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CIVIL LAW
I. LEGAL PERSONALITY; CAPACITY TO ACT
Q1. What are the consequences if an infant with an intrauterine life of less than 7
months is delivered outside the mother’s womb but dies in less than 24 hours?

ANSWER: While Article 40 of the Civil Code provides that civil personality begins at
birth, birth of a natural person is qualified by Article 41 of the same Code which states
that infants with an intrauterine life of less than 7 months must survive outside the
mother’s womb for at least 24 hours to be deemed to have possessed civil personality.
(Articles 40 and 41, Family Code)

II. MARITAL RELATIONSHIPS

(See Table 1 in Civil Law Tables file for Summary)

Q2. May the presumption of a property being conjugal in Article 116 of the Family
Code still be invoked even if the acquisition of the property during the
subsistence of the marriage was made, contracted, or registered in the name of
only one spouse?

ANSWER: Yes. Once the condition sine qua non of acquisition during the marriage is
established, then such presumption will apply even if the manner in which the
properties were acquired does NOT appear. Thus, it is immaterial that the property
was contracted or registered in the name of only 1 spouse, so long as it is clearly
proven that the acquisition was made during the subsistence of the marriage.
(Anastacio v. Heirs of Coloma, G.R. No. 224572, August 7, 2020; Tan v. CA, 273 SCA 229)

Q3. What does the Family Code consider to be exclusive property of a spouse in
the conjugal property of gains property regime?

ANSWER: The following shall be the exclusive property of each spouse (OI-GRBE-
E):
1. Before marriage
a. That which is brought to the marriage as his or her Own (Article 109(1),
New Civil Code);
b. Properties bought on Installment paid partly with exclusive common
funds if full ownership was vested before the marriage (Article 118, New
Civil Code);
i. If full ownership was vested during the marriage, it belongs to the
CPG
2. Before or during marriage
a. Property acquired by Gratuitous title;
b. That which is acquired by right of Redemption, by Barter, or by
Exchange with other property belonging to only 1 of the spouses;

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 c. That which is purchased with Exclusive money of the wife or of the
husband (Article 109, New Civil Code)

Q4. When is a party to a relationship where an unmarried man and woman

exclusively live together without the benefit of marriage despite the absence
of legal impediments considered to have participated in the acquisition of
property?

ANSWER: Article 147 of the Family Code applies when a man and a woman, without
any legal impediment to marry each other, exclusively live together as husband and
wife under a void marriage or without the benefit of marriage. It states that property
acquired by both parties through their work & industry shall be governed by the rules
on equal co-ownership. Any property acquired during the union is prima facie
presumed to have been obtained through their joint efforts. (Article 147, Family Code)

The term "acquired" must be taken in its ordinary acceptance. If the property had been
purchased, whether on installment, financing or other mode of payment, during the
period of cohabitation, the disputable presumption that they have been obtained by
the parties' joint efforts, work or industry, and shall be owned by them in equal shares,
shall arise. A party shall be considered as having contributed to the same jointly if said
party's efforts consisted in the care and maintenance of the family household. (Paterno
v. Paterno, G.R. No. 213687, January 8, 2020)

Q5. After being married for 5 years, B filed an action for Declaration of Nullity of
Marriage with A, on the ground of psychological incapacity. The court ruled
in favor of B. However, the court modified its ruling and said that a decree of
absolute nullity of marriage may only be issued after liquidation, partition
and distribution of the spouses’ properties under Article 147 of the Family
Code. Is the modified decision of the court correct?

ANSWER: No. Article 50 of the Family Code does NOT apply to marriages which are
declared void ab initio under Article 36 of the Family Code, which should be declared
void without waiting for the liquidation of the properties of the parties. In a void
marriage, regardless of its cause, the property relations of the parties during the
period of cohabitation is governed either by Article 147 or Article 148 of the Family Code.
Article 147 of the Family Code applies to union of parties who are legally capacitated
and NOT barred by any impediment to contract marriage, but whose marriage is
nonetheless void. Since the rules on co-ownership apply, under Article 496 of the Civil
Code, partitions may be made judicially or extrajudicially, even if NOT in the same
proceeding for declaration of nullity of marriage. (Diño v Diño, G.R. No. 178044,
January 19, 2011)

The property regime of all void marriages, except Article 40, shall be governed by the
rules on co-ownership, either by Article 147 or Article 148 of the Family Code.
Meanwhile, the first paragraph of Article 50 of the Family Code, applying par. (2), (3),
(4), and (5) of Article 43 relates only to voidable marriages and exceptionally, to void
marriages under Article 40 of the Code. (Valdes v. RTC, G.R. No. 122749, July 31, 1996)

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In marriages that are void because of bigamy, the subsequent judicial declaration of
the nullity of the first marriage is immaterial if prior to the declaration of nullity, the
crime of bigamy had already been consummated. All that is required for the charge of
bigamy to prosper is that the 1st marriage be subsisting at the time the 2nd marriage
is contracted. (Abunado v. People, G.R. 159218, March 30, 2004)

Q6. What happens when property is sold by a husband without his wife’s consent
and it is not proven that conjugal funds were used, but it was proven that such
property was acquired during the marriage?

ANSWER: Under the Civil Code, property acquired during the marriage is presumed
to be conjugal. There is NO need to prove that the money used to purchase a property
came from the conjugal fund. What must be established is that the property was
acquired during the marriage. The sale of conjugal property by a spouse WITHOUT
the other's consent is void. All subsequent transferees of the conjugal property acquire
NO rights whatsoever from the conjugal property's unauthorized sale. However,
pursuant to Articles 96 and 124 of the Family Code, the transaction shall be construed as
a continuing offer on the part of the consenting spouse and the 3rd person and may
be perfected as a binding contract upon the acceptance by the other spouse or
authorization by the court before the offer is withdrawn by either or both offerors.
(Malabanan v. Malabanan, G.R. No. 187225, March 6, 2019; Arts. 96 and 124 of the Family
Code)

Q7. What are the causes for the termination of an absolute community of property
regime and a conjugal partnership of gains property regime?

ANSWER: The causes for termination are the same for both regimes. These are
(LANDJ):
1. Issuance of a decree of Legal separation (Article 42, Family Code);
2. Issuance of a final judgment of Annulment (Article 50, Family Code);
3. Issuance of a judgment or a declaration of Nullity (Article 63, Family Code);
4. Death of 1 of the spouses (Article 135, Family Code);
5. Judicial separation of property, whether voluntarily or for a cause. (Article 136,
Family Code)

Q8. What is the effect of a favorable foreign decree dissolving the marriage of a
Filipino with an alien when it is the Filipino spouse who initiated the divorce
proceeding?

ANSWER: While Article 26 explicitly states that it should be the alien spouse who
should have procured the divorce, such provision was expanded by the Supreme
Court in the case of Republic v. Manalo where it was held that even if it was the Filipino
spouse who initiated and obtained the divorce decree, the same may be recognized in
the Philippines. With this, whether the Filipino spouse initiated the foreign divorce
proceeding or NOT, a favorable decree dissolving the marriage bond and capacitating
his or her alien spouse to remarry will have the same result: the Filipino spouse will
effectively be WITHOUT a husband or a wife. Article 26 of the Family Code does NOT
distinguish whether the Filipino spouse is the petitioner or the respondent in the

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foreign divorce proceeding, as a Filipino who initiated a foreign divorce proceeding
is in the same place and in similar circumstances as a Filipino who is at the receiving
end of an alien-initiated proceeding. The purpose of Article 26 (2) of the Family Code is
to avoid the absurd situation where the Filipino spouse remains married to the alien
spouse, who after a foreign divorce decree that is effective in the country where it was
rendered, is NO longer married to the Filipino spouse. (Article 26(2), Family Code;
Republic v. Manalo, G.R. No. 221029, April 24, 2018)

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 III. PROPERTY
Q9. When is a tree considered ‘dangerous’ and, if a tree is so classified, what is the
tree owner’s obligation under Civil Law?

ANSWER: A large tree can be considered dangerous when it threatens to fall in such
a way as to cause damage to the land or tenement of another or to travellers over a
public or private road. In such case, the owner of the tree shall be obliged to fell and
remove it; and should he NOT do so, it shall be done at his expense by order of the
administrative authorities. (Article 483, New Civil Code)

OWNERSHIP

Q10. Compare the remedies to recover ownership and possession of real property
and actions for recovery of possession of personal property.

ANSWER:
As to Nature
1. Replevin: an action where the complainant prays for the recovery of possession
of personal property. (Rule 60, Revised Rules of Court).
2. Forcible entry: the legal proceeding that should be taken if the possessor took
possession of real property by force, intimidation, threat, strategy, or stealth.
(De Guzmán-Fuerte v. Spouses Estomo, G.R. No. 223399, April 23, 2018)
3. Unlawful detainer: the legal proceeding that should be taken if the person
possessing the property initially had a legal right to possess the property and
the possession had become illegal for one reason or another. (De Guzmán-Fuerte
v. Spouses. Estomo, G.R. No. 223399, April 23, 2018)
4. Accion Publiciana: an action for the recovery of the real right of possession of
real property or possession de jure. (Eversley Childs Sanitarium v. Sps. Barbona,
2019)
5. Accion Reivindicatoria: an action to recover ownership and dominion over real
property. It includes, but is NOT limited to, possession. (Article 434, New Civil
Code)

As to Prescription:
1. Replevin:
a. 4 years from time of dispossession if done in good faith (Article 1132,
New Civil Code;
b. 8 years from time of dispossession if done in bad faith (Article 1132, New
Civil Code);
2. Forcible Entry:
a. 1 year from deprivation by force or intimidation, or
b. 1 year from knowledge of entry by strategy or stealth (Section 1, Rule 70,
Revised Rules of Court)

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 3. Unlawful Detainer:
a. 1 year from last demand to vacate (Section 1, Rule 70, Revised Rules of
Court)
4. Accion Publiciana:
a. 10 years from dispossession (Cutanda v. Cutanda, G.R. No.109215, July 11,
2000 & Article 555(4), New Civil Code)
5. Accion Reivindicatoria:
a. 10 years from dispossession (Cutanda v. Cutanda, G.R. No.109215, July 11,
2000 & Article 555(4), New Civil Code)
b. Imprescriptible if the petitioner is a registered owner (Article 1126
paragraph 2, New Civil Code in relation to Presidential Decree No. 1529
Section 47)

As to requisites:
1. Replevin (OWDNV):
a. That the applicant is the Owner of the property claimed, particularly
describing it, or is entitled to the possession;
b. That the property is Wrongfully Detained by the adverse party, alleging
the cause of detention thereof according to the best of his knowledge,
information, and belief;
c. That the property has NOT been distrained or taken for a tax assessment
or a fine pursuant to law, or seized under a writ of execution or
preliminary attachment, or otherwise placed under custodia legis, or if so
seized, that it is exempt from such seizure or custody;
d. The actual market Value of the property (Section 2, Rule 60, Revised Rules
of Court)
2. Forcible Entry (P3B1):
a. That plaintiff has Prior Physical Possession of the property;
b. That plaintiff was deprived of possession either By (FITSS): Force,
Intimidation, Threat, Strategy, or Stealth;
c. That the action was filed within 1 year from the time the owners or legal
possessors learned of their deprivation of the physical possession of the
property (Section 1, Rule 70, Revised Rules of Court)
3. Unlawful Detainer (ILNR1)
a. That defendant had Initial Lawful possession, either by contract or by
tolerance of the plaintiff;
b. That a Notice to vacate served on defendant by plaintiff;
c. That the defendant Remains in possession of the property and deprived
the plaintiff of its enjoyment despite the notice to vacate;
d. That the action was filed within 1 year from the last demand to vacate
the property (Section 1, Rule 70, Revised Rules of Court)
4. Accion Publiciana
a. That the action for recovery of possession is filed after 1 year from the
last demand to vacate the property (Spouses Valdez v. Court of Appeals,
G.R. No.132424, May 2, 2006)

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 5. Accion Reivindicatoria (IS)
a. That the property is Identified
b. That the plaintiff relies on the Strength of his title and NOT on the
weakness of the defendant's claim (Article 434, New Civil Code).

ACCESSION

Q11. Distinguish avulsion from alluvion.

ANSWER:
Alluvium Avulsion

As to nature The gradual deposit of soil, The sudden detachment of

silt, sand, gravel, and the like
materials on land adjoining a
riverbank.
an identifiable part of a
person‘s land adjoining the
bank of a creek or river and
the attachment thereof to the
land of another person
through the current of the
creek, river or torrent.

As to how the Gradual Sudden or abrupt

deposit of soil is
formed

Who owns the Owner of the property where Owner of the property from
accretion the accretion was deposited which the part was detached

As to identification The soil CANNOT be The detached portion can be

identified. identified.
(Articles 457 and 459, New Civil Code; Paras, Civil Code of the Philippines Annotated
Property 2021, p. 275)

CO-OWNERSHIP

Q12. Explain the concept of “forced lease”.

