2022 NEW POINTERS

Commercial law

.
Department Chairs

Dean Aristeo R. Cruz

Commercial Law Department

Atty. Voltaire T. Duano

Labor Law Department

Prof. Jose Ortiz, Jr.

Chairperson, Civil Law Department

State Solicitor Ruben S. Ayson, Jr.

Political Law Department

Chief City Prosecutor Aldrin P. Evangelista

Criminal Law Department

Dean Salvador Moya

Remedial Law Department

Atty. Mark Anthony Tamayo

Taxation Law

Atty. Alma Lanzo

Legal Ethics Department
 Bar Operations Committee
Political and International Law
Atty. Evangeline Omadto (Supervising Lawyer)
Del Agua, Athena - Team Leader; Balacanao, Hannah – Asst.
Members: Acosta, Pamela; Balan, Ailene; De La Rosa, Ma. Kathyrine Rose; Felimon, Jean Lianne; Galdo, Arwin; Garil,
Mary Ann; Grospe, Kathryne Joy; Mirador, Jerome

Labor Law
Atty. Patrick Cortes (Supervising Lawyer)
Singson, Nikki – Team Leader; Santiago, Jullia Nicole – Asst.
Members: Andres, Alyssa Faith; Dimaculangan, Leila; Diomino, Katleen; Marlin,Georgelyn; Orillosa, Mariel; Santoyo, Iralyn;
San Pedro, Carmela; De Chavez, Alvin

Criminal Law
Atty. Ellizar Castelltort (Supervising Lawyer)
Canoso, Marvic – Team Leader
Members: Abad, Samuel Edrian; Baldesco, Maria Monica; Cabading, Hyacinth Anne; Garlitos, Victor; Gemoto, Joyce; Luisa,
Andrea Mariz B. Padilla, Ruby; Salazar, Franchesca

Commercial Law
Atty. Mark Angelo Reyes (Supervising Lawyer)
Tagumpay, Diwa – Team Leader; Alejos, Jenaline – Asst.
Members: Alipio, Mark; De Jesus, Ryan Joeferson; Medico, Irish

Civil Law
Atty. Randel Felismino (Supervising Lawyer)
Olalo, Lycel , Team Leader; Cabang, John Benedick P. - Asst.
Members: Agustin, Arvy; Bactin, April Joy; Dazo, Al Adrian; Doctor, Lorenz Benedict; Guzman, Mariah Alliana; Vicedo, Lloyd
David

Remedial Law
Atty. Katherine Macorol (Supervising Lawyer)
Jungco, Jericho – Team Leader; Pado, Maria Potenciana – Asst.
Members: Ampa, Monisah; Belleza, Jan Pauline; Datlan, Johayra; Dela Cruz, Arthur Michael; Rodriguez, Jayra; Salvacion,
Odette

Taxation Law
Atty. Ana Reyes (Supervising Lawyer)
Fuentes, Angelo – Team Leader; Sembrana, Jonel – Asst.
Members: Balero, Ma Lourdes; Cortes, Dann Philip; Domingo, Kim; Tagulob, Gizella Kym

Legal Ethics
Atty. Leihriza Urban (Supervising Lawyer)
Ronquillo, Ian – Team Leader; Vertucio, Stella Anne Marie – Asst.
Members: Barrameda, Victorio III; Basal, Bernadeth; Espineli, Caryl; Ferrer, Karl Mark
Executive Committee
Atty. Nery B. Aspili
Chairperson

Mark JR. Alipio

Assistant

Assistant Layout Artist

Adviser
DEAN RODERICK MANZANO
Administrative Officers

Mr. Ravi dG. Ysmael

Legal Aid Clinic’s Staff

 COMMERCIAL LAW REVIEW
Questions and Suggested Answers

PROBLEM No. 1. What is the minimum and maximum number/s of incorporators in

an ordinary corporation?

ANSWER: 1 is the minimum (for a One Person Corporation) and maximum is 15.
(Sec 10 and Section 116 RCC).

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PROBLEM No. 2: May domestic corporations make donations in aid of any political
party or candidate or for purposes of partisan political activity? How about foreign
corporations?

