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THE LAW PERTAINING TO PRIVATE PERSONAL

AND COMMERCIAL RELATIONS
(formerly Civil and Commercial Law)

CIVIL LAW

LEGAL PERSONALITY, CAPACITY TO ACT

Q: What determines personality? (BAR 2008)

A: The Civil Code provides that birth determines personality, but the conceived child shall be
considered born for all purposes that are favorable to it, provided it is born later with the
conditions specified in Article 41, NCC (Art. 40, NCC).

Q: What are the conditions for the provisional personality of a conceived child?
A:
1. The child must be alive for at least 24 hours from complete delivery, if it had an intra-uterine
life of less than seven months; or
2. The child must be alive even only for a few hours from complete delivery, if it had an intra-
uterine life of at least seven months. (Article 41, NCC)

Q: Differentiate Capacity to Act and Juridical Capacity

A:
CAPACITY TO ACT JURIDICAL CAPACITY
Power to do acts with legal effect Fitness to be the subject of legal relations
Active Passive
Merely Acquired Inherent
Lost through death and other causes Lost only through death
Cannot exist without juridical capacity Can exist without capacity to act
Can be restricted, modified, or limited Cannot be limited or restricted

MARRIAGE

Q: Effect of the absence of any of the formal or essential requisites of marriage?

A:
General Rule: Marriage is void ab initio (Art. 4, FC).

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Exception: Where either or both were contracted with either or both parties believing in good faith
that the solemnizing officer had the legal authority to do so (Art. 35 [2] FC).

Q: Can a Filipino Citizen initiate and obtain a divorce decree abroad?

A: Yes. Art 26(2) of the Family Code, applies when a Filipino Citizen, who initiated a divorce
proceeding abroad and obtained a favorable judgement against his/her alien spouse. The law only
requires that there be a divorce decree validly obtained abroad. The letter of the law does not
demand that the alien spouse should be the one who initiated the proceeding wherein the divorce
decree was granted. However, as a condition for the Filipino Spouse to have the capacity to
remarry, the divorce decree and the National Law of the Foreigner Spouse must first be proven as
a fact (Republic v. Manalo, G.R. 221029, April 24, 2018).

Q: What are other void marriages besides those under Article 35, 37, and 38 of the Family Code?
A:
1. A marriage contracted by any party who, at the time of the celebration, was psychologically
incapacitated to comply with the essential marital obligations of marriage, shall likewise be
void even if such incapacity becomes manifest only after its solemnization (Art. 36 FC).
2. Failure to secure judicial declaration of previous marriage before contracting a subsequent
marriage (Art. 40 FC);
3. Subsequent marriage under Article 41 where both spouses acted in bad faith.

Q: Difference between Article 147 and Article 148 of the Family Code as to wages and salaries
and property acquired during cohabitation
A:
Article 147 Article 148
Wages Owned by the parties in equal shares Wages and salaries earned by each party
and and will be divided equally between belong to him or her exclusively.
Salaries them, even if only one party earned the
wages and the other did not contribute
thereto.
Property Properties acquired by both parties Only the properties acquired by both
Acquired during their union through their work parties through their actual joint
during and industry are presumed co-owned contributions of money, property and
Cohabitati by the parties. industry shall be owned by them in
on Efforts in the care and maintenance of common in proportion to their
the family and household are regarded respective contributions.
as contributions to the acquisition of
common property.

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PROPERTY

Q: What are the classifications of donations?

A: These are:
1. Donation inter vivos - When the donation takes effect during the donor’s lifetime or
independently of the donor’s death or when the full or naked ownership of the donated properties
passes to the donee during the donor’s lifetime, not by reason of his death but because of the deed
of donation.
2. Donation mortis causa - When the donation takes effect only upon the donor’s death or when
the full or naked ownership of the donated properties will pass to the donee only because of the
donor’s death.

Q: In case of non-fulfillment of the condition or charge imposed by the donor upon the donee,
what is the period of prescription for bringing the action for revocation of the donation? Is the
action transmissible? (BAR 1991)
A: The action shall prescribe after four (4) years from the non-compliance with the condition. It
may be transmitted to the heirs of the donor, and may be exercised against the donee's heirs (Art.
764, NCC).

Q: What are the requisites for hidden treasures?

A:
1. The deposit of money, jewelry or other precious objects must be hidden or unknown; and
2. The lawful ownership of which must not appear (Rabuya, 2021).

