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CODE OF COMMERCE

CODE OF COMMERCE

COMMERCE – branch of human activity; purpose is to bring products to the consumer through operations habitually and with intent of gain

COMMERCIAL LAW – branch of private law which regulates the juridical relations arising from commercial acts

CHARACTERISTICS OF COMMERCIAL LAW:

1.       universal
2.       uniform
3.       equitable
4.       customary
5.       progressive

PORTIONS OF CODE OF COMMERCE STILL APPLICABLE:

1.       merchants; book of merchants and general provision of contracts
2.       joint account association
3.       commercial barter
4.       transfers of non-negotiable credits
5.       commercial contracts of overland transportation
6.       letters of credit
7.       maritime commerce

OTHERS:

1.       Commerce – bringing products from the manufacturers to the consumers
2.       Characteristics of Commerce:
   1.       habituality
   2.       rapidity – if period is fixed, debtor in delay without need of demand; if contract does not fix period, 10 days
   3.       intent to join
3.       Merchant:
   1.       Individuals – legal capacity, 21 years, or subject to parental authority, habitually engaged in commerce
   2.       Juridical Persons – commercial and industrial company organized in accordance with law, habitually engaged in business
4.       General Rule:  Minors cannot engage in commerce

       Exceptions:

1.       to continue business of deceased parents through guardian
2.       court authorizes guardian to place minor and property in business
3.       minor is an alien and his national law allows him to be a merchant
4.       Which persons are not allowed to engage in commerce?
   1.       suffering accessory penalty of civil interdiction (reclusion perpetuaandreclusion temporal)
   2.       those judicially declared insolvent until they can obtain their discharge
   3.       prohibited by Constitution and special laws
5.       Aliens
   1.       capacitated under his national law to engage in business
   2.       engaged in the business in the Philippines not reserved for the Filipinos
   3.       after securing license and BOI certificate
6.       Family Code:  Either spouse may engage in business; when objected to by the other, court will look into valid grounds, i.e. serious and moral grounds
7.       BOI Certificate must be obtained by:
   1.       alien
   2.       foreign firm
8.       Meaning of Philippine National
   1.       citizen
   2.       domestic corporation wholly owned and organized by Filipinos in the Philippines
   3.       Filipino corporation where Filipino capital entitled to vote is at least 60%
9.   Query:  If a corporation is a shareholder of another corporation, how do you determine whether the latter corporation is a Filipino national?

Answer:  The following must concur -

1.       At least  60% of the outstanding capital stock and entitled to vote of both corporations are held by citizens of the Philippines
2.       At least 60% of the Board of Directors of both corporations are Filipinos
3.   Tenor of BOI Certificate
   1.       Business or activity to be engaged is consistent with the Investment Priorities Plan
   2.       Business will contribute to the sound and balanced development of the national economy in a self-sustaining basis
   3.       Business will not conflict with the Constitution and local laws
   4.       Business is not adequately exploited by Filipino nationals
   5.       No danger of monopolies/combinations in restraint of trade
4.   Basic Principles/Conditions laid down by BOI
   1.       resident agent of foreign firm is a Filipino citizen
   2.       establishment of office in the Philippines
   3.       bringing assets tot he Philippine office as capital
   4.       complete set of accounting records
5.   Merger and Consolidation subject to BOI requirements for the issuance of certificate:

When merger and consolidation result in ownership and control of non-Filipino nationals over more than 40% of the capital of a consolidated corporation.

1.   SEC License issued upon compliance with the following requirements:
   1.       proof of compliance with principle of reciprocity
   2.       BOI certificate
   3.       Applicant for license gives required information

n  articles of incorporation

n  by-laws

n  names and addresses of resident agents

n  principal place of business in the Philippines

1.       proof of solvency
2.       deposit acceptable securities to protect future creditors

RETAIL TRADE NATIONALIZATION LAW

(Note: Material on the Retail Trade Liberalization Law will not be included in this reviewer.  Supplement to follow)

1.       Retail Trade – any act, occupation, or calling of habitually selling direct to the general public, merchandise, commodities, or goods for consumption

Jurisprudence has held that the term “retail” should be associated with and limited to goods for personal, family or household use, consumption and utilization.  The Retail Trade Nationalization Law refers to “consumption goods” or “consumer goods” which directly satisfy human wants and desires and are needed for home and daily life.  Excluded from the law are those goods which are considered generally raw material used in the manufacture of other goods, or if not, as one of the component raw material, or at least as elements utilized in the process of production and manufacturing.

1.       Elements of What Constitutes Retail Trade:
   1.       The seller habitually engages in selling;
   2.       The sale is direct to the general public; and
   3.       The object of the sale is limited to merchandise, commodities or goods for consumption.
2.       General Rule: After 1964, only Filipinos or corporations whose capital is 100% Filipino may engage in retail trade.
3.       Exceptions, that is, instances when aliens may engage in retail trade in the Philippines:
   1.       manufacturer or processor if capital does not exceed P5,000.00;
   2.       farmer or agriculturist when selling his products;
   3.       manufacturer or processor selling to industrial or commercial users or consumers who use the produce to render service to the general public or to produce or manufacture goods which are sold by them to the public;
   4.       hotel owners or keepers of restaurants included or incidental to the hotel business;
   5.       sale by a manufacturer or processor to the Government or its agencies, including government owned and controlled corporations.
4.       Query:  How to determine citizenship of shares of the corporation when they are not held directly by individuals, but in turn held by another entity?

Answer:  apply the GRANDFATHER RULE, to wit:

Shares belonging to corporations or partnerships at least 60% of the capital of which is owned by Filipino citizens shall be considered as Philippine nationality, but if the percentage of Filipino ownership in the corporation or partnership is less than 60%, only the number of shares corresponding to such percentage shall be counted as of Philippine nationality.  Thus, if 100,000 shares are registered in the name of a corporation or partnership at least 60% of the capital stock or capital respectively, of which belong to Filipino citizens, all of the said shares shall be recorded as owned by Filipinos.  But, if let’s say, 50% of the capital stock belongs to Filipino citizens, only 50,000 shares shall be counted as owned by Filipinos and the other 50,000 shares shall be recorded as belonging to aliens.

However, while a corporation with 60% Filipino and 40% foreign equity ownership is considered a Philippine national for purposes of investment, it is not qualified to invest in or enter into a joint venture agreement with corporations or partnerships, the capital or ownership of which under the Constitution or other special laws are limited to Filipino citizens only.  Hence, for purposes of the law, whatever the percentage of Filipino  ownership in the owning corporation, the foreign ownership would always render a portion of its holding in the company as foreign equity and would disqualify the corporation to engage in retail trade.

ANTI-DUMMY ACT

1.       The Act penalizes Filipinos who permit aliens to use them as nominees or dummies to enjoy privileges reserved for Filipinos or Filipino corporations.  Criminal sanctions are imposed on the president, manager, board member or persons in charge of the violating entity and causing the latter to forfeit its privileges, rights and franchises.
2.       Disqualified aliens cannot intervene in the management, operation, administration or control of the business reserved to Filipinos whether as an officer, employee or laborer, with or without remuneration, except when:
   1.       alien takes part in technical aspects;
   2.       provided that no Filipino can do such technical work; and
   3.       with express authority from the President, upon the recommendation of the department head concerned.
3.       By way of exception, the following may participate in management:
   1.       Aliens may be elected to the Board of Directors to the extent of their allowable share in the capital of the corporation (in partially nationalized industries).
   2.       A registered enterprise may employ foreign nationals in supervisory, technical, and advisory positions for a period of 5 years subject to extension.
   3.       Where majority of stocks of a pioneer enterprise is owned by foreign investors, the following positions may be held by foreign nationals:

n  president

n  treasurer

n  general manager

n  equivalent positions

1.       A Filipino common-law wife of an alien is not barred from engaging in the retail business provided she uses capital exclusively derived from her paraphernal properties; however, allowing her common-law alien husband to take part in the management of the retail business would be a violation of the law.
2.       What doing business means:
   1.       soliciting orders, purchases, service contracts;
   2.       opening offices whether called liaison offices or branches;
   3.       appointing representatives or distributors who are domiciled in the Philippines or who in any calendar year stay in the country for a period totaling 180 days or more;
   4.       participating in the management or supervision or control of any domestic firm, entity or corporation in the Philippines;
   5.       any other act or acts that imply continuity in commercial dealings
3.       When commissioned merchants/investors or commercial brokers act in their own name in selling foreign products, the foreign firm manufacturing these products is not doing business in the Philippines.
4.       When a local corporation or person acts in the name of a foreign firm, the latter is doing business in the Philippines.
5.       The following are NOT doing business:
   1.       mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do business;
   2.       exercise of rights as such investor;
   3.       having a nominee director or officer to represent interests in such corporation;
   4.       appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own accounts.
6.       Purpose:
   1.       to encourage use of and to promote transactions based on trust receipts;
   2.       to regulate the use of trust receipts

TRUST RECEIPTS LAW

1.       Definition:

A written/printed document signed by the ENTRUSTEE in favor of the ENTRUSTER whereby the latter releases the goods, documents or instruments tot he possession of the former upon the ENTRUSTEE’S promise to hold said goods in trust for the ENTRUSTER, and to sell the goods, etc. WITH THE OBLIGATION TO TURN OVER THE PROCEEDS THEREOF TO THE EXTENT OF WHAT IS OWING TO THE ENTRUSTER; or to return the goods if UNSOLD, or for other purposes.

