Professional Documents
Culture Documents
Day 2 AM CIV COMM
Day 2 AM CIV COMM
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a. Marriages exempt from license and wife without getting married (PARAS,
requirement 2016).
b. Either or both parties believed in good This form of marriage is not recognized in the
faith that the solemnizing officer had the proper Philippines.
authority [FC, ART. 35 (2)].
If performed abroad – Whether it is allowed or
3. Defect in any of the essential requisites –
not depends upon the law of the place where the
Voidable (FC, ART. 4).
marriage was celebrated (lex loci celebrationis).
4. Irregularity in any of the formal requisites-
Valid, but the party responsible for such As to marriages between Filipinos - all
irregularity shall be civilly, criminally or marriages solemnized outside the Philippines,
administratively liable (FC, ART. 4). in accordance with the laws enforced in said
country where they are solemnized, and valid
Marriage Ceremony there as such, shall also be valid here in the
country, except those prohibited under Art.
Requisites: 35(1),(2),(4), (5), (6), 36, 37 and 38 (FC,ART.
26).
1. Personal appearance of the contracting
parties before the solemnizing officer;
Persons authorized to solemnize marriage
Note: There is no marriage ceremony if what (1994 1995, 1999 BAR)
transpired was a mere private act of signing a
marriage contract by the contracting parties, The following are the persons authorized to
without the presence of the solemnizing officer solemnize marriage depending upon the
(MORIGO V. PEOPLE, G.R. NO. 145226, circumstances:
FEBRUARY 6, 2004).
Under ordinary circumstances (FC, ART. 7):
2. Their personal declaration that they shall take
each other as husband and wife; and a. Incumbent judiciary member – Provided, It
is within the court’s jurisdiction.
3. In the presence of not less than 2 witnesses
of legal age. b. Priest , rabbi, imam or minister of any
church/religious sect duly authorized - by his
No particular form of ceremony or religious rite church or religious sect and registered with the
for solemnization of the marriage is required by civil registrar general, acting within the limits of
law (FC, ART. 6). the written authority granted him by his church
or religious sect –
The declaration of consent need not be vocally
expressed. It can be shown by other Provided at least one of the parties belongs to
manifestations or signs of approval and such church or religious sect.
consent. It is the agreement itself, and not the
form in which it is couched, which constitutes the c. Consul general, consul or vice-consul -
contract (STA. MARIA, 2010). Provided both parties are Filipinos and marriage
takes place abroad in the country where the
Common-law marriages are not recognized in consul holds office (FC, ART. 10).
the Philippines
A common-law marriage, otherwise referred to d. Mayors (LGC, ARTS. 444 AND 445) –
as a live-in relationship, is one where the man including “Acting Mayor”
and the woman just live together as husband
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Marriages in articulo mortis: (ii) Void
a. Ship captain or airplane chief – provided Marriages that are void ab initio
the marriage is performed:
1. Solemnized without License, except
1. During voyage, even during stopovers those marriages that are exempt from the
license requirement;
2. Between passengers or crew members
(FC, ART. 31). 2. Absence of any of the essential or formal
requisites of marriage;
Such authority may be exercised not only while
3. Solemnized by any person not legally
the ship is at sea or the plane is in flight but also
Authorized to perform marriages unless such
during stop-overs at ports of call (Rabuya,
marriages were contracted with either or both
2018).
parties believing in good faith that the
solemnizing officer had the legal authority to do
b. Military commander of a unit who is a
so;
commissioned officer – provided the marriage
is performed (FC,ART.32): 4. Contracted through Mistake of one of the
contracting parties as to the identity of the other;
1. In absence of chaplain;
2. Within zone of military operation; 5. Bigamous or polygamous marriages not
3. Between members of the armed forces or falling under Article 41 of the Family Code or
civilians. those allowed under special laws such as the
Muslim Code;
Marriage License
6. Marriages contracted by any party below
A marriage license is required in order to notify
18 years of age even with the consent of parents
the public that two persons are about to be
or guardians;
united in matrimony and that anyone who is
aware or has knowledge of any impediment to 7. Marriages contracted by any party, who
the union of the two shall make it known to the at the time of the celebration of the marriage,
local civil registrar. was Psychologically incapacitated, even if such
incapacity becomes manifest only after its
The requirement and issuance of marriage
solemnization (FC, ART. 36);
license is the State’s demonstration of its
involvement and participation in every marriage 8. Incestuous Marriages (FC, ART. 37);
(RABUYA, 2018).
9. Marriages declared void because they
What is required is the marriage license, not the are contrary to Public policy (FC, ART. 38);
marriage certificate. The latter is not an
essential or formal requisite; thus an oral 10. Subsequent marriages which are void under
solemnization is valid. In fact, a marriage may Art.53;
be proved by oral evidence (PARAS, 2016).
11. Marriages in jest;
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6. Physical violence or moral pressure to a. expenses shall be paid from the community
compel petitioner to change religious or political property;
affiliation; b. In the absence thereof from the income or
fruits of their separate properties,
7. Bigamous marriage subsequently c. In the absence or insufficiency thereof from
contracted by respondent in the Philippines or their separate properties
abroad;
4. Manage the household (FC, ART. 71);
8. Sexual infidelity or perversion;
5. Not to neglect duties, or commit acts which
tend to bring danger, dishonor, or injury to family
9. Lesbianism or homosexuality of
(FC, ART. 72);
respondent; and
6. Either spouse may practice any legitimate
Note: It must exist after celebration of marriage profession/business even without the consent of
the other.
10. Abandonment of petitioner by respondent
without justifiable cause for more than 1 year. (h) Marriage Settlement
c. Fix the family domicile (FC, ART. 69); 2. Signed by the parties;
Note: In case of disagreement the Court shall 3. Executed before the celebration of marriage;
decide.
4. Registration (to bind 3rd persons)
3. Jointly support the family (FC, ART. 70);
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The provisions in the marriage settlement must hereinafter provided and to the extent of the
be in accordance with law, morals or public value allowed by law (FC, ART. 153).
policy; otherwise such agreement is void
(PARAS, 2008). (j) Rights of Legitimate And Illegitimate
Children
(i) Absolute Community Property Regime
Legitimate children have the right to:
The ACP between spouses shall commence at
the precise moment that the marriage is 1. bear the surname of the father and the mother
celebrated. Any stipulation, express or implied, in conformity with the provisions of CC on
for the commencement of the community surnames;
regime at any other time shall be void (FC, ART. 2. receive support from their parents,
88). ascendants, and in proper cases, their brothers
and sisters, in conformity with the provisions of
Note: The same rule applies to CPG (FC, ART.
this Code on Support;
107).
3. be entitled to the legitimate and other
Absence of specific provisions in the Family successional rights granted to them by the CC
Code regarding the property regime of the [ART. 174, FC].
spouses: 4. receive support from ascendants or
descendants of the same line [ART. 195, FC];
The provisions on co-ownership shall apply to 5. inherit ab intestato from legitimate parents
the ACP between the spouses in all matters not and ascendants [ART. 887, CC].
especially provided for by the Family code (FC,
ART. 90) Illegitimate children have the right to:
No waiver or rights, interests, shares and effects 1. use the surname and be under the parental
of the ACP can be made except upon judicial authority of their mother;
separation of property (FC, ART. 89). 2. be entitled to support in conformity with the
FC;
(ii) Conjugal Partnership of Gains
3. be entitled to the legitime which shall consist
It is that formed by a husband and wife whereby of ½ the legitime of a legitimate child [ART. 176,
they place in a common fund the proceeds, FC];
products, fruits and income of their separate 4. receive support from only up to grandparent
properties, and those acquired by either or both and grandchildren [ART. 195, FC].
spouses through their efforts or by chance, the
same to be divided between them equally (as a (k) Effects of adoption:
general rule) upon the dissolution of marriage or
1. Parental Authority - severance of legal ties
partnership (FC, ART. 106).
between the biological parents and the adoptee,
(i) Family Home which shall be vested in the adopters, except if
the biological parent is the spouse of the adopter
The family home is deemed constituted on a
house and lot from the time it is occupied as a 2. Legitimacy - adoptee shall be considered as
family residence. From the time of its a legitimate child of the adopter(s) for all intents
constitution and so long as any of its and purposes [SEC. 17, RA 8552] and;
beneficiaries actually reside therein, the family
3. Succession - in legal or intestate succession,
home continues to be such and is exempt from
the adoptee and the adopter(s) shall have
execution, forced sale or attachment except as
reciprocal rights of succession without
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distinction from legitimate filiation. However, if 2. During all authorized activities, whether inside
there is a will, the rules on testamentary or outside the premises of the school, entity, or
succession shall be followed [SEC. 18, RA institution [ART. 218, FC]
8552].
Rules in the use of username of a child:
4. Surname - an adopted child shall bear the
surname of the adopter [ART. 365, CC]. 1. Legitimate and legitimated children shall
principally use the surname of the father. [ART.
Grounds for rescission of adoption: 364, CC; ARTICLE 174 (1), FC].