ANSWER: Article 448 of the New Civil Code provides that “the owner of the land on
which anything has been built, sown or planted in good faith, shall have the right to
appropriate as his own the works, sowing or planting, after payment of the indemnity
provided for in Articles 546 and 548, or to oblige the one who built or planted to pay
the price of the land, and the one who sowed, the proper rent. However, the builder
or planter CANNOT be obliged to buy the land if its value is considerably more than
that of the building or trees. In such case, he shall pay reasonable rent, if the owner of
the land does NOT choose to appropriate the building or trees after proper indemnity.

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 The parties shall agree upon the terms of the lease and in case of disagreement, the
court shall fix the terms thereof.”

Thus, a forced lease arises in a situation where the builder in good faith who builds
on land owned by another is entitled to retain the possession of the land until the
builder is paid the value of his building, under Article 546. The Civil Code gives the
landowner the option to either (1) pay the builder for the building or (2) oblige the
builder to buy the land. The landowner CANNOT refuse either option (to pay for the
building and to sell the land) and compel the builder to remove the building from the
land. The landowner is entitled to the removal of the building only when, after having
chosen to sell his land to the builder, the builder fails to pay for the same. Case law
has emphasized that the choice belongs to the landowner, but the landowner must
choose from the 2 available options. (Padilla, Jr. v. Malicsi, G.R. No. 201354, September
21, 2016)

Q13. A sells a definite portion of a co-owned property to X. The other co-owners

contest the sale and allege that it is null and void. A says otherwise. Decide.

ANSWER: The other co-owners are correct. Unless all the co-owners agreed to
partition their property, none of them may sell a definite portion of the co-owned
property. A co-owner may only sell his proportionate share in the co-ownership. A
contract of sale which purports to sell a specific portion of unpartitioned land is null
and void ab initio. Hence, prior to partition, a sale of a definite portion of common
property requires the consent of all co-owners because it operates to partition the land
with respect to the co-owner selling his or her share. The co-owner or seller is already
marking which portion should redound to his or her autonomous ownership upon
future partition. Here, the co-owned property has NOT yet been partitioned; thus, A’s
sale of a definite portion—and NOT his proportionate share in the property—is null
and void. (Cabrera V. Ysaac, G.R. No. 166790, November 19, 2014)

Q14. How many co-owners must consent before an act may be carried out upon the
property owned in common?

ANSWER:
Action Consent Needed

Repairs, ejectment actions 1 co-owner

Alterations or acts of ownership All co-owners

All others (useful improvements, Financial majority of the co-owners,

embellishments, administration and (NOT numerical majority), i.e. 51%
better enjoyment) or more of financial interest
(Articles 489 and 491 New Civil Code)

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 EASEMENT

Q15. The general rule is that an easement of light and view in the case of windows
opened in one's own wall is a negative easement that may only be acquired by
prescription, tacked from a formal prohibition related to the owner of the
servient estate. Is there an exception?

ANSWER: Yes. An easement of light and view may likewise be acquired through title
as in the case of the existence of an apparent sign of easement between 2 estates which
shall be considered as a title in order that the easement may continue actively and
passively in case the owner is alienated from 1 of the estates. (Article 624, Civil Code;
Spouses Garcia v. Santos, G.R. No. 228334, June 17, 2019)

Q16. When is the existence of an easement of light and view established?

ANSWER: ANEA
1. There exists an Apparent sign of servitude between 2 estates;
2. At the time of the alienation Nothing is stated in the document of alienation
contrary to the easement nor is the sign of the easement removed before the
execution of the document;
3. The sign of the easement must be Established by the owner of both estates; and
4. Either or both of the estates are Alienated by the owner. (Spouses Garcia v.
Santos, G.R. No. 228334, June 17, 2019)

Q17. Is the existence of an apparent sign of easement between 2 estates formerly

owned by a single owner considered a title to easement of light and view?

ANSWER: Yes. According to Article 624 of the Civil Code, if there are 2 or more estates
previously owned by a single owner and 1 estate or a portion of the estate is alienated
in favor of another person, there arises a title to an easement of light and view, even
in the absence of any formal act undertaken by the owner of the dominant estate, if
this apparent visible sign continues to remain and subsist. (Spouses Garcia v. Santos,
G.R. No. 228334, June 17, 2019)

Q18. If there is a conflict between the two tests in right of way, for instance, the
shorter route and the less prejudicial route tests, which prevails?

ANSWER: The least prejudicial route prevails. A longer way may be adopted to
avoid injury to the servient estate, such as when there are constructions or walls which
can be avoided by a roundabout way. (Article 650, New Civil Code; Quimen v. Court of
Appeals, G.R. No. 112331, May 21, 1996)

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Q19. What are the requisites for an easement of right of way?

ANSWER: LIPS
1. It must be established at the point Least prejudicial to the servient estate and
insofar as consistent with this rule, where the distance from the dominant estate
to a public highway may be the shortest;
2. The Isolation of the real property should NOT be due to the proprietor’s own
acts;
3. There must be Payment of the proper indemnity; and
4. The property is Surrounded by the estate of others and there is NO adequate
outlet to a public highway. (Article 649 and 650, New Civil Code)

Q20. A and B are adjoining property owners. Their lots are separated by a partition
wall, located on a slope with A owning the higher estate and B owning the
lower one. B built her house such that the partition wall became one of the
walls of her bedroom. Later on, A leveled the uneven portion of his property
along the partition wall by dumping soil on the area. As a result, cracks
developed on the partition wall. B complained that water and debris were
leaking into her bedroom through the cracks, thus causing her damage. B filed
a case for recovery of damages. A argued that the National Building Code
required dwellings to be at least 2 meters away from the property line, and
that B violated this by building her house in such a way that the partition wall
became one of her bedroom walls. A claims that B is not entitled to damages.
(a) What easement is involved in the case, if any?
(b) Rule on A’s liability.

ANSWER:
a. A legal easement pertaining to the natural drainage of lands. Under this
easement provided by the Civil Code, lower estates are obliged to receive the
waters which, naturally and without the intervention of man, descend from
higher estates, and the stones and earth carried by the waters. Additionally, the
owner of the lower estate CANNOT construct works which will impede the
easement, nor can the owner of the higher estate make works which will
increase the burden of the easement. (Article 637, New Civil Code)
b. A is liable for damages. In the case at bar, it is undisputed that B’s property is
lower in elevation than the A’s property, and thus, it is legally obliged to receive
the waters that flow from the latter, pursuant to Article 637 of the Civil Code. This
provision refers to the legal easement pertaining to the natural drainage of
lands, which obliges lower estates to receive from the higher estates water
which naturally and without the intervention of man descends from the latter,
i.e., NOT those collected artificially in reservoirs, etc., and the stones and earth
carried by the waters, viz.: Art. 637. Lower estates are obliged to receive the
waters which naturally and without the intervention of man descend from the
higher estates, as well as the stones or earth which they carry with them. The
owner of the lower estate CANNOT construct works which will impede this
easement; neither can the owner of the higher estate make works which will
increase the burden. (Article 637, New Civil Code; Sps. Vergara v. Sonkin, G.R. No.
193659, June 15, 2015)

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 NUISANCE

Q21. Distinguish between nuisance per se and nuisance per accidens.

ANSWER: A nuisance per se affects the immediate safety of persons and property. It
is recognized as a nuisance under any and all circumstances regardless of location and
surroundings, because it constitutes a direct menace to public health or safety. A
nuisance per se may be summarily abated extrajudicially by a private person, who
was specially injured by the nuisance.

On the other hand, a nuisance per accidens may be considered a nuisance by reason
of circumstances, location or surroundings. It can only be abated judicially, before a
tribunal authorized to decide whether the thing constitutes a nuisance or not. (Rana v.
Wong, G.R. No. 192861, June 30 2014; Aquino v. Municipality of Malay, G.R. No. 211356,
September 29, 2014)

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 IV. OBLIGATIONS
GENERAL PROVISIONS

Q22. May an act that is punishable by law be the basis of a claim under quasi-
contract?

ANSWER: No, an act that is punishable by law CANNOT be the basis of a claim under
quasi-contract. Quasi-contracts arise from lawful, voluntary, and unilateral acts based
on the principle that NO one should unjustly enrich himself at the expense of another.
Thus, for an act to be the basis of a claim under quasi-contract, it must be lawful.
(Article 2142, New Civil Code)

Q23. In January 2018, Mrs. A, a married woman in her 6th month of pregnancy, was
crossing a street when she was suddenly hit by a car being recklessly driven
by Mr. X. As a result, Mrs. A sustained serious injury and further, suffered an
unintentional abortion. Mrs. A was hospitalized for 2 months, during which
she incurred P400,000 in medical fees. Her expenses were all duly
substantiated by official receipts. During the two-month period of her
confinement, she was unable to report for work and earn any salary, which
was established at the rate of P50,000 per month. Mrs. A then filed a civil case
for damages against Mr. X. Based on the case filed by Mrs. A, what is the
source of Mr. X's obligation to her as a result of his acts?

ANSWER: The source of Mr. X’s obligation to Mrs. A as a result of his actions is quasi-
delict. The Civil Code provides that whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the damage done and
such fault or negligence, is called a quasi-delict . Here, Mr. X, in recklessly driving a
car, hit Mrs. A, thereby causing serious injuries and unintentional abortion to the
latter. (Articles 1157 and Article 2176, New Civil Code) (2019 Bar Question)

NATURE AND EFFECT OF OBLIGATIONS

Q24. What are the exceptions to the general rule that demand is necessary to put a
party in delay?

ANSWER: LTU
1. The obligation or the Law expressly so declare,
2. The Time when the thing was to be delivered or the service was to be rendered
was of the essence to the establishment of the contract,
3. Demand is Useless as when the obligor has rendered it beyond his power to
perform. (Article 1169, New Civil Code)

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Q25. What are the exceptions to the general rule that the penalty shall substitute the
indemnity for damages and payment of interest in case of non-compliance?

ANSWER: REF
1. If the obligor Refuses to pay the penalty; and
2. If there is an Express provision that the penalty shall NOT substitute the
indemnity for damages and payment of interest;
3. If the obligor is guilty of Fraud in fulfilling the obligation. (Article 1226, New
Civil Code)

Q26. When may the penalty be reduced by a judge?

ANSWER: Penalty may be reduced when (PII):

1. The principal obligation has been Partly complied with;
2. The principal obligation has been Irregularly complied with; and
3. The penalty is Iniquitous or unconscionable, even if there has been NO
performance. (Article 1229, New Civil Code)

Q27. Differentiate fraud in the performance of an obligation with fraud in

obtaining consent.

ANSWER:
Fraud in Performance Fraud in Obtaining Consent

Where Relevant Relevant in all sources of Only relevant in contracts

obligations

Essential Bad faith or malice in 1. Causal Fraud

Element performing the obligation. a. Effect: voidable, as the
injured party would
NOT have entered into
the contract were it NOT
for the fraud employed.
2. Incidental Fraud
a. Effect: injured party
entitled to damages
(contract remains valid).
(Articles 1170, 1171, 1338, 1344, New Civil Code; Tankeh v. DBP, G.R. No. 171428,
November 11, 2013)

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Q28. X purchased a parcel of land from Y Realty Company (YRC). X was able to pay
in full, however, YRC was unable to deliver the Certificate of Title over the
parcel of land since it was mortgaged to the GSIS. The contract provided, "that
the vendor further warrants that the transfer Certificate of Title of the above-
described parcel of land shall be transferred in the name of the vendee within
6 months from the date of full payment. In case the vendor fails to issue said
Transfer Certificate of Title, it shall bear the obligation to refund the vendee
the total amount already paid plus an interest at the rate of 4% per annum.
Due to the failure of YRC to comply with its obligation, a case was filed by X
to recover the amount paid plus the interest and damages. The trial court
ordered YRC to return all the amounts, including the 4% interest per annum
and nominal damages. YRC, however, contended before the SC that it is a
penal clause, thus, the general rule that the penalty shall substitute the
indemnity for damages and the payment of the interest should have been
applied by the trial court. Is YRC correct?

ANSWER: No, YRC is incorrect. The clause regarding the payment of 4% is NOT a
penal clause because even without this clause, the seller X would be entitled to recover
the purchase price paid to YRC with legal interest, which at 6% is greater than the 4%
provided in the clause. If the clause with 4% interest would substitute the indemnity
for damages and payment of the interest, X would be precluded from receiving 6%
legal interest. Thus, the lower court was correct in awarding NOT only the 4% penalty,
but also nominal damages. (Robles-Francisco Realty and Development Corp. v. CFI of
Rizal, G.R. No. L-41093, October 30, 1978)

Q29. Can an involuntary upgrading of an airline of P’s accommodation from

business class to a more superior class (First Class) at no extra cost give P a
cause of action to sue the airline?

