylaws or done
with the consent of the stockholder, sent electronically. (NEW)
• Appraisal right = stockholder who dissented and voted against the
proposed corporate action, may choose to get out of the corporation by
demanding payment of the fair market value of his shares.
• Though Section 36 mentions only of extension of the term, Section 80
provides for both extension and shortening of term.
Specific powers
B. Power to Increase or Decrease Capital Stock; Incur, Create or
Increase Bonded Indebtedness
• Voting requirement: majority vote of the BOD and by 2/3 of the SH
• Appraisal right: None
• Notification requirement: Written notice sent to
stockholders/members either by mail, served personally, or when
allowed in the bylaws or done with the consent of the stockholder,
sent electronically. (NEW)
Specific powers
C. Power to Deny Pre-emptive Right
• Pre-emptive right - right of all stockholders to subscribe to all issues or disposition of
shares of any class, in proportion to their respective shareholdings.
• All stockholders enjoy this right unless right is denied by the AOI or an amendment
thereto, provided that such pre-emptive right shall not extend to:
1. shares to be issued in compliance with laws requiring stock offerings or minimum
stock ownership by the public;
2. shares to be issued in GF with the approval of 2/3 of the SH, in exchange for
property needed for corporate purposes or in payment of a previously contracted debt.
• The law includes all issues or disposition of shares of any class. This would include not
only new shares issued pursuant to an increase of capital stock, but would cover the
issue of previously unissued shares which form part of the existing ACS, as well as TS.
The former would come under all issues, the latter under disposition.
Specific powers
D. Power to Sell or Dispose Assets
• Subject to the provisions of RA No. 10667 (Philippine Competition Act) etc,
a corporation may, by a majority vote of its BOD/BOT, may SLEMP or
otherwise dispose of its property and assets, including its goodwill, for the
payment of money or other property or consideration.
• Voting requirement: majority vote of the BOD and 2/3 vote of the SH
• However, no stockholder or member action is required if:
a. the same is necessary in the usual and regular course of business of
the corporation or
b. the proceeds of the sale or other disposition of such property and
assets shall be appropriated for the conduct of its remaining business
Specific powers
• How to determine if the sale involves all or substantially all of the
corporation’s properties and assets?
a. computed based on its net asset value, as shown in its latest
financial statements (NEW)
b. if the corporation would be rendered incapable of continuing the
business or accomplishing the purpose for which it was incorporated
Specific powers
• Y-I Leisure Philippines, Inc. vs. Yu, G.R. No. 2017161, September 8, 2015, James Yu purchased golf
and country club shares from Mt. Arayat Development Co. The golf and country club was non-
existent so Yu asked for the return of the payment. However, all of the assets of Mt. Arayat
consisting of 120 hectares of land were sold to Yats International, Y-I Leisure and and Y-I Club &
Resorts. These are investment companies engaged in the development of real estates, projects,
leisure, tourism, and related businesses.
• The Nell Doctrine = the transfer of all the assets of a corporation to another shall not render the
latter liable to the liabilities of the transferor. If any of the following exceptions are present, then
the transferee corporation shall assume the liabilities of the transferor:
1. Where the purchaser expressly or impliedly agrees to assume such debts;
2. Where the transaction amounts to a consolidation or merger of the corporations;
3. Where the transaction is entered into fraudulently in order to escape liability for such
debts; and
4. Where the purchasing corporation is merely a continuation of the selling corporation.
Specific powers
• First exception - transferee expressly or impliedly agrees to assume
the transferor's debts. Under Article 2047 of the Civil Code, when a
person binds himself solidarily with the principal debtor, then a
contract of suretyship is produced.
• Second exception - as to the merger and consolidation of
corporations, if the transfer of assets of one corporation to another
amounts to a merger or consolidation, then the transferee
corporation must take over the liabilities of the transferor.
Specific powers
• Third exception - where sale of all corporate assets is entered into
fraudulently to escape liability for transferor's debts. Under Article 1388 of
the Civil Code, whoever acquires in BF the things alienated in fraud of
creditors, shall indemnify the latter for damages suffered.
• The last exception – “business-enterprise transfer.” The transferee
corporation's interest goes beyond the assets of the transferor's assets and
its desires to acquire the latter's business enterprise, including its goodwill.
• In business-enterprise transfer, transferor and transferee may enter into a
contractual stipulation stating that the transferee shall not be liable for any
debts contracted prior to the transfer. Such stipulations are valid, but only
as to the transferor and the transferee and not on the creditors of the
business enterprise.
Specific powers
E. Power to Acquire Own Shares
• Provided that the corporation has URE, a stock corporation shall have
the power to purchase or acquire its own shares for a legitimate
corporate purpose, including the following:
• To eliminate fractional shares arising out of stock dividends;
• To collect or compromise an indebtedness to the corporation, arising
out of unpaid subscription, in a delinquency sale, and to purchase
delinquent shares sold during said sale; and
• To pay dissenting or withdrawing stockholders entitled to payment for
their shares
Specific powers
• Why the requirement of URE?
• Trust Fund Doctrine = the capital stock, property, and other assets of
a corporation are regarded as equity in trust for the payment of
corporate creditors, who are preferred in the distribution of corporate
assets. The creditors have the right to assume that the BOD will not
use the assets of the corporation to purchase its own stock for as long
as the corporation has outstanding debts and liabilities. There can be
no distribution of assets among the stockholders without first paying
corporate debts.
Specific powers
F. Power to Invest Corporate Funds in Another Corporation/Business or
for Any Other Purpose
• Voting requirement: If primary purpose, only majority of the board
approval.
• If for any purpose other than the primary purpose = majority of the
BOD/BOT and 2/3 of SH
• Notification requirement: Written notice sent to stockholders/members
either by mail, served personally, or when allowed in the bylaws or done
with the consent of the stockholder, sent electronically. (NEW)
Specific powers
G. Power to Declare Dividends
• Whether or not there should be dividends and its form = business
judgment
• BOD may declare dividends out of the URE which shall be payable in cash,
property, or in stock to all stockholders on the basis of outstanding stock
held by them. Cash dividends due on delinquent stock shall first be applied
to the unpaid balance on the subscription plus costs and expenses, while
stock dividends shall be withheld from the delinquent stockholders until
their unpaid subscription is fully paid. Thus, absent the availability of URE,
the BOD had no power to issue dividends. CIR vs. Goodyear Philippines,
Inc., G.R. No. 216130, August 3, 2016.
• Voting Requirement: Cash dividend – majority vote of the BOD
• Stock dividend - majority vote of the board plus 2/3 stockholders
Specific powers
• Stock corporations are prohibited from retaining surplus profits in excess of
100% of their PIC stock, except:
a. when justified by definite corporate expansion projects approved by
the BOD; or
b. when the corporation is prohibited under any loan agreement with
financial institutions or creditors, whether local or foreign, from declaring
dividends without their consent, and such consent has not yet been secured;
or
c. when it can be clearly shown that such retention is necessary under
special circumstances, such as when there is need for special reserve for
probable contingencies.
Specific powers
• Dividends vs profits:
• Profits are a result of operations of the corporation. Hence, it belongs to the
corporation. There can be no dividends unless there are profits, as it is the
source of dividends. Dividends belong to the stockholders.
• It is possible that there are profits but no dividends but there can never be
dividends unless there are profits.
• A stock dividend is a distribution to the stockholders of the company’s own
stocks. The corporate profits are transferred to capital stock and shares of stock
representing the increase in capitalization are distributed to the stockholders.
Unless there are available unissued shares of the corporation, stock dividends
cannot be declared without first increasing the capital stock. Although the
number of their shares increased, the stockholders’ investment and
proportionate interest remain the same. They have received nothing out of the
company’s assets; unless they sell the stock dividends, they receive no income.
This is the rationale why stockholder action is required for stock dividends.
Specific powers
• RE include earnings from sale of goods or services of a corporation in
the ordinary course of business as well as earnings from sale of
corporate property other than the stock in trade, at a price higher
than its cost.
• They do not include premium on par stock, i.e. the difference
between the par value and the higher price for which the stock is sold
by the corporation, since this is regarded as PIC.
• Nevertheless, SEC has allowed the declaration of stock dividends out
of such premium, as stock dividend does not involve distribution of
corporate assets to the stockholders but merely gives tangible
evidence of the increase in their equity.
• Illustrations:
• Land book value 1990 = P10,000 now market value P1M
• Common stock P1 per share sold at P10
Specific powers
H. Power to Enter into Management Contracts
• Voting Requirement: majority of the BOD and majority stockholders
• Special ratification rule of 2/3 of SH if:
a. SH representing the same interest of both the managing and the
managed corporations own/control more than 1/3 of the total OCS
entitled to vote of the managing corporation; or
b. majority of the members of the BOD of the managing
corporation also constitute a majority of the members of the BOD of
the managed corporation
• Contract duration: no longer than 5 years for any 1 term
Ultra vires act
• A corporation shall possess or exercise only those corporate powers
conferred by this Code or by its AOI and those necessary or incidental
to the exercise of the powers conferred; otherwise, ultra vires.
• Corporate contracts which are illegal vs ultra vires: former
contemplates the doing of an act which are contrary to law, morals or
public policy or public duty are void. They cannot serve as basis of a
court action nor acquire validity by performance, ratification or
estoppel. Mere ultra vires acts, on the other hand, or those which are
not illegal or void ab initio, but are not merely within the scope of the
AOI are merely voidable and maybe subject to ratification.
Ultra vires act
• Montelibano, et al. vs. Bacolod-Murcia Milling Co., Inc. 115 Phil. 18
• The test to determine if a corporate act is in accordance with its
purposes: If that act is one which is lawful in itself, and not otherwise
prohibited, is done for the purpose of serving corporate ends, and is
reasonably tributary to the promotion of those ends, in a substantial,
and not in a remote and fanciful, sense, it may fairly be considered
within charter powers.
Ultra vires act
• Illustrations:
1. University of Mindanao does not have the power to mortgage its
properties in order to secure loans of other persons. As an educational
institution, it is limited to developing human capital through formal
instruction. It is not a corporation engaged in the business of securing
loans of others.
University of Mindanao vs. BSP, 778 SCRA 458
Ultra vires act
• Illustrations:
2. The donation given by the corporation to the children of a deceased
person who contributed to the growth of the corporation is valid.
This donation was within the broad scope of powers and purposes
of the corporation to aid in any other manner any person in which
any interest is held by this corporation or in the affairs or prosperity
of which this corporation has a lawful interest.
Pirovano, et al. vs. De la Rama Steamship Co., 96 Phil. 335
Ultra vires act
• Illustrations:
3. The rule by Twin Towers Condo denying delinquent members the
right to use condo facilities is valid. The condo’s power to promulgate
rules on the use of facilities and to enforce provisions of the Master
Deed was clear in the Condominium Act, Master Deed, and By-laws of
the condo. Moreover, the promulgation of such rule was reasonably
necessary to attain the purposes of the condo project.
Twin Towers Condominium Corporation vs. CA, 398 SCRA 203
Ultra vires act
• Illustrations:
4. Suspension of the rights of the members of Magallanes Watercraft
Association for failure to pay membership dues is valid. The fact
alone that neither the AOI nor the by-laws granted its Board the
authority to discipline members does not make the suspension of
the rights and privileges of the respondents ultra vires. An act might
be considered within corporate powers, even if it was not among
the express powers, if the same served the corporate ends.
Magallanes Watercraft Association, Inc. vs. Auguis, G.R. No. 211485,
May 30, 2016
Ultra vires act – 2009 Bar
• Illustrations:
5. The establishment of a local post office in a mining camp which is
far removed from the postal facilities or means of communication
accorded to people living in a city or municipality is valid.
RP vs. Acoje Mining Company, Inc., 7 SCRA 361
RIGHTS OF STOCKHOLDERS
1. Right to vote
2. Appraisal right
3. Right to inspect records
4. Right to institute derivative suit
Manner of votation for stockholders and
members
• The right to vote of stockholders or members may be exercised:
1. In person
2. Through a proxy
3. When so authorized in the bylaws, through remote communication or in
absentia, provided, that the votes are received before the corporation finishes the
tally of votes.
• Proxy - a form of agency created in instances when a person is unable to
personally cast his or her vote; hence, the act of voting is delegated to another
person. It shall be in writing, signed and filed, by the SH/member, and received
by the corporate secretary within a reasonable time before the scheduled
meeting. Unless otherwise provided in the proxy form, it shall be valid only for
the meeting for which it is intended. No proxy shall be valid and effective for a
period longer than 5 years at any one time.
Place of meetings
1. For SH/members, whether regular or special - in the principal
office of the corporation as set forth in the AOI, or, if not practicable, in
the city or municipality where the principal office of the corporation is
located: Provided, That any city or municipality in Metro Manila, Metro
Cebu, Metro Davao, and other Metropolitan areas shall, for purposes of
this section, be considered a city or municipality. (NEW)
2. For DT - anywhere in or outside of the Philippines, unless the
bylaws provide otherwise.
Election of BOD/BOT
• Under Section 23, SH/member shall have the right to nominate any
DT who possesses all of the qualifications and none of the
disqualifications, except when the exclusive right is reserved for
holders of founders’ shares.
• In stock corporations, SH entitled to vote shall have the right to vote
the number of shares of stock standing in their own names in the
stock books of the corporation at the time fixed in the bylaws or
where the bylaws are silent, at the time of the election.
Cumulative voting
• A viva voce or hand raising vote would be sufficient unless a vote by ballot is requested.
• Stock corporations = cumulative voting is mandatory. SH would have such number of
votes equal to the number of shares owned by the SH as shown in the books of the
corporation multiplied by the whole number of directors to be elected.
• No. of votes = No. of shares x vacancy
• SH may: (a) vote such number of shares for as many persons as there are directors to be
elected; (b) cumulate said shares and give 1 candidate as many votes as the number of
directors to be elected multiplied by the number of the shares owned; or (c) distribute
them on the same principle among as many candidates as may be seen fit. No
delinquent stock shall be voted.
• Non-stock corporations = unless otherwise provided in the AoI or bylaws, members may
cast as many votes as there are trustees to be elected but may not cast more than 1 vote
for 1 candidate. Nominees for directors or trustees receiving the highest number of votes
shall be declared elected.
• No. of votes = No. of vacancy but can give only 1 vote to 1 candidate
Cumulative voting
• You have 1 common share.
• There are 3 vacant seats in the board.
• There are 5 candidates (Bulma, Piccolo, Vegeta, Trunks, Chi-chi) .
• How many votes can you cast and to whom will you give it?
Cumulative voting
• If no election is held, or the owners of majority of the OCS/members
entitled to vote are not present in person, by proxy, or through remote
communication or not voting in absentia at the meeting, such meeting may
be adjourned and the corporation shall proceed in accordance with Section
25.
• The non-holding of elections and the reasons therefor shall be reported to
the SEC; report shall specify a new date for the election, which shall not be
later than 60 days from the scheduled date.
• If no new date has been designated, or if the rescheduled election is
likewise not held, the SEC may, upon the application of a SH, member, DT,
and after verification of the unjustified non-holding of the election,
summarily order that an election be held.
Appraisal right
• Appraisal right - SH who dissented and voted against the proposed
corporate action, may choose to get out of the corporation by
demanding payment of the fair market value of his shares.
• SH given the right to get out of the corporation even before its
dissolution because there has been a major change in his contract of
investment with which he does not agree and which the law
presumes he did not foresee when he bought his shares.
When right can be exercised (ATSIM)
a. In case an amendment to the AOI has the effect of changing or
restricting the rights of any stockholder or class of shares, or of
authorizing preferences in any respect superior to those of outstanding
shares of any class, or of extending or shortening the term of corporate
existence;
b. In case of sale, lease, exchange, transfer, mortgage, pledge
(SLEMP) or other disposition of all or substantially all of the corporate
property and assets;
c. In case of merger or consolidation; and
d. In case of investment of corporate funds for any purpose other
than the primary purpose of the corporation.
How right is exercised and implications
1. The dissenting stockholder makes written demand on the corporation
for the payment of the fair value of shares within 30 days from the date on
which the vote was taken. Failure to make the demand within such period =
waiver of the appraisal right.
2. If the withdrawing stockholder and the corporation cannot agree on
the fair value of the shares = determined and appraised by 3 disinterested
persons. No payment unless the corporation has URE. Upon payment by the
corporation of the price, SH shall transfer the shares to the corporation.
3. Rights accruing to the withdrawing SH's shares, including voting and
dividend rights, shall be suspended from the time of demand for the
payment of the fair value of the shares until either the abandonment of the
corporate action involved or the purchase of the shares by the corporation,
except the right of such stockholder to receive payment of the fair value of
the shares.
How right is exercised and implications
4. Within 10 days after demanding payment for shares held, dissenting
SH shall submit the stock certificates. Failure to do so shall, at the option of
the corporation, terminate the rights. If shares represented by the
certificates bearing such notation are transferred, and the certificates
consequently cancelled, the rights of the transferor as a dissenting SH shall
cease and the transferee shall have all the rights of a regular SH; and all
dividend distributions which would have accrued on such shares shall be
paid to the transferee.
5. If the proposed corporate action is implemented, the corporation
shall pay the SH, upon surrender of the certificate, the fair value thereof as
of the day before the vote was taken.
6. If the dissenting SH is not paid the value of the said shares within 30
days after the award, the voting and dividend rights shall be restored.
How right is exercised and
implications
• Requirement of URE = Trust Fund Doctrine.
• Na-explain ko na kanina. Ayaw ko na umulit.
When right to payment ceases
• No demand for payment may be withdrawn unless the corporation
consents thereto. If, however, such demand for payment is:
a. withdrawn with the consent of the corporation, or
b. if the proposed corporate action is abandoned or rescinded by the
corporation or disapproved by the SEC where such approval is necessary, or
c. if the SEC determines that such SH is not entitled to the appraisal right
• then the right of the SH to be paid the fair value of the shares shall cease,
the status as the SH shall be restored, and all dividend distributions which
would have accrued on the shares shall be paid to the SH.
Who bears cost of appraisal
• It shall be borne by the corporation
• Unless the fair value ascertained by the appraisers is approximately
the same as the price which the corporation may have offered to pay
the SH, in which case they shall be borne by the latter. In the case of
an action to recover such fair value, all costs and expenses shall be
assessed against the corporation, unless the refusal of the SH to
receive payment was unjustified.
Right to inspection
• Corporate records shall be open to inspection by any DT, SH/member
in person or by a representative at reasonable hours on business
days, and a demand in writing may be made by such DT or SH at their
expense, for copies of such records. The inspecting or reproducing
party shall remain bound by confidentiality rules, such as the rules on
trade secrets or processes under RA 8293, RA 10173 (Data Privacy),
RA 8799 (SRC), and the Rules of Court. (NEW)
• A requesting party who is not a SH or member of record, or is a
competitor, director, officer, controlling SH or otherwise represents
the interests of a competitor shall have no right to inspect or demand
reproduction of corporate records. (NEW)
Right to inspection
• An action for injunction / writ of preliminary injunction filed by a
corporation is unavailable to prevent SH from exercising their right to
inspection.
• Philippine Associated Smelting and Refining Corporation (PASAR) vs.
Lim, G.R. No. 172948, October 5, 2016.
Right to inspection
• An heir of the deceased SH has no right to inspect the books. Upon
the death of a SH, the heirs do not automatically become SH of the
corporation and acquire the rights and privileges of the deceased as
SH of the corporation. The stocks must be distributed first to the heirs
in estate proceedings, and the transfer of the stocks must be recorded
in the books of the corporation. It is the administrator or executor
who is entitled to exercise the rights of the deceased as SH.
• Puno vs. Puno Enterprises, 599 SCRA 585.
Refusal on the part of the corporation on
the request for inspection
• Any officer or agent of the corporation who shall refuse to allow the
inspection and/or reproduction of records shall be liable to such DT,
SH or member for damages, and in addition, shall be guilty of an
offense which shall be punishable under Section 161 of this Code.
• If such refusal is made pursuant to a resolution or order of the
BOD/BOT, the liability under this section for such action shall be
imposed upon the DT who voted for such refusal.
the request for inspection
• It shall be a defense to any action under this section that the person demanding
to examine and copy excerpts from the corporation’s records and minutes:
a. has improperly used any information secured through any prior
examination of the records or minutes of such corporation or of any other
corporation, or
b. was not acting in GF or for a legitimate purpose in making the demand to
examine or reproduce corporate records, or
c. is a competitor, director, officer, controlling SH or otherwise represents the
interest of a competitor.
• If the corporation denies or does not act on demand for inspection/
reproduction, aggrieved party may report such to the SEC. Within 5 days from
receipt of such report, the SEC shall conduct a summary investigation and issue
an order directing the inspection/reproduction of the requested records.
the request for inspection –
• In Terelay Investment and Development Corp. vs. Yulo, 765 SCRA 1,
Cecilia Yulo, owner of 5 shares of stock or .001% in Terelay, sought for
the examination of the books but was denied as she has insignificant
holding in the corporation, prompting her to file for mandamus.
• Corporation Code has granted to ALL stockholders the right to inspect
the corporate books and records, and in so doing has not required
any specific amount of interest for the exercise of the right to inspect.
the request for inspection –
• Neither could the corporation deny the right to inspect the corporate books and
records on the basis that her inspection would be used for a doubtful or dubious
reason.
• The only time when the demand to examine and copy the corporation's records
and minutes could be refused is when the corporation puts up as a defense to
any action that "the person demanding" had "improperly used any information
secured through any prior examination of the records or minutes of such
corporation or of any other corporation, or was not acting in GF or for a
legitimate purpose in making his demand."
• The right of the SH to inspect the books and records should not be made subject
to the condition of a showing of any particular dispute or of proving any
mismanagement, but if the right is to be denied, the burden of proof is upon the
corporation to show that the purpose of the shareholder is improper, by way of
defense.
Refusal on the part of the corporation
on the request for inspection
• Purposes to justify a demand for inspection:
1. To ascertain the financial condition of the company or the
propriety of dividends;
2. the value of the shares of stock for sale or investment;
3. whether there has been mismanagement;
4. in anticipation of SH meetings to obtain a mailing list of SH to
solicit proxies or influence voting;
5. to obtain information in aid of litigation with the corporation or
its officers as to corporate transactions.
Refusal on the part of the corporation
on the request for inspection
• Improper purposes which may justify denial of the right of inspection:
1. Obtaining of information as to business secrets or to aid a
competitor;
2. to secure business "prospects" or investment or advertising lists;
3. to find technical defects in corporate transactions in order to
bring "strike suits" for purposes of blackmail or extortion.
Derivative Suit
• A SH suing on account of wrongful or fraudulent corporate actions may
sue in any of three (3) capacities: as an individual; as part of a group or
specific class of SH; or as a representative of the corporation.
• Individual suits are filed when the cause of action belongs to the individual
SH personally, and not to the SH as a group or to the corporation, e.g.,
denial of right to inspection and denial of dividends to a SH.
• If the cause of action belongs to a group of SH, such as when the rights
violated belong to preferred SH, a class or representative suit may be filed
to protect the SH in the group.
• A derivative suit is an action filed by SH to enforce a corporate action. It is
an exception to the general rule that the corporation's power to sue is
exercised only by the BOD/BOT.
Basis
• Not based on any express provision of the Corporation Code, but is
impliedly recognized when the law makes corporate directors/officers
liable for damages suffered by the corporation and its SH for violation
of their fiduciary duties e.g. mismanagement, waste or dissipation of
corporate assets
• In derivative suits, the real party in interest is the corporation, and the
suing SH is a mere nominal party.
Requisites for filing
• Rule 8, Section 1 of the Interim Rules of Procedure for Intra-Corporate
Controversies (Interim Rules):
1. He was a SH or member at the time the acts or transactions subject of the
action occurred and at the time the action was filed;
2. He exerted all reasonable efforts, and alleges the same with particularity in
the complaint, to exhaust all remedies available under the AoI, by-laws, laws or
rules governing the corporation or partnership to obtain the relief he desires;
3. No appraisal rights are available for the act or acts complained of; and
4. The suit is not a nuisance or harassment suit.
In case of nuisance or harassment suit, the court shall forthwith dismiss the case.
• The fifth requisite is implied in the first paragraph of Rule 8, Section 1 of the
Interim Rules: The action brought by the SH or member must be "in the name of
the corporation or association."
• A demand made on the BOD for the appropriate relief is considered
compliance with the requirement of exhaustion of corporate
remedies.
• Lopez Realty vs. Spouses Tanjangco, G.R. No. 154291, 12 November
2014.
• Western Institute of Technology, Inc., et al. vs. Salas, et al., 278 SCRA
216
• Minority SH who is suing for and on behalf of the corporation must
allege in his complaint before the proper forum that he is suing on a
derivative cause of action on behalf of the corporation and all other
SH similarly situated who wish to join him. Moreover, it is important
that the corporation be made a party to the case.
• Asset Privatization Trust vs. Court of Appeals, 300 SCRA 579
• It is a condition sine qua non that the corporation be impleaded as
party in derivative suits. Not only is the corporation an indispensible
party, but it is also the present rule that it must be served with
process. The reason given is that the judgment must be made binding
upon the corporation in order that the corporation may get the
benefit of the suit and may not bring a subsequent suit against the
same defendants for the same cause of action. In other words, the
corporation must be joined as party because it is its cause of action
that is being litigated and because judgment must be a res judicata
against it.
• Reasons for disallowing a direct individual suit:
1. The universally recognized doctrine that a SH in a corporation has no legal
or equitable title to corporate property; to allow SH to sue separately would
conflict with the separate corporate entity principle;
2. The prior rights of the creditors may be prejudiced. The SH may not directly
claim damages for themselves for that would result in the distribution of part of the
corporate assets before the dissolution of the corporation and the liquidation of its
debts and liabilities;
3. The filing of such suits would conflict with the duty of the management to
sue for the protection of all concerned;
4. It would produce wasteful multiplicity of suits; and
5. It would involve confusion in ascertaining the effect of partial recovery by
an individual on the damages recoverable by the corporation for the same act.
• The derivative suit did not prosper in the following cases:

1. Suit for the personal loan taken by the President and Corporate
Secretary of the corporation, when the corporation was never made
a party to the agreement;
Ang vs. Spouses Ang, G.R. No. 201675, June 19, 2013.
2. The SH’s allegation that he tried for a number of times to talk to the
corporate director to settle their differences, but the latter would
not listen and that taking further remedies within the corporation
would have been idle ceremony, considering that it was a family
corporation and it was impossible to expect the directors to take
action against themselves who were the ones accused of
wrongdoing.
Yu vs. Yukayguan, 589 SCRA 588.
3. Although the Complaint alleged that demand letters were sent to
the BOD and that these were unheeded, these allegations will not
suffice.
Forest Hills Golf and Country Club, Inc. vs. Fil-Estate Properties, Inc.,
G.R. No. 206649, July 20, 2016.
4. The person instituting the suit is only an employee of JAKA and not
a bona fide SH of Mr. & Ms. Publishing Co., Inc. at the time of the
transaction complained of.
Bitong vs. Court of Appeals, 292 SCRA 503.
5. The suit clearly is not for the benefit of the corporation for a
judgment in favor of the complainant would mean recovery of his
personal property. There is no actual or threatened injury alleged to
have been done to the corporation due to the foreclosure of the
properties belonging to third-party mortgagors.
BSP vs. Campa, Jr., G.R. No. 185979, March 16, 2016.
6. The complaint for nullification of the election is a direct action by
petitioners, who were the members of the BOD of the corporation
before the election, against respondents, who are the newly-
elected BOD. Petitioners are the injured party, whose rights to vote
and to be voted upon were directly affected by the election of the
new set of BODs.
Legaspi Towers 300, Inc., vs. Muer, G.R. No. 170783, June 18, 2012.
7. The allegation of SH Balmores that the acts of Pasig Printing
Corporation's (PPC) directors, specifically the waiver of rights in
favor of Villamor's law firm and their failure to take back the MC
Home Depot checks from Villamor, were detrimental to his
individual interest as a SH. In filing an action, therefore, his
intention was to vindicate his individual interest and not PPC's or a
group of SH.
Villamor, Jr. vs. Umale, 736 SCRA 325.
• Can the majority board institute a derivative suit?
• Can the majority board institute a derivative suit?
• NO. Due to their control over the BOD, the majority should not
ordinarily be allowed to resort to derivative suits. Where a
corporation under the effective control of the majority is wronged,
board-sanctioned litigation should take precedence over derivative
actions. After all, the law expressly vests the power to sue in the BOD,
and a remedy based on equity, such as the derivative suit, can prevail
only in the absence of one provided by statute.
• Ago Realty & Development Corporation vs. Ago, G.R. No. 210906 &
211203, October 16, 2019.
ARTICLES OF INCORPORATION AND BY-LAWS
Corporate term
• Under Section 11, a corporation shall have perpetual existence unless its
AoI provide otherwise. (NEW)
• Corporations with certificates of incorporation issued prior to the
effectivity of this Code, and which continue to exist, shall have perpetual
existence, unless the corporation, upon a vote of its majority of the SH,
notifies the SEC that it elects to retain its specific corporation term
pursuant to its AoI. However, dissenting stockholders can exercise their
appraisal right.
• A corporate term for a specific period may be extended or shortened by
amending the AoI but no extension may be made earlier than 3 years prior
to the original or subsequent expiry dates unless there are justifiable
reasons for an earlier extension.
Corporate term
• A corporation whose term has expired may apply for a revival of its
corporate existence, together with all the rights and privileges under
its certificate of incorporation and subject to all of its duties, debts
and liabilities existing prior to its revival. Upon approval of the SEC,
the corporation shall be deemed revived and a certificate of revival of
corporate existence shall be issued, giving it perpetual existence,
unless its application for revival provides otherwise.
Corporate term
• No application for revival of certificate of incorporation of banks,
banking and quasi-banking institutions, preneed, insurance and trust
companies, non-stock savings and loan associations, pawnshops,
corporations engage in money service business, and other financial
intermediaries shall be approved unless accompanied by a favorable
recommendation of the appropriate government agency.
Corporate term
• SEC Memorandum Circular No. 23 s.2019 or the Guidelines on Revival
of Expired Corporations however provides that (a) an expired
corporation which has completed the liquidation of its assets; (b) a
corporation whose certificate of registration has been revoked for
reasons other than non-filing of reports; (c) a corporation dissolved
by virtue of Sections 6(c)(d) of PD No. 902-A; or (d) an expired
corporation which already availed of re-registration per circular, could
no longer file a Petition for Revival of Corporate Existence.
• Voting requirement for revival = majority vote of the BoD + majority
of the OCS in stock corporations or majority of the members in non-
stock corporation.
Minimum Capital Stock of Stock
Corporations
• Stock corporations shall NOT be required to have a minimum capital
stock, except as otherwise specifically provided by special law. (NEW)
Amendment of Articles of Incorporation
• The voting requirement is majority vote of the BoD or BoT + 2/3 of
the SH
• Dissenting SH can exercise their appraisal right.
• The amendments shall take effect upon their approval by the SEC or
from the date of filing with the SEC if not acted upon within 6 months
from the date of filing for a cause not attributable to the corporation.
Grounds when AoI or amendments may
be disapproved
• The following are ground for such disapproval:
• The AoI is not substantially in accordance with the prescribed form;
• The purpose/s of the corporation are patently unconstitutional,
illegal, immoral, or contrary to government rules and regulations;
• The certification concerning the amount of capital stock subscribed
and/or paid is false; and
• The required percentage of Filipino ownership of the capital stock
under existing laws or the Constitution has not been complied with.
Grounds when articles of incorporation or
amendments may be disapproved
• Banks, banking and quasi-banking institutions, preneed, insurance