1. Repeated physical and verbal maltreatment 2. An adopted child shall bear the surname of
by adopters despite having undergone the adopter. [ART. 365, CC; ART. 189 (1), FC].
counseling
3. A natural child acknowledged by both parents
2. Attempt on life of adoptee shall principally use the surname of the father.
[ART. 366, CC]
3. Sexual assault or violence
4. Illegitimate children shall use the surnames of
4. Abandonment or failure to comply with their mother. [Art. 176, FC].
parental obligations
A married woman may use:
Note: Adoption shall not be subject to rescission
by the adopters. However, the adopters may a. Her maiden first name and surname and add
disinherit the adoptee for causes provided under her husband’s surname, or;
ART. 919 OF THE CIVIL CODE. [SEC. 19, RA
8552] b. Her maiden first name and her husband’s
surname, or;
Parental Authority
c. Her husband’s full name, but prefixing a word
As a general rule, it is jointly exercised by the indicating that she is his wife, such as “Mrs.”
father and the mother of a child [ART. 211(1), [ART. 370, CC]
FC].
(l) Declaration of Absence
The exceptions are:
The following may ask for the declaration of
1. In case of disagreement, the father’s decision absence.
prevails [ART. 211(2), FC]. Exception to the
exception: If there is judicial order to the 1. The spouse present;
contrary.
2. The heirs instituted in a will, who may present
2. In case of absence or death of either parent, an authentic copy of the same;
the parent present or alive [ART. 212, FC].
3. The relatives who may succeed by the law of
3. In case of separation of the parents, the intestacy;
parent designated by the court [ART. 213, FC].
4. Those who may have, over the property of the
Special Parental Authority absentee, some right subordinated to the
condition of his death. [ART. 385, CC]
Special parental authorized is exercised:
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Exception: If the finder is not the owner or is a Note: In this jurisdiction, the legal provisions on
stranger (includes the lessee or usufructuary, he co-ownership do not grant to any of the owners
is entitled to ½ thereof (NCC, ART. 566). of a property held in common a pre-emptive right
to purchase the pro-indiviso shares of his co-
(c) Co-Ownership owners.
ART 484. There is co-ownership whenever the (iv) Right to Contribution For Expenses
ownership of an undivided thing or right belongs
to different persons. Exists whenever an Expenses which the co-owners can be
undivided thing or right belongs to different compelled to contribute Only necessary
persons. expenses. Useful expenses and those for pure
luxury are not included.
(i) Alienation of Property Co-Owned
(v) Sale by A Co-Owner
When a co-owner sells the whole property as
his, the sale will affect only his own share but A sale of the entire property by one co-owner
not those of the other co-owners’ who did not without the consent of the other co-owners is
consent to the sale. A sale of the entire property valid. However, it will only affect the interest or
by one co-owner without the consent of the share in the undivided property of the co-owner
other co-owners is not null and void but affects who sold the same. The remedy is an action for
only his undivided share and the transferee gets partition under Rule 69 of the Revised Rules of
only what would correspond to his grantor in the Court, the division of the common property
partition of the thing owned in common (ACABAL V. ACABAL, G.R. NO. 148376,
(PAULMITAN V. CA, G.R. NO. 51584, MARCH 31, 2005)
NOVEMBER 25, 1992)
(d) Right of Accession
(ii) Effect of Renunciation
It is that right of ownership of which an owner of
Since renunciation is intended as payment for a thing has over the products of said thing
expenses already made, it is in the nature of (accession discreta), as well as to all things
dacion en pago - there is a change in the object inseparably attached or incorporated thereto
of the obligation (i.e. from sum of money to whether naturally or artificially (accession
interest in the co-ownership). Consequently, the continua) (PINEDA, 2009).
consent of the other co-owner who made the
advances is necessary (TOLENTINO, 2013). Note: Accession is NOT a mode of acquiring
ownership.
(iii) Acts of Alteration
ART 448. The owner of the land on which
It is a change which is more or less permanent, anything has been built, sown or planted in good
which changes the use of the thing and which faith, shall have the right
prejudices the condition of the thing or its a) to appropriate as his own the works, sowing
enjoyment by the others (PARAS, 2008). or planting, after payment of the indemnity
provided for in articles 546 and 548, or
Alteration includes the act by virtue of which a b) to oblige the one who built or planted to pay
co-owner changes the thing from the state in the price of the land, and the one who sowed the
which the others believe it should remain. It is proper rent.
not limited to material charges.
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However, the builder or planter cannot be more persons, simultaneously or successively,
obliged to buy the land if its value is and in every case from or to a certain day, purely
considerably more than that of the building or or conditionally. [ART. 564, CC]
trees.
In such case, he shall pay reasonable rent, if the (f) Easements
owner of the land does not choose to
A servient estate may be the object of usufruct
appropriate the building or trees after proper
but an easement cannot be the object of
indemnity. The parties shall agree upon the
usufruct because it has no existence
terms of the lease and in case of disagreement,
independent of the immovable. [DE LEON, p.
the court shall fix the terms thereof.
488]
(e) Quieting of Title Note: easements cannot be mortgaged
separately. Servitudes are merely accessories
Requisites that must be fulfilled in quieting of to the tenements of which they form part.
titles? Although they are possessed of a separate
juridical existence, as mere accessories, they
1. Plaintiff or complainant has a legal or an
cannot, however, be alienated from the
equitable title to or interest in the real property
tenement, or mortgaged separately. [SOLID
subject of the action; and [ART. 477, CC]
MANILA CORP. V. BIO HONG TRADING CO.,
INC., G.R. NO. 90596 (1991)]
2. The deed, claim, encumbrance or proceeding
claimed to be casting a cloud on his title must be (g) Nuisance
shown to be in fact invalid or inoperative despite
its prima facie appearance of validity or legal Criminal prosecution is instituted only for “public
efficacy. [SPS. CHUA V SPS. LO, G.R. NO. nuisance” and not for a private nuisance. The
196743 (2019)] action is brought in the name of the “People of
the Philippines” since public nuisances are
When the plaintiff is NOT in possession of the considered as offenses against the State. [DE
real property, the action to quiet title may LEON, p. 573] The remedies against a private
prescribe depending upon the right of action nuisance are: (1) a civil action; or (2) abatement,
filed by the plaintiff: without judicial proceedings. [ART. 705, CC]
1. 10 years - if plaintiff is a possessor with a real Modes of Acquiring Ownership
right, i.e. accion publiciana, or if action is for
reconveyance on the basis of a constructive A donation cannot be forced: it cannot arise from
trust under Art. 1456, CC. compulsion, be borne by a requirement, or
2. 30 years - if plaintiff is the owner of real otherwise be impelled by a mandate imposed
property. upon the donor by forces that are external to him
or her. [NAPOCOR v. Delta P, Inc., G.R. No.
(i) Usufruct 221709 (2019)]
Usufruct is a temporary real right which gives a 4. OBLIGATIONS
right to enjoy the property as well as its fruits of
another with the obligation of preserving its form (a) Obligation
and substance, unless the title constituting it or
the law otherwise provides. [ART. 562, CC] Obligation is a juridical necessity to give, to do,
or not to do. (ART. 1156)
Usufruct may be constituted on the whole or a
part of the fruits of a thing, in favor of one or
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(i) Elements of an Obligation (ii) Liability for loss due to fortuitous event
The following are the elements of an obligation: General Rule: There is no liability for loss in
case of fortuitous event.
1. Juridical tie or vinculum juris or efficient
cause - the efficient cause by virtue of which the Exceptions:
debtor becomes bound to perform the 1. Law;
prestation. (PINEDA, 2000) 2. Nature of the obligation requires the
assumption of risk;
2. Active subject [creditor (CR) or obligee] - 3. Stipulation;
The person demanding the performance of the 4. The debtor is guilty of dolo, malice or bad
obligation. It is he in whose favor the obligation faith, has Promised the same thing to two or
is constituted, established, or created. more persons who does not have the same
interest (NCC, Art. 1165);
3. Passive subject [debtor (DR) or obligor] - 5. The debtor Contributed to the loss
The person bound to perform the prestation to 6. The possessor is in Bad faith (NCC, Art. 552);
give, to do, or not to do. or
7. The obligor is Guilty of fraud, negligence or
4. Object or prestation - The subject matter of delay or if he contravene the tenor of the
the obligation which has a corresponding obligation (Juan Nakpil v. United Construction
economic value or susceptible of pecuniary Co., Inc. v. CA, G.R. No. L-47851, April 15,
substitution in case of noncompliance. 1988).
It is an obligation where the debtor, who has a 2. First infractor cannot be determined —
reserved right to choose another prestation or Contract shall be deemed extinguished and
thing, is bound to perform one of the both bear the damages sustained.
severalprestations due or to deliver a thing as a
substitute for the principal.