ANSWER: Yes, P has a cause of action to sue the airline. Breach of contract is defined
as the failure, WITHOUT legal excuse, to perform any promise which forms the whole
or part of the contract. Where the contract of carriage between the airline and P was
for business class transportation—NOT First Class—and the airline was unable to
provide business class transportation, the airline breached its contractual obligation
to P. It is of no moment that the service rendered was a greater luxury, as the contract
between the parties was clearly made for the purpose of acquiring business class seats.
(Cathay Pacific v. Spouses. Vasquez, G.R. 150843, May 14, 2003)

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 KINDS OF OBLIGATIONS

Q30. Are the following obligations valid, why, and if they are valid, when is the
obligation demandable in each case?
(a) If the debtor promises to pay as soon as he has the means to pay;
(b) If the debtor promises to pay when he likes;
(c) If the debtor promises to pay when he becomes a lawyer;
(d) If the debtor promises to pay if his son, who is sick with cancer, does NOT
die within the year.

ANSWER:
a. This obligation is valid as the law expressly provides that this should be
considered as an obligation with a period with the creditor having a right to
ask the court to fix a period. This obligation would become demandable upon
expiration after the period fixed by the court.
b. The obligation “to pay when he likes” is a suspensive condition the fulfillment
of which is subject to the sole will of the debtor; therefore the conditional
obligation is void.
c. The obligation is valid. It is subject to a suspensive condition, i.e., the future
and uncertain event of the debtor becoming a lawyer. The performance of
this obligation does NOT depend solely on the will of the debtor but also on
other factors outside the debtor’s control. The obligation is demandable once
the debtor becomes a lawyer.
d. The obligation is valid. The death of the son within 1 year is a negative
suspensive condition to the debtor’s payment. The obligation is demandable if
the son does NOT die within 1 year. (Articles 1197,1181, 1421 New Civil Code;
Virginia A. Perez v. Court of Appeals, G.R. No. 112329, January 28, 2000) (2003 Bar
Question)

Q31. Juancho, Don, and Pedro borrowed PhP150,000 from their friend Cita to put
up an internet café orally promising to pay her the full amount after 1 year.
Because of their lack of business know-how, their business collapsed. Juancho
and Don ended up penniless, but Pedro was able to borrow money and put up
a restaurant which did well. Can Cita demand that Pedro pay the entire
obligation since he, together with the 2 others, promised to pay the amount in
full after 1 year? Defend your answer.

ANSWER: No, Cita CANNOT demand that Pedro pay the entire obligation because
the obligation here is presumed to be joint, NOT solidary. Article 1207 of the Civil Code
states, “The concurrence of 2 or more creditors or of 2 or more debtors in 1 and the
same obligation does NOT imply that each one of the former has a right to demand,
or that each one of the latter is bound to render, entire compliance with the prestation.
There is a solidary liability only when the obligation expressly states, or when the law
or the nature of the obligation requires solidarity.” In simple terms, the law states that
solidarity is NOT presumed. In a joint obligation—like the one in this case— there is
NO mutual agency among the joint debtors such that if one of them is insolvent the
others shall NOT be liable for his share. (Article 1207, New Civil Code) (2005 Bar
Question)

16
Q32. Buko, Fermin and Toti bound themselves solidarily to pay Ayee the sum of
PhP10,000. When the obligation became due and demandable, Ayee sued
Buko for the payment of the PhP10,000. Buko moved to dismiss on the ground
that there was failure to implead Fermin and Toti who are indispensable
parties. Will the motion to dismiss prosper? Why?

ANSWER: No, the motion to dismiss will NOT prosper. In a solidary obligation, the
creditor may proceed against any one of the solidary debtors or some or all of them
simultaneously. Here, Ayee was entitled to proceed against only Buko as 1 solidary
debtor, and Fermin and Toti are NOT indispensable parties to the action such that
Ayee’s failure to implead them would give rise to a ground to dismiss the action.
(Living Sense Essence Inc v. Malayan Insurance Company, Inc., G.R. No. 193753, September
26, 2012)

EXTINGUISHMENT OF OBLIGATIONS

Q33. Who may validly act as a payor?

ANSWER: The payor may be (DAHS-3I-3N):

1. The Debtor or his duly authorized Agent,
2. The debtor’s Heir or Successor-in-interest,
3. A 3rd person Interested in the fulfillment of the obligation (i.e. co- debtor,
guarantor) whether the debtor consents to it or NOT, and even without the
debtor's knowledge. This includes payment by a joint debtor but NOT a
solidary co-debtor,
4. A 3rd person who is NOT interested in the obligation; but the creditor is NOT
bound to accept payment by him, unless there is a stipulation to the contrary.
(Articles 1302 and 1236, New Civil Code; Monte de Piedad y Caja de Ahorros de
Manila v. Rodrigo, G.R. No. L-42928, August 18, 1936)

Q34. To whom may payment be made?

ANSWER: Payment may be made to (PIG3):

1. The Person in whose favor the obligation has been constituted; or his successor-
in-interest; or any person authorized to receive it;
2. Payment to a person who is Incapacitated to administer his property shall be
valid (KB):
a. If he has Kept the thing delivered OR
b. Insofar as the payment has been Beneficial to him;
3. Payment made in Good faith to any person in possession of the credit shall
release the debtor;
4. Payment to a 3rd person insofar as it has redounded to the benefit of the
creditor. Such benefit to the creditor need NOT be proved in the following
cases (ARB):
a. If after the payment, the 3rd person Acquires the creditor's rights;
b. If the creditor Ratifies the payment to the 3rd person;

17
 c. If by the creditor's conduct, the debtor has been led to Believe that the
3rd person had authority to receive the payment. (Articles 1240, 1241(1)
1241(2), 1242, New Civil Code)

Q35. When are valid tender of payment and unjust refusal NOT required for valid
consignation?

ANSWER: JA-2-IT
1. When, without Just cause, the creditor refuses to give a receipt.
2. When the creditor is Absent or unknown, or does NOT appear at the place of
payment.
3. When 2 or more persons claim the same right to collect (i.e. Interpleader)
4. When the creditor is Incapacitated to receive the thing due at the time of
payment.
5. When the Title of the obligation has been lost. (Article 1256, New Civil Code)

Q36. What are the differences between Cession and Dacion en Pago?

ANSWER:
Cession Dacion en Pago

As to applicable Article 1255 Article 1245

law

As to requisites DCPA EAS

1. Plurality of Debts 1. Existence of a money
2. Plurality of Creditors obligation
3. Partial or relative 2. Alienation to the
insolvency of the creditor of a property
debtor by the debtor with the
4. Acceptance of the creditor’s consent
cession by the 3. Satisfaction of the
creditors. money obligation.

As to number of Plurality of creditors 1 creditor

creditors

As to solvency of Debtors must be partially or Debtor NOT necessarily in

debtor relatively insolvent state of financial difficulty

As to effect; Payment by cession merely Payment by dacion en pago

extinguishment of releases debtors for the net extinguishes obligation to the
obligation proceeds of things ceded or extent of the value of the thing
assigned, unless there is delivered.
contrary intention.

As to property The debtor delivers all of his Does NOT involve all
involved property as payment. properties of the debtor.

18
 As to effect; Creditor does NOT become Creditor becomes the owner of
creditor the owner of the ceded the property.
property.
(Arco Pulp v. Lim, G.R. No. 206806, June 25, 2014; Desiderio Dalisay Investments In. v.
Social Security System, G.R. No. 231053, April 4, 2018; Luzon Development Bank v.
Enriquez, G.R. No. 168646, January 12, 2011)

Q37. In reimbursement for payment made by a 3rd person, what is the difference
between when the debtor is given knowledge, or his consent is obtained and
when the debtor is unaware or does not consent?

ANSWER:
With consent of debtor WITHOUT the knowledge or
consent of the debtor

The 3rd party may claim reimbursement The 3rd party may only claim insofar
for the full amount. as the payment has been beneficial to
the debtor.

The third party is presumed to be legally
subrogated to the rights of the debtor
(e.g., rights arising from mortgage,
guaranty, and penalty).
(Articles 1206,1237, 1302, New Civil Code)
The third party CANNOT compel the
creditor to subrogate him in his
rights.

19
 V. CONTRACTS
GENERAL PROVISIONS

Q38. Define what a contract is.

ANSWER: A contract is a meeting of minds between 2 persons whereby one binds

himself, with respect to the other, to give something or to render some service. (Article
1305, New Civil Code)

Q39. What are the essential requisites of a contract?

ANSWER: There is NO contract unless the following requisites concur (COC):

1. Consent of the contracting parties;
2. Object certain which is the subject matter of the contract; and
3. Cause of the obligation which is established. (Article 1318, New Civil Code)

Q40. What is the rule on relativity of contracts and what are the exceptions to this
rule?

ANSWER: GR: A contract is only valid between the parties, their assigns, and heirs.
(Article 1311, New Civil Code)

EXC: (S-3I-3PC)
1. Stipulation pour autrui (Article 1311, New Civil Code);
2. When a 3rd person Induces a party to violate the contract, otherwise known as
Tort Interference (Article 1312, New Civil Code);
3. 3rd persons who come into Possession of the object of the contract creating real
rights (Article 1313, New Civil Code); and
4. Contracts entered in fraud of creditors, otherwise known as Accion Publiciana.
(Article 1314, New Civil Code)

Q41. How is consent manifested?

ANSWER: Consent is manifested by the meeting of the offer and the acceptance
upon the thing and the cause which are to constitute the contract. The offer must be
certain and the acceptance absolute. A qualified acceptance constitutes a counter-
offer. Acceptance made by letter or telegram does NOT bind the offerer except from
the time it came to his knowledge. The contract, in such a case, is presumed to have
been entered into in the place where the offer was made. (Article 1319, New Civil Code)

Q42. Differentiate mistake of fact and mistake of law.

ANSWER: Based on Article 1331 of the Civil Code, a mistake of fact is made when a
party enters into a contract based on a false belief regarding its substance which is the
object of the contract, conditions which principally moved 1 or both parties to enter
into the contract, or identity or qualifications of one of the parties if such identity or

20
 qualifications were the principal cause of the contract.

Meanwhile, a mistake of law, based on Article 1334 of the Civil Code, is made when
there is mutual error of the parties regarding the legal effect of a contract, thereby
frustrating the real intent of the parties. (Articles 1331 and 1334, New Civil Code)

Q43. When does misrepresentation constitute a vitiation of consent? When does it

not?

ANSWER: Misrepresentation by a 3rd person does NOT vitiate consent, unless such
misrepresentation has created substantial mistake and the same is mutual.
Misrepresentation made in good faith is NOT fraudulent but may constitute error
(Articles 1342 and 1343, New Civil Code)

Q44. Different absolute simulation and relative simulation.

ANSWER:
Absolute Simulation Relative Simulation

An absolutely simulated or fictitious A relative simulation, when it does NOT

contract is void. prejudice a 3rd person and is NOT
intended for any purpose contrary to
laws, morals, good customs, public order
or public policy binds the parties to their
real agreement.

Takes place when the parties do NOT When the parties conceal their true
intend to be bound at all. agreement.

In absolute simulation, there is a If the parties state a false cause in the

colorable contract but it has NO
substance as the parties have NO
intention to be bound by it. “The main
characteristic of an absolute simulation is
that the apparent contract is NOT really
desired or intended to produce legal
effect or in any way alter the juridical
situation of the parties. As a result, an
absolutely simulated or fictitious
contract is void, and the parties may
recover from each other what they may
have given under the contract.”
(Articles 1345 and 1346, New Civil Code; Heirs of Intac v. Court of Appeals and Sps. Roy and
Lozada, G.R. No. 173211, October 11, 2012)
contract to conceal their real agreement,
the contract is only relatively simulated,
and the parties are still bound by their
real agreement. Hence, where the
essential requisites of a contract are
present and the simulation refers only to
the content or terms of the contract, the
agreement is absolutely binding and
enforceable between the parties and their
successors in interest.

21
Q45. What is the difference between the causes of onerous contracts and
remuneratory contracts?

ANSWER: Article 1350 of the Civil Code highlights the difference between the two by
emphasizing their dissimilarity in terms of cause. It states that in onerous contracts,
the cause is understood to be, for each contracting party, the prestation or promise of
a thing or service by the other. Meanwhile, for remuneratory contracts, the cause is
the service or benefit which is remunerated. (Article 1350, New Civil Code)

Q46. What is the effect if the cause is unlawful?

ANSWER: Contracts WITHOUT cause, or with unlawful cause, produce NO effect

whatever. The cause is unlawful if it is contrary to law, morals, good customs, public
order or public policy. (Article 1352, New Civil Code)

Q47. Differentiate rescission from the resolution of contracts.