ANSWER: Domestic corporations, Yes. Foreign corporations, No. (Section 35 par (i))
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PROBLEM No. 3: A new ordinary stock corporation is being incorporated. How

much is the minimum capital stock required? How much should be subscribed? How much
should d be paid up?

ANSWER: Section 12 of the RCC does not require any minimum capital stock,
except if specifically provided by special law. It removed the 25-25 percent rule.

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PROBLEM No. 4: If an ordinary stock corporation would like to increase its

authorized capital stock, will the 25-25 per cent rule still apply? If the proposed increase is
P10M, how much should be subscribed? Paid?

ANSWER: Yes, Section 37, it specifically states that the increase in capital must
comply with the 25-25 rule. P2.5M of the P10M increase must be subscribed and P625K must
be paid.
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PROBLEM No. 5: Alvin, a Filipino; Boy, an American and Carlo, a Filipino citizen,
all of them are residents of Manila, wants to form a corporation with the primary purpose of
buying and selling second hand vehicles. They went to you to seek your advise if the three
of them may do so. They are worried that one is an American and that they are only three in
number. Explain.

ANSWER: Under the Revised Corporation Code, the three may lawfully form a
corporation. The number of incorporators required is from one to fifteen (Sec. 10). The three
of them may form a corporation. Likewise, there is no nationality and residency
requirement for forming a corporation unless a special law or the Articles of Incorporation

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and By-laws so requires, and as such the fact that Boy is an American is of no consequence
and he may be an incorporator in the proposed corporation.

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PROBLEM No. 6. ABC Corporation was formed and organized under the RCC in
2020. The Articles of Incorporation of the company was silent with regard to its corporate
term. What is the corporate term of the said corporation? Explain.

ANSWER: ABC Corporation having been formed and organized under the RCC in
2020 has a perpetual existence absence any provision of a specific corporate term (Sec. 11).
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PROBLEM No. 7: What is a mortgage redemption insurance?

ANSWER: A mortgage redemption insurance (MRI) is a form of insurance for the

protection of both the mortgagor and the mortgagee. In the event of the death of the
mortgagor during the subsistence of the mortgage contract, the proceeds from such
insurance will be applied to the payment of the mortgage debt. The mortgage obligation
will be extinguished by the application of the insurance proceeds to the mortgage
indebtedness. (Great Pacific Life Assurance Corp. vs. Court of Appeals, G.R. No. 113899,
October 13, 1999).

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PROBLEM No. 8: What is the “cash and carry” rule in Insurance Law?

ANSWER: The cash and carry rule, notwithstanding any agreement to the
contrary no policy or contract of insurance issued by an insurance company is valid and
binding unless and until the premium thereof has been paid. (Insurance Code, Sec. 77).

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PROBLEM No. 9. What are common carriers?

ANSWER: Common carriers are persons, corporations, firms or associations engaged

in the business of carrying or transporting passengers or goods or both, by land, water, or
air, for compensation, offering their services to the public. (New Civil Code, Art. 1732).
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PROBLEM No. 10: What is Droit de Suite?

ANSWER: Droit de Suite means “art proceeds right”. In every sale or lease of an
original work of painting or sculpture or of the original manuscript of a writer or composer,
subsequent to the first disposition thereof by the author, the author or his heirs shall have an
inalienable right to participate in the gross proceeds of the sale or lease to the extent of five

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per cent (5%). This right shall exist during the lifetime of the author and for fifty (50) years
after his death. (Intellectual Property Code, Sec. 200).

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PROBLEM No 11: Professor Santos made several copies of a chapter of a book on

Intellectual Property for use of his students in their class discussion. Is such an act
considered an infringement of copyright? Explain.

ANSWER: No such an act is not considered as infringement of copyright. It falls

under the privilege of fair use. The fair use of a copyrighted work for criticism, comment,
news reporting, teaching including multiple copies for classroom use, scholarship, research,
and similar purposes is not an infringement of copyright. (Intellectual Property Code, Sec.
185).
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PROBLEM No. 12: Under the Electronic Commerce Act (R.A. No. 8792), what is the
presumption relating to electronic signatures?