1.       Trust receipts are denominated in Philippine currency or acceptable and eligible foreign currency.
2.       ENTRUSTER is not liable as principal or vendor under any sale or contract to sell made by the ENTRUSTEE.
3.       Risk of loss is borne by the ENTRUSTEE.
4.       Pending the duration of the trust agreement, the ENTRUSTER’S security interest cannot be prejudiced by claims of creditors of the ENTRUSTEE.
5.       Loss of goods pending the dispossession shall not extinguish the obligation to the ENTRUSTER  for the value thereof.

 LETTERS OF CREDIT

1.       Kinds:
   1.       Commercial Letters of Credit
   2.       Traveler’s Letters of Credit
2.       No protest required in case of dishonor.
3.       Issued to definite persons and not to order, thus, non-negotiable.
4.       Limited to a fixed account.

 PRICE TAGS LAW

1.       It requires articles of commerce sold at retail to bear prices.

JOINT ACCOUNTS

1.       It exists when a merchant interests himself in the transaction of another merchant, contributing thereto the amount of capital they may agree upon, and participating in the favorable or unfavorable results thereof in the proportion they may determine.
2.       Joint accounts do not adopt a firm name.
3.       No suit may be maintained – investor and third persons dealing with the merchant conducting business.
4.       It is not subject to any formal requirement for validity; it may be oral.

 BULK SALES LAW

1.       Purpose: meant to protect creditors of businessmen against preferential or fraudulent transfers
2.       The law covers all transactions, whether done in good faith or not, or whether or not the seller is in a state of insolvency, that fall within the description of what is a “bulk sale.”
3.       Types of transactions which are treated as “bulk sales”:
   1.       Sale, transfer, mortgage or assignments of a stock of goods, wares, merchandise, provisions, or materials otherwise than in the ordinary course of trade;
   2.       Sale transfer, mortgage or assignments of all, or substantially all, of the business of the vendor, mortgagor, transferor, or assignor;
   3.       Sale, transfer, mortgage, or assignment of all, or substantially all, of the fixtures and equipment used in the business of the vendor, mortgagor, transferor, or assignor.
4.       Only creditors at the time of the sale in violation of the law are within the protection of the laws and creditors subsequent to the sale are not covered.
5.       Even if the transaction falls within the definition of “bulk sale”, the following are not deemed covered by the law:
   1.       If the vendor, mortgagor, transferor or assignor produces and delivers a written waiver of the provisions of the law from his creditors as shown by verified statements;
   2.       The law does not apply to executors, administrators, receivers, assignees in insolvency, or public officers, acting under process.
6.       Obligations when transaction is a bulk sale:
   1.       The vendor must deliver to such vendee a written statement of:

n  names and addresses of all creditors to whom said vendor or mortgagor may be indebted;

n  amount of indebtedness due or owing to each of said creditors

1.       The vendor must apply the purchase money to the pro-rata payment of bona fide claims of the creditors as shown in the verified statement.
2.       The seller, at least 10 days before the sale, shall:

n  make a full detailed inventory of the goods, merchandise, etc., cost price of each article to be included in the sale

n  notify every creditor at least 10 days before transferring possession of the goods, of the price, terms and conditions of the sale

1.       Consequences of Violation of Requirements under #6 above stated:
   1.       When 6(a) above is not complied with, the sale itself is void; the seller will be criminally liable.
   2.       When 6(b) above is not complied with, the sale itself is also void; seller is also criminally liable.
   3.       When 6(c) is not complied with, the sale is not void; no criminal liability on the seller.

 INSURANCE LAW

1.       Laws applicable to insurance in the order of priority:
   1.       Insurance Code
   2.       Civil Code
   3.       General Principles prevailing on the subject in the US
2.       Contract of Insurance – an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown contingent event.
3.       Contract of Suretyship – deemed to be an insurance contract within the meaning of the Insurance Code, only if made by a surety who or which, as such, is doing an insurance business
4.       Definition of “doing an insurance business”:
   1.       making or proposing to make, as insurer, any insurance contract;
   2.       making or proposing to make as a surety, any contract of suretyship as a vocation and not merely incidental to any other legitimate business or activity of the surety;
   3.       doing reinsurance business;
   4.       doing or proposing to do any business in the substance equivalent to any of the foregoing in a manner designed to evade the provisions of the Insurance Code.
5.       Requisites of Insurance:
   1.       existence of an insurable interest;
   2.       risk of loss;
   3.       assumption of risk;
   4.       scheme to distribute losses; and
   5.       payment of premiums

• Note:  If only a, b, and c are present, it is not a contract of insurance but a risk shifting device.

1.       Characteristics of an insurance contract:
   1.       consensual
   2.       voluntary
   3.       aleatory – depends upon some contingent event; however, it is not a wagering nor a gambling contract
   4.       executed as to the insured after payment of the premium
   5.       executory as to insurer – not executed until payment for a loss
   6.         personal – each party takes into account the character, credit and the conduct of the other
   7.       conditional – liability is based on the happening of the event insured against
2.       Parties to a contract of Insurance:
   1.       insurer – party who assumes the risk or undertakes to indemnify the insured or to pay a certain sum on the happening  of a specified contingency
   2.       insured – person in whose favor the contract is operative, and who is indemnified against, or is to receive a certain sum upon the happening of a specified contingency
   3.       beneficiary – may or may not be the same as the insured

• What perils may be insured?

(a)    any contingent or unknown event, whether past or future, which may damnify a person having an insurable interest; or

(b)    any contingent or unknown event, whether past or future, which may create a liability against the person insured.

1.       Every person has an insurable interest in the life and health of:
   1.       himself, his spouse and his children
   2.       any person on whom he depends wholly or in part for education or support, or in whom he has a pecuniary interest
   3.       any person under a legal obligation to him for the payment of money, or respecting property or services, of which death or illness might prevent the performance or delay it
   4.       any person upon whose life any estate or any interest vested in him depends
2.       Insurable Interest in Property may consist of:
   1.       an existing interest
   2.       an inchoate interest, founded on an existing interest
   3.       an expectancy, coupled with an existing interest out of which the expectancy arises

• Definition of Insurable Interest in Property: Interest in property, whether real or personal, or any relation thereto, or liability in respect thereof, of such nature that a contemplated peril might directly damnify the insured.

1.   Instances when Insurable Interest must exist:
   1.       Interest in Property insured must exist when the insurance takes effect and when the loss occurs, but need not exist in the meantime.
   2.       Interest in the Life or Health of a Person Insured must exist when the insurance takes effect, but need not exist thereafter or when the loss occurs.
   3.       Beneficiaries of Life Insurance need not have insurable interest in the life of the insured.
   4.       Beneficiaries of Property Insurance must have insurable interest in the property insured.

1.   General Rule: A change of interest in any part of a thing insured unaccompanied by a corresponding change in interest in the insurance suspends the insurance to an equivalent extent, until the interest in the thing and the interest in the insurance are vested in the same person.