Q: Can a builder be considered in good faith despite knowledge of non-ownership of the property?
A: Yes. Article 448 of the Civil Code applies in cases where the builders knew that they were not
the owners of the land (e.g., lessee) but they constructed improvements on the land of another with
the consent of the owner. (Sps. Aquino vs. Sps. Aguilar, G.R. No. 182754; June 29, 2015)

Q: What are the options of the landowner when the builder and the landowner is in good faith?
A: Article 448 of the Civil Code provides that if a person builds on another's land in good faith,
the land owner may either:
1. appropriate the works as his own after paying indemnity; or
2. oblige the builder to pay the price of the land.

OBLIGATIONS AND CONTRACTS

Q: What are the remedies of the parties in cases of Breach of Obligations?
A:
1. Specific or substituted performance
2. Damages (Art. 1191, NCC).
3. Resolution/Cancellation - implied in reciprocal obligations, but not available if the breach is
slight, unless time is of the essence.

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4. Rescission - To rescind is to declare a contract void at its inception and to put an end to it as
though it never was. (CJDC v. CCCC, G.R. No. 198849, August 7, 2019).

Q: Z and N were best friends for a long time already. Z borrowed 310K from N, evidenced by a
promissory note whereby Z promised to pay the loan "once his means permit." 2 months later, they
had a quarrel that broke their long-standing friendship. N seeks your advice on how to collect from
Z despite the tenor of the promissory note. What will your advice be? (2017 BAR)
A: The remedy of N is to go to court and ask that a period be fixed for the payment of the debt.
Art. 1180 of the NCC provides that when a debtor binds himself to pay when his means permit
him to do so, the obligation shall be deemed to be one with a period. Art. 1197 provides that the
Courts may fix a period if such was intended from the nature of the obligation and may also fix
the duration of the period when such depends on the will of the debtor.

Q: What is Dation in Payment?

A: Dation in Payment is the delivery and transmission of ownership of a thing by the debtor to the
creditor as an accepted equivalent of the performance of the obligation (dacion en pago). This is
governed by the law on sales.

Q: What is the difference between Commodatum and Mutuum? (BAR 1977)

A: Commodatum is defined as a contract by virtue of which one of the contracting parties delivers
to the other a non-consumable (non-fungible) thing so that the latter may use the same for a certain
time and return it.

Simple loan or mutuum, on the other hand, is defined as a contract by virtue of which one of the
contracting parties delivers to the other money or any other consumable (fungible) thing subject
to the condition that the same amount of the same kind and quality be paid or returned. (Art. 1933,
NCC.)

Q: Who may ask for Reformation of Contracts?

A:
1. The party who is not at fault;
2. Party who is not asked to enforce the instrument;
3. If there is a mutual mistake, reformation may be had by either party or successor-in-interest.

Q: What Contracts need to be in writing?

A: When the law requires a contract be in writing for its:
1. Validity (Formal Contracts);
2. Enforceability (Under Statute of Frauds);
3. For the convenience of the parties.

Q: What is a stipulation pour atrui?

A: A stipulation pour atrui is a provision in favor of a third person, not a party to the contract
(Bonifacio Bros. v. Mora, 20 SCRA 262)

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Q: What are the contracts that are required by law to be in a certain form to be valid?
A:
1. Those which should appear in writing (sale of piece of land or any interest therein through an
agent);
2. Those which must appear in a public document (a partnership contract where real property is
contributed);
3. Those which must be registered.

Q: What are the requisites under the law for a valid real estate mortgage?
A:
1. Consent of the contracting parties, object certain, and cause of the obligation, (Art. 1318, NCC)
2. The mortgage must be constituted to secure the fulfillment of a principal obligation,
3. The mortgagor must be the absolute owner of the thing mortgaged,
4. The mortgagor must have free disposal of the property mortgage, and in the absence thereof,
that the mortgagor be legally authorized for the purpose (Art. 2085, NCC), and
5. The document in which the mortgage appears must be recorded in the Registry of Property
(Art. 2125, NCC)
NOTE: Effect of non-registration of the mortgage – the mortgage is still binding between the
parties. (Art. 2125, NCC)

Q: Is Usury under the law, void?

A: No, CB Circular No. 905 abolished interest rate ceilings. With the promulgation of such
circular, usury has become “legally inexistent” as the parties can now legally agree on any interest
that may be charged on the loan.

Q: What are the requisites for interest to be chargeable?

A:
1. Must be expressly stipulated (Art. 1956, NCC)
2. Agreement must be in writing (Art.1956, NCC)
3. Must be lawful.

TORTS AND DAMAGES

Q: What are the elements of Quasi-Delict?

A:
1. There must be an act or omission on the part of the defendant;
2. Such act or omission causes damage to another;
3. The injury suffered is the proximate cause of the act or omission of the defendant;
4. There is no contractual relation between the plaintiff and defendant.