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(vii) Joint Obligations Effects of Partial Performance
One where the whole obligation is to be paid or Debtor who fails to fully perform the work agreed
fulfilled proportionately by the different debtors upon, but abandons the same after performing
and/or is to be demanded proportionately by the a part, cannot recover on quantum meruit for the
different creditors. (Art 1208) work already finished, because in indivisible
obligations, partial performance is equivalent to
When there is no expressed provision in the non-performance. Exceptions: a) where the
contract, joint obligation is presumed. obligation has been substantially performed in
good faith, the debtor may recover as if there
The Effects - Art 1207, 1208 had been complete performance, minus the
damages suffered by the creditor (Art 1234);
1. Demand by one creditor upon one debtor, and b) when the creditor accepts performance,
produces the effects of default only with respect knowing its incompleteness, and without
to the creditor who demanded and the debtor on protest, the obligation is deemed fully performed
whom the demand was made, but not with (Art 1235).
respect to the others.
(e) Extinguishment of Obligations
2. The interruption of prescription by the judicial
demand of one creditor upon a debtor, does not (i) Payment or performance- is the fulfillment
benefit the other creditors nor interrupt the of the obligation by the realization of the
prescription as to the other debtors. On the purposes for which it was constituted.
same principle, a partial payment or
acknowledgment made by one of several joint Note: Payment may consist not only in the
debtors does not stop the running of the statute delivery of money but also the giving of a thing
of limitations as to the others. (other than money), the doing of an act, or not
doing of an act. (NCC, ART. 1232)
3. In the joint divisible obligation, the defense of
res judicata is not extended from one debtor to How payment is made
another.
A debt shall not be understood to have been
(viii) Solidary Obligations paid unless the thing or service in which the
obligation consists has been completely
One where each of the debtors is bound to delivered or rendered, as the case may be. (Art
render, and/or each one of the creditors has a 1233)
right to demand entire compliance with the
prestation (Art 1207). General Rule: Partial Payment NOT allowed;
(Art 1248)
The Effects - ART 1216.
Exception: Unless there is an express
1. The creditor may proceed against any one of stipulation to that effect. When the debt is in part
the solidary debtors or some or all of them liquidated and in part unliquidated, the creditor
simultaneously. The demand made against one may demand and the debtor may effect the
of them shall not be an obstacle to those which payment of the former without waiting for the
may subsequently be directed against the liquidation of the latter. (Art 1248 par. 2)
others, so long as the debt has not been fully
collected. Dation in Payment (dacion en pago)- The
delivery and transmission of ownership of a
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thing by the debtor to the creditor as an or in that part or aspect of the same to which the
accepted equivalent of the performance of the condonation or remission refers.
obligation. The property given may consist not
only of a thing but also of a real right. (Tolentino, (iv) Confusion or Merger- There is a confusion
2002) when there is a meeting in one person of the
qualities of a creditor and debtor of the same
Payment by Cession- is the abandonment of obligation.
the universality of the property of the debtor for
the benefit of his creditors in order that such (v) Compensation- It is a mode of extinguishing
property may be applied to the payment of the obligations that take place when two persons, in
credits. their own right, are creditors and debtors of each
other
Consignation- Act of depositing the object of
the obligation with the court or competent (vi) Novation- It is the substitution or change of
authority after the creditor has unjustifiably an obligation by another, resulting in its
refused to accept the same or is not in a position extinguishment or modification, either by
to accept it due to certain reasons or changing the object or principal conditions, or by
circumstances. substituting another in the place of the debtor or
by subrogating a third person to the rights of the
Tender of payment is the act of offering the creditor.
creditor what is due him together with a demand
that the creditor accepts the same. If the creditor (vii) Subrogation
to whom tender of payment has been made Is the extinctive subjective novation by change
refuses without just cause to accept it, the of creditor is the transfer to a third person of all
debtor shall be released from responsibility by the rights pertaining to the creditor.
the consignation of the thing or sum due.
ART 1301. Conventional subrogation of a third
Note: When a tender of payment is made in person requires the consent of the original
such a form that the creditor could have parties and of the third person.
immediately realized payment if he had
accepted the tender, followed by a prompt ART 1302. It is presumed that there is legal
attempt of the debtor to deposit the means of subrogation:
payment in court by way of consignation, the 1) When a creditor pays another creditor who is
accrual of interest on the obligation will be preferred, even without the debtor's knowledge;
suspended from the date of such tender. But 2) When a third person, not interested in the
when the tender of payment is not accompanied obligation, pays with the express or tacit
by the means of payment, and the debtor did not approval of the debtor;
take any immediate step to make a 3) When, even without the knowledge of the
consignation, then interest is not suspended debtor, a person interested in the fulfillment of
from the time of such tender. the obligation pays, without prejudice to the
effects of confusion as to the latter's share.
(ii) Loss of the thing due
Note: The enumeration is not exclusive.
(iii) Condonation or remission of debt- An act
of liberality by virtue of which the creditor,
without receiving any price or equivalent,
renounces the enforcement of the obligation, as
a result of which it is extinguished in its entirety
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5. CONTRACTS (in general, loans and 3. Relativity — Contracts take effect only
mortgages, interest) between the parties, their assigns and heirs,
except in case where the rights and obligations
(a) Contract is a meeting of the minds between arising from the contract are not transmissible
two or more parties, whereby one party binds by their nature, or by stipulation or by provision
himself with respect to the other, or where both of law. (ART 1311)
parties bind themselves reciprocally, in favor of
one another, to fulfill a prestation to give, to do Note: The exceptions on Relativity of Contracts
or not to do. (PINEDA, 2009) are as follows:
1. Where the rights and obligations arising from
(METRO RAIL TRANSIT V. GAMMON the contract are not transmissible by their
PHILIPPINES) nature, or by stipulation or by provision of law;
2. Stipulation pour autrui — if a contract should
To determine when the contract was perfected, contain some stipulation in favor of a third
the acceptance of the offer must be unqualified, person;
unconditional, and made known to the offeror. 3. Tortious interference — Where a third person
Before knowing of the acceptance, the offeror induces another to violate his contract, he shall
may withdraw the offer. Moreover, if the offeror be liable for damages to the other contracting
imposes the manner of acceptance to be done party; (ART 1314)
by the offeree, the offeree must accept it in that 4. Where third persons may be adversely
manner for the contract to be binding. If the affected by a contract where they did not
offeree accepts the offer in a different manner, it participate;
is not effective, but constitutes a counter-offer, 5. Accion directa — Where the law authorizes
which the offeror may accept or reject. the creditor to sue on a contract entered into by
his debtor
In bidding contracts, this Court has ruled that the
award of the contract to the bidder is an (FLORENTINO VS. ENCARNACION)
acceptance of the bidder's offer. Its effect is to
perfect a contract between the bidder and the A stipulation pour autrui is a stipulation in favor
contractor upon notice of the award to the of a third person.
bidder. Thus, the award of a contract to a bidder
perfects the contract. Failure to sign the physical The requisites are:
contract does not affect the contract's existence. 1. There must be a stipulation in favor of a third
person.
(i) Characteristics of a Contract 2. The stipulation must be a PART, not the
whole of the contract.
1. Freedom to Stipulate or Autonomy or 3. The contracting parties must have clearly and
Liberality — The contracting parties may deliberately conferred a favor upon a third
establish such stipulations, clauses, terms and person, not a mere incidental benefit or interest.
conditions as they may deem convenient, 4. The third person must have communicated
provided they are not contrary to law, morals, his acceptance to the obligor before its
good customs, public order, or public policy. revocation.
(ART 1306) 5. Neither of the contracting parties bears the
legal representation or authorization of the third
2. Mutuality — The contract must bind both party.
contracting parties; its validity or compliance
cannot be left to the will of one of them. (ART
1308)
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4. Consensuality — Contracts are perfected by stipulation therein is ambiguous. Absent any
mere consent xxx (ART 1315) ambiguity, the provision on its face will be read
as it is written and treated as the binding law of
5. Obligatory Force — xxx Parties are bound the parties to the contract.
not only to the fulfillment of what has been
expressly stipulated but also to all the (v) Defective Contracts
consequences which, according to their nature,
may be in keeping with good faith, usage and Rescissible Voidable
law. (ART 1315)
Valid until rescinded Valid until annulled
(ii) Essential Requisites of a Contract
Reason: Reason:
1. Consent;
2. Object or subject matter; and Extrinsic, consisting Intrinsic, as in vitiated
3. Cause or consideration (NCC, ART 1318). of economic damage consent
(See CATHAY PACIFIC V. VASQUEZ, 2003) or lesion
Non-ratifiable Ratifiable
(iii) Reformation of Instruments
Reason: Reason:
Reformation is a remedy in quity by means of
which a written instrument is made or construed
Lack of authority; Various, see Art 1409
so as to express or confirm the real intention of
Failure to comply with
the parties when some error or mistake is
Statute of Frauds;
committed. (PINEDA, 2009)
Both parties lack
consent
(iv) Interpretation of Contracts
Ratifiable Non-ratifiable
The "interpretation" of a contract is the
determination of the meaning attached to the
words written or spoken which make the Note: Resolution is a principal action based on
contract. a breach by a party under Article 1191, while
rescission under Article 1383 is a subsidiary
(CENTURY PROPERTIES, INC. V. BABIANO, action limited to cases of rescission for lesion
ET AL 2016) under Article 1381. (SPS POON V. PRIME
SAVINGS BANK 2016)
The rule is that where the language of a contract
is plain and unambiguous, its meaning should (vi) Ratification
be determined without reference to extrinsic
facts or aids. The intention of the parties must It is the act or means by virtue of which, efficacy
be gathered from that language, and from that is given to a contract which suffers from a vice
language alone. of curable nullity (MANRESA).