ANSWER: In any proceedings involving an electronic signature, it shall be presumed

that:

a). The electronic signature is the signature of the person to whom it correlates; and
b). The electronic signature was affixed by that person with the intention of signing or
approving the electronic document unless the person relying on the electronically signed
electronic document knows or has notice of defects in or unreliability of the signature or
reliance on the electronic signature is not reasonable under the circumstances. (Electronic
Commerce Act, Sec. 9).

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PROBLEM No. 13: What are covered transactions of the Anti-Money Laundering Act
as amended?

ANSWER: The following are covered transaction under the AMLA as amended:
a). The transaction in cash or other equivalent monetary instrument exceeding five hundred
thousand pesos (P500,000.00);
b). A transaction with or involving jewelry dealers, dealers in precious metals and dealers in
precious stones in cash or other equivalent monetary instrument exceeding one million
pesos (P1,000,000.00);
c). A casino cash transaction exceeding five million pesos (P5,000,000.00) or its equivalent in
other currency. (2018 IRR of AMLA, Rule 2, Sec. 1 (w)).

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PROBLEM No. 14: What is the nature of the proceeding under the Financial
Rehabilitation and Insolvency Act (FRIA) of 2010?

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 ANSWER: The proceedings under the FRIA of 2010 shall be in rem. Jurisdiction over
all persons affected by the proceedings shall be considered as acquired upon publication of
the notice of commencement of the proceedings in any newspaper of general circulation in
the Philippines in the manner prescribed by the rules of procedure to be promulgated by the
Supreme Court.

The proceedings shall be conducted in a summary and non-adversarial manner

consistent with the declared policies of the Act and in accordance with the rules of
procedure that the Supreme Court may promulgate. (FRIA of 2010, Sec.3.)

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PROBLEM No. 15: On 31 March 2021, John took an insurance policy on the life of
her girlfriend, Yoko. In the insurance application, John misrepresented that Yoko was in
perfect health although he knew all the time that Yoko was afflicted with COVID-19. Exactly
after a year, Yoko died in a vehicular accident. Hence, John filed his insurance claim. Is the
insurer liable? Justify.

ANSWER: The insurer is not liable. John has no insurable interest over the life of
Yoko. Friendship alone is not sufficient. It is settled that a person has insurable interest over
the life of another only if he has pecuniary interest over the life of such person, except if the
person insured is his spouse or child.

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PROBLEM No. 16. Paul, in action for damages on account of an infringement of a

copyright, as defendant of the alleged piracy, he raised by way of defense that he was
unaware that what he had copied was a copyright material. Is Paul’s defense valid?

ANSWER: No. The rights conferred by the Intellectual Property Code with respect to
copyright subsists from the moment of creation. Infringement was committed the moment
Paul copied the copyrighted material. Being unaware that what he copied was a copyrighted
material is not a valid defense.

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PROBLEM No. 17: George, a paying passenger boarded a plane of Beatles Airline,
bound from Manila to Naga. In mid-air, the plane exploded, crashed causing death of all
persons on board. Thereafter, it was determined that the mid-air explosion was due to the
explosive device contained in a suitcase of another passenger. Rule on the case.

ANSWER: I will make Beatles Airline liable. As a common carrier, it is bound to

exercise extraordinary diligent in carrying its passenger died due to explosion. It is
presumed negligent when its passenger died due to explosion. Its negligence was apparent
by the fact that it failed to detect, inspect and investigate suspicious packages that are being

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brought into the aircraft.

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PROBLEM No. 18: Starr Corporation was dissolved on 1 January 2022.

Unfortunately, its lawyer uttered that since its juridical existence ceases, all of its obligations
and liabilities thereafter are extinguished. Is the lawyer correct?

ANSWER: The dissolution does not itself extinguish the obligations and liabilities of
the corporation. In fact, cases that were filed against the corporation even before dissolution
and remain pending when the 3-year liquidation period expired may be continued by the
trustees or directors until rendition of the final judgment.