  Exceptions:  a.  In case of life, health, and accident insurance

1.       when the change in interest results after the occurrence of an injury which results in a loss
2.       a change of interest in one or more several distinct things, separately insured by one policy
3.       a change in the interest by will or succession on the death of the insured (interest passes to the heirs)
4.       a transfer of interest by one of several partners, joint owners in common who are jointly insured to the others (even though it has been agreed that the insurance shall seize upon the alienation of the thing insured)
5.   Revocation of Beneficiaries

• General Rule: Insurance contracts are revocable.
• Exception: Any person who is forbidden to receive any donation under Article 739 of the Civil Code cannot be named beneficiary of a life insurance policy by the person who cannot make the donation to him.
• The following donations shall be void:

1.       those made between persons who were guilty of adultery or concubinage at the time of the donation;
2.       those made by persons found guilty of the same criminal offense, in consideration thereof;
3.       those made to a public officer or his wife, descendants, ascendants, by reason of his office.

• Other Pertinent Provisions on Revocation:

(a)    The termination of a subsequent marriage shall allow the innocent spouse to revoke the designation of the other spouse who acted in bad faith as beneficiary in any insurance policy, even if such designation be stipulated as irrevocable.

(b)    After the finality of the decree of legal separation, the innocent spouse may revoke the donations as well as the designation of the latter as a beneficiary in any insurance policy, even if such designation is irrevocable.  The revocation of or change in the designation shall take effect upon written notification thereof to the insured.  The action to revoke the donation under this article must be brought within 5 years from the time the decree of legal separation has become final.

(c)     The interest of a beneficiary in a life insurance policy shall be forfeited when the beneficiary is the principal, accomplice or accessory in willfully bringing about the death of the insured, in which event, the nearest relative of the insured shall receive the proceeds of said insurance if not otherwise disqualified.

1.   Suspension – a change of interest in any part of a thing insured unaccompanied by a corresponding change of interest in the insurance suspends the insurance to an equivalent extent until the interest in the thing and the interest in the insurance are vested in the same person.
2.   Concealment – a neglect to communicate that which the party knows or ought to communicate

• General Rule:  The insured is not required to communicate the nature (or kind) or the amount of his insurable interest in the life or property insured to the insurer.
• Exception:  a.  When the insurer makes inquiry from the insured of the nature or amount of the latter’s insurable interest, whether in life or property insurance;

1.       insurance policy must specify the interest of the insured in the property insured, if he is not the absolute owner thereof.

• A concealment, whether intentional or not, entitles the injured party to rescind a contract of insurance.
• Requisites:

(a)    the party concealing must have knowledge of the facts concealed;

(b)    the facts concealed must be material to the risk;

(c)     the party is duty bound to disclose such fact to the other;

(d)    the party concealing makes no warranty as to the facts concealed;

(e)    the other party has no other means of ascertaining the facts concealed.

• Note:  An insured need not die of the very disease he failed to reveal to the insurer.  It is sufficient that the non-revelation has misled the insurer in forming his estimate of the disadvantages of the proposed policy or in making his inquiries in order to entitle the insurance company to avoid the contract.
• Note:  The insured is under an obligation to disclose not only such material facts as are known to him, but also those known to his agent where:

1.       it was the duty of the agent to acquire and communicate information of the facts in question;
2.       it was possible for the agent, in the exercise of reasonable diligence, to have made the communication before the making of the insurance contract.

n  Failure on the part of the insured to disclose such facts known to his agent, or wholly due to the fault of the agent, will avoid the policy, despite the good faith of the insured.

1.   Neither party to the insurance contract is bound to communicate information on the following matters except in answer to the inquiries of the other:
   1.       those of which the other knows;
   2.       that which, in the exercise of ordinary care, the other ought to know and of which the former has no reason to suppose his ignorance, i.e. political situation, general usages of trade;
   3.       those of which the other waives communication;
   4.       those which prove or tend to prove the existence of the risk excluded by a warranty and which are not otherwise material;
   5.       those which relate to a risk excepted from the policy and which are not otherwise material.

• Neither party is bound to communicate his mere opinion, even upon inquiry, because such opinion would add nothing to the appraisal of the application.
• Waiver of material facts may be:

(a)    by the terms of the insurance; or

(b)    by the neglect to make inquiry as to such facts, where they are distinctly implied in other facts which information is communicated

• Materiality is to be determined not by the events but solely upon the probable and reasonable influence of the facts on the party to whom the communication is due in forming his estimate of the disadvantages of the proposed contract or in making his inquiries.
• Concealment, whether intentional or not, entitles the other party to rescind the contract.

1.   Representation

It is a factual statement made by the insured at the time of, or prior to, the issuance of the policy, to give information to the insurer and otherwise induce him to enter into the insurance contract.

• It may be made orally or in writing.
• It may be made at the time of, or before, the issuance of the policy.
• It may be altered or withdrawn before the insurance is effected, but not afterwards.
• A representation cannot qualify an express provision in a contract of insurance but it may qualify an implied warranty.
• A representation as to the future is to be deemed a promise unless it appears that it was merely a statement of belief or an expectation.  (must be susceptible of present, actual knowledge)
• The statement of an erroneous opinion, belief or information, or of an unfulfilled intention, will not avoid the contract of insurance, unless fraudulent.
• Right to rescind because of false representation:

1.       must be exercised previous to the commencement of an action on the contract (the action referred to is that to collect a claim on the contract)
2.       misrepresentation, whether intentional or not, gives the right to rescind

• Incontestable Clause:  After a policy of life insurancemade payable on the death of the insuredshall have been in force during the lifetime of the insured for a period of 2 years from the date of its issue or of its last reinstatement, the insurer cannot prove that the policy is void ab initio or is rescindable by reason of the fraudulent concealment or misrepresentation of the insured or his agent.
• Exceptions:  (a)  absence of insurable risk

(b)    cause of loss is an unexpected risk

(c)     fraud

(d)    non-payment of premium

(e)    violation of conditions relating to naval or military services

(f)      failure to comply with conditions subsequent to the occurrence of the loss

1.   Warranties:

• General Rule: Non-performance of a promissory warranty avoids a contract of insurance.
• Exceptions:

1.       when before the time for performance of the promissory warranty, a loss insured against occurs;
2.       when before the time of the performance of the warranty, the act becomes unlawful;
3.       when before the time of the performance of the warranty, said performance becomes impossible.

• A statement or a promise set forth in the policy or by reference incorporated therein, the non-fulfillment of which in any respect and without reference to whether the insurer was in fact prejudiced by such non-fulfillment, renders the policy voidable by the insurer, wholly irrespective of the materiality of such statement or promise.

• Note:  If there is a breach of warranty, even if the cause of the loss is a different risk, the insurer is entitled to rescind the contract of insurance.
• Breach must refer to a material warranty, whether intentional or not.

1.   Policy

• What is a Rider?  It is an additional provision in a policy not part of the body of the printed form.
• Cover Note: written memorandum of the most important terms of a preliminary contract of insurance, intended to give temporary protection pending the investigation of the risk by the insurer, or until the issuance of a formal policy.
• General Rule: Cover notes bind insurer temporarily pending the issuance of the policy.
• Exception:  Where it is merely an acknowledgment on behalf of the company that the latter’s branch office had received from the applicant the insurance premium and accepted the application subject for processing by the insurance company and that the latter will either approve or reject the same.
• Kinds of Policies:

1.       Open – the value of the thing insured is not agreed upon, but is left to be ascertained at the time of the loss
2.       Valued – expresses on its face an agreement that the thing insured shall be valued at a specific sum
3.       Running – contemplates successive insurance which provides that the object of the policy may be from time to time defined especially as to the subject of insurance by additional statements or endorsements

n  Note:  If an amount is written on the face of an open policy, it is merely a determination of the maximum limit of recovery and not as the value of the policy.

• Period for commencing an action against the policy:  Within 1 year from the time the cause of action accrues, i.e., from the time of rejection of the claim by the insurer.  Any condition, stipulation, or agreement limiting the time to less than 1 year is void.
• Grounds for Cancellation of a Policy by the Insurer:

For Policies Other than Life:

(1)    prior notice of the cancellation to insured

(2)    notice must be based on the ff. occurrences after effective date of the policy

(a)    non-payment of premiums

(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 results in the property becoming uninsurable

(f)      determination by the Commissioner that the continuation of the policy would violate or would place the insurer in violation of the Insurance Code

(3)    notice must be in writing

(4)    it must be mailed or delivered to the insured at the address shown in the policy

(5)    notice must state the ground relied upon and that upon written request of the insured, the insurer will furnish facts on which the cancellation is based

• Renewal of the Policies Other than Life:

Insurer must mail or deliver to the insured notice of its intention not to renew the policy or to condition its renewal upon reduction of limits or elimination of coverages within 45 days before the policy ends.  Otherwise, insured entitled to renew the policy upon payment of the premium due on the effective date of the renewal.