and trust companies, non-stock savings and loan associations
(NSSLAs), pawnshops, and other financial intermediaries, their AoI
shall be accompanied by a favorable recommendation of the
appropriate government agency to the effect that such AoI is in
accordance with law.
Corporate name
• Under Section 17, no corporate name shall be allowed if it is not
distinguishable from that already reserved or registered for the use of
another corporation, or if such name is already protected by law, or when
its use is contrary to existing law, rules and regulations.
• A name is not distinguishable even if it contains one or more of the
following (NEW):
a. The word “corporation,” “company,” “incorporated,” “limited,”
“limited liability,” or an abbreviation of such words; and
b. Punctuations, articles, conjunctions contraction prepositions,
abbreviations, different tenses, spacing, or number of the same word or
phrase.
Corporate name
• The SEC, upon determination that the corporate name is:
a. not distinguishable from a name already reserved, or registered for the use
of another corporation;
b. already protected by law; or
c. contrary to law, rules and regulations
may summarily order the corporation to immediately cease and desist from using
such name and require the corporation to register a new one. It shall also cause
the removal of all visible signages, marks, advertisements, labels, prints and other
effects bearing such corporate name.
• If the corporation fails to comply with the SEC’s order, the SEC may hold the
corporation and its responsible directors or officers in contempt and/or hold
them administratively, civilly and/or criminally liable and/or revoke the
registration of the corporation.
Corporate name
• Why is name so important?
Corporate name
• Why is name so important?
• Philips Export B.V. vs. Court of Appeals, 206 SCRA 457 held that a
name is necessary to the very existence of a corporation. Its name is
one of its attributes, an element of its existence, and essential to its
identity. Each corporation must have a name by which it is to sue and
be sued and do all legal acts.
Corporate name
• The SC disallowed the use of the following corporate names, as the
name chosen is either not distinguishable from a name registered in
favour of another corporation or is already protected by law
(trademark):
1. Paperone Inc., as Asia Pacific has trademark over “Paper
One”
Asia Pacific Resources International Holdings, Ltd. vs.Paperone, Inc.,
G.R. No. 213365-66, December 10, 2018.
Corporate name
2. De La Salle Montessori International Malolos, Inc., was
required to change its name due to the complaint from De La Salle
Brothers, Inc., De La Salle University, Inc., La Salle Academy, Inc., De La
Salle-Santiago Zobel School, Inc. and De La Salle Canlubang, Inc.;
De La Salle Montessori International Malolos, Inc., vs. De La Salle
Brothers, Inc., G.R. No. 205548, February 7, 2018.
Corporate name
3. "Indian Chamber of Commerce Phils., Inc.", when Filipino-
Indian Chamber of Commerce of the Philippines, Inc. has right of
priority; Indian Chamber of Commerce Phils., Inc. vs. Filipino-Indian
Chamber of Commerce of the Philippines, Inc., G.R. No. 184008, August
3, 2016.
Corporate name
4. The use of “Family Bank” by GSIS Family Bank upon
complaint of BPI Family Bank;
GSIS Family Bank-Thrift Bank [formerly Comsavings Bank, Inc.] vs. BPI
Family Bank, 771 SCRA 284.
Corporate name
5. Eli Soriano’s “Ang Mga Kaanib sa Iglesia ng Dios Kay
KristoHesus, H.S.K, sa Bansang Pilipinas”, with the acronym "H.S.K." for
Haligi at Saligan ng Katotohanan vs. Iglesia ni Cristo’s “Iglesia ng Dios
Kay Cristo Jesus, Haligi at Suhay ng Katotohanan”
Ang mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus, H.S.K. sa Bansang
Pilipinas, Inc. vs. Iglesia ng Dios Kay Cristo Jesus, Haligi at Suhay ng
Katotohanan, 372 SCRA 171.
Corporate name
• Articles of incorporation of Zeta was amended to change the
corporate name to Zuellig Freight and Cargo Systems, Inc. Was Zeta
dissolved?
• What is the effect of a change in corporate name?
Corporate name
• What is the effect of a change in corporate name?
• NONE. A change in the corporate name does not make a new
corporation. It has no effect on the identity of the corporation, or on
its property, rights, or liabilities. The corporation, upon the change in
its name, is not a new corporation. It is the same corporation with a
different name, and its character is in no respect changed.
• Zuellig Freight and Cargo Systems vs. NLRC, 701 SCRA 561
Registration, incorporation and
commencement of corporate existence
• The first step to be performed is submission of the intended corporate
name to the SEC for verification. If the name is distinguishable from a
name already reserved or registered for the use of another corporation,
not protected by law and is not contrary to law, rules and regulations, the
name shall be reserved in favor of incorporators. The incorporators shall
then submit their AoI and bylaws to the SEC.
• It is only when the submitted documents and information are fully
compliant with the requirements would the SEC issue a certificate of
incorporation.
• A private corporation commences its corporate existence and juridical
personality from the date the SEC issues the certificate of incorporation.
Effect of non-use of corporate charter
and continuous inoperation
• If a corporation does not formally organize and commence its business
within 5 years from the date of its incorporation, its certificate of
incorporation shall be deemed revoked as of the day following the end of
the 5 year period.
• However, if a corporation has commenced its business but subsequently
becomes inoperative for a period of at least 5 consecutive years, the SEC
may, after due notice and hearing, place the corporation under delinquent
status. (NEW)
• A delinquent corporation shall have 2 years to resume operations and
comply with all requirements that the SEC shall prescribe. Upon
compliance by the corporation, the SEC shall issue an order lifting the
delinquent status. Failure to comply with the requirements and resume
operations within the period shall cause the revocation of the corporation’s
certificate of incorporation.
Adoption of bylaws
• By-laws - regulations, ordinances, rules or laws adopted by a corporation
for its internal governance.
• By-laws may be necessary for the government of the corporation but these
are subordinate to the AOI.
• In the absence of charter or statutory provisions to the contrary, by-laws
are not necessary either to the existence of a corporation or to the valid
exercise of its powers, certainly in all cases where the charter sufficiently
provides for the government of the body.
• By-laws operate merely as internal rules among the SH; they cannot affect
or prejudice third persons who deal with the corporation, unless they have
knowledge of the same.
Adoption of bylaws
• Voting Requirement: vote of majority SH
• Effectivity: upon the issuance by the SEC of a certification that the
bylaws are in accordance with this Code
• Bylaws may be adopted and filed prior to incorporation; in such case,
such bylaws shall be approved and signed by all the incorporators and
submitted to the SEC, together with the AOI.
Amendment of bylaws
• Voting Requirement: majority of the BOD/BOT + majority
SH/members OR majority of the BOD/BOT pursuant to a delegation
by owners of 2/3 of the SH/members, but power to delegate shall be
considered as revoked whenever SH/members shall so vote at the
meeting
• Effectivity: Upon the issuance by the SEC of a certification that the
same is in accordance with this Code and other relevant laws
By laws vs. articles
• Considering that bylaws are subordinate only to the AOI, the
following bylaws provisions are invalid:
1. Automatic inclusion of Grace Christian High School as a permanent
member of the BOD of the Association without the benefit of
election;
Grace Christian High School vs. Court of Appeals, 281 SCRA 133
2. Authorized the giving of continuous compensation to particular
directors after their employment has terminated for past services
rendered gratuitously by them to the corporation;
Vda. De Barretto vs. La Previsora Filipina, 59 Phil 212
3. Provision restricting the transfer of ownership where the owner of a
share of stock could not sell it to another person except to the
defendant corporation, when the same does not even appear in the
AOI.
Fleischer vs. Botica Nolasco Co., Inc., 47 Phil. 583.
Securities Regulation Code
• Intra-corporate dispute (concept)
• Why is it important to know whether intra-corporate or not?
• Why is it important to know whether intra-corporate or not?
• Jurisdiction!
Jurisdiction now lodged with the RTC
• Intra-corporate controversies
Disputes that involve any of the following relationships:
a. between the corporation, partnership or association and the public;
b. between the corporation, partnership or association and the state in
so far as its franchise, permit or license to operate is concerned;
c. between the corporation, partnership or association and its
stockholders, partners, members or officers; and
d. among the stockholders, partners or associates, themselves.
Cosare vs. Broadcom Asia, Inc., February 5, 2014
Tests of determining intra-corporate controversy:
Status or relationship of the parties and the nature of the
question that is the subject of the controversy.
The controversy must not only be rooted in the existence of an
intra-corporate relationship, but must as well pertain to the
enforcement of the parties' correlative rights and obligations under the
Corporation Code and the internal and intra-corporate regulatory rules
of the corporation. If the relationship and its incidents are merely
incidental to the controversy or if there will still be conflict even if the
relationship does not exist, then no intra-corporate controversy exists.
Aguirre v. FQB+7, INC, 688 SCRA 242, January 9, 2013
Illustrations:
• Petitioner is an investor while the respondent is a stock broker.
Petitioner filed an action to recover the value of the shares of stocks
due to the mismanagement of the respondent. Is this an intra-
corporate dispute?
Illustrations:
• NO. Petitioner is neither a stockholder, partner, member or officer of