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PROBLEM No. 19: In action for sum of money, Ringo sought the assistance of a legal
counsel as to whether or not his text messages to his creditors, could be used against him
that indeed he owed them P5,000,000.00. And that, this would violate his right to privacy.
What will be your advise?

ANSWER: The claim that the admission of the text messages as evidence constitutes
a violation of his right to privacy is unavailing. Text messages have been classified as
“ephermal electronic communication” under the E-Commerce Act.

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PROBLEM NO. 20: Harrison, the President of Beatles Corporation argued before the
Board that, it is for the best interest of the Corporation to submit the same before a court-
supervised rehabilitation. However, Lennon & Mcartney opposed such a proposition stating
that rehabilitation is just but a mere formality and would not be of help in the current
state of Beatles Corporation even if the same is distressed. As counsel for Beatles
Corporation, how would you support the position of its President?

ANSWER: I will advice the Board that the purpose of rehabilitation proceedings is to
enable the corporation to gain a new lease life and thereby allow creditors to be paid their
claims from its earnings. The successful rehabilitation of a distressed corporation will benefit
its debtors, creditors, employees and economy in general. And thereafter, if there are
remaining assets, shareholders can recover their investments.

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PROBLEM No. 21: Atty. John opined that the Court of Appeals may issue Freeze
Order on its own and for however long it may deem appropriate as long the transaction so
warrants. Is Atty. John’s legal opinion with proper basis?
ANSWER: The CA may issue a freeze Order only when: there is a verified ex parte

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petition by the AMLC, and that the CA must determine that probable cause exists that any
monetary instrument or property is in a way related to an unlawful activity. Further, the
Freeze Order shall be effective immediately and shall be for a period not exceeding 6
months.

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PROBLEM NO. 22: Paul bought 1,000 shares from Beatles Corporation, a domestic
corporation organized and registered under Philippine Laws. In this case, how should his
shares of stocks is transferred in his favor?

ANSWER: There must be delivery of the certificate of stock; Indorsement by the

owner; and to be valid to third parties, the transfer must be recorded in the books of Beatles
Corporation.

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PROBLEM No. 23: What is the Purpose of Compulsory Third-Liability Insurance?

ANSWER: To give immediate financial assistance to victims of motor vehicle accidents

and/ or dependents, especially if they are poor regardless of the financial stability of motor
vehicle owners or operators responsible for the accident sustained.

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PROBLEM No. 24: What is your understanding of the doctrine of limited liability?

ANSWER: This refers to the exclusive real and hypothecary of maritime law which
operates to limit the liability of the ship-owner to the vessel, earned freightage, and proceeds
of the insurance, if any. In a nutshell, it means “ no vessel, no liability”.

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PROBLEM No. 25: The Assistant Vice-President for the Compliance Department of
Pilipinas Bank filed a suspicious transaction report pertaining to a transaction of Senator X,
who has a pending criminal case with the Sandiganbayan. When Senator X found out that
Pilipinas Bank filed a suspicious transaction report against him, he filed criminal and civil
complaint against the Assistant Vice-President and Pilipinas Bank for violation of Republic
Act No. 1405, known as the Secrecy of Bank Deposits. Is the Assistant Vice-President and
Pilipinas Bank liable? Explain.

ANSWER: No, the Assistant Vice-President and Pilipinas Bank are not liable. Section
9(c) of the Anti-Money Laundering Act provides that “[W]hen reporting covered or
suspicious transactions to the AMLC, covered persons and their officers and employees
shall not be deemed to have violated Republic Act No. 1405.
Based on the aforesaid safe harbor provision, no administrative, criminal or

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civil proceedings shall lie against any person for having made a covered transaction
report or suspicious transaction report in the regular performance of duties and in
good faith, whether or not such reporting results in any criminal prosecution under
the AMLA or any other Philippine law.

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PROBLEM No. 26: Who are the covered persons under the AMLA?

ANSWER: Under Section 3(a) of the AMLA, as amended, the following are the
covered persons:
a. entities and persons supervised or regulated by the Bangko Sentral ng
Pilipinas;

b. entities and persons supervised or regulated by the Insurance Commission;

c. entities and persons supervised or regulated by the Securities and Exchange

Commission;

d. jewelry dealers in precious metals (Added by R.A. 10365);

e. jewelry dealers in precious stones (Added by R.A. 10365);

f. service providers which provide services to third parties (Added by R.A.