1.   Premium

• General Rule: No policy is binding until the premium thereof has been paid.
• Exceptions:  (a)  in case of life or industrial life policy, whenever the grace period applies

(b)    in case of estoppel

• Insurer is entitled to payment of premiums as soon as the thing insured is exposed to the perils insured against.
• When insurer entitled to Return of Premiums

1.       when the contract is voidable on account of fraud or misrepresentation of the insurer;
2.       when on account of facts, the existence of which the insured was ignorant without his fault
3.       when by any default of the insured other than actual fraud, the insurer never incurred any liability under the policy
4.       when the insured has become a public enemy and the policy automatically canceled (on the ground of equity)
5.       in case of over-insurance by several insurers (ratable return of premiums, proportioned to the amount by which the aggregate sum insured in all policies exceed the insurable value of the thing at risk)
6.   Loss

• When Insurer is Liable:

1.       where the peril insured against was the proximate cause, although a peril not contemplated by the contract may have been the remote cause or even the immediate cause of the loss
2.       where the thing insured is rescued from the peril insured against that would otherwise have caused a loss, if, in the course of such rescue, the thing is exposed to a peril not insured against, which permanently deprives the insured of its possession in whole or in part
3.       where loss is caused by efforts to rescue the thing insured from a peril insured against
4.       insurer is not exonerated by a loss caused by simple negligence of the insured if the proximate cause of the loss is a peril insured against
5.       loss, the immediate cause of which is a peril insured against except when the proximate cause is an excepted peril

• When Insurer Not Liable:

1.       where the peril insured against was only a remote cause
2.       where the peril is specifically excepted, a loss which would not have occurred but for such peril is thereby excepted
3.       loss caused by the connivance of the insured
4.       loss caused by the willful act of insured
5.       loss caused by insured’s negligence, if it amounts to bad faith

• General Rule: The insurer is not liable for a loss caused by the willful act of the insured.
• Exception:  Suicide Clause in Life Insurance: Insurer liable in case insured committed suicide after the policy has been in force for a period of 2 years from the date of its issue or last reinstatement.  If insured kills himself within a period of 2 years, insurer is not liable.
• Exception to Exception:  If suicide is committed in a state of insanity, regardless of the time of commission, the insurer is liable.

1.   Double Insurance – exists where the same person is insured by several insurers separately in respect to the same subject and interest

• Requisites:  a.    person insured must be the same

1.       existence of several insurers
2.       subject matter insured must be the same
3.       interest the same
4.       risk insured against also the same

• The Code prohibits double insurance without the consent of the insurer.
• Liability of Insurer:

Insurance taken

from each insurer

———————————-   x      value of property received      =   liability of insurer total insurance

1.   Reinsurance:  A process by which an insurer procures a third person to insure him against loss or liability by reason of such original insurance.

The original insured cannot recover from this insurance unless there is a specific grant, or assignment of, the reinsurance contract in favor of the insured, or a manifest intention of the contracting parties to the reinsurance contract to favor the insured.

• General Rule:  The insurer who obtains reinsurance must communicate:

1.       all the representations of the original insured; and
2.       all the knowledge and information he possesses, whether previously or subsequently acquired which are material to the risk

• Exception:  under automatic reinsurance treaties

1.   Marine Insurance:  insures against perils of the sea, not of the ship

• Owner of the Ship has Insurable Interest:

1.       in the ship even if it has been chartered by one who promises to pay him in value in case of loss (insurer is liable for what insured cannot recover from the charterer), even when hypothecated by bottomry (only the excess of its value over the amount secured by bottomry) and
2.       in the freightage, which according to the ordinary and probable course of things he would have earned but for the intervention of a peril insured against or other peril incident to the voyage

• Charterer has insurable interest in the ship to the extent that he is liable to be damnified by its loss.
• Barratry:  Any willful misconduct on the part of the masters or crew, in pursuance of some unlawful or fraudulent purpose, without the consent of the owners and to the prejudice of the owner’s interest.
• Jettison:  Intentional casting overboard of any part of a venture exposed to a peril, whether it be of the cargo, or the ship’s furniture or tackle, in the hope of saving the rest of the venture.
• Insurable Interest in Marine Insurance:  Determined when one will sustain loss from the destruction of the subject matter or derive benefit from its preservation.
• Charter Party:  Contract by virtue of which the owner or the agent of a vessel binds himself to transport merchandise or persons for a fixed price.  It has also been defined as a contract by virtue of which the owner or the agent of the vessel for the transportation of goods or persons from one port to another.
• Loan on Bottomry:  Contract in the nature of a mortgage whereby the owner of a ship borrows money for the use, equipment or repair of the vessel for a definite term, and pledges the ship as a security for repayment, with maritime or extraordinary interest on the account of the maritime risks to be borne by the lender.  It is stipulated in such a contract that if the ship be lost in the course of the specific voyage or during a specified limited time caused by any of the perils enumerated in the contract, the lender shall resolutely lose his money.
• Loan on Respondentia:  Contract akin to that of mortgage made on the goods on board the ship, and which are to be sold or exchanged in the course of the voyage.  The goods serve as the principal security.
• Freightage:  Signifies all the benefits derived by the owner, carriage of his own goods, or those of others.
• Concealment:  In marine insurance, information or the belief or expectation of a 3^rdperson, in reference to a material fact is material.

n  Concealment of the following merely exonerates the insurer from the resulting loss therefrom:

1.       national character of the insured
2.       liability of the thing insured to capture and detention
3.       liability to seizure from breach of foreign laws of trade
4.       want of necessary documents
5.       use of false and simulated papers

• Implied Warranties:

1.       that the ship is seaworthy – complied with if the ship is seaworthy at the time of commencement of risk, except:  (a)  insurance for a specified length of time – at the commencement of every voyage it undertakes during that time; (b) cargo to be transshipped at indeterminate port – each vessel upon which cargo is shipped is seaworthy at the commencement of each particular voyage
2.       that the vessel shall not engage in illegal venture
3.       that the vessel shall not deviate from the course of the voyage insured
4.       where the nationality or neutrality of a ship or cargo is expressly warranted, it is implied that the ship will carry the requisite documents to show such nationality or neutrality and that it will not carry any documents which may cast reasonable suspicion thereon

• Seaworthiness depends on:

1.       nature of the ship
2.       nature of the voyage
3.       nature of the service

n  Seaworthiness of the vessel is required only at the commencement of the risk

n  Exceptions:

1.       in a Time Policy – commencement of every voyage that must be undertaken
2.       in a Cargo Policy – commencement of each particular voyage
3.       in a Voyage Policy – commencement of each portion of the voyage

• Deviation

1.       a departure from the course of the voyage insured
2.       unreasonable delay in pursuing the voyage
3.       commencement of an entirely different voyage

• When is Deviation proper?

1.       when caused by circumstances over which neither the master not the owner of the ship has any control
2.       when necessary to comply with a warranty or to avoid a peril whether it is insured against or not
3.       when made in good faith for the purpose of saving human life or relieving another vessel in distress
4.       when made in good faith and upon reasonable grounds of belief in its necessity to avoid a peril

• Loss

1.       Actual Total Loss

n  a total destruction of the thing insured

n  the irretrievable loss of the thing by sinking or by being broken up

n  any damage to the thing which renders it valueless tot he owner for which he held it

n  any other event which effectively deprives the owner of possession, at the port of destination, of the thing insured

1.       Constructive Total Loss – gives to the person insured the right to abandon

• Average – any extraordinary or additional expense incurred during the voyage for the preservation of the vessel, cargo, or both and all damages to the vessel and cargo from the time it is loaded and the voyage commenced until it ends and the cargo unloaded
• General Average – an expense or damage suffered deliberately in order to save the vessel, its cargo, or both from the real or known risk
• Abandonment – act of the insured by which, after a constructive total loss, he declares the relinquishment to the insured of his interest in the thing insured (where the cause of loss is a peril insured against)

(a)    more than ¾ thereof in value is actually lost or would have been expended to recover it from the peril

(b)    it is injured to such an extent as to reduce its value by more than ¾

(c)     if the thing insured is the ship and the voyage cannot be lawfully performed without incurring an expense of more than ¾ of the whole, or a risk which a prudent man would not undertake under the circumstances