respondent corporation. The parties' relationship is limited to that of
an investor and a securities broker. Moreover, the questions involved
neither pertain to the parties' rights and obligations under the
Corporation Code, if any, nor to matters directly relating to the
regulation of the corporation.
• Ku vs. RCBC Securities, Inc., G.R. No. 219491, October 17, 2018
Illustrations:
• A General Manager of a cooperative was dismissed from his
employment. His position is provided in the by-laws. Is this an intra-
corporate dispute?
Illustrations:
• YES, applying the two-fold test.
• Ellao vs. Batelec I, G.R. No. 209166, July 9, 2018.
Illustrations:
• An “AVP for Sales” was dismissed from his employment. This position
is not included in the articles and by-laws but there is a blanket
provision providing for the appointment of such other officers
deemed necessary by the corporation. Is the said position considered
a corporate officer?
Illustrations:
• NO. Although there is a blanket authority, the corporation failed to
establish that the position of AVP for Sales was created by virtue of an act
of the board, and that Cosare was specifically elected or appointed to such
position by the BOD. No board resolutions to establish such facts was
presented. An enabling clause in the by-laws cannot make such position a
corporate office. The BOD has no power to create other corporate offices
without first amending the by-laws so as to include therein the newly
created corporate office. To allow the creation of a corporate officer
position by a simple inclusion in the by-laws of an enabling clause
empowering the BOD to do so can result in the circumvention of the right
of every employee to security of tenure.
• Cosare vs. Broadcom Asia, Inc., G.R. No. 201298, February 5, 2014.
Illustrations:
• Belo Medical Group received a request from Jose Santos for the
inspection of corporate records. Santos claimed that he was a
shareholder and a co-owner of Belo's shares, as these were acquired
while they cohabited as husband and wife. Belo wrote Belo Medical
Group that Santos is only holding the shares in trust for her as she
was the one who paid for the shares and that Santos owns majority
shares in House of Obagi, a competitor. Belo Medical Group filed a
complaint for interpleader, seeking determination of who is the true
owner of the stocks in order to prevent Santos from examining the
records. Is the case an intra-corporate?
Illustrations:
• Applying the relationship test, both Belo and Santos are shareholders in
the AoI. The conflict is intra-corporate as it involves two shareholders,
although the ownership of stocks of one stockholder is questioned.
Applying the nature of the controversy test, this is still an intra-corporate
dispute. The complaint for interpleader seeks a determination of the true
owner of the shares of stock registered in Santos' name. Ultimately,
however, the goal is to stop Santos from inspecting corporate books as
even if Santos is declared the true owner of the shares of stock, Belo
Medical Group still seeks his disqualification from inspecting the books
based on bad faith. Therefore, the controversy shifts from a mere question
of ownership over movable property to the exercise of a registered
stockholder's proprietary right to inspect corporate books.
• Belo Medical Group vs. Santos, G.R. No. 185894, August 30, 2017.
Illustrations:
• DTTI is a domestic close corporation owned by the Dy siblings. Due to
certain disagreements relating to its management, DTTI instituted an
action for injunction against respondents Peter, Johnny and Ramon
Dy. DTTI alleged that Johnny, an employee, squandered money of
Montilla branch. The corporation closed the branch but it was
forcibly opened by the respondents. Is this a civil action or intra-
corporate one?
Illustrations:
• It is a civil one. The complaint contains no allegation that the respondents
are stockholders of the corporation. Johnny was even identified as a DTTI
employee. The nature of the controversy does not involve an intra-
corporate dispute. The complaint for injunction asks the RTC to order
respondents to cease from controlling DTTI's Montilla branch and allow
DTTI to use the same. The complaint does not allege that it arose out of a
disagreement between the stockholders. Rather, the complaint states that
Johnny colluded with Peter and Ramon in forcibly opening the Montilla
branch store and preventing DTTI from using the property. Nowhere in its
complaint did DTTI ask for a determination of the parties' rights under the
Corporation Code, its AoI or its by-laws.
• Dy Teban Trading, Inc. vs. Dy, G.R. No. 185647, July 26, 2017.
Illustrations:
• Concorde Condominium, Inc. filed an action for injunction to enjoin
respondents Baculio and New PPI Corporation from misrepresenting
to the public that they are the owners of the disputed lots and
Concorde Condominium Building, and from pushing for the
demolition of the building as well as to prevent Asian Security and
Investigation Agency from deploying its security guards within the
perimeter of the said building. Is this an intra-corporate dispute?
Illustrations:
• It is an ordinary civil case. There is no intra-corporate relations
between the parties. The petition deals with the conflicting claims of
ownership over the lots where Concorde Condominium Building
stands and the parking lot for unit owners, which were developed by
Pulp and Paper Distributors, Inc. (now claimed by respondent Baculio
as the New PPI Corporation), as well as the purported violations of
the National Building Code which resulted in the revocation of the
building and occupancy permits by the Building Official of Makati City.
• Concorde Condominium, Inc. vs. Baculio, G.R. No. 203678, February
17, 2016.
Illustrations:
• PCGG Chairman Sabio requested to suspend the listing of the increase
in PHILCOMSAT Holdings Corporation (PHC) capital stock as there is a
need to settle the conflicting claims of the two sets of BOD of the
Philippine Overseas Telecommunication Corporation (POTC) and
PHILCOMSAT. PHILCOMSAT filed a complaint before the
Sandiganbayan against PCGG to compel the latter to withdraw its
opposition to the listing of the increase in PHC's capital stock.
Sandiganbayan dismissed the complaint for lack of jurisdiction. PHC
argued that PCGG is not a stockholder, partner, member or officer of
the corporation. Is this correct?
Illustrations:
• NO. This case is intra-corporate in character. The Republic of the Phils
owns shares in POTC, which wholly owns PHILCOMSAT. PCGG
nominees and directors sit in the BOD of sequestered corporations
not for themselves but on behalf of the Republic. The act of Chairman
Sabio in asking the SEC to suspend the listing of PHC's shares was
done to protect the interest of the Republic, a legitimate stockholder
in PHC's controlling parent company, POTC.
• Philippine Communications Satellite Corp. vs. Sandiganbayan, 759
SCRA 242.
Illustrations:
• A condominium unit owner allegedly failed to pay his association
dues. As a result, he was barred from running as a director, prompting
him to file an action for damages against the corporation. Is this an
intra-corporate dispute or one where the HLURB has jurisdiction?
Illustrations:
• It is an intra-corporate one. Though denominated as an action for
damages, the allegations in the complaint shows that the case dwells
on the propriety of the assessment made by the corporation against
the condo unit owner as well as the validity of its acts in preventing
him from participating in the election of the corporation’s BOD. It
arose from the intra-corporate relations between the parties, and the
questions involved pertain to their rights and obligations under the
Corporation Code and matters relating to the regulation of the
corporation.
• Medical Plaza Makati Condominium Corp. vs. Cullen, 709 SCRA 110.
• What is the effect of dissolution of a corporation on pending intra-
corporate disputes?
Jurisdiction now lodged with the RTC (2015, 2014,
2009, 2006, 1997, 1996, 1991, 1987, 1985, 1981
Bar)
None. The dissolution of the corporation simply prohibits it from
continuing its business. However, despite such dissolution, the parties
involved in the litigation are still corporate actors. The dissolution does
not automatically convert the parties into total strangers or change
their intra-corporate relationships. Neither does it change or terminate
existing causes of action, which arose because of the corporate ties
between the parties.
Aguirre v. FQB+7, INC, 688 SCRA 242, January 9, 2013
Intellectual property
• Copyright, including fair use and moral rights
Patent vs. Trademark vs. Copyright
2015, 2010, 1960 Bar: Patent Trademark Copyright
Subject matter Invention Goods or services Literary, artistic, scientific,
scholarly works
Where right registered Intellectual Property Office Intellectual Property Office Submission only to the
National Library and
Supreme Court Library (for
legal works) but for
purposes of completing the
records only
Duration of right 20 years from filing date; 10 years from registration; Economic right and moral
not subject to renewal can be renewed right of integrity of
ownership - during lifetime
and 50 years after death;
not subject to renewal
Moral right of attribution –
in perpetuity after death
Copyright
• Extent of copyright protection
Baker vs. Selden, 101 US 102 – copyright does not cover process
Protected from the moment of creation
Merger doctrine - when there is only 1 way, or a very few ways,
to express an idea, the expression is said to merge with its idea and is
not protected by a copyright
Doctrine of fixation – bare ideas are not protected unless it is
fixed in some material form
Idea-expression dichotomy – copyright extends only to the fixed
expression of an idea, and not to the idea itself
What can be copyrighted?
A. Original Works
1. Books, pamphlets, articles and other writings
2. Periodicals and newspapers;
3. Lectures, sermons, addresses, dissertations prepared for oral
delivery, whether or not reduced in writing or other material form;
4. Letters;
5. Dramatic or dramatico-musical compositions; choreographic works
or entertainment in dumb shows;
6. Musical compositions, with or without words;
7. Works of drawing, painting, architecture, sculpture, engraving,