ANSWER:
Rescission Resolution

As to legal basis Articles 1380 and 1381 Article 1191

As to nature A subsidiary action based on Based on the defendant’s

injury to the plaintiff’s breach of faith, a violation of
economic interests the reciprocity between the
parties.

As to cause Economic prejudice Breach of faith

rendering the contract
legally rescissible, but NOT
all forms of economic
prejudice are recognized by
law as a ground to rescind.

As to effect The cause of action is The reparation of damages for

subordinated to the the breach is purely
existence of an economic secondary.
prejudice. Hence, where the
defendant makes good the
damages caused, the action
CANNOT be maintained or
continued.

As to parties-in- Prejudiced third parties may Only parties to the contract

interest also seek remedy. may seek remedy.

As to grounds Equity Non-compliance or non-

performance

22
 (Heirs of Sofia Quirong v. Development Bank of the Philippines, G.R. No. 173441, December
3, 2009)

LOAN

Q48. Discuss the effect of bifurcation to conventional interest (interest as the cost
of borrowing money) when the parties to a simple loan or mutuum stipulated
interest in writing but failed to mention the exact interest rate applicable.

ANSWER: Bifurcation has NO effect. In case there is NO stipulated interest, but the
parties agreed to pay interest, the legal rate of interest, when applied as conventional
interest, shall always be the legal rate at the time the agreement was executed, and
shall NOT be susceptible to shifts in rate. Applying this, if 12% is the legal rate of
interest at the time the parties executed their agreement, and conventional interest is
still due as of July 1, 2013, the rate of 12% per annum shall persist as the rate of
conventional interest despite the change in the legal rate of interest to 6% on July 1,
2013. (Abella v. Abella G.R. No. 195166, July 8, 2015; BSP Circular No. 799, Series of 2013)

Q49. What is a forbearance of money, goods, or credits?

ANSWER: It is an arrangement other than a loan agreement, where a person

acquiesces to the temporary use of his money, goods, or credits pending the
happening of certain events of the fulfillment of certain conditions. Forbearance of
goods includes the sale of goods on installment, requiring periodic payment of money
to the creditor. This includes forbearance of credits or the sale of anything on credit,
where the full amount due can be paid at a date after the sale. (Estores v. Spouses
Supangan, G.R. No. 175139, April 18, 2012; Lara’s Gifts & Decors v. Midtown Industrial
Sales, Inc., G.R. No. 225433, August 28, 2019)

Q50. When is compounding of interest allowed?

ANSWER: Compounding of interest is allowed only when it is expressly agreed upon

in writing by the parties or mandated by law or regulation. (Lara’s Gifts & Decors v.
Midtown Industrial Sales, Inc, G.R. No. 225433, August 28, 2019; Section 5, Act No. 2655)

Q51. What is the prevailing guideline with regard to an award of interest in the
concept of actual and compensatory damages?

ANSWER: In Lara’s Gift, the Court further modified the guidelines in Eastern Shipping
Lines and Nacar for clarity and uniformity, as follows: (See Tables 2 and 3 in Civil Law
Tables file for Summary)
1. When the obligation is breached, and it consists in the payment of a sum of
money, i.e., a loan or forbearance of money, goods, credits or judgments and
there is stipulated interest, the interest due shall be that which is stipulated by
the parties in writing, provided it is NOT excessive and unconscionable. In the
absence of a stipulated reckoning date, the interest shall be computed from
default, i.e., from extrajudicial or judicial demand in accordance with Article

23
 1169 of the Civil Code, until full payment, without compounding any interest
unless compounded interest is expressly stipulated by the parties, by law or
regulation. In addition, interest due on the principal amount accruing as of
judicial demand shall SEPARATELY earn legal interest at the prevailing rate
prescribed by the Bangko Sentral ng Pilipinas, from the time of judicial demand
until full payment.
2. When the obligation is breached, and it consists in the payment of a sum of
money, i.e., a loan or forbearance of money, goods, credits or judgments and
there is NO stipulated interest or if the stipulated interest is
UNCONSCIONABLE, the rate of interest on the principal amount shall be the
prevailing legal interest prescribed by the Bangko Sentral ng Pilipinas, which
shall be computed from default, i.e., from extrajudicial or judicial demand in
accordance with Article 1169 of the Civil Code, until full payment, without
compounding any interest unless compounded interest is expressly
stipulated by law or regulation. Additionally, interest due on the principal
amount accruing as of judicial demand shall SEPARATELY earn legal interest
at the prevailing rate prescribed by the Bangko Sentral ng Pilipinas, from the
time of judicial demand until full payment.
3. When the obligation, NOT constituting a loan or forbearance of money, goods,
credits or judgments, is breached, an interest on the amount of damages
awarded may be imposed in the discretion of the court at the prevailing legal
interest prescribed by the Bangko Sentral ng Pilipinas, pursuant to Articles 2210
and 2011 of the Civil Code. NO interest, however, shall be adjudged on
unliquidated claims or damages until the demand can be established with
reasonable certainty. Accordingly, where the amount of the claim or damages
is established with reasonable certainty, the prevailing legal interest shall
begin to run from the time the claim is made extrajudicially or judicially (Art.
1169, Civil Code) until full payment. However, if such certainty CANNOT be so
reasonably established at the time the demand is made, the interest shall begin
to run only from the date of the judgment of the trial court (at which time the
quantification of damages may be deemed to have been reasonably
ascertained) until full payment. The actual base for the computation of the
interest shall, in any case, be on the principal amount finally adjudged, without
compounding any interest unless the compounded interest is expressly
stipulated by law or regulation.

NOTE: Justice Leonen disagreed with the ponencia regarding the further application of legal
interest on the stipulated 24% interest as it would effectively increase the interest on the unpaid
account to over 24%, making it unconscionable. He stated that the contract involved a sale of
goods on credit, thus, the 24% interest rate is a compensatory interest, imposed as indemnity
for damages caused by the delay in the payment of the raw materials' purchase price, pursuant
to Article 2209. (Lara’s Gifts & Decors v. Midtown Industrial Sales, Inc, G.R. No. 225433,
August 28, 2019)

24
 REAL ESTATE MORTGAGE LAW

Q52. What are the essential requisites of a mortgage?

ANSWER: PA3R
1. That it is constituted to secure the fulfillment of a Principal obligation (Article
2085, New Civil Code);
2. That the mortgagor is the Absolute owner of the thing mortgaged (Article 2085,
New Civil Cod)e;
3. That the person constituting the mortgage has the free disposal, or in its
absence, legal Authority to dispose the property (Article 2085, New Civil Code);
4. That the thing mortgaged may be Alienated to secure payment when the
principal obligation becomes due (Article 2216, New Civil Code); and
5. That the mortgage is Recorded with the Registry of Property, to bind 3rd
persons. (Article 2125, New Civil Code)

Q53. Must a mortgage be registered to be valid?

ANSWER: No, a mortgage, whether registered or NOT, is binding between the

parties. Registration is only necessary to make the same valid against 3rd persons.
Thus, it only operates as a notice of the mortgage to others, but neither adds to its
validity nor converts an invalid mortgage into a valid one between the parties. (Article
2125, New Civil Code; Salmonella v. Cajucom, G.R. No. L-13683, March 28,1960)

Q54. Can future properties be an object of mortgage?

ANSWER: Yes. Although the general rule is future property CANNOT be the object
of mortgage, an exception to this are after-acquired properties. In order to bring future
property within the coverage of the mortgage, the mortgagor must execute a mortgage
supplement after the mortgagor acquires ownership of the properties or after those
properties come into existence. They must be registered with the relevant Register of
Deeds. A stipulation subjecting to the mortgage lien, improvements which the
mortgagor may subsequently acquire, install, or use in connection with the real
property already mortgaged belonging to the mortgagor is valid. (People’s Bank and
Trust Co. v. Dahican Lumber Co., G.R. No. L-17500, May 16, 1967; Dilag v. Heirs of
Resurreccion, G.R. No. 48941, May 6, 1946)

25
 VI. TORTS, QUASI-DELICTS
Q55. What are the requisites for a quasi-delict?

ANSWER: To sustain a claim liability under quasi-delict, the following requisites

must concur (DNC):
1. Damages suffered by the plaintiff;
2. Fault or Negligence of the defendant, or some other person for whose acts he
must respond; and
3. Causal connection between the fault or negligence of the defendant and the
damages incurred by the plaintiff. (Article 2176, New Civil Code & Huang V. Phil.
Hoteliers, Inc., G.R. No. 180440, December 5, 2012)

Q56. What is the Abuse of Rights doctrine?

ANSWER: Article 19 of the Civil Code prescribes that a person should NOT use his right
unjustly or contrary to honesty and good faith, otherwise he opens himself to liability.
(HSBC v. Catalan, G.R. No. 159590-159591, October 18, 2004)

Abuse of right exists when the following are present (LBP):

1. There exists a Legal right/duty;
2. Exercised in Bad faith; and
3. Done with the sole intent of Prejudicing or injuring another. (Van De Brug v.
PNB, G.R. No. 207004, June 6, 2018)

Q57. What is the exception to the general rule that an obligation based on quasi-
delict cannot arise between parties who have no pre-existing contractual
relationship?

ANSWER: The exception is when the act that breaks a contract also amounts to a
tort. In particular, in situations where the contractual relation is indispensable to hold
a party liable, there must be a finding that the act or omission complained of was done
in bad faith and in violation of Article 21 of the Civil Code to give rise to an action based
on tort. (Orient Freight International v. Keihin Everett Forwarding Co., G.R. No. 191937,
August 9, 2017)

26
Q58. Distinguish proximate cause from an efficient intervening cause.

ANSWER: On the one hand, proximate cause is that which, in a natural and
continuous sequence unbroken by any efficient intervening cause, produces the
injury, and without which the result would NOT have occurred.

On the other hand, an efficient intervening cause is an independent cause that breaks
the natural and continuous sequence of the first wrongful cause invalidating liability.
However, any cause between the first wrongful cause and the final injury which the
original wrongdoer might have reasonably foreseen or anticipated is NOT such an
efficient intervening cause as will relieve the original wrong of its character as the
proximate cause of the final injury. (Abrogar V. Cosmos Bottling Company, G.R. No.
164749, March 15, 2017)

Q59. What is the nature of the liability of joint tortfeasors?

ANSWER: The nature of their liability is solidary. In other words, joint tortfeasors are
liable as principals, to the same extent and manner as if they had performed the
wrongful act themselves. (Article 2194, New Civil Code; People v. Velasco, G.R. No.
195668, June 25, 2014)

Q60. What is the difference between an employer vicariously liable under Article
2180 of the Civil Code from an employer subsidiarily liable under Article 103
of the Revised Penal Code?

ANSWER:
Vicarious Liability Subsidiary Liability

Vicarious liability arises when there is an An employer may be held subsidiary

employer-employee relationship. To liable for a felony committed by his
determine its existence, the “control test” employee in the discharge of his duty.
is used. Under this, a relationship exists if
the “employer” controls both the means
and the details of the process by which
the “employee” is to accomplish his task.

Requires preponderance of evidence Liability attaches when the employee is

convicted beyond reasonable doubt

Enforcement of judgment does NOT The employee must be insolvent for the
require the employee to be insolvent, the employer to respond to his civil liability.
employer and employee being joint
tortfeasors with solidary liability.

Direct and primary liability of the Indirect and subsidiary liability of the
employer employer
(Professional Services v. CA and Agana, G.R. No. 126297 (2010)], Reyes Trucking v. People,
G.R. No. 129029, April 3, 2000)

27
Q61. How is the State or its entities liable for torts committed by employees?

ANSWER: The test of liability depends on whether or not the employees acting on the
State’s behalf were performing governmental or proprietary functions. Thus, the State
may be liable for the tortious acts of its special agents or as an ordinary employer. The
following are the rules on the State’s liability:
1. When the State performs governmental functions:
a. It is ONLY liable for torts committed by its employees acting as special
agents.
b. It is NOT liable for torts committed by employees performing functions
which naturally pertain to their office.
c. It is NOT liable for any damages when the employee or officer acts
WITHOUT or in excess of jurisdiction, such act is the employee's
personal liability and CANNOT be imputed to the State.
2. When the State performs proprietary functions:
a. It is liable for the damages caused by its employees acting within the
scope of their assigned task as an ordinary employer – including acts
done by employees in furtherance of the employer’s interests
b. It is NOT liable for any damages when the employee or officer acts
without or in excess of jurisdiction, such act is the employee's personal
liability and CANNOT be imputed to the State. (Articles 2180(5) and (6),
New Civil Code)

NOTE: A special agent is one who receives a definite and fixed order or commission, foreign
to the exercise of the duties of his office. (National Irrigation Administration v. Spouses
Fontanilla, G.R. No. L-55963 & 61045, February 27, 1991)

Q62. What is the registered owner rule?