(d)    if the thing insured is cargo or freightage, and the voyage cannot be performed on another ship procured by the master within a reasonable time and with reasonable diligence to forward the cargo without incurring an expense or a risk as stated above

• Freightage cannot be abandoned unless ship is also abandoned.
• Requisites of a Valid Abandonment:

1.       must be total and conditional
2.       made within a reasonable time
3.       explicit notice
4.       coupled with actual abandonment

• Requisites for Valid Valuation in the Valued Marine Policy:

1.       insured must have interest at risk
2.       there must be no fraud on the insured’s part

• Notice of Abandonment:

1.       may be oral or in writing (if oral, written notice must be submitted within 7 days from oral notice)
2.       must be explicit
3.       must specify the particular cause for abandonment
4.       need not be accompanied by proof of interest or loss

• Acceptance of Abandonment

1.       may be express or implied (i.e. silence for unreasonable length of time)
2.       conclusive upon the parties and admits the loss and sufficiency of abandonment
3.       irrevocable, unless the ground on which it is made is proved to be unfounded

• If insurer refuses to accept a valid abandonment – liable as upon actual total loss
• Upon actual abandonment

1.       freightage earned before loss – belongs to the insurer of freightage
2.       freightage earned after loss – belongs to insurer of ship

• Co-insurance:  form of insurance in which the person who insures his property for less than the entire value is understood to be his own insurer for the difference which exists between the true value of the property and the amount of insurance
• Co-insurance applies only where the:

1.       insurance taken is less than the actual value of the thing insured
2.       loss is partial

• Primage – increase in freightage

1.   Fire Insurance

Insurer is liable for loss or damage caused by hostile fire (fire that escapes from the place where it was intended to burn and ought to be in) and not that caused by friendly fire (fire which burns in a place where it is intended to burn).

• Scope of Fire Insurance:

1.       fire
2.       lightning
3.       windstorms
4.       tornado
5.       earthquake
6.         other allied risks

• When does alteration in the use or condition entitle the insurer to rescind the contract?

1.       such alteration violates a provision in the policy
2.       it was made without the insurer’s consent
3.       it is done within the insured’s control, and it increases the risk of loss or damage

• Rules:

1.       policy shall not protect the insured from injury consequent upon his negligent use or management of fire, so long as it is confined to the place where it ought to be
2.       if it escapes, even though the insured was negligent, the insurer is liable
3.       even though a fire may remain in its proper place, it may become hostile if it by accident, becomes so extensive as to be beyond control

• Options of the Insurer

1.       purchase the property at appraised valuation
2.       restore the property damaged – contract of insurance is discharged and parties enter into a new contract of insurance
3.   Casualty Insurance:  Any injury that is intended, unexpected and unusual, even though it results from an act or even which was intelligently done.

• Insurer is Liable for death/injury to insured:

1.       by his own hand while insane
2.       by taking poison by mistake
3.       by overdoes of drugs administered or taken by mistake, by ignorance or material pathological conditions
4.       by unexpected bacterial infection consequent upon doing acts, even though such acts were intentionally done
5.       by unprovoked violence of others

• Compulsory Motor Vehicle Liability Insurance

Persons subject to CMVLI:

1.       motor vehicle owner or one who is the actual legal owner of a motor vehicle in whose name such vehicle is registered with the LTO
2.       land transport operator or one who is the owner of a motor vehicle or vehicles being used for conveying passengers for compensation (including school buses)

• No Fault Indemnity Clause:  The insurance company shall pay any claim for death or bodily injuries sustained by a passenger or 3^rdparty without the necessity of proving fault or negligence of any kind subject to certain conditions.  This does not apply to property damage.

1.   Suretyship – an agreement whereby the surety guarantees the performance of the principal or obligor of an obligation or undertaking in favor of a 3^rdparty called the obligee
2.   Life Insurance:  an insurance in human life and insurance appertaining thereto or connected therewith may be payable:
   1.       on the death of the insured
   2.       on his surviving a specified period
   3.       otherwise, contingently on the continuance or cessation of life

(b and c refer to endowment or annuities)

• Uses and Common Kinds of Life Insurance:

1.       Whole Life or Ordinary Policies – here, the insured agrees to pay annual, semi-annual or quarterly premiums while he lives.  The insurer agrees to pay the face value of the policy upon the death of the insured.
2.       Limited Payment Life Policy – premiums paid only for a specified period of years.
3.       Term Policy – insurer’s liability arises only upon the death of the insured within the agreed term as period.  If the latter survives the period, the contract terminates and the insurer is not liable
4.       Endowment Policy – insurer agrees to pay a certain sum to the insured if the latter outlives a designated period; if he dies before that time, the proceeds are paid to the beneficiary
5.       Life Annuity – debtor binds himself to pay an annual pension or income during the life of one or more persons in consideration of a capital consisting of money or other property, whose ownership is transferred to him with the burden of income
6.   The Business of Insurance
   1.       Life or Endowment Policies

Grace Period – 30 days for the payment of any premium due after the first premium has been paid

Period of Incontestability – after the lapse of 2 years from the date of issue or date of approval of last reinstatement

Reinstatement of Policy – within 3 years from the date of default of premium, upon:

1.       production of evidence of insurability, and
2.       payment of all overdue premiums and any indebtedness to the company upon said policy

Exceptions:

1.       if cash surrender value has been paid
2.       if period of extension has expired
3.       Claims Settlement

Unfair Claims Settlement Practices:

(a)    knowingly misrepresenting to claimants pertinent facts or policy provisions relating to coverage at issue

(b)    failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies

(c)     failing to adopt or implement reasonable standards for the prompt investigation of claims arising under its policies

(d)    no attempt in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear

(e)    compelling policy holders to institute suits to recover the amount due under its policies by offering with no justifiable reason an amount substantially less than that ultimately recovered in suits brought by them

Proceeds of Life Insurance – payable within 60 days after:

(a)    presentation of claims, and

(b)    filing of proof of death (upon failure to pay interest, at the rate of 2 times the ceiling prescribed by the Monetary Board unless based on the ground that the rate is fraudulent)

Proceeds of Policies other than Life – payable:

(a)    upon proof of loss

(b)    upon ascertainment of loss or damage (if not made within 60 days of proof of loss, payable in 90 days)

1.       Power of Commissioner to Suspend/Revoke License

(a)    if insurance contract is in unsound condition

(b)    if it has failed to comply with the provisions of law or regulations obligatory upon it

(c)     its conditions or methods of business s such as to render its proceedings hazardous to the public or to its policy holders

(d)    that its paid up capital stock, or its available cash assets, or its security deposits, as the case may be, is impaired or deficient

(e)    that the margin of solvency required of each company is deficient

Insurance Agent – any person who for compensation solicits or obtains insurance on behalf of any insurance company or transacts for a person other than himself an application for a policy or contract of insurance to or from such company or offers or assumes to act in negotiating of such insurance.  He must be first licensed as such before doing any acts as insurance agent.

Insurance Broker – any person for any compensation, commission or any other thing of value, acts, or aids in any manner in soliciting, negotiating or procuring the making of any insurance contract or in placing risk or taking out insurance, on behalf of an insured other than himself.  A license is required.

 WAREHOUSE RECEIPTS LAW

1.       Warehouse – a building or place where goods are deposited and stored for profit.
2.       Warehouseman – person lawfully engaged in the business of storing goods for profit.

• Only  a warehouseman may issue warehouse receipts.