lithography or other works of art; models or designs for works of art;
8. Original ornamental designs or models for articles of
manufacture, whether or not registrable as an industrial design, and
other works of applied art;
A work of applied art is an artistic creation with utilitarian
functions or incorporated in a useful article.
• Ching vs. Salinas, Sr. 462 SCRA 241, June 29, 2005 (spring and
bearing for cars are not works of applied art);
• Olano vs. Lim Eng Co, G.R. No. 195835, March 14, 2016 (Hatch
door is a useful article)
• Denicola test - if design elements of an article reflect merger of
aesthetic and functional considerations, the artistic aspects of the work
cannot be conceptually separable from the utilitarian aspects, the
article cannot be copyrighted
9. Illustrations, maps, plans, sketches, charts and three-

dimensional works relative to geography, topography, architecture or
science;
10. Drawings or plastic works of a scientific or technical
character;
11. Photographic works including works produced by a process
analogous to photography; lantern slides;
12. Audiovisual works and cinematographic works and works

produced by a process analogous to cinematography or any process for
making audio-visual recordings;
13. Pictorial illustrations and advertisements;
14. Computer programs;
15. Other literary, scholarly, scientific and artistic works
B. Derivative Works
1. Dramatizations, translations, adaptations, abridgments,
arrangements, and other alterations of literary or artistic works
2. Collections of literary, scholarly or artistic works, and
compilations of data and other materials which are original by reason
of the selection or coordination or arrangement of their contents
(Doctrine of Compilations)
Unprotected Works:
1. Any idea, procedure, system, method or operation, concept,
principle, discovery or mere data as such, even if they are expressed,
explained, illustrated or embodied in a work;
• Joaquin vs. Drilon, 302 SCRA 225, January 28, 1999
2. News of the day and other miscellaneous facts having the
character of mere items of press information;
• ABS-CBN Corporation vs. Gozon, 753 SCRA 1, March 11, 2015,
J. Leonen
3. Any official text of a legislative, administrative or legal nature, as

well as any official translation thereof
4. Any work of the Government of the Phils; however, prior
approval of the government agency or office wherein the work is
created shall be necessary for exploitation of such work for profit
5. Those which copyright had already lapsed
Copyright
Copyright or Economic Rights:
1. Reproduction of the work or substantial portion of the work;
Habana vs. Robles, 310 SCRA 511
2. Dramatization, translation, adaptation, abridgment, arrangement
or other transformation of the work
Copyright
3. The first public distribution of the original and each copy of the
work by sale or other forms of transfer of ownership;
First sale doctrine – distribution right exhausted by the first
authorized sale of the work
Kirtsaeng vs. John Wiley & Sons, Inc., 568 U.S. 519, 133 S. Ct.
1351 (2013) where the Court ruled that physical books produced and
purchased abroad could be imported into the United States for resale
without violating the copyright owner's distribution rights under
copyright law
Copyright
4. Rental of the original or a copy of an audiovisual or
cinematographic work, a work embodied in a sound recording, a
computer program, a compilation of data and other materials or a
musical work in graphic form, irrespective of the ownership of the
original or the copy which is the subject of the rental;
5. Public display of the original or a copy of the work;
6. Public performance of the work; and
7. Other communication to the public of the work
Copyright
Rules on Copyright Ownership:
1. Original literary and artistic works = author of the work;
2. Joint authorship, the co-authors shall be the original owners of
the copyright and in the absence of agreement, their rights shall be
governed by the rules on co-ownership. If, however, a work of joint
authorship consists of parts that can be used separately and the author
of each part can be identified, the author of each part shall be the
original owner of the copyright in the part that he has created;
Copyright
3. In the case of work created by an author during and in the
course of his employment, the copyright shall belong to:
(a) The employee = if the creation of the object of copyright is
not a part of his regular duties even if the employee uses the time,
facilities and materials of the employer.
(b) The employer = if the work is the result of the
performance of his regularly-assigned duties, unless there is an
agreement, express or implied, to the contrary.
Copyright
4. Work commissioned by a person other than an employer of the
author and who pays for it and the work is made in pursuance of
the commission, the person who so commissioned the work shall
have ownership of the work, but the copyright thereto shall remain
with the creator, unless there is a written stipulation to the
contrary;
But submission of a literary, photographic or artistic work to a
newspaper, magazine or periodical for publication shall constitute only
a license to make a single publication unless a greater right is expressly
granted.
Copyright
5. Audiovisual work = producer, the author of the scenario, the
composer of the music, the film director, and the author of the work so
adapted.
6. Letters = writer subject to the provisions of Article 723 of the Civil
Code
Anonymous and Pseudonymous Works — publishers shall be
deemed to represent the authors of articles published without the
names of the authors or under pseudonyms, unless the contrary
appears, or the pseudonyms leaves no doubt as to the author's
identity, or if the author of the anonymous works discloses his identity
Copyright
• Doctrine of Divisibility of Copyright = copyright may be assigned or
licensed in whole or in part.
Copyright
Limitations on Copyright:
(a) The recitation or performance of a work, once it has been lawfully
made accessible to the public, if done privately and free of charge
or if made strictly for a charitable or religious institution or society;
Filipino Society of Composers vs. Tan, 148 SCRA 461, March 16,
1987
(b) The making of quotations from a published work if they are
compatible with fair use and only to the extent justified for the
purpose, including quotations from newspaper articles and periodicals
in the form of press summaries: Provided, That the source and the
name of the author, if appearing on the work, are mentioned;
Copyright
(c) The reproduction or communication to the public by mass media of
articles on current political, social, economic, scientific or religious
topic, lectures, addresses and other works of the same nature,
which are delivered in public if such use is for information purposes
and has not been expressly reserved: Provided, That the source is
clearly indicated;
(d) The reproduction and communication to the public of literary,
scientific or artistic works as part of reports of current events by means
of photography, cinematography or broadcasting to the extent
necessary for the purpose;
Copyright
(e) The inclusion of a work in a publication, broadcast, or other
communication to the public, sound recording or film, if such inclusion is
made by way of illustration for teaching purposes and is compatible with
fair use: Provided, That the source and the name of the author, if
appearing in the work, are mentioned;
(f) The recording made in schools, universities, or educational institutions of
a work included in a broadcast for the use of such schools, universities or
educational institutions:
Provided, That such recording must be deleted within a reasonable
period after they were first broadcast:
Provided, further, That such recording may not be made from
audiovisual works which are part of the general cinema repertoire of feature
films except for brief excerpts of the work;
Copyright
(g) The making of ephemeral recordings by a broadcasting
organization by means of its own facilities and for use in its own
broadcast;
(h) The use made of a work by or under the direction or control of
the Government, by the National Library or by educational, scientific or
professional institutions where such use is in the public interest and is
compatible with fair use;
(i) The public performance or the communication to the public of a
work, in a place where no admission fee is charged in respect of such
public performance or communication, by a club or institution for
charitable or educational purpose only, whose aim is not profit makin
Copyright
(j) Public display of the original or a copy of the work not made by means
of a film, slide, television image or otherwise on screen or by means of any
other device or process: Provided, That either the work has been published,
or, that the original or the copy displayed has been sold, given away or
otherwise transferred to another person by the author or his successor in
title; and
(k) Any use made of a work for the purpose of any judicial proceedings or
for the giving of professional advice by a legal practitioner
(l) The reproduction or distribution of published articles or materials in a
specialized format exclusively for the use of the blind, visually- and
reading-impaired persons: Provided, That such copies and distribution
shall be made on a nonprofit basis and shall indicate the copyright owner
and the date of the original publication.(NEW)
Copyright
Fair Use of a Copyrighted Work:
Fair use is the privilege to use the copyrighted material in a
reasonable manner without the consent of the copyright owner or as
copying the theme or ideas rather than their expression.
Fair use of a copyrighted work for criticism, comment, news
reporting, teaching including limited number of copies for classroom
use, scholarship, research, and similar purposes is not an infringement
of copyright.
Copyright
Decompilation, which is the reproduction of the code and translation of
the forms of a computer program to achieve the interoperability of an
independently created computer program with other programs may
also constitute fair use as decompilation is done for the purpose of
obtaining the information necessary to achieve interoperability.
Jailbreaking for IOS and rooting for android
Copyright
Four-factor Test:
(a) The purpose and character of the use, including whether such use is of a
commercial nature or is for non-profit educational purposes;
The "transformative test" is generally used in reviewing the purpose
and character of the usage of the copyrighted work. The court must look into
whether the copy of the work adds new expression, meaning or message to
transform it into something else.
(b) The nature of the copyrighted work;
(c) The amount and substantiality of the portion used in relation to the
copyrighted work as a whole;
(d) The effect of the use upon the potential market for or value of the
copyrighted work (Probable effects test) ABS-CBN vs. Gozon, March
11, 2015, J.Leonen
Copyright
Reproduction of published work allowed if:
1. Single copy
2. Made by natural person
3. Exclusively for research and private study
Can you make a “book-alike”?