Thus, in the interpretation of contracts, the Court Note: Ratification extinguishes the action to
must first determine whether a provision or annul a voidable contract (NCC, ART. 1392).
- 17 -
Requisites of ratification: 2. Mutuum or Simple Loan – where the lender
1. The contract involved must be voidable; delivers to the borrower money or other
2. Person ratifying must know the reason for the consumable thing upon the condition that the
voidability; latter shall pay the same amount of the same
3. The cause for the voidability must kind and quality. Commodatum is a loan of use
immediately cease after the ratification; and (because there is a transfer of the use of the
4. Ratification must be express or through an act thing borrowed) while mutuum is a loan of
implying a waiver of the action to annul; consumption (because there is a transfer of the
ownership of the thing, which is generally
(vii) Reitaration received for consumption).
General Rule: They produce no legal effect (PRODUCERS BANK V. CA.) Thus, if
whatsoever in accordance with the principle consumable goods are loaned only for purposes
quod nullum est nullum producit effectum of exhibition, or when the intention of the parties
(JURADO, 2011). is to lend consumable goods and to have the
very same goods returned at the end of the
Exception: In case of pari delicto since it will period agreed upon, the loan is a commodatum
refuse legal remedy to either party to an illegal and not a mutuum.
agreement and leaves them to where they were.
Hence, if a void contract is already executed, (ii) Obligations of the Bailee (Arts 1941-1945)
neither of the parties can recover from each
other. NOTE: A party has a right to unilaterally 1. To pay for the ordinary expenses for the use
cancel and treat as avoided a void contract. and preservation of the thing loaned.
However, an action to declare its inexistence is 2. Liable for the loss of the thing, even if it
necessary to allow restitution of what has been should be through a fortuitous event:
given under it (FUENTES V. ROCA, 618 SCRA a) If he devotes the thing to any purpose
702, [2010]). different from that for which it has been loaned;
b) If he keeps it longer than the period
(b) Loans stipulated, or after the accomplishment of the
use for which the commodatum has been
Loan is a contract where one of the parties constituted;
delivers to another, either something not c) If the thing loaned has been delivered with
consumable so that the latter may use the same appraisal of its value, unless there is a
for a certain time and return it, in which case is stipulation exempting the bailee from
called a commodatum; or money or other responsibility in case of a fortuitous event;
consumable things, upon the condition that the d) If he lends or leases the thing to a third
same amount of the same kind and quality shall person, who is not a member of his household;
be paid, in which case the contract is simply e) If, being able to save either the thing
called a loan or mutuum (NCC, ART. 1933) borrowed or his own thing, he chose to save the
latter.
(i) Kinds of loan
(iii) Obligations of the Bailor (ARTS 1946 -
1. Commodatum – where the bailor (lender) 1952)
delivers to the bailee (borrower) a non
consumable thing so that the latter may use it 1. To pay extraordinary expenses of
for a given time and return the same thing (i.e. preservation.
identical thing); and 2. To answer for damages to the borrower The
bailor who:
- 18 -
a) knowing the flaws of the thing loaned, security for subjecting to
b) does not advise the bailee of the same, shall the such security,
be liable to the latter for the damages which he performance immovable
may suffer by reason thereof. of an property or
obligation. real rights
Note: The bailor cannot evade liability by over
abandonment of the thing. immovable
property, in
(iv) Termination case the
principal
1. Expiration of time or use stipulated obligation is
2. Claim of the lender- lender has urgent need not paid or
of the thing loaned, in which case, he may complied with
demand its: at the time
a. Return, or stipulated
b. Temporary use- commodatum is suspended.
Object Personal Immovable
3. Destruction of the thing property property or
4. Death of parties real rights
5. Ingratitude of the borrower: Exception: A over
a. If the bailee should commit some offenses real property immovable
against the person, honor or property of the may be a property
bailor or of his wife or children under his parental subject of
authority. chattel
b. If the bailee imputes any criminal offense, or mortgage as
any act involving moral turpitude, even though long as the
he should prove it, unless the crime or the act parties to the
has been committed against the bailee himself, contract
his wife or children under his authority; and agree and no
c. If the bailee unduly reuses the bailor support innocent third
when the bailee is legally or morally bound to do party will be
so. prejudiced
thereby.
(c) Mortgage (MAKATI
LEASING
Chattel Real Estate AND
Mortgage Mortgage FINANCE
CORPORATI
Definition is a contract is a contract ON V
by virtue of whereby the WEAVER
which a debtor TEXTILE
personal secures to the MILLS, INC.,
property is creditor the G.R. NO
recorded in fulfillment of a L58469, MAY
the Chattel principal 17, 1983)
Mortgage obligation,
Register as a specially
- 19 -
(i) Rights of a mortgagor obligation at the time of the foreclosure
proceedings (RABUYA, 2017).
To alienate the mortgaged property but the
mortgage shall remain attached to the property Kinds of Foreclosure
(NCC, ART. 2130).
1. Judicial – Governed by Rule 68, Rules of
(ii) Rights of a Mortgagee Court;
2. Extrajudicial – The mortgagee is given a
To claim from a third person in possession of the SPA to sell the mortgaged property (ACT NO.
mortgaged property the payment of the part of 3135).
the credit secured by the property which said
third person possesses (NCC, ART. 2129). (vi) Redemption of Mortgage
- 21 -
When Efficient Intervening Cause is not 3. As a direct and proximate result of the failure
applicable to disclose, the patient consented to treatment
she otherwise would not have consented to; and
There is no efficient intervening cause if the 4. Plaintiff was injured by the proposed
force created by the negligent act or omission treatment.
have either:
(xii) Damnum Absque Injuria
1. Remained active itself;
2. Created another force which remained active A person who only exercises his legal rights
until it directly caused the result; or does no injury. If damages result from such
3. Created a new active risk of being acted upon exercise of legal rights, the consequences must
by the active force that caused the result be borne by the injured person alone.
(ix) Doctrine of Last Clear Chance Note: The principle does not apply when the
exercise of this right is suspended or
Where both parties are negligent but the extinguished pursuant to a court order (Amonoy
negligent act of one is appreciably later in point v. Gutierrez, 651 SCRA 731, 2001).
of time than that of the other, or where it is (i) Prohibition against Double Recovery
impossible to determine whose fault or
negligence brought about the occurrence of the Responsibility for fault or negligence under
incident, the one who had the last clear quasi-delict is entirely separate and distinct from
opportunity to avoid the impending harm but the civil liability arising from negligence under
failed to do so, is chargeable with the the Penal Code. But the plaintiff cannot recover
consequences arising therefrom. damages twice for the same act or omission of
the defendant (NCC, Art. 2177).
(x) Doctrine of Common Knowledge
7. DAMAGES
In cases where res ipsa loquitur is applicable,
the court is permitted to find a physician (a) Damages is the pecuniary compensation,
negligent upon proper proof of injury to the recompense, or satisfaction for an injury
patient, without the aid of expert testimony, sustained, or as otherwise expressed, the
where the court from its fund of common pecuniary consequences which the law imposes
knowledge can determine the proper standard for the breach of some duty or violation of some
of care. (Borromeo v. Family Care Hospital rights.
2016)
Note: There is a material distinction between
(xi) Doctrine of Informed Consent damages and injury. Injury is the illegal invasion
of a legal right; damage is the loss, hurt or harm
There are four essential elements a plaintiff which results from the injury; and damages are
must prove in a malpractice action based upon the recompense or compensation awarded for
the doctrine of informed consent: the damage suffered.
- 23 -
COMMERCIAL LAW
- 24 -
(CIVIL CODE, Art. 44(2)) o As to the Legal Right to Corporate
Existence
(d) Government Owned and Controlled
Corporations (a) De Jure Corporation
Corporations organized as stock or non-stock A corporation created in strict or substantial
corporations, vested with functions relating to compliance with the mandatory requirements for
public needs whether governmental or incorporation, and the right of which to exist as
proprietary in nature, and owned by the a corporation cannot be successfully attached
government directly or through its or questioned by any party (including the State)
instrumentalities either wholly or to the extent of even in a direct proceeding for that purpose by
at least 51% of its capital stock. the State.
(REVISED ADMINISTRATIVE CODE, Sec.