10365);

g. persons who provide management services (Added by R.A. 10365);

h. casinos, including internet and ship-based casinos (Added by R.A. 10927);

i. real estate developers and brokers (Added by R.A. 11521); and

j. offshore gaming operation, as well as their service providers, supervised,

accredited or regulated by the Philippine Amusement and Gaming
Corporation (PAGCOR) or any government agency (Added by R.A. 11521).

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PROBLEM No. 27: After winning the lottery jackpot of Php100,000,000.00, Mr. X
decided to purchase a luxury car from a known vehicle dealer worth Php7,000,000.00, partly
paid Php5,000,000.00 in cash and the remaining Php2,000,000.00 secured by a manager’s
check from XYZ Bank. He also purchased 2 paintings from an art gallery worth
Php2,000,000.00 each, a diamond ring worth Php2,000,000.00 from a jewelry store and a
watch worth Php2,000,000.00 from a watch retailer. Who is/are bound to report such
transaction/s with AMLC?

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 ANSWER: XYZ Bank and the jewelry store are bound to submit transaction reports
to AMLC since they are both covered persons under Section 3(a) of the AMLA. The motor
vehicle dealer, art dealer, and watch retailer are not required to file any report since they are
not considered covered persons.

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PROBLEM No. 28: Flora, a frequent traveler, found a purse concealed

between the cushions of a large sofa inside the VIP lounge in NAIA while she was
waiting for her flight to be called. Inside the purse was a very valuable diamond-
studded necklace. She decided not to turn over the purse to the airport management,
and instead to keep it. On her return from her travels, she had a dependable jeweller
appraise the necklace, and the latter told her that the necklace was easily worth at
least ₱5,000,000.00 in the open market. To test the appraisal, she pawned the
necklace for ₱2,000,000.00. She then deposited the entire amount in her checking
account with Metro Bank. Promptly, Metro Bank reported the transaction to the
AMLC. Given that her appropriation of the necklace was theft, may Flora be
successfully prosecuted for money laundering? Explain briefly your answer.

ANSWER: No. Theft is not an unlawful activity under Section 3(i) of the AMLA.

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PROBLEM No. 29: Assuming it was a case for violation of Presidential Decree No.
1612, otherwise known as the Anti-Fencing Law, may Flora be prosecuted for money
laundering?

ANSWER: Yes. Presidential Decree No. 1612, otherwise known as the Anti-Fencing
Law, is a prediate crime to money laundering.

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PROBLEM No. 30: In a Mutual Legal Assistance Treaty request, the Financial
Intelligence Unit (FIU) of Country X sought the assistance of AMLC to conduct a bank
inquiry and to freeze the bank accounts of Money Launderer X in the Philippines. According
to the FIU of Country X, Money Launderer X was charged under its Cybercrime Law for the
hacking he committed on several banks in Country X, which illicit proceeds were
transferred to Money Launderer X’s bank accounts in the Philippines. In opposing the
freezing of his bank accounts, lawyers for Money Launderer X argued in their Motion to Lift
that R.A. 10175, known as the Cybercrime Prevention Act of 2012, is not a predicate crime to
money laundering. Decide.

ANSWER: The Motion to Lift should be denied. The crime of hacking under the
cybercrime law of Country X is “of a similar nature” to the predicate crime of hacking under
Section 33(a) of R.A. 8792, known as the Electronic Commerce Act of 2000.
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 The penal laws of other countries are not exactly mirror image of Philippine laws. In
determining whether or not a felony or offense punishable under the penal laws of other
countries is “of a similar nature”, as to constitute an unlawful activity under the AMLA, the
nomenclature of the felony or offense need not be identical to any of the unlawful activities
listed under the AMLA.
It is sufficient that both the Philippines and the other jurisdiction criminalize the conduct or
activity underlying the offense, regardless of whether both countries place the offense
within the same category, or denominate the offense under the same nomenclature.