Copyright
But excludes:
(a) A work of architecture in the form of building or other construction;
(b) An entire book, or a substantial part thereof, or of a musical work in
graphic form by reprographic means;
(c) A compilation of data and other materials;
(d) A computer program except as back-up copy/archival purpose; and
(e) Any work where reproduction would unreasonably conflict with a
normal exploitation of the work or would prejudice the legitimate interests
of the author.
Copyright
Reproduction by libraries in limited copies allowed if:
1. Fragile character or rarity cannot be lent
2. Isolated articles, instead of lending the entire volume
3. Preserve or replace a copy not available with the publisher; not
permissible to produce missing pages unless out of stock
Copyright
No more ban on importation for personal purposes (correlate Kirtsaeng
case)
Deposit and notice
Copyright
Moral right:
1. The right of attribution or paternity or authorship – in perpetuity
after death
2. Right to alteration and integrity of ownership – GR 50 years after
death
Waiver of moral right
• Valid if in writing
• Void if it is:
• To use the name of the author, or the title of his work, or otherwise to make
use of his reputation with respect to any version or adaptation of his work
which, because of alterations therein, would substantially tend to injure the
literary or artistic reputation of another author; or
• To use the name of the author with respect to a work he did not create.
• Section 195.
Exceptions to moral rights
• 1. When an author contributes to a collective work, his right to have his
contribution attributed to him is deemed waived unless he expressly
reserves it.
• 2. In the absence of a contrary stipulation at the time an author licenses
or permits another to use his work, the necessary editing, arranging or
adaptation of such work, for publication, broadcast, use in a motion
picture, dramatization, or mechanical or electrical reproduction in
accordance with the reasonable and customary standards or requirements
of the medium in which the work is to be used, shall not be deemed to
contravene the author’s rights. Nor shall complete destruction of a work
unconditionally transferred by the author be deemed to violate such rights.
• Sections 196 and 197.
Copyright
• Resale right - right to participate in the gross proceeds of the sale or
lease to the extent of 5%. This right shall exist during the lifetime of
the author and for 50 years after his death.
This however shall not apply to prints, etchings, engravings,
works of applied art, or works of similar kind wherein the author
primarily derives gain from the proceeds of reproductions Section 200.
Copyright
Term of Protection
1. Original works and derivative works - during the life of the author and
for 50 years after his death; also applies to posthumous works.
2. Works of joint authorship - during the life of the last surviving author
and for 50 years after his death.
3. Anonymous or pseudonymous works - 50 years from the date on
which the work was first lawfully published: Provided, That where, before
the expiration of the said period, the author's identity is revealed or is no
longer in doubt, apply #1 or #2 as previously mentioned; provided, further,
That such works if not published before shall be protected for 50 years
counted from the making of the work.
Copyright
4. Works of applied art - 25 years from the date of making.
5. Photographic works - 50 years from publication of the work and,
if unpublished, 50 years from the making.
6. Audio-visual works including those produced by process
analogous to photography or any process for making audio-visual
recordings - 50 years from date of publication and, if unpublished, from
the date of making.
Copyright
7. Performances not incorporated in recordings - 50 years from the
end of the year in which the performance took place;
8. Sound or image and sound recordings and for performances
incorporated therein - 50 years from the end of the year in which the
recording took place
9. Broadcasts - 20 years from the date the broadcast took place.
Copyright
Infringement (NEW) — A person infringes a right when one:
(a) Directly commits an infringement;
(b) Benefits from the infringing activity of another person who
commits an infringement if the person benefiting has been given notice
of the infringing activity and has the right and ability to control the
activities of the other person;
(c) With knowledge of infringing activity, induces, causes or
materially contributes to the infringing conduct of another.
Copyright
• Can mall owners whose tenants are selling pirated materials be
liable?
Copyright
• Can mall owners whose tenants are selling pirated materials be
liable?
• Mall owners are not automatically penalized for the infringing acts of
their tenants. One must have both proven knowledge of the
infringement, and the ability to control the activities of the infringing
person to be held liable. The mall owner must have also benefited
from the infringement.
• GF not a defense.
Copyright
Remedies for infringement:
(a) Injunction restraining such infringement
(b) Pay the copyright proprietor actual damages as he may have
incurred due to the infringement as well as the profits the infringer
may have made due to such infringement
In proving profits the plaintiff shall be required to prove sales
only and the defendant shall be required to prove every element of
cost which he claims, or, in lieu of actual damages and profits, such
damages which to the court shall appear to be just and shall not be
regarded as penalty
Copyright
Damages to be awarded shall be doubled against any person who:
(NEW)
(i) Circumvents effective technological measures; or
Technological protection measures (TPM) = those used by the
author to restricts acts which are unauthorized. It is any technology
(software or hardware) which restricts access to a copyrighted material
without the consent of the copyright holder. E.g. software requiring a
password to gain access to a website.
Copyright
(ii) Having reasonable grounds to know that it will induce, enable,
facilitate or conceal the infringement, remove or alter any e-RMI
from a copy of a work, sound recording, or fixation of a
performance, or distribute, import for distribution, broadcast, or
communicate to the public works without authority, knowing that
e-RMI has been removed or altered without authority.
Rights management information (RMI) = information which
identifies the work, the author of the work, or information about the
terms and conditions of use of the work
Copyright
The copyright owner may elect, at any time before final judgment is rendered, to
recover instead of actual damages and profits, statutory damages equivalent to the
filing fee but not less than P50K. In awarding statutory damages, the court may
consider the following:
(1) The nature and purpose of the infringing act;
(2) The flagrancy of the infringement;
(3) Whether the defendant acted in bad faith;
(4) The need for deterrence;
(5) Any loss that the plaintiff has suffered/likely to suffer by reason of the
infringement; and
(6) Any benefit shown to have accrued to the defendant by reason of the
infringement.
Copyright
In case the infringer was not aware and had no reason to believe that his
acts constitute an infringement of copyright, the court in its discretion may
reduce the award of statutory damages to not more than P10K: Provided,
That the amount of damages to be awarded shall be doubled against any
person who:
(i) Circumvents effective technological measures;
(ii) Having reasonable grounds to know that it will induce, enable,
facilitate or conceal the infringement, remove or alter any e-RMI from a copy
of a work, sound recording, or fixation of a performance, or distribute,
import for distribution, broadcast, or communicate to the public works
without authority, knowing that e-RMI has been removed or altered without
authority.
Copyright
Remedies for infringement:
(c) Deliver under oath, for impounding during the pendency of the
action, sales invoices and other documents evidencing sales, all articles
and their packaging alleged to infringe a copyright and its implements
(d) Deliver under oath for destruction without any compensation all
infringing copies or devices, as well as all plates, molds, or other means
for making such infringing copies
(e) Payment of moral and exemplary damages and destruction of
infringing copies of the work even in the event of acquittal in a criminal
case.
INSURANCE
• What can be insured
• Claims for life insurance
What May be Insured
• Q: What may be insured?
What May be Insured
• Q: What may be insured?
• A: One can an insure a contingent or unknown event, past or future,
which may damnify a person OR create a liability against him (Section
3).
• In short, you can insure anything or something which you have
insurable interest on.
What May be Insured
• So what is insurable interest?
What May be Insured
• Mamaya muna, wag atat.
What May be Insured
• Q: Can a past event be insured?
What May be Insured
• Q: Can a past event be insured?
• A: Yes, provided the past event is unknown to the parties AND they
must expressly stipulate that a prior loss is insured by the policy. (44
CJS 991)
What May be Insured
• Q: Can you insure the probability of winning the lottery?
What May be Insured
• Q: Can you insure the probability of winning the lottery?
• A: NO. A gaming or wagering policy is void. (Sections 4 and 25)
What May be Insured
• Q: Driver sideswiped a pedestrian. The pedestrian then sued the
driver as well as the third party liability insurer for damages but the
insurance company moved to dismiss on the ground that the liability
of the driver has not yet been determined with finality. Is this
correct?
What May be Insured
• Q: Driver sideswiped a pedestrian. The pedestrian then sued the
driver as well as the third party liability insurer for damages but the
insurance company moved to dismiss on the ground that the liability
of the driver has not yet been determined with finality. Is this
correct?
• A: NO. Where the insurance policy insures directly against liability,
the insurer’s liability accrues immediately upon occurrence of the
injury or event upon which liability depends. (1996 Bar)
What May be Insured
• Q: Wife takes an insurance on her life and/or of her children’s life. Is
the consent of the husband required?
What May be Insured
• Q: Wife takes an insurance on her life and/or of her children’s life. Is
the consent of the husband required?
• A: No more. Marital consent is not necessary (Section 3).
What May be Insured
• Q: Husband took an insurance on the life of his wife and designated
himself as beneficiary. The husband however died. Who can get the
proceeds?
What May be Insured
• Q: Husband took an insurance on the life of his wife and designated
himself as beneficiary. The husband however died. Who can get the
proceeds?
• A: The wife. In case of predecease of the owner of the policy on an
insurance taken on the life of the insured, the interest shall vest in the
insured, unless otherwise provided for in the policy. (Section 3)
What May be Insured
• Q: What is insurable interest?
What May be Insured
• Q: What is insurable interest?
• A: Insurable interest is that interest which a person is deemed to
have in the subject matter insured, where he has a relation or
connection with or concern in it, such that the person will derive
pecuniary benefit or advantage from the preservation of the subject
matter insured and will suffer pecuniary loss or damage from its
destruction, termination, or injury by the happening of the event
insured against.
• The existence of an insurable interest gives a person the legal right to
insure the subject matter of the policy of insurance.
• Lalican vs. Insular Life Assurance Co. Ltd., 597 SCRA 159
Life Property
1. Amount to be insured Unlimited, except one taken Limited to actual value of
by creditor on life of debtor interest in the property
2. When it must exist Must exist at the time Must exist both at the time
insurance takes effect but not insurance takes effect and at
when the loss occurs the time of loss, but need not
exist in the meantime
3. As to beneficiary Beneficiary need not possess Beneficiary must possess