Q: What is the Doctrine of Last Clear Chance?

A: The person who has 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.

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Q: What is Res Ipsa Loquitor and its elements?

A: The thing or transaction speaks for itself.
Elements:
a. The accident was of a kind which does not ordinarily occur unless someone is negligent;
b. The instrumentality or agency which caused the injury was under the exclusive control of the
person charged with negligence;
c. The injury suffered must not have been due to any voluntary action or contribution on the part
of the person injured.

Q: What is the meaning of proximate cause?

A: Proximate cause is the cause which, in natural and continuous sequence, unbroken by an
efficient intervening cause, produces the injury, and without which the result would not have
occurred (Bataclan v. Medina, G.R. No. L-101126, Oct 22, 1957).

Q: Application of the Registered Owner Rule and Employer’s Vicarious Liability under Article
2180 of the Civil Code
A: In cases where both the registered-owner rule and Article 2180 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 Tours International, Inc. v.
Abejar, G.R. No. 170631, February 10, 2016, J. Leonen)

Q: Defenses in cases involving negligence?

A:
1. Plaintiff’s Negligence was the Proximate Cause of the Injury;
2. Contributory Negligence;
3. The doctrine of assumption of risk or volenti non fit injuria;
4. Emergency rule;
5. Fortuitous event.

Q: Under the Theory of Vicarious Liability under Article 2180 of the Civil Code, who are
vicariously liable?
A:
1. Parents for their minor children who live in their company;
2. Guardians for the minors or incapacitated persons who are under their authority and live in
their company;
3. The owners and managers of an establishment or enterprise for their employees on the occasion
of their functions;
4. Employers for their employees and household helpers acting within the scope of their assigned
tasks, even if not engaged in any business or industry;
5. The State for its special agent;
a. Exception: when the damage was caused by the official to whom the task pertains
6. Teachers or heads of establishments of arts and trades for their pupils and students or
apprentices, so long as they remain in their custody.

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COMMERCIAL LAW

CORPORATION LAW
Q: What is the three-fold duty of Directors and Trustees?
A:
1) A: Duty of Obedience - shall direct the affairs of the corporation only in accordance with
the purposes for which it was organized;
2) Duty of Diligence - shall not willfully and knowingly vote for or assent to patently unlawful
acts of the corporation or act in bad faith or with gross negligence in directing the affairs
of the corporation; and
3) Duty of Loyalty - shall not acquire any personal or pecuniary interest in conflict with their
duty as such directors or trustees
Q: What is business judgment rule?
A: In the case of Philippine Stock Exchange Inc. vs Court of Appeals, G.R. No. 125469, October
27, 1997, The Courts are barred from intruding into business judgments of corporations, when
the same are made in good faith. Unless such contracts are so unconscionable and oppressive as
to amount to a wanton destruction of rights of the minority.
Q: What is a derivative suit?
A: A derivative suit is an action filed by stockholders to enforce a corporate action. It is an
exception to the general rule that the corporation’s power to sue is exercised only by the board of
directors or trustees.
Individual stockholders may be allowed to sue on behalf of the corporation whenever the directors
or officers of the corporation refuse to sue to vindicate the rights of the corporation or are the ones
to be sued and are in control of the corporation. It is allowed when the "directors [or officers] are
guilty of breach of . . . trust, [and] not of mere error of judgment." In derivative suits, the real party
in interest is the corporation, and the suing stockholder is a mere nominal party (Villamor v. Umale,
G.R. No. 172843, September 24, 2014, J. Leonen).
Q: What is concept of intra-corporate dispute?
A: An intra-corporate dispute is one that arises from intra-corporate relation that is:
(a) between the corporation, partnership or association and the public;
(b) between the corporation, partnership or association and its stockholders, partners,
members, or officers;
(c) between the corporation, partnership or association and the state in so far as its franchise,
permit or license to operate is concerned; and
(d) among the stockholders, partners or associates themselves.