1.       Warehouse Receipt – written acknowledgment by a warehouseman that he has received and holds certain goods therein described in store for the person to whom it is issued.
2.       Non-negotiable Receipt – receipt deliverable to a specified person.
3.       Negotiable Receipt – receipt deliverable to order or to bearer.
4.       Essential Terms which MUST be embodied in a Warehouse Receipt:
   1.       location of the warehouse
   2.       date of the issue of the receipt
   3.       consecutive number of the receipt
   4.       statement whether the goods received will be delivered to bearer, or a specified person, or his order
   5.       rate of storage charges
   6.         description of the goods or packages containing them for identification purposes
   7.       signature of the warehouseman
   8.       statement of the amount of advances made and of liabilities incurred for which the warehouseman claims as lien
5.       Effect of omission of any of the essential terms:
   1.       The validity of the warehouse receipt is not affected.
   2.       The warehouseman shall be held liable for damages to those injured by his omission.
   3.       The negotiability of the warehouse receipt is not affected.
   4.       The issuance of a warehouse receipt in the form provided by the law is merely permissive and directory and not mandatory in the sense that if the requirements are not observed, then the goods delivered for storage become ordinary deposits.
6.       Terms which may be inserted in a Warehouse Receipt:  Any other terms except (a) those contrary to the provisions of this Act; (b) those that would impair a warehouseman’s obligation to exercise that degree of care in the safekeeping of the goods entrusted to him
7.       Marks to be made on a warehouse receipt:
   1.       A non-negotiable receipt must be clearly marked non-negotiable or not negotiable, otherwise, the holder of the receipt who purchased it for value and who supposed it to be negotiable, may treat it as negotiable.
   2.       Duplicate receipts must be so marked, otherwise, the warehouseman is held liable for all damages suffered by a holder believing the same to be the original.
8.   Warranties of a warehouseman as to duplicate receipts:
   1.       The duplicate is an accurate copy of the original receipt.
   2.       Such original receipt is uncancelled at the date of the issue of the duplicate.
9.   Effects of alteration on the liability of the warehouseman:
   1.       If the alteration is IMMATERIAL (the tenor of the receipt is not changed), whether fraudulent or not, authorized or not, the warehouseman is liable on the altered receipt according to its original tenor.
   2.       If the alteration is MATERIAL but AUTHORIZED, the warehouseman is liable according to the terms of the altered receipt.
   3.       If the alteration is MATERIAL, UNAUTHORIZED but INNOCENTLY MADE, the warehouseman is liable on the altered receipt according to its original tenor.
   4.       If the alteration is MATERIAL and FRAUDULENTLY MADE, the warehouseman is liable:

(1)    to the purchaser of the receipt for value and without notice of the alteration according to the tenor of the altered receipt

(2)    to the alterer, according to the terms of the original receipt

(3)    to subsequent purchasers with notice of the alteration, according to the terms of the original receipt

1.   Effects of misdescription of goods:
   1.       A warehouseman is under the obligation to deliver the identical property stored with him and if he fails to do so, he is liable directly to the owner.
   2.       As against a bona fide purchaser of a warehouse receipt, the warehouseman is estopped from denying that he has received the goods described in the receipt.
   3.       If the description consists merely of marks or label upon the goods or upon the packages containing them, the warehouseman is not liable even if the goods are not of the kind as indicated in the marks or labels.
2.   Principal Obligations of a Warehouseman:
   1.       To take care of the goods entrusted to his safekeeping

• General Rule:  A warehouseman is required to exercise such degree of care which a reasonable careful owner would exercise over similar goods of his own.  He shall be liable for any loss or injury to the goods caused by his failure to exercise such care.
• Exception:  He shall not be liable for any loss or injury which could not have been avoided by the exercise of such care.
• Exception to the Exception:  He may limit his liability to an agreed value of the property received in case of loss. He cannot stipulate that he will not be responsible for any loss caused by his negligence.

1.       To deliver the goods to the holder of the receipt or the depositor upon demand, provided demand is accompanied with:

(1)    an offer to satisfy the warehouseman’s lien;

(2)    an offer to surrender the negotiable receipt properly endorsed.  If the receipt is non-negotiable, any person lawfully entitled to the possession of the goods may be entitled to delivery without surrender of the receipt.

(3)    a readiness and willingness to sign an acknowledgment that the goods have been delivered if such is requested by the warehouseman.

1.   Persons to whom goods must be delivered:
   1.      Persons lawfully entitled to the possession of the goods or his agent:

a.  persons to whom a competent court has ordered the delivery of the goods

(1)    where a negotiable instrument has been lost or destroyed, the court may order delivery to a person upon satisfactory proof of such loss or destruction and upon proper posting of a bond to protect the warehouseman from any liability or expense which he may incur by reason of the original receipt remaining outstanding.

(2)    where more than one person claims title or possession of the goods the warehouseman may require all claimants to interplead.  The court will then order delivery to the person having a better right.

1.       an attaching creditor – Goods, while in the possession of the warehouseman and covered by a negotiable receipt, cannot be attached or levied upon under an execution unless:

(I)      the negotiable receipt is first surrendered to the warehouseman, or

(ii)     its negotiation is enjoined, or

(iii)   the receipt is impounded by the court

c.  to the purchaser in case of sale of the goods by the warehouseman to enforce his lien

1.       to the purchaser where perishable or hazardous goods are sold at private or public sale
2.      If goods are covered by a non-negotiable receipt:
   1.       a person entitled to the delivery by the terms of the receipt, or
   2.       one who has written authority from letter a
3.      If goods are covered by a negotiable receipt, a person in possession of the receipt, the terms of which the goods are deliverable:
   1.       to him or order
   2.       to bearer
   3.       indorsed to him
   4.       indorsed in blank by the person whom delivery was promised
4.   When is there Misdelivery?

When the warehouseman delivers the goods to a person who is not in fact lawfully entitled to the possession of the goods because:

1.       the person does not fall under letter B or C above; or
2.       the person falls under letter B or C but prior to delivery, the warehouseman had either:

(1)    been requested by the person lawfully entitled to the delivery not to make such delivery, or

(2)    had information that the delivery about to be made was to one not lawfully entitled to the possession of the goods

1.   Effects of Misdelivery:

The warehouseman shall be liable for conversion to all having a right to property or possession of the goods.

1.   What happens if there is proper delivery or partial delivery but the warehouseman fails to cancel the receipt or record on the receipt of such partial delivery?
   1.       If goods covered by a negotiable warehouse receipt are delivered by a warehouseman but he fails to take the receipt and cancel it, then he is still liable to one who purchases for value and in good faith such receipt.
   2.       If he makes partial delivery of the goods but fails to record the partial delivery on the receipt then he may still be held liable for the entire receipt to one who purchases for value and in good faith such receipt.
2.   Lawful excuses for refusal to deliver goods:
   1.       The warehouseman can refuse to deliver the goods if he has acquired title or right to the possession of the goods:

(1)    directly or indirectly from a transfer made by the depositor at the time of the deposit for storage or subsequent thereto; or

(2)    from the warehouseman’s lien

1.       If someone other than the depositor or person claiming under the depositor has a claim to the title or possession of the goods and the warehouseman has information of such claim, the warehouseman shall be excused from liability for refusing to deliver the goods either to the depositor or person claiming under him until he has had a reasonable time to ascertain the validity of the adverse claim or to bring legal proceedings to compel all claimants to interplead.
2.       The warehouseman will not be required to deliver the goods if such had been lost.  But this is without prejudice to liabilities which may be incurred by him due to such loss.
3.       The warehouseman having a valid lien against the person demanding the goods may refuse to deliver the goods to him until the lien is satisfied.
4.       If goods have been lawfully sold or disposed of because of their perishable or hazardous nature, the warehouseman shall not be liable for failure to deliver the goods.
5.   A warehouseman cannot refuse to deliver goods to the depositor or to a person claiming under him on the ground that adverse title to the goods belongs to a third person.
6.   Rules as regards Co-mingling of Deposited Goods:

• General Rule:  A warehouseman may not co-mingle goods belonging to different depositors or belonging to the same depositor for which separate receipts had been issued.
• Exception:  A warehouseman may co-mingle fungible goods of the same kind and grade provided he is authorized by agreement or by custom.

1.   Effect of Co-mingling of Goods:
   1.       The different owners become co-owners of the whole mass.
   2.       The warehouseman shall be severally liable to each depositor for the care and redelivery of his share of such mass to the same extent and under the same circumstances as if the goods had been kept separate.
2.   Remedies of a Creditor:  (the debtor being the owner of the negotiable receipt)

Creditors of the depositors, before negotiation, may protect themselves by obtaining a writ of preliminary injunction and serve the same on the depositor before he has a chance to negotiate the receipt.  Once enjoined, there will be no longer a danger that a 3^rd person will be prejudiced so the goods may now be attached, levied upon, or that the vendor’s lien or the right of stoppage in transit be exercised.

1.   Warehouseman’s Lien

• Extent of Warehouseman’s Lien:

A warehouseman shall have a lien on goods deposited or on the proceeds thereof in his hands for:

1.       all lawful charges for storage and preservation of the goods
2.       all lawful claims for money advances, interest, insurance, transportation, labor, weighing, cooperating and other charges and expenses in relation to such goods
3.       all reasonable charges and expenses for notice and advertisements of sale and for sale of the goods where default has been made in satisfying the warehouse lien

• Goods Subject to lien:

1.       goods belonging to the depositor who is liable to the warehouseman as debtor whenever such goods are deposited and
2.       goods belonging to other persons stored by the depositor who is liable to the warehouseman as debtor with authority to make a valid pledge

• How is a lien enforced?