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PROBLEM No. 31: What are the different covered transactions under the AMLA?

ANSWER: In general, a covered transaction is a transaction in cash or other

equivalent monetary instrument where such transaction has exceeded a certain
threshold defined under the AMLA.

For covered persons, in general, a covered transaction is a transaction in cash

or other equivalent monetary instrument involving a total amount in excess of
Php500,000.00 within one (1) banking day.

For jewelry dealers in precious metals and stones, a transaction in cash or

other equivalent monetary instrument in an amount exceeding Php1,000,000.00,
whether single or multiple transactions.

For casinos, a single casino cash transaction involving an amount in excess of

Php5,000,000.00 or its equivalent in any other currency.

For real estate developers and brokers, a single cash transaction involving an amount
in excess of Php7,500,000.00 or its equivalent in any other currency. (SECTION 3(b), AMLA)

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PROBLEM No. 32: X, a person with a known pending criminal case for human
trafficking, decided to purchase a diamond ring from a jewelry dealer worth Php500,000.00
and a condominium unit from a known real estate developer for Php2,000,000.00 in cash.
After those purchases, he went to play in a casino in Pasay and spent about Php4,000,000.00
in cash, and received a payout of Php10,000,000.00 in cash. Are the covered persons bound
to file transaction reports? If yes, what form transaction reports?

ANSWER: Yes, the covered persons are bound to submit suspicious transaction
reports to the AMLC for all the transactions, including the payout of Php10,000,000.00. The
transaction of X, a person with a pending human trafficking case, is related to an unlawful
activity or offense under Section 3(b-1)f of the AMLA.

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PROBLEM No. 33: Assuming that X is known businessman who likes to play in the
casino and for the payout of Php10,000,000.00, he received a check and had it deposited with
his collecting bank, ABC Bank. Who is bound to file a transaction report?

ANSWER: Only ABC Bank should file a covered transaction report. The payout to
the businessman was not in cash and so the casino is not bound to submit any transaction
report to AMLC unless there was something suspicious with the transaction.

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PROBLEM No. 34: A accomodated the request of Money Launderer X to purchase a

beach house in Batangas using laundered money. A registered the property in his name, for
and on behalf of Money Launderer X. Assuming all elements are present, what specific
“acts” of money laundering did A commit?

ANSWER: The act of accomodating the request of Money Launderer X may fall
within any of the specific “acts” of converting, acquiring, or possessing, among others, in
conspiracy to commit money laundering.

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PROBLEM No. 35: Accused X in the money laundering case before the Regional
Trial Court moved to hold the trial of the case against him since he has not yet been
convicted for the alleged unlawful activity. According to Accused X, conviction in the
unlawful activity is an essential element to the crime of money laundering under Section 4 of
the AMLA. Resolve.

ANSWER: The prosecution of any offense or violation under AMLA Act shall
proceed independently of any proceeding relating to the unlawful activity. (SECTION 6,
AMLA)

The elements of money laundering are separate and distinct from the
elements of the associated unlawful activity. The elements of the unlawful activity,
including the identity of the perpetrators and the details of the commission of the
unlawful activity, need not be established by proof beyond reasonable doubt in the
case for money laundering.

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PROBLEM No. 36: Distinguish an ex parte petition for freeze and a bank inquiry
application, both of which are filed with the Court of Appeals.

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 ANSWER:

Distinction Freeze Order Bank Inquiry Order

As to Purpose to prevent the monetary to gather evidence; there is
instrument or property no physical seizure of the
from dissipating property
As to Duration initially effective for a Initially effective for 120
period of 20 calendar days, days calendar days, which
and extension should not can be extended for
exceed six (6) months another 120 calendar days
As to Notice respondent is notified by respondent is not notified
the covered person upon of the conduct of bank
receipt of the freeze order inquiry
As to Rights Affected Substantive rights are
No rights violated if there
violated if there is notice is no notice since it is
procedural
As to Related when a freeze order is the AMLC will have to file
Accounts issued, covered persons are another application for
bound to also freeze the bank inquiry in order to
related accounts inquire on the related
accounts
As to Applicable 1. terrorist financing; 1. kidnapping for ransom
Exceptions; Orders 2. for purposes of 2. violation of the
that may be issued implementing targeted Comprehensive
by AMLC financial sanctions in Dangerous Drugs Act
relation to proliferation of 2002
of weapons of mass 3. hijacking and
destruction and its destructive arson and
financing murder
4. terrorism and
conspiracy to commit
terrorism, financing of
terrorism and
5. felonies or offenses of a
similar nature to
kidnapping, drug
trafficking, hijacking,
arson and murder
6. offenses of similar
nature from 1-5 above