ANSWER: The registered owner rule provides that the registered owner is liable for
the death or injuries caused by the operation of their vehicles. The source of a
registered owner’s liability remains to be Articles 2176 and 2180 of the New Civil Code.
(Erezo V. Jepte, G.R. No. L-9605, September 30, 1957)

NOTE: The Registered Owner Rule has no independent statutory basis. Its basis, if at all, is
Art. 2180. The source of the Registered Owner Rule is Article 2180. (J. Leonen)

Q63. How is liability proved where both the registered owner rule and Art. 2180(4)
and (5) are applicable, i.e., the registered owner of the vehicle is also the
employer of the driver?

ANSWER: In cases where both can apply, the plaintiff must first establish that the
employer is the registered owner of the vehicle in question. Once the plaintiff
successfully proves ownership, there arises a disputable presumption that the
requirements of Article 2180 have been proven. As a consequence, the burden of proof
shifts to the defendant to show that no liability under Article 2180 has arisen. (Caravan
Travel and Tours International v. Abejar, G.R. No. 170361, February 10, 2016)

28
Q64. When is the registered owner presumed vicariously liable even though he is
not the employer of the vehicle’s driver?

ANSWER: It is presumed that all the requirements for vicarious liability attach to the
registered owner when the plaintiff proves that:
1. The driver is liable; and
2. The identity of the registered owner. (Caravan Travel and Tours International v.
Abejar, G.R. No. 170361, February 10, 2016)

Q65. What defenses are available to the registered owner (RO) of a vehicle who is
sought to be held liable for the damages caused by the driver of this vehicle?

ANSWER: The ordinary defenses available to an employer under Art. 2180 (i.e., NO
employer-employee relationship, the employee NOT acting within the scope of
assigned tasks, and due diligence in selection and supervision of employees) are NOT
available to the RO. However, once the RO is presumed vicariously liable, the
presumption may be overcome by proof of any of the following defenses (NSDUS):
1. NO employer-employee relationship between the driver and the RO;
2. The driver/employee was NOT acting within the Scope of assigned tasks;
3. The RO/employer observed due Diligence in selection and supervision;
4. Unauthorized use of the vehicle; or
5. The vehicle was Stolen. (Caravan Travel and Tours International v. Abejar, G.R.
No. 170361, February 10, 2016)

Q66. What is the doctrine of last clear chance?

ANSWER: Also known as the Doctrine of Discovered Peril or the Doctrine of

Supervening Negligence. The person who had the last fair chance to avoid the
impending harm and fails to do so is chargeable with the consequences WITHOUT
reference to the prior negligence of the other party. Both parties are negligent but the
negligent act of one is appreciably later than that of the other, or where it is impossible
to determine whose fault/negligence caused the loss, the one who had the last clear
chance to avoid the loss but failed to do so is chargeable with the loss. (PNRC V.
Vizcara, G.R. No. 190022, February 15, 2012)

29
Q67. When is the doctrine of last clear chance NOT applicable?

ANSWER: NE3C
1. In case of culpa contractual, where Neither the contributory negligence of the
plaintiff nor his last clear chance to avoid the loss, would Exonerate the
defendant from liability. Such contributory negligence/last clear chance by the
plaintiff merely serves to reduce the recovery of damages by the plaintiff but
does NOT exculpate the defendant from his breach of contract (Consolidated
Bank & Trust Corporation v. Court of Appeals, G.R. No. 138569, September 11, 2003);
2. When the proximate cause of the injury has been Established PNR v. Baesa, G.R.
No. 79050-51, November 14, 1989;
3. When the party charged is required to act instantaneously, and if the injury
CANNOT be avoided by the application of all means at hand after the peril is
discovered (Emergency Doctrine) (PNR v. Baesa, G.R. No. 79050-51, November
14, 1989);
4. Where a passenger demands responsibility from the Carrier to enforce its
contractual relations. Note that such doctrine only applies in a suit between the
owners and drivers of colliding vehicles. (Bustamante v. Court of Appeals, G.R.
No. 89880, February 6, 1991; Anuran v. Buno, G.R. No. L-21353-21354, May 20,
1966)

Q68. What are the elements of Res Ipsa Loquitur?

ANSWER: NO-E-NV
1. The accident does NOT Ordinarily occur unless someone is negligent;
2. The instrumentality which caused the injury/damage was under the Exclusive
control of the person causing such; and
3. Injury was NOT due to any Voluntary action on the part of the person injured.
(Cantre v. Sps. Go, G.R. No. 160889, April 27, 2007)

NOTE: The doctrine can only be invoked when under the circumstances, direct evidence is
absent and not readily available. The inference that the doctrine permits is grounded upon the
fact that the chief evidence of the true cause, whether culpable or innocent, is practically
accessible to the defendant but inaccessible to the injured person. (Macalinao v. Ong, G.R. No.
146635, December 14, 2005)

30
Q69. Enumerate the valid defenses available to defendants in negligence cases.

ANSWER: COAL-PWEDE
1. Contributory Negligence (Article 2179, New Civil Code),
2. Plaintiff’s Own negligence is the proximate cause of the injury (Article 2179,
New Civil Code),
3. Assumption of Risk (Abrogar v. Cosmos Bottling Company, G.R. No. 164749,
March 15, 2017),
4. Last Clear Chance/”The Doctrine of Discovered Peril” (Picart v. Smith, G.R. No.
L-12219, March 15, 1918),
5. Prescription (Article 1146, New Civil Code)
6. Waiver (Article 6, New Civil Code)
7. Fortuitous Event (Article 1174, New Civil Code),
8. Damnum Absque Injuria (BPI Express Card Corporation vs. Court of Appeals, G.R.
No. 120639, September 25, 1998),
9. Emergency (Gan v. Court of Appeals, G.R. No. L-44264, September 19, 1988)

Q70. How is the relations back theory applied in the case of Henson Jr., vs. UCPB?

ANSWER: The relations back theory was applied in setting the rules on prescription
of actions based on quasi-delict filed by the subrogee-insurer. While the Supreme
Court expressly abandoned its ruling in Vector Shipping Corporation v. American Home
Assurance Company (Vector) that an insurer may file an action against the tortfeasor
within 10 years from the time the insurer indemnifies the insured, it clarified that
Vector’s abandonment is prospective in application. The Court reasoned that judicial
interpretations, until reversed, form part of the Philippine legal system. Thus, the
Court issued the following guidelines relative to the application of Vector and its
decision in Henson v. UCPB:
1. For actions filed and pending in courts at the time of the finality of the Henson
Jr. ruling, the rules on prescription prevailing at the time the action is filed
would apply.
a. Cases filed before August 15, 2013 (Vector): A period of 4 years from the
time the wrongdoer caused damage to the insured.
b. Cases filed from August 15, 2013 (Vector) until Henson’s finality (2019):
A period 10 years from the time the insurer pays the insured.
2. For actions NOT yet filed at the time the Case of Henson Jr. reached finality, the
time the tort was committed determines the applicable prescriptive period:
a. Cases where damage occurred prior to Henson’s finality (2019): The
subrogee-insurer is given a period NOT exceeding 4 years therefrom to
file an action, provided the total period to shall NOT exceed 10 years
from subrogation.
b. Cases where damage occurred after Henson’s finality: The subrogee-
insurer only has 4 years to file an action, and Vector NO longer applies.
(Henson Jr. v. UCPB General Insurance, G.R. No. 223134, August 14, 2019)

31
Q71. Can there be damage without injury?

ANSWER: Yes. In situations damnum absque injuria, there can be damage WITHOUT
injury in those instances where the loss or harm was NOT the result of a violation of
a legal duty. Thus, the injured person bears the consequences alone because the law
affords NO remedy for damages resulting from an act that does NOT amount to a
legal injury or wrong. (BPI Express Card Corporation vs. Court of Appeals, G.R. No.
120639, September 25, 1998)

Q72. Can private individuals violate the provisions of the Bill of Rights?

ANSWER: Yes. Article 32 of the Civil Code provides for an independent civil action for
damages for violation of civil and political rights. The coverage of torts violating
constitutional rights was expanded to cover both public officers and private
individuals. The law expressly imposes liability on private individuals who obstruct,
defeat, violate or in any manner impede or impair the rights and liberties of another.
(Aquino, Torts and Damages, p. 520)

32
 VII. DAMAGES
(See Tables 4, 5, and 6 in Civil Law Tables file for Summary)

Q73. What damages may be awarded in case of death?

ANSWER: CALSIME
1. Civil indemnity is the award given to the heirs as compensation for the death
of the victim. Such grant is mandatory and does NOT require proof other than
the fact of death as a result of the crime/quasi-delict, and the fact that the
accused was responsible therefore (People v. Combate, G.R. No. 189301, December
15, 2010);
2. Actual Damages. If the amount of these expenses is NOT fully substantiated,
temperate damages may be awarded instead (People v. Combate, G.R. No.
189301, December 15, 2010);
3. Actual Damages for Loss of Earning Capacity (People v. Combate, G.R. No.
189301, December 15, 2010);
4. Support for a period NOT exceeding 5 years to persons whom the deceased
was obliged to support (Article 2206(2), New Civil Code);
5. Interest which may be awarded at the discretion of the court (Article 2211, New
Civil Code);
6. Moral Damages only to the spouse, legitimate and illegitimate ascendants, and
descendants (Article 2206(3), New Civil Code);
7. Exemplary Damages (People v. Combate, G.R. No. 189301, December 15, 2010)

Q74. Is Article 2219 an exclusive enumeration of grounds or circumstances when an

award for moral damages would be proper?

ANSWER: No, Article 2219 is NOT an exclusive list because it only specifies, among
others, Article 21. When a party reneges on his or her contractual obligations in bad
faith, it is also a violation of Article 1159. Breaches of contract become the basis of moral
damages, NOT only under Article 2220 but also under Articles 19 and 20 in relation to
Article 1159. Thus, in Arco, Justice Leonen said that Articles 19, 20, 2219, and 2220 in
relation to Article 1159, provide the grounds when an award for moral damages would
be proper. (Arco Pulp v. Lim, G.R. No. 206806, June 15, 2014)

Q75. May damages for Loss of Earning Capacity (LEC) be awarded to the parents of
a minor who had no history of earnings at the time of his death or permanent
incapacity?

ANSWER: Yes. Art. 2206(1) of the New Civil Code provides that damages for LEC shall
be assessed and awarded by the court “unless the deceased on account of permanent
physical disability NOT caused by the defendant, had NO earning capacity at the
time of his death”. Damages for LEC may be awarded to a minor’s heirs although he
had NO history of earnings because compensation of this nature is awarded NOT for
loss of time or earnings but for loss of deceased power or ability to earn money.
(Spouses. Pereña v. Spouses Zarate, G.R. No. 157917, August 29, 2012)

33
Q76. What is the extent or scope of actual damages in contracts and quasi-contracts?
In crimes and quasi delicts?

ANSWER: In contracts and quasi-contracts, when the obligor acted in good faith the
extent of actual damages is the natural and probable consequences of the breach of the
obligation which the parties have foreseen or could have reasonably foreseen at the
time the obligation was constituted.

However, in case of fraud, bad faith, malice or wanton attitude, the extent includes
all damages which may be reasonably attributed to the non-performance of the
obligation. (Article 2201, New Civil Code)

In crimes and quasi-delict, the defendant shall be liable for all damages which are the
natural and probable consequences of the act or omission complained of, and it is NOT
necessary that such damages have been foreseen or could have reasonably been
foreseen by the defendant. (Article 2202, New Civil Code)

Q77. Can temperate damages be awarded on top of actual damages?

ANSWER: Yes.
GR: Actual damages and temperate damages are mutually exclusive.

EXC: When the injury is chronic and continuing, exemplary damages may be
awarded on top of actual damages. Actual damages cover previous expenses
incurred, while the temperate damages cover future and continuing expenses. These
damages cover 2 distinct phases. (Ramos v. Court of Appeals, G.R. No. 124354, December
29, 1999)

Q78. When are exemplary damages granted in criminal offenses, quasi-delicts, and
quasi-contracts?

ANSWER: In criminal offenses, exemplary damages are imposed if there are 1 or

more aggravating circumstances. In quasi-delicts, exemplary damages are granted if
there is gross negligence as to approximate malice. In contracts and quasi-delicts,
exemplary damages are granted if the defendant is found to have acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner. (Articles 2230, 2231 and 2232,
New Civil Code)

34
Q79. What are the EXCEPTIONS to the general rule that the plaintiff must prove
negligence in an action for damages based on quasi-delict?