insurable interest on the life of insurable interest on the
the insured property
What May be Insured
• Q: Can you take an insurance over your own life?
What May be Insured
• Q: Can you take an insurance over your own life?
• A: Yes, as you have insurable interest over your own life (Section 10).
What May be Insured
• Q: Can you take an insurance over your own life AND designate
anyone as beneficiary?
What May be Insured
• Q: Can you take an insurance over your own life AND designate anyone as
beneficiary?
• A: Yes, as designation is based on liberality. However, the beneficiary
designated must not be disqualified under Article 739 of the Civil Code.
These are:
• Those made between persons who are guilty of adultery or concubinage at
the time of donation;
• those made between persons found guilty of the same criminal offense, in
consideration thereof;
• those made to a public officer or his wife, descendants and ascendants, by
reason of his office.
What May be Insured
• Q: Husband took an insurance on his life and designated his
concubine and illegitimate children as beneficiaries. Is this valid?
What May be Insured
• Q: Husband took an insurance on his life and designated his
concubine and illegitimate children as beneficiaries. Is this valid?
• A: The designation as to the concubine is void. However, there is no
legal proscription in naming as illegitimate children as beneficiaries. It
is only in cases where the insured has not designated any beneficiary,
or when the designated beneficiary is disqualified by law to receive
the proceeds, that the insurance policy proceeds shall redound to the
benefit of the estate of the insured.
• Heirs of Loreto C. Maramag vs. Maramag, 588 SCRA 774.
What May be Insured
• Q: Can a husband take an insurance on the life of the wife and vice-
versa and designate himself/herself as beneficiary?
What May be Insured
• Q: Can a husband take an insurance on the life of the wife and vice-
versa and designate himself/herself as beneficiary?
• A: Yes, under Section 10 (legitimate).
What May be Insured
• Q: Can the father/mother take an insurance on the life of their
children and designate himself/herself as beneficiary?
What May be Insured
• Q: Can the father/mother take an insurance on the life of their
children and designate himself/herself as beneficiary? ?
• A: Yes, under Section 10 (no distinction between legitimate or
illegitimate)
What May be Insured
• Q: Can grandparents take an insurance on the life of their
grandchildren and vice-versa and designate himself/herself as
beneficiary?
What May be Insured
• Q: Can grandparents take an insurance on the life of their
grandchildren and vice-versa and designate himself/herself as
beneficiary?
• A: Yes, provided relationship is legitimate (Article 992 Civil Code on
iron-curtain rule).
What May be Insured
• Q: Can siblings insure one another?
What May be Insured
• Q: Can siblings insure one another?
• A: Yes, even if the relationship is illegitimate (Article 196 Family Code)
What May be Insured
• Q: Can a corporation take an insurance on the life of its official,
designating itself as beneficiary?
What May be Insured
• Q: Can a corporation take an insurance on the life of its official,
designating itself as beneficiary?
• A: Yes, provided the death of the employee would result to material
injury for the corporation.
• El Oriente Fabrica de Tobacos vs. Posadas, 56 Phil 147
What May be Insured
• Q: Can you insure the life of your househelp/driver?
What May be Insured
• Q: Can you insure the life of your househelp/driver?
• A: No, absence of material injury. (2011 Bar)
What May be Insured
• Q: Can you insure the life of your co-partner in a partnership?
What May be Insured
• Q: Can you insure the life of your co-partner in a partnership?
• A: Yes. (2011 Bar)
What May be Insured
• Q: Can you insure the life of your fellow stockholder?
What May be Insured
• Q: Can you insure the life of your fellow stockholder?
• A: No.
What May be Insured
• Q: A loan was taken by the debtor from the creditor. Can a creditor
insure the life of the debtor?
What May be Insured
• Q: A loan was taken by the debtor from the creditor. Can a creditor
insure the life of the debtor?
• A: Yes, but it is limited only to the amount of the indebtedness.
What May be Insured
• Q: Can a debtor insure his life and designate the creditor as
beneficiary?
What May be Insured
• Q: Can a debtor insure his life and designate the creditor as
beneficiary?
• A: Yes. In taking out a policy on his own life and paying its premium,
the debtor intended to use it as a collateral for his debt at least to the
amount of the policy's face value.
• Dela Fuente vs. Fortune Life Insurance Co., Inc., G.R. No. 224863,
December 2, 2020
What May be Insured
• Q: What is the difference between an insurance taken by the debtor
on his own life payable to the creditor and one taken by the creditor
on the life of the debtor?
What May be Insured
• Q: What is the difference between an insurance taken by the debtor on his
own life payable to the creditor and one taken by the creditor on the life of
the debtor?
• A: Where a debtor in good faith insures his life for the benefit of his
creditor, full payment of the debt does not invalidate the policy; in such
case, the proceeds should go to the estate of the debtor.
• Where an insurance is taken by a creditor on the life of his debtor, the
insuring creditor could only recover such amount as remains unpaid at the
time of the death of the debtor, — such that, if the whole debt has already
been paid, then recovery on the policy is no longer permissible.
• Dela Fuente vs. Fortune Life Insurance Co., Inc., G.R. No. 224863,
December 2, 2020.
What May be Insured
• Q: Sailormoon allows Tuxedo Mask to occupy her house as long as
she is alive. Can a usufructuary (Tuxedo Mask) insure the life of the
naked owner (Sailormoon)?
What May be Insured
• Q: Sailormoon allows Tuxedo Mask to occupy her house as long as
she is alive. Can a usufructuary (Tuxedo Mask) insure the life of the
naked owner (Sailormoon)?
• A: Yes, as one can insure any person upon whose life any estate or
interest vested in him depends. (Section 10)
What May be Insured
• Q: Can an unpaid seller insure the items sold to the buyer?
What May be Insured
• Q: Can an unpaid seller insure the items sold to the buyer?
• A: Yes. A vendor or seller retains an insurable interest in the property
sold so long as he has any interest therein, as where he has a vendor’s
lien. The vendor has an insurable interest until full payment of the
value of the delivered goods.
• Gaisano Cagayan vs. Insurance Company of Northern America, 490
SCRA 286.
What May be Insured
• Q: Can an owner of a house insure the same?
What May be Insured
• Q: Can an owner of a house insure the same?
• A: Yes, he has insurable interest over it.
What May be Insured
• Q: Can an owner of a house insure the same AND designate a third
person as beneficiary?
What May be Insured
• Q: Can an owner of a house insure the same AND designate a third
person as beneficiary?
• A: NO, the beneficiary must have insurable interest over it. (Section
18 – principle of strict indemnity)
What May be Insured
• Q: Can a mere lessee insure the property subject of the lease?
What May be Insured
• Q: Can a mere lessee insure the property subject of the lease?
• A: Yes, as the lessee will suffer with the loss of the property.
• Ong Lim Sing vs. Feb Leasing, 524 SCRA 333, June 8, 2007
What May be Insured
• Q: Asgard and Milestone are partners in a contract where Milestone
will create boxes using Asgard’s equipment, with some parts thereof
modified by Milestone by attaching its own parts. Does Milestone
possess insurable interest over the equipment?
What May be Insured
• Q: Asgard and Milestone are partners in a contract where Milestone will create
boxes using Asgard’s equipment, with some parts thereof modified by Milestone
by attaching its own parts. Does Milestone possess insurable interest over the
equipment?
• A: Yes. Insurable interest in property is not limited to property ownership in the
subject matter of the insurance. Where the interest of the insured in the property
is such that he will be benefitted by its continued existence, or will suffer a direct
pecuniary loss by its destruction, his contract of insurance will be upheld,
although he has no legal or equitable title.
• When Milestone removed its parts and machines, Milestone still had an actual
and real interest in the preservation of the machines while the contract is not yet
terminated and non-preservation will render Milestone liable for breach of
contract as no boxes would be manufactured under the contract.
• UCPB General Insurance Co., Inc. vs. Asgard Corrugated Box Manufacturing Corp.,
G.R. No. 244407 , January 26, 2021.
What May be Insured
• Q: Can a mortgagee insure the property subject of the mortgage?
What May be Insured
• Q: Can a mortgagee insure the property subject of the mortgage?
• A: Yes, but it is limited only to the amount of the loan or credit.
(Section 8). Upon payment of the insurance proceeds, the insurer is
subrogated to the rights of the mortgagee.
What May be Insured
• Q: Can a mortgagor insure the property subject of the mortgage and
designate the mortgagee as beneficiary?
What May be Insured
• Q: Can a mortgagor insure the property subject of the mortgage and
designate the mortgagee as beneficiary?
• A: Yes, pursuant to a “Loss Payable Clause”. However, the mortgagee
can recover only up to the extent of the loan, and the remainder
accrues to the mortgagor. Upon payment of the proceeds, the debt is
extinguished.
What May be Insured
• Q: A debtor borrowed from a creditor. Since the loan was a clean
one, can a general creditor insure the property of the debtor?
What May be Insured
• Q: A debtor borrowed from a creditor. Since the loan was a clean
one, can a general creditor insure the property of the debtor?
• A: NO, he has no interest over it.
• 2014, 1965 Bar
What May be Insured
• Q: Can a judgment creditor insure his levied property? How about
the highest bidder in the auction sale?
What May be Insured
• Q: Can a judgment creditor insure his levied property? How about
the highest bidder in the auction sale?
• A: Yes, they have an interest over it within the redemption period.
• 1977 Bar
What May be Insured
• Q: Can a buyer of an item in transit take an insurance over it?
What May be Insured
• Q: Can a buyer of an item in transit take an insurance over it?
• A: Yes, he already has equitable title to it.
• 2015, 1991 Bar
• Filipino Merchants Insurance vs. CA, 179 SCRA 698
What May be Insured
• Q: Can a child take an insurance over the property of his parents?
What May be Insured
• Q: Can a child take an insurance over the property of his parents?
• A: No, he has no insurable interest yet, the interest being merely
contingent.
• 1987, 1960 Bar
What May be Insured
• Q: Can you take an insurance on your growing crops / young of
animals?
What May be Insured
• Q: Can you take an insurance on your growing crops / young of
animals?
• A: Yes, as this in an expectancy, coupled with an existing interest in
that out of which the expectancy arises (Section 14)
Claims Settlement
• Q: When are proceeds of a life insurance policy payable?
Claims Settlement
• Q: When are proceeds of a life insurance policy payable?
• A: It shall be paid immediately upon maturity of the policy, unless
such proceeds are made payable in installments or as an annuity, in
which case the installments, or annuities shall be paid as they
become due.
• In the case of a policy maturing by the death of the insured, the
proceeds thereof shall be paid within 60 days after presentation of
the claim and filing of the proof of death of the insured.
• Refusal/failure to pay within the timeframe entitles the party to
interests, unless reason for refusal/failure to pay is due to fraudulent
claim (Section 248)
Data Privacy Act
Data Privacy Act
• Q: What is Personal Information (PI)?
Data Privacy Act
• Q: What is Personal Information (PI)?
• A: It is any information whether recorded in a material form or not,
from which the identity of an individual is apparent or can be
reasonably and directly ascertained by the entity holding the
information, or when put together with other information would
directly and certainly identify an individual. (Section 3)
Data Privacy Act
• Q: What is Sensitive Personal Information (SPI)?
Data Privacy Act
• Q: What is Sensitive Personal Information (SPI)?
• A: It refers to personal information:
A. About an individual’s -
race
ethnic origin
marital status
age
color
religious, philosophical or political affiliations;
health
education
genetic or sexual life of a person
or to any proceeding for any offense committed or alleged to have been committed by
such person, the disposal of such proceedings, or the sentence of any court in such proceedings;
Data Privacy Act
b. Issued by government agencies peculiar to an individual which
includes, but not limited to:
social security numbers
previous or current health records
licenses or its denials
suspension or revocation
tax returns
c. Specifically established by an executive order or an act of Congress
to be kept classified.
Data Privacy Act
Q: The processing of PI is being done remotely abroad. Can the Data
Privacy Act be applied then?
Data Privacy Act
Q: The processing of PI is being done remotely abroad. Can the Data
Privacy Act be applied then?
A: Yes, it is possible. It applies to the processing of all types of PI and
to any natural and juridical person involved in PI processing including
those PI controllers and processors who, although not found or
established in the Philippines, use equipment that are located in the
Philippines, or those who maintain an office, branch or agency in the
Philippines (Section 4)
Data Privacy Act
Q: What kind of information is excluded under the law?
Data Privacy Act
Q: What kind of information is excluded under the law?
a. Information about any individual who is or was an officer/employee of a
government institution that relates to the position or functions of the individual,
including:
1. The fact that the he is or was an officer/employee of the government
institution;
2. The title, business address and office telephone number of the individual;
3. The classification, salary range and responsibilities of the position held by
him;
4. The name of the individual on a document prepared him in the course of
employment with the government.
Data Privacy Act
b. Information about an individual who is or was performing service
under contract for a government institution that relates to the services
performed, including the terms of the contract, and the name of the
individual given in the course of the performance of those services;
c. Information relating to any discretionary benefit of a financial nature

such as the granting of a license or permit given by the government to
an individual, including the name of the individual and the exact nature
of the benefit;
Data Privacy Act
d. PI processed for journalistic, artistic, literary or research purposes;
e. Information necessary in order to carry out the functions of public

authority which includes the processing of personal data for the
performance by the independent central monetary authority and law
enforcement and regulatory agencies of their constitutionally and statutorily
mandated functions. Nothing in this Act shall be construed as to have
amended or repealed RA 1405 (Secrecy of Bank Deposits Act); RA 6426
(Foreign Currency Deposit Act); and RA 9510 (Credit Information System
Act);
Data Privacy Act
f. Information necessary for banks and other financial institutions
under the jurisdiction of the BSP to comply with AMLA; and
g. PI originally collected from residents of foreign jurisdictions in