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PROBLEM No. 37: In its money laundering investigation against X based on the
crime of kidnapping with ransom, the AMLC issued a freeze order and bank inquiry order
against the bank account of X with ABC Bank where the ransom money of P10,000,000.00
was deposited. Upon receipt of the freeze order and bank inquiry order, ABC Bank refused
to comply with the said orders since they were not issued by the Court of Appeals. Resolve.

ANSWER: ABC Bank is partly correct.

Under Section 11 of the AMLA, the AMLC can issue bank inquiry order when the
unlawful activity involves any of the following:

i. Kidnapping for ransom under Article 267 of Act No. 3815, otherwise
known as the Revised Penal Code, as amended;

ii. Sections 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15 and 16 of Republic Act No. 9165,
otherwise known as the Comprehensive Dangerous Drugs Act of 2002;

iii. Hijacking and other violations under Republic Act No. 6235; destructive
arson and murder, as defined under the Revised Penal Code, as amended;

iv. Terrorism and conspiracy to commit terrorism as defined and penalized

under Republic Act No. 9372;

v. Financing of terrorism under Section 4 and offenses punishable under

Sections 5, 6, 7 and 8 of Republic Act No. 10168, otherwise known as the
Terrorism Financing Prevention and Suppression Act of 2012; and

vi. Felonies or offenses of a nature similar to those mentioned in Section 3(i)

(1), (2) and (12) of the AMLA which are punishable under the penal laws
of other countries.

On the other hand, under Section 10(b) of the AMLA, the AMLC can only issue a freeze
order when the deposits are in any way related to financing of terrorism, terrorist acts or for
purposes of implementing targeted financial sanctions in relation to proliferation of
weapons of mass destruction and its financing.

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PROBLEM No. 38: The AMLC filed a petition for freeze and an application for bank
inquiry with the Court of Appeals against the bank accounts of Senator X, who is the subject
of an ongoing investigation for graft and corruption. Senator X only found out about the
freeze order when he could no longer withdraw or make transfers from his numerous bank
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accounts. He also found out in a newspaper article that his bank accounts are the subject of a
bank inquiry by the AMLC. Aggrieved, Senator X filed a petition before the Supreme Court
alleging constitutional violation of his right to due process and right to privacy. Resolve.

ANSWER: The petition is partly granted. A bank inquiry being conducted by AMLC
into certain bank deposits of Senator X does not violate substantive due process, there being
no physical seizure of property involved. It is the preliminary and actual seizure of the bank
deposits or investments through the freezing of the bank acounts which brings these within
reach of the judicial process, specifically a determination that the seizure violated due
process. (Subido Pagente Certeza Mendoza and Binay Law Offices v. Court of Appeals, G.R.
No. 216914, December 06, 2016)

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PROBLEM No. 39: Three brothers inherited a Riceland. The profits derived from the
Riceland was used by the co-owners to buy three brand new vans to be operated as a for-
hire shuttle and divide the profits among them. Is there a partnership?

ANSWER: Yes, a partnership has been formed. The elements of a contract

partnership are present. There is a contribution of money, property or industry. The profits
from the co-owned Riceland were contributed to a common fund which were used to but
the vans which will be operated for a for-hire shuttle. There is the intention of dividing the
profits amongst themselves.

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PROBLEM No. 40 May a corporation enter into a partnership contract in the

Philippines?

ANSWER: Yes, a corporation may enter into a partnership contract in the

Philippines. Under Section 35 of the Revised Corporation Code (RA 11232), a corporation
has the power to enter into a contract of partnership with natural and juridical persons. A
power that was not present under the old Corporation Code (BP68).