ANSWER: RIL-VO-DaV
1. When the doctrine of Res Ipsa Loquitur applies (Cantre v. Spouses. Go, G.R. No.
16889, April 27, 2007);
2. In cases involving Violations or statutes, Ordinances, and/or traffic rules or
regulations, where the concept of negligence per se applies (Article 2185, New
Civil Code);
3. When death or injury results from the defendant’s possession of Dangerous
weapons or substances, except when the defendant proves that his possession
of dangerous weapons or substances is indispensable to his business (Article
2188, New Civil Code); and
4. In cases involving Vicarious liability, where a presumption of negligence arises
against parents, guardians, employers, the State, and teachers or heads of
establishments of arts and trades in the cases enumerated in Article 2180.
(Article 2180, New Civil Code)

35
35
 COMMERCIAL LAW
I. CORPORATIONS
KINDS OF CORPORATIONS, INCLUDING CORPORATION SOLE

Q1. Differentiate the following: corporation sole, one-person corporation, and

religious society.

ANSWER:
1. A corporation sole is one that may be formed by a chief archbishop, bishop,
priest, minister, rabbi, or other presiding elder of a 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 (Section 108, Revised Corporation Code)
2. A one-person corporation is a corporation with a single stockholder. Only a
natural person, trust or an estate may form a one-person corporation (Section
116, Revised Corporation Code)
3. A religious society is one formed by any religious society, religious order,
diocese, synod, or district organization of any religious denomination, sect, or
church, for the administration of its temporalities or for the management of its
affairs, properties, and estate. (Section 114, Revised Corporation Code)

Q2. Does a corporation sole have the ability to acquire/hold alienable lands of
public domain?

ANSWER: No. Section 11, Article XIV of the 1973 Constitution states that “NO private
corporation or association may hold alienable lands of the public domain except by
lease NOT to exceed 1,000 hectares in area.” However, the constitutional prohibition
does NOT apply if the land acquired by the private corporation is private land to begin
with. There is NO prohibition in the 1935 or 1973 Constitution on the acquisition of
private corporations over private lands. The 1973 Constitution and the present 1987
Constitution only gives a prohibition on private corporations in their acquiring lands
of the public domain, meaning agricultural lands. (Director of Land v. IAC, G.R. No.
73002, December 29, 1986)

Q3. State the rules regarding the right of foreign corporations to bring suit in
Philippine courts.

ANSWER: The principles regarding the right of a foreign corporation to bring suit in
Philippine courts may thus be condensed in 4 statements:
1. If a foreign corporation does business in the Philippines without a license, it
CANNOT sue before the Philippine courts;
2. If a foreign corporation is NOT doing business in the Philippines, it needs NO
license to sue before Philippine courts on an isolated transaction or on a cause
of action entirely independent of any business transaction;

36
 3. If a foreign corporation does business in the Philippines without a license, a
Philippine citizen or entity which has contracted with said corporation may be
estopped from challenging the foreign corporation’s corporate personality in a
suit brought before Philippine courts; and
4. If a foreign corporation does business in the Philippines with the required
license, it can sue before Philippine courts on any transaction. (Agilent
Technologies Singapore (PTE), Ltd. v. Integrated Silicon Technology Phil. Corp., G.R.
No. 154618, April 14, 2004)

COMPOSITION OF OR MEMBERSHIP IN BOARD OF DIRECTORS

Q4. Who are the corporate officers?

ANSWER: PTSO
1. a President, who must be a director;
2. a Treasurer, who must be a resident;
3. a Secretary, who must be a citizen and resident of the Philippines; and
4. such Other officers as may be provided in the bylaws. (Section 24, Revised
Corporation Code)

Q5. How are directors elected?

ANSWER: Stockholders of stock corporations have the right to vote based on the
number of shares of stock standing in their own names in the stock books of the
corporation. The said stockholder 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. For members of nonstock corporations, they may
cast 1 vote for 1 candidate. Nominees for directors or trustees receiving the highest
number of votes shall be declared elected. (Section 23, Revised Corporation Code)

Q6. How are directors removed?

ANSWER: The authority to remove directors is the prerogative of the stockholders or

members of the corporation. To do so, a vote of the stockholders holding or
representing at least 2/3 of the outstanding capital stock shall be done in a meeting
called for such purpose. (Section 27, Revised Corporation Code)

37
 DUTIES AND PREROGATIVES OF BOARDS OF DIRECTORS

Q7. A corporation exercises its corporate powers through the board. May the board
validly delegate such powers?

ANSWER: Yes. The authority of the board of directors to delegate its corporate
powers may either be actual or apparent. Actual authority may be express or implied.

Express actual authority refers to the corporate powers expressly delegated by the
board of directors. Implied actual authority can be measured by the director’s prior
acts which have been ratified by the corporation or whose benefits have been accepted
by the corporation. (Terp Construction Corp. vs. Banco Filipino, G.R. No. 221771,
September 18, 2019)

Q8. What are the power, duties, and prerogatives of boards of directors?

ANSWER:
Board of Directors

Powers GR: The Board of Directors ALONE exercises the powers of the
corporation.

EXC: Other persons or groups within the corporation may do so

similarly (MCDO-A3):
1. If: (1) there is a Management Contract AND (2) powers are
Delegated by majority of the board to an executive
committee;
2. Corporate Officers via authority from:
a. law,
b. corporate bylaws; or
c. authorization from the board, either expressly or
impliedly by habit, custom or acquiescence in the
general course of business;
3. A corporate Agent in transactions with 3rd persons to the
extent of the authority to do so has been conferred upon him;
4. Those with Apparent Authority.

Duties 3-Fold Duties of Directors (OLD):

1. Duty of Obedience: Directors or Trustees should direct the
affairs of the corporation only in accordance with the
purposes for which it was organized.
2. Duty of Loyalty: Directors or Trustees should NOT acquire
any personal or pecuniary interest in conflict with their duty
as such directors or trustees.
3. Duty of Diligence: Directors or trustees should NOT
willfully and knowingly vote for or assent to patently
unlawful acts of the corporation or act in bad faith or with

38
 gross negligence in directing the affairs of the corporation.

Prerogatives The Chairman or, in his absence, the President, shall preside at all
meetings of the directors or trustees as well as of stockholders of
members, unless the bylaws provide otherwise.
(Sections 24, 30, 33, and 53, Revised Corporation Code; Strategic Alliance Development
Corporation v. Radstock, G.R. No. 178158, 2009)

Shareholders

Powers 1. Majority vote is required when (BRCT):

a. Adopting, amending, or repealing corporate Bylaws,
b. Revoking the delegation of power to the Board to
amend, repeal, or adopt new corporate bylaws,
c. Granting Compensation to directors or trustees,
d. Electing to follow the corporate Term indicated in the
Articles of Incorporation instead of perpetual existence
granted by the Revised Corporation Code

2. At least 2/3 of the outstanding capital stock vote is required

when (MISS-DP-RIMA-DT):
a. Mergers or consolidations,
b. Increasing or decreasing capital stock or creating bonded
Indebtedness,
c. Declaring of Stock dividend,
d. Selling all or substantially all corporate assets,
e. Denying Pre-emptive right, when:
i. Shares issued in good faith in exchange for
property for corporate purposes,
ii. Shares in payment of previously contracted
debts
f. Removing directors,
g. Investing corporate funds in another corporation or
business or for any other purpose other than its primary
purpose,
h. Entering into Management contracts in the following
instances:
i. where stockholders representing the same
interest of both the managing and the managed
corporations own more than 1/3 of the total
outstanding capital stock entitled to vote of the
managing corporation; or
ii. where a majority of the members of the Board
of Directors of the managing corporation also
constitute a majority of the members of the
Board of Directors of the managed corporation
i. Amending the Articles of Incorporation,

39
 j. Delegating the power to amend, repeal, or adopt new
corporate bylaws to the Board,
k. Extending or shortening corporate Term

Rights/ Minority shareholders have 6 basic rights (VoPE-IRIDA):

Prerogatives 1. Voting right,
2. Pre-Emptive right,
3. Power of Inspection of corporate Records,
4. Right to Information,
5. Right to Dividends,
6. Appraisal right

Instances when holders of non-voting shares are entitled to vote:

(MIISSAD)
1. Merger or consolidation of the corporation with another
corporation/s,
2. Incurring, creating, or increasing bonded Indebtedness,
3. Investment of corporate funds in another corporation or
business for any purpose other than its primary purpose,
4. Sale, lease, exchange, mortgage, pledge, or other disposition
of all or substantially all of the corporate property,
5. Increase or decrease of authorized capital Stock,
6. Amendment of the Articles of incorporation,
7. Dissolution of the corporation.

Any stockholder of a corporation shall have the right to dissent

and to demand payment of fair value of the shares in the
following cases (ART-DMC-IO):
1. In case an Amendment to the articles of incorporation 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 the outstanding shares of
any class, or of extending or shortening the Term of
corporate existence.
2. In case of sale, lease, exchange, transfer, mortgage, pledge or
other Disposition of all or substantially all of the corporate
property and assets as provided by the Code
3. In case of Merger and Consolidation.
4. In case of Investment of corporate funds for any purpose
Other than the primary purpose of the corporation.
(Sections 11, 15, 27, 29, 36, 37, 38, 39, 41, 42, 43, 45, 47, 76, 80, Revised Corporation Code;
Article V, Code of Corporate Governance)

40
 Q9. When can an individual stockholder bring suit on behalf of the corporation?

ANSWER: The corporation’s power to sue is lodged with its board of directors or
trustees. However, when corporate officials refuse to sue, or are the ones to be sued,
or hold control of the corporation, an individual stockholder may be permitted to
institute a derivative suit to enforce a corporate cause of action on behalf of a
corporation in order to protect or vindicate its rights. (Forest Hills Golf and Country
Club, Inc. v. Fil-Estate Properties, Inc., G.R. No. 206649, July 20, 2016)

Q10. Spouses X and Y entered into a Contract to Sell with Corporation A for the
purchase of a 100-square meters lot as part of its subdivision project. They
agreed that Corporation A would execute the final deed of sale upon full
payment of the Corporations X and Y. However, Corporation A failed to
deliver the Deed and Title of the land despite full payment and repeated
demands of the spouses. Thus, Spouses X and Y filed a complaint for specific
performance or rescission with damages against Corporation A and the
members of the board. Should the Board of Directors be held liable by the
spouses?

ANSWER: No. Settled is the rule that in the absence of malice and bad faith, as in this
case, officers of the corporation CANNOT be made personally liable for liabilities of
the corporation which, by legal fiction, has a personality separate and distinct from its
officers, stockholders, and member. (Gotesco Properties, Inc. v. Spouses Fajardo, G.R. No.
201167, February 27, 2013)

Q11. What happens if there is NO quorum?

ANSWER: A Vacancy and Emergency Board may be created if there is NO quorum

and an action is necessary to prevent grave, substantial, and irreparable loss or
damage to the corporation. (Section 28, Revised Corporation Code)

DUTIES AND PREROGATIVES OF BOARDS OF STOCKHOLDERS

Q12. What is cumulative voting?

ANSWER: Cumulative voting is the manner of voting in which the stockholder, or a

member when so provided by the bylaws of a nonstock corporation, is entitled to give
a candidate as many votes as the number of directors or trustees to be elected
multiplied by the number of his shares or to distribute them among the candidates as
he may see fit. (Sections 23 and 88, Revised Corporation Code)

41
Q13. What are the remedial rights available to stockholders and members, in case
of a wrongful or fraudulent acts of a director, officer or agent?

ANSWER:
1. Individual suit: involves direct injury to the rights of stockholders and
members, such as denial of his right to inspect corporate books and records or
preemptive rights.
2. Representative or class suit: one in which 1 or more members of a class sue for
themselves as a class or for all to whom the right was denied, either as an
individual action or a derivative suit.
3. Derivative suit: an action based on injury to the corporation—to enforce a
corporate right—wherein the corporation itself is joined as a necessary party,
and recovery is in favor of and for the corporation. It is a suit granted to any
stockholder to institute a case to remedy a wrong done directly to the
corporation and indirectly to stockholders. (Cua v. Tan, G.R. No. 18145556,
December 4, 2009.)

ARTICLES OF INCORPORATION AND BYLAWS

Q14. Differentiate a corporation’s Articles of Incorporation and Bylaws.

ANSWER:
Articles of Incorporation Bylaws

As to nature Defines the contractual The self-imposed private laws of a

relationships between the State corporation, have, when valid,
and the corporation, the substantially the same force and
stockholders and the State, and effect as laws of the corporation, as
between the corporation and its have the provisions of its charter
stockholders. insofar as the corporation and the
persons within it are concerned.
They are in effect written into the
charter and in this sense, they
become part of the fundamental
law of the corporation. And the
corporation and its directors (or
trustees) and officers are bound by
and must comply with them.