1.       by refusing to deliver the goods until the lien is satisfied
2.       by causing the extrajudicial sale of the property and applying the proceeds to the value of the lien
3.       by filing a civil action for unpaid charges or by way of counterclaim in an action to recover the property from him

• How is a lien lost?

1.       when the warehouseman voluntarily surrenders possession of the goods without requiring payment of his lien; or
2.       when the warehouseman wrongfully refuses to deliver the goods when a demand is made with which he is bound to comply
3.   Negotiation and Transfer of Receipts

• How do we negotiate a receipt deliverable to order?

1.       by indorsing it in blank thereby making it deliverable to bearer or
2.       by special indorsement – which would require further indorsements for further negotiations.

In both cases, the indorsements must be coupled with delivery.

• How do we negotiate a receipt deliverable to bearer?

There is no need to indorse for negotiation.  Physical delivery of the instrument will suffice.  But if the instrument is indorsed specially, the bearer character of the receipt is destroyed and for further negotiation, there will be a need for indorsement.

• Who may negotiate warehouse receipts?

1.       the owner of the receipt, or
2.       the person to whom possession of the receipt was entrusted to by the owner

• Rights acquired by a person to whom the receipt has been negotiated:

1.       the title of the person negotiating the receipt over the goods covered by the receipt
2.       the title of the person (depositor or owner) to whose order by the terms of the receipt the goods were to be delivered
3.       the direct obligation of the warehouseman to hold possession of the goods for him, as if the warehouseman directly contracted with him

• May non negotiable receipts be negotiated?

No, even if the receipt is indorsed, the transferee acquires no additional right.  That is why they are called non negotiable receipts.  But they may be transferred or assigned by delivery.

• Rights of a person to whom a non negotiable receipt has been transferred:

1.       the title to the goods as against the transferor
2.       the right to notify the warehouseman of the transfer thereof and
3.       the right thereafter to acquire the obligation of the warehouseman to hold the goods for him

• Distinction between a non negotiable receipt from a negotiable receipt with regard to attachment or execution upon goods:

• Rights of a person to whom a negotiable receipt has been transferred, not indorsed:

1.       the right to the goods as against the transferor
2.       the right to compel the transferor to indorse the receipt.  But if the intention of the parties is that the receipt should merely be transferred, the transferee has no right to require the transferor to indorse the receipt.

Note:  Negotiation takes effect as of the time when the indorsement is actually made.

• Warranties of a person negotiating or transferring a receipt:

1.       the receipt is genuine
2.       he has a legal right to negotiate or transfer it
3.       he has knowledge that would impair the validity or worth of the receipt and
4.       he has a right to transfer the title to the goods and that the goods are merchantable

• A holder for security of a receipt (mortgagee or pledgee) who in good faith accepts payment of the debt from a person does not warrant the genuineness of the receipt not the quality or quantity of the goods therein described.
• It is the duty of the purchaser, mortgagee or pledgee of goods for which a negotiable receipt has been issued to require the negotiation of the receipt to him, otherwise his failure will have the same effect as an express authorization on his part to the seller, mortgagor, or pledgor in possession of such receipt to make any subsequent negotiation.  The subsequent purchaser must have taken the receipt in good faith and for value.
• A bona fide purchaser of a negotiable warehouse receipt acquires title to the goods where he purchases from the owner’s agent within the actual or apparent scope of his authority.  In sum, negotiation is valid despite having been made in breach of trust.
• Distinctions between a negotiable instrument and a negotiable warehouse receipt:

 GENERAL BONDED WAREHOUSE LAW

• Any warehouseman receiving commodities for (a)  storage; (b) milling; (c) co-mingling must:

1.       obtain prior license from the Bureau of Commerce
2.       file a bond in an amount equivalent to 33 1/3 % of the capacity of the warehouse against which bond depositors may sue directly
3.       open to the public, no discrimination allowed
4.       liable for double market value should he accept goods in excess of the capacity of warehouse if goods are damaged or destroyed

• Note:  for palay and corn license, a bond with the National Grains Authority is required; also an insurance cover is required.

 Uniform Currency Law

1.       Obligations Null and Void
   1.       obligations payable in gold/foreign currency
   2.       obligations payable in Philippine currency but measured in gold/foreign currency
2.       Exempt Transactions
   1.       government to government transactions or with international banking institutions
   2.       transactions affecting high priority economic projects
   3.       forward exchange transactions between banks
   4.       import and export and other international banking, financial, investment and industrial transactions
3.       Merchants and Commercial Transactions

• Classes of Investments:

1.       Permitted – one allowed without need of prior authority from the Philippine Government.  If registered status, invest up to extent as not to affect its registered status.  If enterprise not registered, investment not to exceed 40%.
2.       Permissible – invest in excess of 40% in unregistered enterprise but with prior approval of BOI
3.       Pioneer Area – (a)  involves manufacturing, processing, production of product not produced at all/produced in non-commercial scale; (b)  uses a design, scheme, formula that is new and untried in the Phils.; (c) agricultural activities/services essential to the attainment of food sufficiency; (d) produces non-conventional fuels/utilizes non-conventional sources of energy (all others are non-pioneer)
4.       Absolutely Disqualified to become Merchants
   1.       serving penalty of civil interdiction
   2.       insolvent
   3.       absolutely disqualified by special laws
5.       Relatively Disqualified
   1.       judicial and prosecuting officials in active service
   2.       administrative, economic, military chiefs
   3.       government collection agents and custodian of funds
   4.       stock and commercial brokers
   5.       by special laws cannot trade in specified territories
6.       Books a Merchant must keep
   1.       book of inventories and balances, statement of assets, liabilities and capital
   2.       journal of day to day operations
   3.       ledger for classifying accounts
   4.       copying book for letters and telegrams; if juridical person, include book of minutes and stock and transfer book
7.       Probative Value of Merchant’s Book
   1.       evidence against merchants themselves
   2.       in case of conflicts between 2 books – that which s properly kept prevails
   3.       if one keeps books and the other does not and cannot explain why, the former prevails
   4.       if both books are properly kept and there is a conflict, other proofs can be resorted to
8.       Commercial Contracts by Correspondence are perfected from the moment the offeree accepts the offer, even before knowledge of said acceptance by the offeror.  This does not apply to deposit, guaranty, sales, loan, agency, partnership.
9.       Joint Account Partnership – business arrangement whereby 2 or more persons interest themselves in the business of another by making contributions thereto and participating in the results thereof
   1.       only one member is ostensible, others are silent
   2.       no common name
   3.       only ostensible partners can sue/be sued
   4.       no juridical personality

Transportation Law

1.       Contract of Transportation – contract whereby a certain person or association of persons obligate themselves to transport persons, things, news, from one place to another for a fixed price
2.       Parties to the Contract of Transportation:
   1.       Shipper – one who gives rise to the contract of transportation by agreeing to deliver the things or news to be transported, or to present his own person or those of other or others in the case of transportation of passengers
   2.       Carrier/Conductor – one who binds himself to transport persons, things, or news, as the case may be, or one employed in or engaged in the business of carrying goods for others for hire
3.       Common Carrier – person, corporation, firm, association engaged in the business of carrying or transporting passengers, goods or both, by land, water, air, for compensation, offering services to the public; must exercise extraordinary diligence

Private Carrier – not engaged in the business of carrying; no public employment; undertakes to deliver goods/passengers for compensation; requires only ordinary diligence

4.  Requisites of Caso Fortuito

1.       event independent of human will
2.       occurrence makes it impossible for debtor to perform in normal manner
3.       debtor free from aggravation/participation
4.       impossible to foresee or avoid
5.       Contributory negligence does not entitle passengers to recover moral/exemplary damages.
6.       Bill of Lading – written acknowledgment of receipt of goods and agreement to transport them to a specific place to a person named or his carrier

It is not indispensable to the creation of a contract of carriage.  The contract itself arises from the moment goods are delivered by shipper to carrier and the carrier agrees to carry them.

The function of the Bill of Lading:  the legal basis of the contract between the shipper and carrier shall be the bills of lading, by the contents of which all disputes which may arise with regard to their execution and fulfillment shall be decided, no exceptions being admissible other than forgery or material errors in the drafting thereof.