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PROBLEM No. 41: Distinguish a partnership from a joint venture.

ANSWER: When two or more entities come together to an understanding for a

specific action or purpose then it is known as a joint venture and when that purpose is
completed the joint venture shall come to an end as it is temporary in nature, whereas a
partnership is an understanding amongst its partners for a common goal and has a separate
status which is more permanent in nature. A joint venture has no distinct juridical
personality unlike a partnership.

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 PROBLEM No. 42: Attys A, B and C formed a partnership for the exercise of the
legal profession and named it A,B, C and Associates Law Offices. How many persons are
there in this set-up?

ANSWER: Four (4) persons are present. Three (3) natural persons (Attys A, B, and
C0 and one (1) juridical person (ABC and Associates Law Offices). “The partnership has a
juridical personality separate and distinct from that of each of the partners, even in the case
of failure to comply with the requirements of Art. 1772, first paragraph of the Civil Code.”.
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PROBLEM No. 43: In what form must the contract of partnership be, to be valid and
enforceable?

ANSWER: As a general rule, a partnership to be valid and enforceable, maybe

constituted in any form. However by way of exceptions, where immovables or real rights
are contributed it must in a public instrument. There must be an inventory, duly signed by
the partners and attached to the public instrument. Otherwise, the partnership is void.
(Arts. 1771 and 1773 NCC). Likewise, if capital of the partnership is three thousand pesos or
more, it must appear in a public instrument and registered with the SEC to be valid and
enforceable.

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PROBLEM No. 44: When does a partnership begin to exist?

ANSWER: “A partnership begins from the moment of the execution of the contract,
unless it is otherwise stipulated.” (Art. 1784 NCC). Being a consensual contract, it exists
upon the moment of the celebration of the contract by the parties. Its registration with the
SEC is not essential to give it a juridical personality. The life and birth of a partnership is
predicated on the mutual desire and consent of the partners.

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PROBLEM No. 45: What is a partnership at will?

ANSWER: “When a partnership for a fixed term or particular undertaking is

continued after the termination of such term or particular undertaking without any express
agreement, the rights and obligations and duties of the partners remain the same as they
were at such termination so far as is consistent with a partnership at will.
A continuation of a business by the partners or such of them as habitually acted therein
during the term, without any settlement or liquidation of the partnership affairs, is prima
facie evidence of a continuation of the partnership.” (Art. 1785 NCC).

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 PROBLEM No. 46: What is the doctrine of delectus personae?

ANSWER: Delectus personae (latin: choice of the person). By this term it is

understood that right of partners to exercise their choice and preference as to the admission
or any new members to the partnership, and as to the persons to be so admitted, if any. Is
applied to show that partners have the right to select their co-partners and that no set of
partners can take another person into the partnership, without the consent of each of the
partners. (Art. 1804 NCC).

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PROBLEM No. 47: What are the property rights of a partner?

ANSWER: The property rights of a partner are:

1. His right in specific partnership property.

A and B are partners, each contributed a car to the partnership. The two
cars are specific partnership properties. This right is not assignable; not
subject to support. The partner is a co-owner with other partners of the
specific partnership property.
2. His interest in the partnership.
The partner’s share of the profits an losses are a partner’s interest in the
partnership. This is without mentioning any particular or specific
property. This is assignable and subject to support.
3. His right to participate in the management of the partnership.
(Art. 1810 NCC).

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PROBLEM No. 48: What is dissolution, winding up and termination of a

partnership?

ANSWER: Dissolution of a partnership refers to the change in the relations

between the partners in a partnership caused by any partner ceasing to be associated
in the carrying on the business. Winding up is the process of settling partnership
business or affairs after dissolution. For a partnership, there is no definite period
provided by law and is therefore indefinite. Unlike in a corporation when the
winding up period is only for a maximum of three (3) years as provided in the RCC.
Termination is that point in time that when all partnership affairs are completely
wound up and finally settled. It signifies the end of the partnership. (Art. 1828
NCC).

-God Bless-

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