As to Section 13 Section 46
applicable law

As to necessity Mandatory Discretionary

As to content NaP-I-TOAD-CAP-CIaO MeN-QuoVoPro-QDRC-

1. The Name of the corporation; TiMPeCO

42
2. The specific Purpose or
purposes for which the
corporation is being
incorporated. Where a directors or trustees;
corporation has more than 1
stated purpose, the articles of
incorporation shall state
which is the primary purpose
and which is/are the
secondary purpose or
purposes: Provided, That a
non-stock corporation may
NOT include a purpose
which would change or
contradict its nature as such;
3. The names, nationalities and
residences of the
Incorporators;
4. The Term for which the
corporation is to exist, if NOT
elected the perpetual
existence;
5. The place where the principal
Office of the corporation is to
be located, which must be
within the Philippines;
6. The names, nationalities and
residences of persons who
shall Act as directors or
trustees until the first regular
directors or trustees are duly
elected and qualified in
accordance with the
Corporation Code;
7. The number of Directors or
trustees, which shall NOT be
more than 15;
8. If it be a stock corporation,
the amount of its authorized
Capital stock in lawful
money of the Philippines, the
number of shares into which
it is divided, and in case the
share are par value shares,
the Par value of each, the
names, nationalities and
residences of the original
43
1. The time, place and manner of
calling and conducting regular
or special Meetings of the
2. Mode of Notifying the
stockholders or members
thereof;
3. The required Quorum in
meetings of stockholders or
members and the manner of
voting therein;
4. The modes by which a
stockholder, member, director,
or trustee may attend meetings
and cast their Votes;
5. The form for Proxies of
stockholders and members
and the manner of voting
them;
6. The directors’ or trustees’
Qualifications, Duties and
Responsibilities, the guidelines
for setting the Compensation
of directors or trustees and
officers, and the maximum
number of other board
representations that an
independent director or trustee
may have which shall, in NO
case, be more than the number
prescribed by the SEC;
7. The Time for holding the
annual election of directors or
trustees and the mode or
manner of giving notice
thereof;
8. The Manner of election or
appointment and the term of
office of all officers other than
directors or trustees;
9. The Penalties for violation of
the bylaws;
10. In the case of stock
corporations, the manner of
issuing stock Certificates; and
11. Such Other matters as may be
necessary for the proper or
 subscribers, and the amount convenient transaction of its
subscribed and paid by each corporate affairs for the
on his subscription, and if promotion of good governance
some or all of the shares are and anti-graft and corruption
without par value, such fact measures.
must be stated;
9. If it be a non-stock
corporation, the amount of its
capital, the names,
nationalities and residences
of the Contributors and the
Amount contributed by each;
and
10. Such Other matters as are
NOT inconsistent with law
and which the incorporators
may deem necessary and
convenient.
(Sections 13 and 46 Revised Corporation Code; Lanuza v. CA, G.R. No. 131394, 2005; Cebu
Mactan Members Center, Inc. v. Tsukahara, G.R. No. 159624, July 17, 2009)

Q15. What are the limitations on bylaws?

ANSWER: LAUD
1. Bylaws CANNOT be contrary to Law and Articles of incorporation;
2. Bylaws CANNOT be Unreasonable or be contrary to the nature of bylaws;
3. Bylaw provisions CANNOT Discriminate among its stockholders or members.
(GPI v. El Hogar Filipino, G.R. No. L-26649, July 13, 1927)

44
 II. INTRA-CORPORATE DISPUTE (CONCEPT)
Q16. How do you determine the existence of an intra-corporate dispute?

ANSWER: The existence of an intra-corporate dispute must be properly alleged in a

complaint filed before a commercial court because the allegations in the complaint
determine a tribunal's jurisdiction over the subject matter. This means that the
complaint must make out a case that meets both the relationship and the nature of the
controversy tests. (Rule 2, A.M. No. 01-2-04-SC. March 13, 2001)

Relationship Test Nature of the Controversy Test

A dispute is intra-corporate if it is: The dispute itself must be intrinsically

(1) Between the corporation, connected with the regulation of the
partnership or association and the corporation, partnership or association.
public; The controversy "must NOT only be
(2) Between the corporation, rooted in the existence of an intra-
partnership or association and the corporate relationship, but must also
state insofar as its franchise, permit refer to the enforcement of the parties'
or license to operate is concerned; correlative rights and obligations under
(3) Between the corporation, the Corporation Code as well as the
partnership or association and its internal and intra-corporate regulatory
stockholders, partners, members or rules of the corporation.”
officers; and
(4) Among the stockholders, partners or
associates themselves.
(Philippine Communications Satellite Corp. v. Sandiganbayan, G.R. No. 203023, June 17,
2015; Dy Teban Trading Inc. v. Dy, G.R. No. 161803, February 4, 2008)

Q17. Who has authority over intra-corporate disputes?

ANSWER: Effective on August 8, 2000, upon the passage of Republic Act No. 8799,
otherwise known as The Securities Regulation Code, the Securities and Exchange
Commission’s jurisdiction over all intra-corporate disputes was transferred to the
Regional Trial Court. However, the Commission shall retain jurisdiction over pending
suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally
disposed. (Malcaba vs. ProHealth Pharma Philippines, Inc., G.R. No. 209085, June 6, 2018)

45
 III. INTELLECTUAL PROPERTY
COPYRIGHT
Q18. What is copyright?

ANSWER: Copyright refers to the right granted by a statute to the proprietor of an

intellectual production to its exclusive use and enjoyment to the extent specified in the
statute. (Olaño v. Lim Eng Co, G.R. 195835, March 14, 2016)

Q19. Differentiate copyrights, trademarks, and patents.

ANSWER:
As to definition:
1. Trademark: It is any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise and shall include a
stamped or marked container of goods. (Section 121.1, Intellectual Property Code,
as amended)
a. Tradename – name or designation identifying or distinguishing an
enterprise.
2. Patent: It is the grant issued by the Intellectual Property Office of the
Philippines (IPOPHL) to an inventor over an invention or a utility model or
industrial design to sell, use, and make the same for commerce and industry.
(Section 21, Intellectual Property Code, as amended)
3. Copyright: It is the right granted to the author or originator of certain literary
or artistic productions, whereby he or she is invested, for a specific period, with
the sole and exclusive privilege of multiplying copies of the same and
publishing and selling them. (Kensonic, Inc. v. Uni-Line Multi Resources, Inc.
(Phils.), G.R. Nos. 211820-21, June 6, 2018)

As to scope:
1. Trademark: Attaches to goods or services of an enterprise and stamped or
marked containers. (Section 38, Intellectual Property Code, as amended)
2. Patent: Covers any technical solution of a problem in any field of human
activity which is new, involves an inventive step, and is industrially applicable.
(Section 21, Intellectual Property Code, as amended)
3. Copyright: Confined to literary and artistic work, and scientific and scholarly
works which are original intellectual creations in the literary and artistic
domain. (Section 172, Intellectual Property Code, as amended)

As to term of protection:
1. Trademark: Certificate of registration remains in force for 10 years, provided
the registrant shall file a declaration of actual use and evidence to that effect,
or shall show valid reasons based on the existence of obstacles to such use,
within 1 year from the 5th anniversary of the date of the registration of the
mark. Otherwise, the mark shall be removed from the register. (Section 145,
Intellectual Property Code, as amended)

46
 2. Patent: 20 years from filing of the application for the grant of patent. (Section
54, Intellectual Property Code, as amended)
3. Copyright: During the life of the author and for 50 years after his death (also
applicable to posthumous works), subject to Sections 213.2 to 213.5 of the
Intellectual Property Code, as amended. (Section 213.1, Intellectual Property Code,
as amended)

As to commencement of protection of right:

1. Trademark: requires registration before the Code can protect them against
competitors.
a. EXC: Trade name which is acquired by use and protected even prior to
or without registration. (Section 165.2(a), Intellectual Property Code, as
amended)
2. Patent: requires registration before the Code can protect them against
competitors. (Section 46 in relation to Section 76, Intellectual Property Code, as
amended)
3. Copyright: does NOT require registration since protection begins from the
moment of creation. (Section 172, Intellectual Property Code, as amended)

As to remedies against infringement:

1. Trademark: 1st act of trademark infringement gives rise to criminal liability.
(Section 147, Intellectual Property Code, as amended)
2. Patent: criminally liable if offender repeats the commission of the same
infringing acts after finality of the court judgment against him in a civil action
for infringement. (Sections 76 and 84, Intellectual Property Code, as amended)
3. Copyright: 1st act of copyright infringement gives rise to criminal liability.
(Section 217, Intellectual Property Code, as amended)

Q20. How is copyright infringement committed?

ANSWER: Whenever a person (DB-KIC):

1. Directly commits an infringement;
2. 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;
3. With Knowledge of infringing activity, Induces, causes or materially
Contributes to the infringing conduct of another. (Section 216, Intellectual
Property Code, as amended)

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Q21. X, an amateur astronomer, stumbled upon what appeared to be a massive
volcanic eruption in Jupiter while peering at the planet through his telescope.
The following week, X, without notes, presented a lecture on his findings
before the Association of Astronomers of the Philippines. To his dismay, he
later read an article in a science journal written by Y, a professional
astronomer, repeating exactly what X discovered without any attribution to
him. Has Y infringed on X’s copyright, if any?

ANSWER: No, since NO protection extends to any discovery, even if expressed,

explained, illustrated, or embodied in a work. (Section 175, Intellectual Property Code,
as amended)

Q22. X and Y are famous personalities in show business who kept their love affair
secret. They use a special instant messaging service which allows them to see
one another’s typing on their own screen as each letter key is pressed. When
A, the controller of the service facility, found out their identities, he kept a
copy of all the messages X and Y sent each other and published them. Is A
liable for copyright infringement? Why or why not?

ANSWER: Yes. Under the law, text messages are NOT expressly enumerated as
among the copyrightable works. However, these messages are akin to letters or may
at least fall under “other literary, artistic, scientific, and scholarly works.” They are
therefore protected from the moment of creation. The publication of the messages
without the consent of their writers constitutes infringement of copyright. (Section
172.1, Intellectual Property Code, as amended)

Q23. What original works are NOT protected by copyright?

ANSWER: News-LId-GC
1. News of the day and other miscellaneous facts having the character of mere
items of press information;
2. Any official text of a legislative, administrative or Legal nature, as well as any
official translation thereof;
3. 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;
4. Any work of the Government of the Philippines (prior approval of the
government agency or office wherein the work is created is necessary for
exploitation of such work for profit); and
5. Statutes, rules and regulations, and speeches, lectures, sermons, addresses, and
dissertations, pronounced, read, or rendered in Courts of justice, before
administrative agencies, in deliberative assemblies and in meetings of public
character. (Sections 174, 176.1, and 176.2, Intellectual Property Code, as amended)

Notwithstanding the provisions of Sections 172 and 173, NO protection shall extend,
under this law, to 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; news of the day and other miscellaneous facts

48
 having the character of mere items of press information; or any official text of a
legislative, administrative or legal nature, as well as any official translation thereof.
(Section 175, Intellectual Property Code, as amended)

Q24. What are the rules on copyright ownership?

ANSWER:
Type of Work Owner

Only 1 creator Copyright shall belong to the author of the work.

Joint ownership GR: 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.

EXC: If, however, a work 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.

Created in the course of The copyright shall belong to:

employment (1) 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.
(2) 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.

Commissioned work GR: The person who so commissioned the work shall
have ownership of the work, but the copyright thereto
shall remain with the creator.

EXC: There is a written stipulation to the contrary.

Letters Person/s to whom they are addressed and delivered.

Anonymous or GR: The publishers shall be deemed to represent the

pseudonymous works authors of articles and other writings published
WITHOUT the names of the authors or under
pseudonyms.

EXC: The contrary appears, or the pseudonyms or

adopted name leaves NO doubt as to the author's
identity, or if the author of the anonymous works
discloses his identity.
(Section 178.1, 178. 2, 178.3, 178.5, 178.6, 179, Intellectual Property Code, as amended.)

49
 FAIR USE PRINCIPLE

Q25. What is the fair use principle?

ANSWER: The Doctrine of Fair Use Fair use is a 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 is an exception to the
copyright owner’s monopoly of the use of the work to avoid stifling the very creativity
which that law is designed to foster. (ABS-CBN Corp. v. Gozon, G.R. No. 195956, March
11, 2015)

Q26. What are the factors to be considered in determining fair use?

ANSWER: SuP-VaN
1. The amount and Substantiality of the portion used in relation to the
copyrighted work as a whole;
2. The Purpose and character of the use, including whether such use is of a
commercial nature or is for non-profit educational purposes;
3. The effect of the use upon the potential market for or Value of the copyrighted
work; and
4. The Nature of the copyrighted work. (Section 185, Intellectual Property Code, as
amended)

MORAL RIGHTS

Q27. What are moral rights?