2(13))) (b) De Facto Corporation
A de facto corporation is a company which has
Note: Not all GOCCs are quasi-public colorable compliance in good faith to the legal
corporations. GOCCs organized under the requirements set by the Revised Penal Code
Corporation Code, and thus, without original and the SEC.
charters, are private corporations
Requisites:
NATIONAL COAL CO v. CIR (1) A valid law under which the corporation is
(G.R. No. L-22619, Dec. 2, 1924) organized
The government, as a member of a corporation (2) A bona fide attempt in good faith to
organized under the Corporation Code, merely incorporate; and
acts as a corporator and does not exercise any (3) An assumption of corporate powers
sovereignty. The mere fact that the government
happens to be the majority stockholder of a MISSIONARY SISTERS OF OUR LADY OF
corporation does not make it a public FATIMA v. ALZONA (2018)
corporation. The filing of AOI and the issuance of the
certificate of incorporation are essential for the
o As to the Manner of Creation existence of a de facto corporation. In fine, it is
the act of registration with SEC through the
(a) Corporation created by SPECIAL LAW issuance of the Certificate of Incorporation that
A corporation directly created by Congress marks the beginning of an entity’s corporate
through a special law. Such corporation must be existence. Thus, a donation made in favor of the
a government-owned or controlled corporation. corporation after which the filing of its
incorporation papers with the SEC, but before
(b) Corporation created under GENERAL the issuance of the SEC Certificate of
LAW Incorporation requires the application, not of the
A corporation created under the Revised de facto corporation doctrine, but rather of the
Corporation Code of the Philippines, the corporation by estoppel doctrine under [Sec. 20]
Corporation Code of the Philippines and the Old
Corporation Law. o As to Nationality or Place of Incorporation
(a) Holding or Parent Corporation (a) That the applicant chief archbishop,
A corporation that has control over another bishop, priest, minister, rabbi, or
corporation directly or indirectly through one or presiding elder represents the religious
more intermediaries. It is the corporation that denomination, sect, or church who
owns all or substantially all or the controlling desires to become a corporation sole;
shares in the subsidiary. (b) That the rules, regulations and discipline
of the religious denomination, sect or
(b) Subsidiary Corporation church are consistent with becoming a
A corporation more than 50% of the voting stock corporation sole and do not forbid it;
of which is owned and controlled directly or (c) That such chief archbishop, bishop,
indirectly through one or more intermediaries by priest, minister, rabbi, or presiding elder
another corporation, which thereby becomes a is charged with the administration of the
parent corporation.; or temporalities and the management of the
affairs, estate and properties of the
(c) Affiliate religious denomination, sect, or church
A corporation that, directly or indirectly, through within the territorial jurisdiction, so
one or more intermediaries, is controlled by, or described succinctly in the articles of
is under the common control, of a parent incorporation;
corporation. (d) The manner by which any vacancy
occurring in the office of chief
o As to Number of Corporators archbishop, bishop, priest, minister,
rabbi, or presiding elder is required to be
(a) Corporation Aggregate filled, according to the rules, regulations
A corporation consisting of more than one or discipline of the religious
person or member. It has been defined as an denomination, sect, or church; and
artificial body of men, composed of diverse (e) The place where the principal office of the
individuals, the ligaments of which body, the corporation sole is to be established and
franchises and liberties bestowed upon it, bind located, which place must be within the
and unite all into one, and consists of the whole territory of the Philippines.
frame and essence of the corporation.
The AOI may include any other provision not
(b) Corporation Sole contrary to law for the regulation of the affairs of
A corporation consisting of only one person or the corporation (Sec. 109, RCC).
member, for the purpose of administering and
managing, as trustee, the affairs, property and The articles of incorporation must be verified, by
temporalities of any religious denomination, sect affidavit or affirmation of the chief archbishop,
or church, a corporation sole may be formed by bishop, priest, minister, rabbi, or presiding elder,
the chief archbishop, bishop, priest, minister, as the case may be, and accompanied by a
26
copy of the commission, certificate of election or Dissolution: A corporation sole may be
letter of appointment of such chief archbishop, dissolved and its affairs settled voluntarily by
bishop, priest, minister, rabbi, or presiding elder, submitting to the SEC a verified declaration of
duly certified to be correct by any notary public. dissolution, setting forth:
From and after filing with the SEC of the said (a) The name of the corporation;
AOI, verified by affidavit or affirmation, and (b) The reason for dissolution and winding
accompanied by the documents mentioned in up;
the preceding paragraph, such chief (c) The authorization for the dissolution of
archbishop, bishop, priest, minister, rabbi, or the corporation by the particular religious
presiding elder shall become a corporation sole denomination, sect or church;
and all temporalities, estate and properties of (d) The names and addresses of the
the religious denomination, sect or church persons who are to supervise the winding
theretofore administered or managed as such up of the affairs of the corporation.
chief archbishop, bishop, priest, minister, rabbi,
or presiding elder shall be personally held in Upon approval of such declaration of dissolution
trust as a corporation sole, for the use, purpose, by the SEC, the corporation shall cease to carry
exclusive benefit and on behalf of the religious on its operations except for the purpose of
denomination, sect, or church, including winding up its affairs (Sec. 113, RCC).
hospitals, schools, colleges, orphan asylums,
parsonages, and cemeteries thereof (Sec. 110, (c) One Person Corporation
RCC). A corporation with a single stockholder, who
may be a natural person, a trust, or an estate
Filling of vacancies: (Sec. 116, RCC). No other person / entity,
The successors in office of any chief outside those mentioned in Section 116 of the
archbishop, bishop, priest, minister, rabbi, or RCC, may form an OPC. An OPC is a stock
presiding elder in a corporation sole shall corporation. Submission of By-Laws is not
become the corporation sole on their accession required for an OPC (Sec. 119, RCC)
to office and shall be permitted to transact
business as such upon filing a copy of their o As to existence of Delectus Personae
commission, certificate of election, or letters of Feature
appointment, duly certified by any notary public
with the SEC. (a) Open Corporation
One which is open to any person who may wish
During any vacancy in the office of chief to become a stockholder or member thereto.
archbishop, bishop, priest, minister, rabbi, or
presiding elder of any religious denomination, (b) Close Corporation
sect or church incorporated as a corporation A close corporation is one whose AOI provides
sole, the person or persons authorized by the that:
rules, regulations or discipline of the religious (1) All the corporation’s issued stock of all
denomination, sect, or church represented by classes, exclusive of treasury shares, shall be
the corporation sole to administer the held of record by nor more than a specified
temporalities and manage the affairs, estate, number of persons, not exceeding 20;
and properties of the corporation sole shall (2) All the issued stock of all classes shall be
exercise all the powers and authority of the subject to one or more specified restrictions on
corporation sole during such vacancy transfer permitted by this Title; and
(Sec. 112, RCC). (3) The corporation shall not list any stock
exchange or make any public offering of its
stocks of any class. Notwithstanding the
27
foregoing, a corporation shall not be deemed a B. COMPOSITION OF / MEMBERSHIP IN
close corporation when at least 2/3 of its voting BOARD OF DIRECTORS:
stock or voting rights is owned or controlled by
another corporation which is not a close Number of Directors/Trustees:
corporation within the meaning of this Code. Directors must NOT be more than fifteen (15)
(REVISED CORPORATION CODE, Sec. 95) (REVISED CORPORATION CODE, Sec. 10)
o Special Types of Corporations under the The number of Trustees shall be fixed in the AOI
Revised Corporation Code of the or by laws which may or may not be more than
Philippines fifteen (15)
(REVISED CORPORATION CODE, Sec. 91)
(a) Close Corporation
Term of the Board:
(b) Special Corporations A Director holds office for 1 year while a
i. Educational Corporations Trustee holds office for a term not exceeding
It is a stock or non-stock corporation organized 3 years, or until the replacement
to provide facilities for teaching or instruction. It Director/Trustee is elected.
shall be governed by special laws and the (REVISED CORPORATION CODE, Sec. 22)
general provision of the RCC.
(REVISED CORPORATION CODE, Sec. 105) While there appears to be no maximum limit (on
the number of trustees in order to give more
ii. Religious Corporations representation to the Board of Trustees of
It is a corporation composed entirely of spiritual nationwide membership associations) the
persons and which is organized for the number should not exceed the number of
furtherance of perpetuating religion or for members of the corporation.
perpetuating the rights of the church or for the (SEC Opinion dated August 21, 1997)
administration of church or religious work or
property. General Authority and Duty of the Board
Unless otherwise provided in this Code, the
It may be classified into corporation sole and board of directors or trustees shall exercise the
religious societies. corporate powers, conduct all business, and
control all properties of the corporation.
o Other Special Classes of Corporations (REVISED CORPORATION CODE, Sec. 22,
par. 1)
(a) Ecclesiastical Corporation
Corporations composing entirely of spiritual Minimum Qualifications of Directors or
persons and are established for the furtherance Trustees:
of religion and for perpetuating the rights of a (1) For a director, legal ownership of at least one
church. share of the capital stock of the corporation in
his own name;
(b) Lay Corporations (2) Directors and Trustees must be natural
All corporations other than ecclesiastical. person of legal age possessed of full legal
capacity; and
(c) Eleemosynary Corporation or Charitable (3) He must possess other qualifications as may
Corporation be prescribed in the by-laws of the corporation
A corporation created not for private gain or (REVISED CORPORATION CODE, Sec. 46)
profit but for charitable purposes for the
administration of charitable trust.