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INTELLECTUAL PROPERTY

Q: What is Copyright?
A: It is a right over literary and artistic works which are original intellectual creations in the literary
and artistic domain protected from the moment of creation. (Sec. 171.1, Intellectual Property
Code/R.A. 8293)
Q: What is the principle of Automatic Protection?
A: Under this principle - works are protected by the sole fact of their creation irrespective of their
content, quality or purpose. Such rights are conferred from the moment of creation.
Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory grant,
the rights are limited to what the statute confers. It may be obtained and enjoyed only with respect
to the subjects and by the persons, and on terms and conditions specified in the statute.
Accordingly, it can only cover the works falling within the statutory enumeration or description.
Only the expression of an idea is protected by copyright, not the idea itself. (Pearl & Dean (Phil.),
Inc. vs. Shoemart, Incorporated, G.R. No. 148222, August 15, 2003).
Q: What is the four-factor test to determine whether or not there is fair use?
A: 1. The purpose and character of the use, if the nature is commercial or nonprofit educational
purposes; 2. The nature of a copyrighted work; 3. The amount and substantiality of the portion
used in relation to the entirety of the copyrighted work and 4. The effect of the use upone the
potential market for the value of the copyrighted work.
Q: What is the doctrine of fair use? (Limitation on copyright)
A: The fair use of copyrighted work for criticism, news reporting, teaching (including multiple
copies for classroom use), research and similar purposes is not an infringement of copyright.
[Sec. 185.1, RA 8293]
Q: What is “transformative test”?
A: It is generally used in reviewing the purpose and character of the usage of the copyrighted work.
This court must look into whether the copy of the work adds "new expression, meaning or
message" to transform it into something else.

INSURANCE LAW
Q: What is insurable interest?
A: In general, an insurable interest is that interest which a person is deemed to have in the subject
matter insured, where he has a relation or connection with or concern in it, such that the person
will derive pecuniary benefit or advantage from the preservation of the subject matter insured

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and will suffer pecuniary loss or damage from its destruction, termination, or injury by the
happening of the event insured against.
The existence of an insurable interest gives a person the legal right to insure the subject
matter of the policy of insurance. (LALICAN VS. THE INSULAR LIFE ASSURANCE
COMPANY, LTD., G.R. No. 183526, August 25, 2009)
Insurable interest is that interest which a person is deemed to have in subject matter of the
insurance where he has a relation or connection to it such that the person will derive pecuniary
benefit or advantage from the preservation of the subject matter or will suffer pecuniary loss
or damage from its destruction, termination, or injury by the happening of the event insured
against it. (PHILIPPINE HEALTH CARE PROVIDERS VS. COMMISSIONER OF
INTERNAL REVENUE, G.R. NO. 177330, SEPTEMBER 18, 2009)

Q: May an insurance policy be cancelled? If yes, under what grounds?

A: No policy of insurance other than life insurance shall be cancelled by the insurer except upon
prior notice thereof to the insured, and no notice of cancellation shall be effective unless it is
based on the occurrence, after the effective date of the policy, of one or more of the following:
a. Nonpayment of premium;
b. Conviction of a crime arising out of acts increasing the hazard insured against;
c. Discovery of fraud or material misrepresentation
d. Discovery of willful or reckless acts or omissions increasing the hazard insured against;
e. Physical changes in the property insured which result in the property becoming
insurable;
f. Discovery of other insurance coverage that makes the total insurance in excess of the
value of the property insured; or
g. A determination by the Commissioner that the continuation of the policy would violate
or would pace the insurer in violation of the Insurance Code.

Q: Is payment of premiums by check valid?

A: Under the cash and carry doctrine, as a general rule there is no valid and binding insurance
contract unless premium is paid. With respect to premiums paid by check:
The payment of premium by a postdated check at a stated maturity subsequent to
the loss is insufficient to put the insurance into effect. But payment by a check
bearing a date prior to the loss, assuming availability of funds, would be sufficient,
even if it remains unencashed at the time of the loss. The subsequent effects of
encashment would retroact to the date of the instrument and its acceptance by the
creditor (Vitug, Commercial Laws and Jurisprudence, 2006).

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DATA PRIVACY ACT

Q: What is General Data Privacy Principle?

A: The processing of personal information shall be allowed, subject to compliance with the
requirements of this Act and other laws allowing disclosure of information to the public and
adherence to the principles of transparency, legitimate purpose and proportionality (Sec. 11, DPA).

Q: What are the rights of the data subject?

A: The data subject is entitled to:
(a) Be informed whether personal information pertaining to him or her shall be, are being or
have been processed;

(b) Be furnished the information indicated hereunder before the entry of his or her personal
information into the processing system of the personal information controller, or at the next
practical opportunity:
(1) Description of the personal information to be entered into the system;
(2) Purposes for which they are being or are to be processed;
(3) Scope and method of the personal information processing;
(4) The recipients or classes of recipients to whom they are or may be disclosed;
(5) Methods utilized for automated access, if the same is allowed by the data subject, and the
extent to which such access is authorized;
(6) The identity and contact details of the personal information controller or its representative;
(7) The period for which the information will be stored; and
(8) The existence of their rights, i.e., to access, correction, as well as the right to lodge a
complaint before the Commission.

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