ANSWER: The author of a work shall, independently of the economic rights in Section
177 or the grant of an assignment or license with respect to such right, have the right
(RObAAt):
1. To Restrain the use of his name with respect to any work NOT of his own
creation or in a distorted version of his work (Section 193.4, Intellectual Property
Code, as amended);
2. To Object to any distortion, mutilation or other modification of, or other
derogatory action in relation to, his work which would be prejudicial to his
honor or reputation (Section 193.3, Intellectual Property Code, as amended);
3. To make any Alterations of his work prior to, or to withhold it from publication;
(Section 193.2, Intellectual Property Code, as amended)
4. To require that the authorship of the works be Attributed to him, in particular,
the right that his name, as far as practicable, be indicated in a prominent way
on the copies, and in connection with the public use of his work. (Section 193.1,
Intellectual Property Code, as amended)

50
Q28. Can moral rights be assigned or licensed?

ANSWER: Moral rights CANNOT be assigned or licensed. While Moral Rights

CANNOT be assigned or licensed, it can be waived. Moral rights can be waived in
writing, expressly stating such waiver. (Sections 195 and 198, Intellectual Property Code,
as amended)

Q29. What are the EXCEPTIONS to waiving moral rights?

ANSWER: Even if made in writing, waiver is still NOT valid if (I-UN-CNN):

1. Use of the name of the author, title of his work, or his reputation with respect
to any version or adaptation of his work, which because of alterations
substantially tends to Injure the literary or artistic reputation of another author
(Section 195.1, Intellectual Property Code, as amended;
2. It Uses the name of the author in a work that he did NOT create (Section 195.2,
Intellectual Property Code, as amended);
3. The right of attribution is waived by contribution to a Collective work unless
such is expressly reserved. (Section 196, Intellectual Property Code, as amended)
4. Necessary editing, arranging or adaptation does NOT contravene moral rights
(Section 197, Intellectual Property Code, as amended)

51
 IV. INSURANCE
WHAT CAN BE INSURED

Q30. Differentiate insurable interest in life insurance and insurable interest in

property insurance.

ANSWER:
Property Insurance Life Insurance

As to scope ExInCo HiDEO

1. an Existing interest; 1. Himself, of his spouse
2. an Inchoate interest and of his children; If a
founded on an person will insure the life
existing interest; or of another payable to
3. an expectancy, himself, he must have an
Coupled with an insurable interest in the
existing interest in life of the person whose
that out of which the life he is insuring.
expectancy arises. 2. Any person on whom he
Depends wholly or in
party for education or
support, or in whom he
has pecuniary interest;
3. Any person upon whose
life any Estate or interest
vested in him depends;
4. Any person under a legal
Obligation to him for the
payment of money, or
respecting property or
services, of which death
or illness might delay or
prevent the performance;

NOTE: A creditor may insure his

debtor’s life for the purpose of
protecting his debt, but only to the
extent of the amount of the debt and
the cost of carrying the insurance
on the debtor’s life.

As to extent of Unlimited Limited to the value of the

recover property.
EXC: secured by the creditor.

As to when the At the time of the perfection At the time of perfection of the

52
 insurable interest of the insurance contract. contract and at the time of the
must exist loss.

As to Expectation of benefit need Expectation of benefit must

requirement for NOT have legal basis or need have legal basis.
legal basis NOT be based on legally
enforceable obligation.

As to Insurable interest is NOT Beneficiary must have insurable

beneficiary’s necessary if the insured took interest.
interest out the policy on his own life
and designated another.

Beneficiary must have

insurable interest if one took
out an insurance on the life
of another.
(Sections 13, 14, 15, 16, 17, 18, 181, 182, 183, 184, 185, and 186, Insurance Code)

CLAIMS FOR LIFE INSURANCE

Q31. When is the insurer subrogated to the rights of the insured?

ANSWER: The right of subrogation accrues upon payment by the insurance company
of the insurance claim. The payment by the insurer to the insured operates as an
equitable assignment to the insurer of all the remedies which the insured may have
against the third party whose negligence or wrongful act caused the loss (Keihin-
Everett Forwarding Co., Inc. v. Tokio Marine Malayan Insurance Co., Inc. and Sunfreight
Forwarders & Customs Brokerage, G.R. No. 212107, January 28, 2019).

Q32. What are the limitations to the right of subrogation of the insurer?

ANSWER: If the claim of the insured against a 3rd party is limited, the right of
subrogation of the insurer is likewise limited. As subrogee, the insurer steps into the
shoes of the insured and may exercise only those rights that the insured may have
against the wrongdoer who caused the damage. (Aboitiz Shipping Corp. vs. Insurance
Company of North America, G.R. No. 168402, August 6, 2008)

53
Q33. A designated C as his beneficiary, referring to her as his wife. When A died, C
tried to claim the proceeds of A’s life insurance policy, but this was denied by
Insurance Company since P, claiming to be the legal wife of A, also filed a
claim to claim the proceeds of A’s life insurance policy. Who is entitled to
claim on A’s life insurance policy?

ANSWER: P is entitled to the proceeds of her husband’s life insurance policy. Article
2012 of the Insurance Code provides that any person who is forbidden from receiving
any donation under Article 739 of the Civil Code CANNOT be named beneficiary of a
life insurance policy by the person who CANNOT make any donation to him. In
relation, Article 739 (1) of the Civil Code states that donations between persons who
were guilty of adultery or concubinage at the time of the donation are void.

In essence, a life insurance policy is NO different from a civil donation insofar as the
beneficiary is concerned. Both are founded upon the same consideration: liberality. A
beneficiary is like a donee, because from the premiums of the policy which the insured
pays out of liberality, the beneficiary will receive the proceeds or profits of said
insurance.

Hence, since C is incapacitated from receiving donations from A because of their

adulterous relationship, and since a life insurance policy is akin to a donation, by
inference, C is precluded from claiming on the life insurance policy of A, making P,
A’s legal wife, the one entitled to claim on the policy. (Insular Life v. Ebrado, G.R. No.
L-44059, October 28, 1977)

Q34. When are the proceeds of a life insurance policy payable?

ANSWER: An insurance upon life may be made payable (DeC2S):

1. On the Death of the person, or
2. On the Continuance or Cessation of life, or
3. On his Surviving a specified period. (Section 182, Insurance Code)

Q35. X applied for life insurance with Metropolitan Life Insurance Company. The
application contained the question, “Have you ever had any ailment or disease
of the stomach or intestines, liver, kidney or genitourinary organ?” X, a
laundry woman who has no medical knowledge answered “No”. The
application was approved, and premium was paid. 6 months later, X died from
stomach cancer. The post-mortem examination of X shows that she had the
cancer at the time she applied for a policy. Can the beneficiary of X collect on
the policy? Explain.

ANSWER: No, the beneficiary of X CANNOT collect on the policy. The matter
concealed was material. Hence, the insurer has a valid defense of concealment against
the beneficiary. The defense is available even if X was NOT aware of her fatal illness
because Section 27 of the Insurance Code gives the right to the insurer to avoid the policy
whether the concealment is intentional or unintentional. (Section 27, Insurance Code)

54
Q36. On May 3, 2017, a life insurance policy was issued by the insurer to W payable
upon her death. She designated her husband, H, as her beneficiary. In the
application form for the life insurance policy, there was a question whether W
had ever consulted a psychiatrist to which she answered “Never” although the
truth was that she had undergone psychiatric counseling for depression. On
May 10, 2019, W deliberately jumped off a building and died. H filed a claim
on the policy. The insurer denied the claim on the ground that W committed
suicide and that W was guilty of fraudulent misrepresentation. Is the insurer’s
refusal to pay the proceeds of the policy justified?

ANSWER: No. The insurer in life insurance contract shall be liable in case of suicide
only when it is committed after the policy has been in force for a period of 2 years
from the date of its issue or of its last reinstatement, unless the policy provides a
shorter period. (Section 183, Insurance Code)

Moreover, after a life insurance policy made payable on the death of the insured shall
have been in force during the lifetime of the insured for a period of 2 years from the
date of its issue or of its last reinstatement, the insurer CANNOT prove that the policy
is void ab initio or is rescindable by reason of fraudulent concealment or
misrepresentation of the insured or his agent. Here, the policy was in force for more
than 2 years since it was issued on May 3, 2017. Hence, the insurer can NO longer raise
as grounds for refusal of payment the fact of suicide and fraudulent
misrepresentation. (Section 48, Insurance Code)

55
 V. DATA PRIVACY ACT
(Republic Act No. 10173)
Q37. What are the general data privacy principles that govern the processing of
personal information?

ANSWER: TLP
1. Transparency: the data subject must be aware of the nature, purpose, and
extent of the processing of his or her personal data, including the risks and
safeguards involved, the identity of personal information controller, his or her
rights as a data subject, and how these can be exercised. Any information and
communication relating to the processing of personal data should be easy to
access and understand, using clear and plain language.
2. Legitimate purpose: the processing of information shall be compatible with a
declared and specified purpose which must NOT be contrary to law, morals,
or public policy.
3. Proportionality: the processing of information shall be adequate, relevant,
suitable, necessary, and NOT excessive in relation to a declared and specified
purpose. Personal data shall be processed only if the purpose of the processing
could NOT reasonably be fulfilled by other means. (Section 18, Implementing
Rules and Regulations)

Q38. To whom does the Data Privacy Act apply?

ANSWER: The Data Privacy Act applies to the processing of all types of personal
information by (NJP-CPUM):
1. Any Natural and Juridical Person involved in personal information processing,
2. Personal information 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, Republic Act No. 10173)

Q39. What are the rights of a data subject?

ANSWER: FACODDIE
1. Right to File a complaint.
2. Right to Access,
3. Right to Correct/rectification,
4. Right to Object,
5. Right to Damages,
6. Right to Data portability,
7. Right to Information,
8. Right to Erasure/blocking. (Section 34(f)), Implementing Rules and Regulations)

56
Q40. When are the rights of a data subject NOT applicable?

ANSWER: The provisions on the rights of the data subject are NOT applicable if the
processed personal information is (SNL):
1. Used only for the needs of Scientific and statistical research and,
2. On the basis of such, NO activities are carried out and NO decisions are taken
regarding the data subject. The personal information shall be held under strict
confidentiality and shall be used only for the declared purpose.
3. Information gathered for the purpose of investigations in relation to any
criminal, administrative or tax Liabilities of a data subject. (Section 19, Republic
Act No. 10173)

NOTE: Any limitations on the rights of the data subject shall only be to the minimum extent
necessary to achieve the purpose of said research or investigation.

Q41. When may personal data be retained?

ANSWER: Retention of personal data shall only for as long as necessary (LLB):
1. For the Fulfillment of the declared, specified, and Legitimate purpose, or when
the processing relevant to the purpose has been terminated;
2. For the establishment, exercise or defense of Legal claims; or
3. For legitimate Business purposes, which must be consistent with standards
followed by the applicable industry or approved by appropriate government
agency. (Section 19(d)), Implementing Rules and Regulations)

Q42. What is data sharing?

ANSWER: The disclosure or transfer to a third party of personal data under the
custody of a personal information controller or personal information processor. In the
case of the latter, such disclosure or transfer must have been upon the instructions of
the personal information controller concerned. The term excludes outsourcing, or the
disclosure or transfer of personal data by a personal information controller to a
personal information processor. (Section 3(f), Implementing Rules and Regulations)

Q43. What is informational privacy?

ANSWER: The individual’s ability to control the flow of information concerning or

describing him, which however must be overbalanced by legitimate public concerns.
To deprive an individual of his power to control or determine whom to share
information of his personal details would deny him of his right to his own
personhood. (KMU v. NEDA, GR. No. 167798, April 19, 2006, J. Ynares Santiago
dissenting opinion; Bayan Muna v. Ermita, GR. No. 167930, April 25, 2006)

57
Q44. What is processing?

ANSWER: It is any operation or any set of operations performed upon personal

information including, but not limited to, the collection, recording, organization,
storage, updating or modification, retrieval, consultation, use, consolidation,
blocking, erasure or destruction of data. (Section 3(o), Implementing Rules and
Regulations)

Q45. What is the right to access?

ANSWER: The Data Subject shall have reasonable access to, upon demand, the
following (Con-Con-Sma-PIRB):
1. Contents of his or her personal information that were processed;
2. The designation, or name or identity and address of the personal information
Controller;
3. Sources from which personal information were obtained;
4. Manner by which such data were processed;
5. Names and addresses of recipients of the Personal Information;
6. Reasons for the disclosure of the personal information to recipients;
7. Information on automated processes where the data will or likely to be made
as the sole Basis for any decision significantly affecting or will affect the data
subject. (Section 34(c)), Implementing Rules and Regulations)

58