28
Disqualifications of Directors, Trustees, and Independent Director
Officers: An independent director is a person who, apart
A person shall be disqualified from being a from shareholdings and fees received from the
director, trustee, or officer of any corporation if, corporation, is independent of management and
within 5 years prior to the election or free from any business or other relationship
appointment as such, the person was: which could or could reasonably be perceived to
(1) Convicted by final judgment: materially interfere with the exercise of
i. Of an offense punishable by independent judgment in carrying out the
imprisonment for more than 6 years; responsibilities as a director. Independent
ii. For violating of the RCC; and directors are required to constitute at least 20%
iii. For violating of the SRC’ of the Board’s membership in corporations
(2) Found to be administratively liable or any vested with public interest.
offense involving fraudulent acts; and (REVISED CORPORATION CODE, Sec. 174)
(3) By a foreign court or equivalent foreign
authority for acts, violations, misconducts Election of Directors/Trustees:
similar to (1) and (2) VALLE VERDE COUNTRY CLUB, INC. v.
(REVISED CORPORATION CODE, Sec. 26) AFRICA (2009)
The underlying policy of the Corporation Code
Note: The enumeration of grounds for is that the business and affairs of a corporation
disqualifications is not exclusive. The by-laws must be governed by a Board of Directors
may validly provide that a stockholder is whose members have stood for election, and
ineligible to be a director if he is also a director who have been elected by the stockholders, on
in a corporation whose business is in an annual basis. Only in that way can the
competition with that of other corporation. director’s continued accountability to the
shareholders, and the legitimacy of their
Designated Name: decisions that bind the corporation’s
HORNILLA v. SALUNAT (2003) stockholders, be assured. The shareholder vote
Whatever may be the term used in the company is critical to the theory that legitimizes the
charter, the “Board of Directors” is the body exercise of power by the directors or officers
which: (1) exercises all powers provided for over properties that they do not own.
under the [RCC]; (2) conducts all business of the
corporation; and (3) controls and holds all Cumulative voting in stock corporations, a
properties of the corporation. Its members have stockholder is entitled to vote as many as the
been characterized as clothed with a fiduciary number of his shares and apportion them in any
character. Hence, the corporation’s general way he likes.
counsel cannot represent the members of the
board who have been sued by the stockholders Straight voting in non-stock corporations, a
in a derivative suit, for clearly the Board is member is generally entitled to 1 vote; unless,
separate and distinct from the corporate entity the AOI or the bylaws allow that a member is
itself. entitled to vote as many as the number of seats
in the Board of Trustees to be filled provided that
Non-stock and other special corporations, may no candidate shall be voted more than once by
through their AOI or their bylaws, designate their a member.
Governing Board by any name other than as (REVISED PENAL CODE, Sec. 23)
“Board of Trustees”
(REVISED CORPORATION CODE, Sec. 174) RICAFORT v. DICDICAN (2016)
All election contests over directors and trustees
fall within the original and exclusive jurisdiction
29
of the RTC Special Commercial Courts and no C. POWERS, DUTIES AND PREROGATIVES
longer with the SEC. 181 Under Secs. 1-3 of OF BOARD OF DIRECTORS AND
Rule 6 of the Interim Rules of Procedure for STOCKHOLDERS
Intra-Corporate Controversies, an election
contest should be dismissed when filed beyond • EXPRESS POWERS OF THE
the 15-day prescriptive period allowed for an CORPORATION
election protest.
Every corporation incorporated under this Code
Vacancies in the Board: has the power and capacity:
If the reason for the vacancy is Removal,
Expiration of term, or Increase in the number (a) To sue and be sued in its corporate
of seats (REI), the stockholders will fill the name;
vacancy. For all other reasons, the Board will fill (b) To have perpetual existence unless the
the vacancy if there is it still has quorum. If the certificate of incorporation provides
Board does not have a quorum, the otherwise;
stockholders will fill the vacancy. (c) To adopt and use a corporate seal;
(d) To amend its AOI in accordance with the
A director or trustee elected to fill a vacancy provisions of this Code;
shall be referred to as replacement director or (e) To adopt bylaws, not contrary to law,
trustee and shall serve only for the unexpired morals or public policy, and to amend or
term of the predecessor in office. repeal the same in accordance with this
(REVISED CORPORATION CODE, Sec. 28) Code;
(f) In case of stock corporations, to issue or
Emergency Board: sell stocks to subscribers and to sell
When the vacancy prevents the remaining treasury stocks in accordance with the
directors from constituting a quorum and provisions of this Code; and to admit
emergency action is required to prevent grave, members to the corporation if it be a non-
substantial, and irreparable loss or damage to stock corporation;
the corporation, the vacancy may be temporarily (g) To purchase, receive, take or grant, hold,
filled from among the officers of the corporation convey, sell, lease, pledge, mortgage,
by unanimous vote of the remaining and otherwise deal with such real and
directors or trustees. personal property, subject to the
limitations prescribed by law and the
The action by the designated director or trustee Constitution;
shall be limited to the emergency action (h) To enter into a partnership, joint venture,
necessary, and the term shall cease within a merger, consolidation, or any other
reasonable time from the termination of the commercial agreement with natural and
emergency or upon election of the juridical persons;
replacement director or trustee, whichever (i) To make reasonable donations, including
comes earlier. The corporation must notify the those for the public welfare or for
SEC within 3 days from the creation of the hospital, charitable, cultural, scientific,
emergency board, stating therein the reason for civic, or similar purposes: Provided, That
its creation. no foreign corporation shall give
(REVISED CORPORATION CODE, Sec. 22) donations in aid of any political party or
candidate or for purposes of partisan
political activity;
30
(j) To establish pension, retirement, and increase bonded indebtedness are as follows:
other plans for the benefit of its directors, (NARS-CPF25)
trustees, officers, and employees; and 1. Prior written Notice of the proposed
(k) To exercise such other powers as may be increase or decrease of the capital stock
essential or necessary to carry out its indicating the time and place of meeting
purpose or purposes as stated in the AOI. addressed to each stockholder which
(REVISED CORPORATION CODE, Sec. 35) must be made either by mail or personal
service;
Doctrine of Necessary Implication: 2. Approval by the majority vote of the
Reference must be made to a corporation’s AOI Board of directors;
and unless the power to carry a particular 3. Ratification by the Stockholders holding
business is either expressly or impliedly or representing at least 2/3 of the
conferred thereby, it does not exist. outstanding capital stock at a meeting
duly called for that purpose;
• POWER TO EXTEND OR SHORTEN 4. Submission to the SEC for approval;
CORPORATE TERM 5. A Certificate in duplicate signed by a
majority of the directors of the
Corporate term may be extended or shortened corporation, countersigned by the
upon compliance with the following (NARS): chairman and the secretary of the
1. Written Notice of the proposed action and stockholders meeting;
the time and place of meeting served to 6. In case of decrease in capital stock, the
each stockholder or member either by same must not Prejudice the right of the
mail or personal service; creditors;
2. Approval by a majority vote of the board 7. Filing of the certificate with the SEC; and,
of directors/trustees; 8. In case of increase in capital stock, 25%
3. Ratification by the stockholders of such increased capital must be
representing at least 2/3 of the subscribed and that at least 25% of the
outstanding capital stock or 2/3 of the amount subscribed must be paid either in
members in case of non-stock cash or property.
corporations; and (REVISED CORPORATION CODE, Sec. 37)
4. A copy of the amended AOI Submitted to
the SEC for approval (Sec. 36, RCC). Bonded indebtedness is a secured
indebtedness or those secured by real or
Despite the Board resolution approving the personal property that is covered by certificates.
increase in capital stock and the receipt of
payment on the future issues of the shares from • POWER TO SELL OR DISPOSE OF
the increased capital stock, such funds do not CORPORATE ASSETS
constitute part of the capital stock of the
corporation until approval of the increase by The requirements are as follows (NARC):
SEC.
1. Prior written Notice of the proposed
• POWER TO INCREASE OR action indicating the time and place of
DECREASE CAPITAL STOCK, OR meeting addressed to each stockholder
INCUR, CREATE, OR INCREASE or member which must be made either by
BONDED INDEBTEDNESS mail or personal service;
2. Approval by the majority vote of the board
The requirements for the increase or decrease of directors;
of authorized capital stock or incur, create, or
31
3. Ratification by the stockholders holding 2. Approval by the majority of the board
or representing at least 2/3 of the of directors or trustees;
outstanding capital stock at a meeting 3. Ratification by the stockholders
duly called for that purpose; and, representing at least 2/3 of the
4. The sale of the assets shall not be outstanding capital stock or 2/3 of the
Contrary to the provisions of existing members in case of non-stock
laws on illegal combinations and corporation at a meeting duly called
monopolies and Bulk Sales Law. for the purpose (Sec. 39, RCC).