accordance with the laws of those foreign jurisdictions, including any
applicable data privacy laws, which is being processed in the
Philippines.
Data Privacy Act
• Q: In entering the mall, you are required to fill-up the Health
Declaration Form where the following details were being asked from
you: Your name, address, e-mail and phone number. The information
given is then processed on-line thru the app.
• Is the information you gave personal information (PI) or sensitive
personal information (SPI)?
Data Privacy Act
• Q: In entering the mall, you are required to fill-up the Health
Declaration Form where the following details were being asked from
you: Your name, address, e-mail and phone number. The information
given is then processed on-line thru the app.
• Y: Personal Information (PI) only.
Data Privacy Act
• Q: You applied for a credit card at one of the booths of Citibank at the
mall. The form contained your personal details (birth date/place,
spouse), including education, workplace and income (SSS/TIN #). The
information is then processed by Citibank personnel.
Data Privacy Act
• Q: You applied for a credit card at one of the booths of Citibank at the
mall. The form contained your personal details (birth date/place,
spouse), including education, workplace and income (SSS/TIN #). The
information is then processed by Citibank personnel.
• Y: Sensitive Personal Information (SPI).
Distinguish the criteria for processing of personal
information vs. sensitive personal information and
privileged information.
Personal Information (PI) Sensitive Personal Information and Privileged Information
(SPIPI)
The processing of PI shall be permitted only if not otherwise The processing of SPIPI shall be prohibited, except in the
prohibited by law, and when at least one of the following following cases:
conditions exists: a. The data subject has given his or her consent, specific to the
a. The data subject has given his or her consent; purpose prior to the processing, or in the case of privileged
b. The processing of PI is necessary and is related to the information, all parties to the exchange have given their
fulfillment of a contract with the data subject or in order to consent prior to processing;
take steps at the request of the data subject prior to entering b. The processing is provided for by existing laws and
into a contract; regulations: Provided:
b1. such regulatory enactments guarantee the protection of
the SPIPI
b2. the consent of the data subjects are not required by law or
regulation permitting the processing of the SPIPI;
c. Necessary to protect the life and health of the data subject
or another person, and the data subject is not legally or
physically able to express his or her consent prior to the
processing;
Distinguish the criteria for processing of personal
information vs. sensitive personal information and
privileged information.
Personal Information (PI) Sensitive Personal Information and Privileged Information
(SPIPI)
c. The processing is necessary: d. Necessary to achieve the lawful and noncommercial
c1. for compliance with a legal obligation to which the objectives of public organizations and their associations,
personal information controller is subject; Provided:
c2. to protect vitally important interests of the data subject, d1. processing is only confined and related to the bona fide
including life and health; members of these organizations or their associations
c3. to respond to national emergency, d2. SPI are not transferred to third parties
c4. to comply with the requirements of public order and d3. consent of the data subject was obtained prior to
safety, or processing;
c5. to fulfill functions of public authority which necessarily e. necessary for purposes of medical treatment, is carried out
includes the processing of personal data for the fulfillment of by a medical practitioner or a medical treatment institution, and
its mandate; an adequate level of protection of personal information is
c6. for the purposes of the legitimate interests pursued by ensured;
the personal information controller or by a third party to f. the processing concerns such PI as is necessary
whom the data is disclosed, except where such interests are for the protection of lawful rights and interests of natural or
overridden by fundamental rights and freedoms of the data legal persons in court proceedings, or
subject which require protection under the Philippine the establishment, exercise or defense of legal claims, or
Constitution. when provided to government or public authority
Protection Afforded to Journalists and Their
Sources (Section 5)
Nothing in this Act shall be construed as to have amended or repealed
the provisions of Republic Act No. 53, which affords the publishers,
editors or duly accredited reporters of any newspaper, magazine or
periodical of general circulation protection from being compelled to
reveal the source of any news report or information appearing in said
publication which was related in any confidence to such publisher,
editor, or reporter.
Requirements in processing of personal
information (Section 11)
The processing of PI is done by the PI controller.
Processing shall be allowed, subject to compliance with the

requirements of this Act and other laws allowing disclosure of
information to the public and adherence to the principles of
transparency, legitimate purpose and proportionality.
Personal information must be:
a. Collected for specified and legitimate purposes determined and

declared before, or as soon as reasonably practicable after collection,
and later processed in a way compatible with such declared, specified
and legitimate purposes only;
b. Processed fairly and lawfully;

c. Accurate, relevant and, where necessary for purposes for which it is
to be used the processing of PI, kept up to date; inaccurate or
incomplete data must be rectified, supplemented, destroyed or their
further processing restricted;
d. Adequate and not excessive in relation to the purposes for which

they are collected and processed;
e. Retained only for as long as necessary for the fulfillment of the purposes
for which the data was obtained or for the establishment, exercise or
defense of legal claims, or for legitimate business purposes, or as provided
by law; and
f. Kept in a form which permits identification of data subjects for no longer

than is necessary for the purposes for which the data were collected and
processed. PI collected may be processed for historical, statistical or
scientific purposes and may be stored for longer periods, but adequate
safeguards must be present.
Subcontract of Personal Information (Section
14)
Q: Can processing of PI be subcontracted?
Subcontract of Personal Information (Section
14)
Q: Can processing of PI be subcontracted?
A: Yes, provided the PI controller shall be responsible for ensuring that
proper safeguards are in place to ensure the confidentiality of the PI
processed, prevent its use for unauthorized purposes, and generally,
comply with the requirements of this Act and other laws for processing
of PI.
Extension of Privileged Communication
(Section 15)
Q: The Comelec had been capturing the data of all voters who applied
for registration. A collection agency would like to know the
whereabouts of a debtor who had been hiding. Can it get such
information from the Comelec database?
Extension of Privileged Communication
(Section 15)
Q: The Comelec had been capturing the data of all voters who applied
for registration. A collection agency would like to know the
whereabouts of a debtor who had been hiding. Can it get such
information from the Comelec database?
A: No. A PI controller cannot be compelled to divulge information it
was able to gather. PI controllers may invoke the principle of privileged
communication over privileged information that they lawfully control
or process. Any evidence gathered on privileged information is
inadmissible.
What are the rights of the data subject?
(Section 16) - (2019 Bar)
a. The right to be informed
b. The right to access
c. The right to object
d. The right to erasure or blocking
e. The right to damages
f. The right to file a complaint
g. The right to rectify
h. The right to data portability
THE RIGHT TO BE INFORMED:
- whether PI pertaining to him is/was processed;
- be furnished with the relevant information before the entry of his PI
into the processing system of the PI controller, or at the next practical
opportunity
- Includes the right to be notified in case of data breach
Eg. Conversation in credit card hotline recorded
THE RIGHT TO OBJECT:
- To processing of data (e.g. profiling, marketing, automated processing)
- Exceptions:
processing is pursuant to a subpoena or
when the collection and processing are for obvious purposes,
including:
when it is necessary for the performance of or in relation to a contract
or service or
when necessary in the context of an employer-employee relationship,
between the collector and the data subject, or
when the information is being collected and processed as a result of
legal obligation
THE RIGHT TO ACCESS:
- To find out whether an organization holds any personal data and be
given reasonable access to it
- Eg. Cctv footage to establish identity
THE RIGHT TO RECTIFY:
- The right to dispute the inaccuracy or error and have the PI controller
correct it immediately unless the request is vexatious or unreasonable
- If the information had been corrected, the PI controller shall ensure
the accessibility of both the new and the retracted information and
the simultaneous receipt of the new and the retracted information by
recipients thereof.
- Eg. Wrong birth date submitted to GSIS
THE RIGHT TO ERASURE OR BLOCKING (The right to be forgotten)
- To suspend, withdraw or order the blocking, removal or destruction
of his PI from the PI controller's filing system upon discovery and
substantial proof that the PI are:
incomplete, outdated, false, unlawfully obtained, used for
unauthorized purposes or are no longer necessary for the purposes for
which they were collected.
- Eg. Sidis case
- Removal of digital records from search engines
THE RIGHT TO DAMAGES:
- The right to claim compensation for any damages sustained due to
such inaccurate, incomplete, outdated, false, unlawfully obtained or
unauthorized use of PI.
• ASSIGNABILITY OF RIGHTS
• The lawful heirs and assigns of the data subject may invoke the rights
of the data subject at any time after the death of the data subject or
when the data subject is incapacitated or incapable of exercising the
rights.
• RIGHT TO DATA PORTABILITY
• The right, where PI is processed by electronic means and in a
structured and commonly used format, to obtain from the PI
controller a copy of data undergoing processing in an electronic
format and allow further use by the data subject.
• Eg. Back-up Facebook data
Limitation on the Rights of the Data Subject
(Section 19)
If the processed PI are used only for:
1. the needs of scientific and statistical research and no activities are
carried out and no decisions are taken regarding the data subject,
provided, That the PI shall be held under strict confidentiality and
shall be used only for the declared purpose.
2. purpose of investigations in relation to any criminal, administrative
or tax liabilities of a data subject
Duties and responsibilities of personal
information controller (Section 20)
The PI controller must implement reasonable and appropriate
measures:
for the protection of PI against any accidental or unlawful
destruction, alteration and disclosure, as well as unlawful processing.
to protect PI against natural dangers such as accidental loss or
destruction, and human dangers such as unlawful access, fraudulent
misuse, unlawful destruction, alteration and contamination.
Determination of the appropriate level of security taking into account
the nature of the PI to be protected, the risks represented by the
processing, the size of the organization and complexity of operations,
current data privacy best practices and cost of security
implementation. Measures implemented must include:
1. Safeguards to protect its computer network against accidental,
unlawful or unauthorized usage or interference with or hindering of
their functioning or availability;
2. A security policy with respect to the processing of PI;
3. A process for identifying and accessing foreseeable vulnerabilities in
its computer networks, and for taking preventive, corrective and
mitigating action against security incidents that can lead to a security
breach; and
4. Regular monitoring for security breaches and a process for taking
preventive, corrective and mitigating action against security incidents
that can lead to a security breach.
d. The PI controller must further ensure that PI processor shall
implement the security measures required.
e. The employees, agents or representatives of a PI controller who are

involved in the processing of PI shall operate and hold PI under strict
confidentiality if the PI are not intended for public disclosure. This
obligation continues even after leaving the public service, transfer to
another position or upon termination of employment or contractual
relations.
f. The PI controller shall promptly notify the NPC and affected data
subjects of data breach.
Notification may be delayed only to the extent necessary to
determine the scope of the breach, to prevent further disclosures, or to
restore reasonable integrity to the information and communications
system.
1. In evaluating if notification is unwarranted, the NPC may take into
account compliance by the PI controller with this section and existence
of good faith in the acquisition of PI.
2. The NPC may exempt a PI controller from notification where such
notification would not be in the public interest or in the interests of the
affected data subjects.
3. The NPC may authorize postponement of notification where it
may hinder the progress of a criminal investigation related to a serious
breach.
Illustration
• Customer care professional changing enrolling an account for express
cash and issuing a temporary PIN for withdrawal
• Hack of customer data in a fast-food chain’s on-line delivery service or
credit card company client profile
The End

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PRE-WEEK LECTURE

Stock corporations - capital stock divided into shares and are

Non-stock corporation - no part of its income is distributable as

Public corporations - created by the State as the latter's own agency or

Quasi-public corporations - private corporations that render public service, supply

Foreign corporation - one formed, organized or existing under laws

Domestic corporation - one formed, organized or existing under

De jure corporation - one which exists by reason of full compliance by

De Facto corporation - one existing under color of law and in pursuance of

The filing of AoI and the issuance of the certificate of incorporation

The doctrine of corporation by estoppel applies when a non-existent

All persons who assume to act as a corporation knowing it to be without

A parent or holding company - a corporation which owns or is organized to

An affiliate or subsidiary company - a corporation that is controlled by

• Compliance Officer - member of the company's management team in

• Doctrine of apparent authority "holding out" theory, or the doctrine of

• It requires presentation of evidence of similar acts executed either in

• The derivative suit did not prosper in the following cases:

• Banks, banking and quasi-banking institutions, preneed, insurance

• NO. Petitioner is neither a stockholder, partner, member or officer of

7. Works of drawing, painting, architecture, sculpture, engraving,

9. Illustrations, maps, plans, sketches, charts and three-

12. Audiovisual works and cinematographic works and works

3. Any official text of a legislative, administrative or legal nature, as

Can you make a “book-alike”?

3. As to beneficiary Beneficiary need not possess Beneficiary must possess

c. Information relating to any discretionary benefit of a financial nature

e. Information necessary in order to carry out the functions of public

g. PI originally collected from residents of foreign jurisdictions in

Processing shall be allowed, subject to compliance with the

a. Collected for specified and legitimate purposes determined and

b. Processed fairly and lawfully;

d. Adequate and not excessive in relation to the purposes for which

f. Kept in a form which permits identification of data subjects for no longer

e. The employees, agents or representatives of a PI controller who are

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