(REVISED CORPORATION CODE, Sec. 39)
A corporation is not allowed to engage in a
Instances when ratification of stockholders business distinct from those enumerated in the
is not required: AOI without amending the purpose clause of
1. If it is necessary in the usual and regular said article. However, if the investment by the
course of business; corporation is reasonably necessary to
2. If the proceeds of the sale or other disposition accomplish its primary purpose as stated in AOI,
of such property and assets be appropriated for there is no need for stockholdersǁ approval.
the conduct of the remaining business; or (REVISED CORPORATION CODE, Sec. 39)
3. If the transaction does not cover all or
substantially all of the assets. • POWER TO ACQUIRE OWN SHARES
(REVISED CORPORATION CODE, Sec. 39)
A corporation can acquire its own shares
Under the Nell Doctrine, the transfer of all the provided that:
assets of a corporation to another shall not 1. The capital is not impaired;
render the latter liable to the liabilities of the 2. A legitimate and proper corporate
transferor, except: purpose or objective is advanced;
1. Where the purchaser expressly or 3. The corporate affairs warrant it;
impliedly agrees to assume such debts; 4. The transaction is designed and carried
2. Where the transaction amounts to a out in good faith;
consolidation or merger of corporations; 5. There is intended and there results no
3. Where the purchasing corporation is undue advantage to a favored
merely a continuation of the selling stockholder at the expense of the
corporation; and remainder;
4. Where the transaction is entered into 6. The creditors are not prejudiced; and
fraudulently in order to escape liability for 7. The corporation acts in good faith and
such debts. without prejudice to the rights of creditors
and stockholders.
• POWER TO INVEST CORPORATE
FUNDS IN ANOTHER CORPORATION • POWER TO DECLARE DIVIDENDS
OR BUSINESS
Dividends are corporate profits allocated,
The following are the requirements for lawfully declared and ordered by the directors to
investment (NAR): be paid to the stockholders on demand or at a
1. Prior written Notice of the proposed fixed time.
investment and the time and place of
the meeting shall be made, The requirements to declare dividends are as
addressed to each stockholder or follows (URC):
member by mail or by personal 1. Unrestricted retained earnings;
service; 2. Resolution of the board; and
32
3. If stock dividends are declared, there estoppel, while the latter is void and cannot be
must be resolution of the board with validated.”
concurrence of 2/3 of outstanding Capital
(Sec. 42, RCC). Types of Ultra Vires Act (BAI)
1. Acts done Beyond the powers of the
The following are the corporate acts which corporation as provided in the law or its
requires the existence of unrestricted retained AOI;
earnings: (ADA) 2. Acts or contracts entered into in behalf of
1. Power to Acquire own shares (Sec. 40, a corporation by persons who have no
RCC); corporate Authority; and
2. Power to Declare dividends (Sec 42, 3. Acts or contracts, which are per se Illegal
RCC); and as being contrary to law.
3. Payment of stocks to dissenting
stockholder in exercise of his Appraisal The effects of an ultra vires act in executed and
right (Sec. 80, RCC). executory contracts are:
1. Executed contract – courts will not set
• POWER TO ENTER INTO aside or interfere with such contracts;
MANAGEMENT CONTRACTS 2. Executory contracts – no enforcement
even at the suit of either party
Management contract is a contract whereby a (unenforceable);
corporation undertakes to manage or operate all 3. Partly executed and partly executory –
or substantially all of the business of another principle prohibiting unjust enrichment at
corporation, whether such contracts are called the expense of another shall apply; and
service contracts, operating agreements or 4. Executory contracts apparently
otherwise (Sec. 43, RCC). authorized but ultra vires – the
principle of estoppel shall apply.
A corporation cannot enter into a management
contract with a natural person.
The grounds for DISAPPROVAL OF THE AOI Bylaws are the self -imposed rules resulting
are the following: from the agreement between the [corporation]
1. AOI or any amendment is not compliant and its members to conduct the corporate
with the form prescribed by the RCC; business in a particular way.
2. Purpose of the corporation is patently
unconstitutional, illegal, immoral, or Bylaws constitute a binding contract as between
contrary to government rules and the [corporation] and its members, and as
regulations; among the members themselves. They are self-
3. The certification concerning the amount imposed private laws binding on all members,
of capital stock subscribed and/or paid is directors, and officers of the [corporation]. The
false; and prevailing rule is that the provisions of the
4. The required percentage of Filipino AOI and the bylaws must be strictly
ownership is not met (Sec. 16, RCC). complied with and applied to the letter.
36
The power to adopt bylaws is an inherent power (j) Such other matters as may be necessary
on the part of those forming a corporation or any for the proper or convenient transaction
other form of association. of its corporate affairs for the promotion
of good governance and anti-graft and
Section 45 of the RCC removed the One- corruption measures.
Month-from-Incorporation Period to Adopt An arbitration agreement may be provided in
Bylaws. However, failure to Adopt and Maintain the bylaws (Sec. 46, RCC).
the Bylaws now specifically criminally
punishable and subject to SECǁs Contempt Adoption of Corporate Bylaws, required
Power (Sec. 161, RCC). votes:
38
sculpture, engraving, lithography or other data and other materials which are original by
works of art; models or designs for works reason of the selection or coordination or
of art; arrangement of their contents. [Sec. 173.1, RA
e) Original ornamental designs or models 8293]
for articles of manufacture, whether or
not registrable as an industrial design, Derivative works are protected as new
and other works of applied art; works, provided they shall not:
f) Illustrations, maps, plans, sketches, (1) Affect the force of any subsisting copyright
charts and three-dimensional works upon the original works employed or any part
relative to geography, topography, thereof; or
architecture or science; (2) Be construed to imply any right to such use
g) Drawings or plastic works of a scientific of the original works, or to secure or extend
or technical character; copyright in such original works.
h) Photographic works including works [Sec. 173.2, RA 8293]
produced by a process analogous to
photography; lantern slides; Useful Article
i) Audiovisual works and cinematographic A “useful article” is defined as an article “having
works and works produced by a process intrinsic utilitarian function that is not merely to
analogous to cinematography or any portray the appearance of the article or to
process for making audio-visual convey information” is excluded from copyright
recordings; eligibility. The only instance when a useful
j) Pictorial illustrations and advertisements; article may be the subject of copyright protection
k) Computer programs; and is when it incorporates a design element that is
l) Other literary, scholarly, scientific and physically or conceptually separable from the
artistic works underlying product. [OLAÑO V. LIM ENG CO,
[Sec. 172.1, RA 8293] G.R. NO. 195835 (2016)]
Scope of Fair Use 2. To make any Alterations of his work prior to,
The fair use of a copyrighted work for criticism, or to withhold it from publication (IPC, Sec.
comment, news reporting, teaching including 193.2);
limited number of copies for classroom use,
scholarship, research, and similar purposes is 3. Right of Integrity - To object to any
not an infringement of copyright distortion, mutilation or other modification of, or
(IPC, Sec.185.1). other derogatory action in relation to, his work
which would be prejudicial to his honor or
Decompilation or the reproduction of the code reputation
and translation of the forms of a computer (IPC, Sec. 193.3); and
program to achieve the interoperability of an 4. To restrain the use of his Name with respect
independently created computer program with to any work not of his own creation or in a
other programs may also constitute fair use distorted version of his work (IPC, Sec. 193.4).
done for the purpose of obtaining the
information necessary to achieve such These rights are distinct from economic rights
interoperability (IPC,Sec. 185.1). and remain with the author even after he has
transferred or assigned to another "other rights
Factors to be considered in determining of copyright"
whether use is fair or not: (PANE)
40
Moral rights allow the author to take certain 4. INSURANCE
actions to preserve the personal link between
himself and the work (Id. at 9). I. WHAT CAN BE INSURED
41
or injury by the happening of the event insured `Distinctions between insurable interest in
against. life and in property:
Basis of Insurable Interest in Property (b) As to time when insurable interest must
Insurance exist
An insurable interest in property may consist in:
1. An existing interest; Insurable Interest in Life:
2. An inchoate interest founded on an General Rule:
existing interest; or It is enough that the insurable interest exists at
3. An expectancy, coupled with an the time the policy takes effect and need not
existing interest in that out of which the exist at the time of the loss.
expectancy arises (Sec. 13, IC).
Exception:
As to a mortgaged property, the mortgagor Creditor taking insurance on the life of debtor,
and the mortgagee have each an independent as the former must have insurable interest at the
insurable interest therein and both interests may time the policy took effect and at the time of loss.
be covered by one policy, or each may take out
a separate policy covering his interest, either at Insurable Interest in Property:
the same or at separate times. The insurable interest must exist when the
● Mortgagor’s insurable interest: covers insurance takes effect and when the loss occurs
the full value of the mortgaged property. but it need not exist in the meantime.
● Mortgagee’s insurable interest: to the
extent of the debt (c) As to beneficiary
(GEAGONIA V. CA, G.R. NO. 114427,
February 6, 1995). Insurable Interest in Life:
If the subject matter of insurance is the life of the
insured, he can designate anyone as
beneficiary though the latter has no insurable
interest in his (insured) life.
42
However, one cannot lawfully procure insurance voyage or a fixed period of time. (INSURANCE
for his own benefit on the life of another in CODE, Sec. 101).
whose life he has no insurable interest.
c. Suretyship
Insurable Interest in Property: - An agreement whereby a party called the
The beneficiary must also have insurable surety, guarantees the performance by another
interest in the property insured when the called the principal or obligor of an obligation or
insurance takes effect and when the loss undertaking in favor of a third party called the
occurs. oblige (INSURANCE CODE, Sec. 177).
In reinsurance, the insurer agrees to indemnify First view: The incontestability clause applies if
the insurer, not against actual payment made the following requisites are present:
but against liabilities incurred. (1) The policy must be a Life Insurance
policy;
II. CLAIMS FOR LIFE INSURANCE (2) The policy is in force for 2 years from
issue or last reinstatement
Liability of Insurer if Insured Commits (MANILA BANKERS LIFE INSURANCE
Suicide CORP. V. ABAN, July 29, 2013).
The insurer in a life insurance contract shall be
liable in case of suicide only when it is Second view: The death of the insured within
committed after the policy has been in force for the two-year period will render the right of the
a period of two years from the date of its issue insurer to rescind nugatory
or of its last reinstatement, unless the policy (SUN LIFE V. SIBYA, June 8, 2016).
provides a shorter period: Provided, however,
That suicide committed in the state of insanity Assignment of Life Insurance Policy
shall be compensable regardless of the date of A policy of life insurance upon life or health may
commission (Sec. 183, IC). pass by transfer, will or succession to any
person, whether he has an insurable interest or
Forfeiture of Beneficiary’s Interest not, and such person may recover upon it
The interest of a beneficiary in a life insurance whatever the insured might have recovered
policy shall be forfeited when the beneficiary is (Sec. 184, IC).
the principal, accomplice, or accessory in
willfully bringing about the death of the insured Notice to an insurer of a transfer or bequest
(Sec. 12, IC). thereof is not necessary to preserve the validity
of a policy of insurance upon life or health,
The share forfeited shall pass on to: unless thereby expressly required (Sec. 185,
1. The other beneficiaries, unless otherwise IC).
disqualified;
2. In the absence of other beneficiaries, the 5. REPUBLIC ACT NO. 10173
proceeds shall
be paid in accordance with the policy contract;
(DATA PRIVACY ACT OF 2012)
and
3. If the policy contract is silent, the proceeds 1. DEFINITIONS AND SCOPE
shall be paid
to the estate of the insured. (Sec. 12, IC) Personal information – Any information
whether recorded in a material form or not:
• From which the identity of an individual is
44
apparent or can be reasonably and 2. The title, business address and office
directly ascertained by the entity holding telephone number of the individual;
the information; or 3. The classification, salary range and
• When put together with other information responsibilities of the position held by the
would directly and certainly identify an individual; and
individual. [Sec. 3(g)] 4. The name of the individual on a
document prepared by the individual in
Scope the course of employment with the
The Data Privacy Act of 2012 applies to: government.
a. The processing of ALL types of personal b. Information about an individual who is or was
information; and performing service under contract for a
government institution that relates to the
b. Any natural and juridical person involved in services performed.
personal information processing including: This includes: The terms of the contract,
i. Those personal information controllers and the name of the individual given in
and processors who use equipment that the course of the performance of those
are located in the Philippines, although services;
not found or established in the
Philippines; or c. Information relating to any discretionary
benefit of a financial nature.
ii. Those who maintain an office, branch Such as the granting of a license or
or agency in the Philippines subject to the permit given by the government to an
immediately succeeding paragraph: individual, including the name of the
Provided, That the requirements of individual and the exact nature of the
Section 5 are complied with. [Sec. 4] benefit;
Nothing in this Act shall be construed as to have d. Personal information processed for
amended or repealed the provisions of Republic journalistic, artistic, literary or research
Act No. 53, which affords the publishers, editors purposes;
or duly accredited reporters of any newspaper,
magazine or periodical of general circulation e. Information necessary in order to carry out the
protection from being compelled to reveal the functions of public authority.
source of any news report or information This includes: the processing of personal
appearing in said publication which was related data for the performance by the
in any confidence to such publisher, editor, or independent, central monetary authority
reporter. [Sec. 5] and law enforcement and regulatory
agencies of their constitutionally and
This Act does NOT apply to the following [Sec. statutorily mandated functions.
4]:
a. Information about any individual who is or was f. Information necessary for banks and other
an officer or employee of a government financial institutions under the jurisdiction of
institution that relates to the position or functions the independent, central monetary authority or
of the individual, including: BSP to comply with the Credit Information
1. The fact that the individual is or was an System Act (RA 9510) and Anti-Money
officer or employee of the government Laundering Act (RA 9160) and other applicable
institution; laws.
45
g. Personal information originally collected from but not limited to, the collection, recording,
residents of foreign jurisdictions in organization, storage, updating or modification,
accordance with the laws of those foreign retrieval, consultation, use, consolidation,
jurisdictions, including any applicable data blocking, erasure or destruction of data. [Sec.
privacy laws, which is being processed in the 3(j)]
Philippines.
The processing of personal information shall
2. EXTRATERRITORIAL APPLICATION be allowed, subject to:
a. Compliance with the requirements of this
This Act applies to an act done or practice Act and other laws allowing disclosure of
engaged in and outside of the Philippines by an information to the public; and
entity if: b. Adherence to the principles of transparency,
legitimate purpose and proportionality. [Sec. 11]
a. The act, practice or processing relates to
personal information about a Philippine citizen Personal information must be:
or a resident; a. Collected for specified and legitimate
b. The entity has a link with the Philippines, purposes determined and declared, and later
and the entity is processing personal processed in a way compatible with such
information in the Philippines or even if the declared, specified and legitimate purposes
processing is outside the Philippines as long as only;
it is about Philippine citizens or residents such • When purposes are determined and
as, but not limited to, the following: declared: before, or as soon as
1. A contract is entered in the Philippines; reasonably practicable after collection.
2. A juridical entity unincorporated in the
Philippines but has central management b. Processed fairly and lawfully;
and control in the country; and
3. An entity that has a branch, agency, c. Accurate, relevant and, where necessary for
office or subsidiary in the Philippines and purposes for which it is to be used the
the parent or affiliate of the Philippine processing of personal information, kept up to
entity has access to personal date.
information; and • Inaccurate or incomplete data must be
rectified, supplemented, destroyed or
c. The entity has other links in the Philippines their further processing restricted;
such as, but not limited to:
1. The entity carries on business in the d. Adequate and not excessive in relation to the
Philippines; and purposes for which they are collected and
2. The personal information was processed;
collected or held by an entity in the
Philippines. e. Retained only for as long as necessary for the
(Sec. 6) fulfillment of the purposes for which the data
was obtained or for the establishment, exercise
3. PROCESSING OF INFORMATION or defense of legal claims, or for legitimate
business purposes, or as provided by law; and
a. General Principles
f. Kept in a form which permits identification of
Processing data subjects for no longer than is necessary for
Any operation or any set of operations the purposes for which the data were collected
performed upon personal information including, and processed.
46
• Provided, That personal information 1. The data subject has given his or her
collected for other purposes may lie consent;
processed for historical, statistical or 2. The processing is necessary and is
scientific purposes, and in cases laid related to the fulfillment of a contract
down in law may be stored for longer with the data subject or in order to
periods. take steps at the request of the data
• Provided, further, That adequate subject prior to entering into a
safeguards are guaranteed by said laws contract;
authorizing their processing. [Sec. 11] 3. The processing is necessary for
compliance with a legal obligation to
b. Sensitive information and Privileged which the personal information
information controller is subject;
4. The processing is necessary to
Sensitive personal information – Personal protect vitally important interests of
information: the data subject, including life and
(1) About an individual’s race, ethnic origin, health;
marital status, age, color, and religious, 5. The processing is necessary in order
philosophical or political affiliations; to respond to national emergency, to
(2) About an individual’s health, education, comply with the requirements of
genetic or sexual life of a person, or to public order and safety, or to fulfill
any proceeding for any offense functions of public authority which
committed or alleged to have been necessarily includes the processing
committed by such person, the disposal of personal data for the fulfillment of
of such proceedings, or the sentence of its mandate; or
any court in such proceedings; 6. The processing is necessary for the
(3) Issued by government agencies peculiar purposes of the legitimate interests
to an individual which includes, but not pursued by the personal information
limited to, social security numbers, controller or by a third party or parties
previous or current health records, to whom the data is disclosed.
licenses or its denials, suspension or
revocation, and tax returns; and Except: Where such interests are overridden by
(4) Specifically established by an executive fundamental rights and freedoms of the data
order or an act of Congress to be kept subject which require protection under the
classified. [Sec. 3(l)] Philippine Constitution. [Sec. 12]
50
The employees, agents or representatives of a
personal information controller who are involved
in the processing of personal information shall
operate and hold personal information under
strict confidentiality if the personal information
are not intended for public disclosure. This
obligation shall continue even after leaving the
public service, transfer to another position or
upon termination of employment or contractual
relations. [Sec. 20]
51