Carrier’s responsibility starts from the moment he receives unconditionally the merchandise personally or through an agent and lasts until he delivers them actually or constructively to the consignee or his agent.

Mere delay in the delivery of goods to consignee does not give right to refuse goods – only breach of contract, ergo damages.  If delay is unreasonable, then he may refuse to accept and make carrier liable for conversion.

1.       Vessels – those engaged in navigation, whether coastwise or on the high seas, including floating docks, pontoons, dredges, scows and any other floating apparatus destined for the services of the industry or maritime commerce
2.       Persons Participating in Maritime Commerce:
   1.       ship owner and/or ship agent
   2.       captain or master
   3.       other officers of the vessel
   4.       supercargo
3.       Liability of Ship owners and Ship agents:
   1.       civil liability for the acts of the captain
   2.       civil liability for contracts entered into by the captain to repair, equip and provision the vessel, provided that the amount claimed was invested for the benefit of the vessel
   3.       civil liability for indemnities in favor of 3^rdpersons which may arise from the conduct of the captain in the care of the goods which the vessel carried, as well as for the safety of the passengers transported

• Ship owner/ship agent not liable for the obligations contracted by the captain if the latter exceeds his powers and privileges inherent in his position of those which may have been conferred upon him by the former.  However, if the amount claimed were made use of for the benefit of the vessel, the ship owner or ship agent is liable.

1.   Doctrine of Limited Liability – liability of shipowners is limited to amount of interest in said vessel because of the real and hypothecary nature of maritime law such that where the vessel is entirely lost, the obligation is extinguished.

Exceptions:  (1)  vessel is not abandoned

(2)    claims under workmen’s compensation

(3)    injury/damage due to shipowner’s fault

(4)    vessel is insured

• The doctrine also applies for claims due to death or injuries to passengers, aside from claims for goods.
• In abandoning the vessel, there is no procedure to be followed.  There is neither a prescriptive period within which the ship owner can make the abandonment.  He may do so for so long as he is not estopped from invoking the same or do acts inconsistent with abandonment.

1.   Roles of the Captain:
   1.       general agent of the ship owner
   2.       technical director of the vessels
   3.       represents the government of the country under whose flag he navigates
2.   Loan on Bottomry – made by shipowner/ship agent guaranteed by vessel itself, repayable upon arrival at destination
3.   Loan In Respondentia – taken on security of the cargo repayable upon the safe arrival at cargo destination
4.   Accidents and Damages in Maritime Commerce:
   1.       Averages
   2.       Arrivals Under Stress
   3.       Collisions
   4.       Shipwrecks
5.   Average:
   1.       all extraordinary or accidental expenses which may be incurred during the voyage for the preservation of the vessel or cargo or both
   2.       all damages or deterioration which the vessel may suffer from the time it puts to sea at the port of departure until it casts anchor at the port of destination, and those suffered by the merchandise from the time they are loaded in the port of shipment until they are unloaded in the port of their consignment
6.   Simple Average – expenses/damages caused to the vessel/cargo not inured to common benefit and profit of all the persons interested in the vessel and her cargo; borne by respective owners
7.   General Average – expenses/damages deliberately caused in order to save the vessel, its cargo or both from a real and known risk

Requisites:

1.       deliberately incurred
2.       intended to save vessel and cargo or both
3.       from real and known risk
4.       there is success
5.   Formalities for Incurring Gross Average:
   1.       there must be an assembly of the sailing mate and other officers with the captain including those with interests in the cargo
   2.       there must be a resolution of the captain
   3.       the resolution shall be entered in the log book, with the reasons and motives and the votes for and against the resolution
   4.       the minutes shall be signed by the parties
   5.       within 24 hours upon arrival at the first port the captain makes, he shall deliver one copy of these minutes to the maritime judicial authority thereat
6.   Arrivals under Stress – arrival of the vessel at a port not of destination on account of (a) lack of provisions; (b) well-founded fear of seizure; (c) by reason of accident of the sea disabling it to navigate

When Not Lawful:

1.       lack of provisions due to negligence to carry according to usage and customs
2.       risk of enemy not well known or manifest
3.       defect of vessel due to improper repair
4.       malice, negligence, lack of foresight or skill of captain
5.   Collision – impact of 2 vessels both of which are moving
6.   Allision – striking of a moving vessel against one that is stationary
7.   Cases of Collision:
   1.       due to the fault, negligence or lack of skill of the captain, sailing mate or the complement of the vessel – ship owner liable for the losses and damages (Culpable Fault)
   2.       due to fortuitous event or force majeure – each vessel and its cargo shall bear its own damages (Fortuitous)
   3.       it cannot be determined which of the 2 vessels caused the collision – each vessel shall suffer its own damages, and both shall be solidarily responsible for the losses and damages occasioned to their cargoes (Inscrutable Fault)
8.   Error in Extremis – sudden movement made by a faultless vessel during the 3^rdzone of collision with another vessel which is at fault, even if the said movement is wrong, no responsibility will fall on said vessel
9.   Shipwreck – denotes all types of loss/ wreck of a vessel at sea either by being swallowed up by the waves, by running against another vessel or thing at sea or on coast where the vessel is rendered incapable of navigation
10.   Salvage – the compensation allowed to persons by whose voluntary assistance a ship at sea or her cargo or both have been saved in whole or in part from an impending peril, or such property recovered from actual peril or loss, in cases of shipwrecks, derelict or recapture; a service which one person renders to the owner of a ship or goods by his own labor, preserving the goods or ship which the owner or those entrusted with the care of them either abandoned in distress at sea or are unable to protect and secure; a permit is required to engage in the salvage business
11.   Derelict – a ship or cargo which is abandoned and deserted at sea by those who are in charge of it, without any hope of recovering it, or without any intention of returning it
12.   Elements of a Valid Salvage:
    1.       a marine peril
    2.       service voluntarily rendered when not required as an existing duty or from special contract
    3.       success, in whole or in part, or that the services rendered contributed to such success
13.   Contract of Towage – contract whereby a vessel usually motorized pulls another from one place to another for compensation.  It is a contract of services.
14.   Difference between Towage and Salvage:

 Carriage of Goods by Sea Act

1.       When Applicable:
   1.       contracts for the carriage of goods
   2.       by sea
   3.       to and from Philippine ports
   4.       in foreign trade
2.       Notice of Loss or damage must be given in writing to the carrier or his agent at the port of discharge or at the time of the removal of the goods into the custody of the person entitled to delivery.  If the loss or damage is not apparent, the notice must be given within 3 days of delivery.  However, the carrier shall be discharged from all liability in respect of loss or damage of goods unless suit is brought within 1 year after delivery of the goods or the date when the goods should have been delivered.  Notice of loss, if not given, that fact shall not affect or prejudice the right of the shipper to bring suit within the 1 year prescriptive period.

 Warsaw Convention

1.       When Applicable:
   1.       international transport by air
   2.       transport of persons, baggage, or goods
2.       Liabilities under the Convention:
   1.       damage sustained in the event of the death or wounding of a passenger taking place on board the aircraft or in the course of any of the operations of embarking or disembarking
   2.       loss or damage to any check baggage or goods sustained during the transport by air
   3.       delay in the transport by air of passengers, baggage, or goods

• Enumeration of causes of action as above stated is not an exclusive list. (Northwest Airlines vs. Cancer)

1.       Meaning of Transport by Air – period during which the baggage or goods are in charge of the carrier, whether in an airport or on board an aircraft, or in the case of landing outside an airport, in any place whatsoever
2.       Action for damages must be brought at the option of the plaintiff, either:
   1.       before the court of the domicile of the carrier;
   2.       court of principal place of business of carrier;
   3.       court where he has a place of business through which the contract has been made;
   4.       before the court at the place of destination
3.       Convention provides for a limitation of liability:
   1.       for each passenger – limited to 125,000 francs
   2.       for goods and checked in baggage – limited to 250 francs per kilogram
   3.       for hand carry – limited to 5,000 francs per passenger

• When can you not avail of this limitation?

(1)    willful misconduct

(2)    default amounting to willful misconduct

(3)    accepting passengers without ticket

(4)    accepting goods without airway bill or baggage without baggage chec

1.       The right to damages shall be extinguished if an action is not brought within 2 years from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the transportation stopped.
2.       Notice requirement:  damage to baggage :  within 3 days from receipt

damage to goods:  within 7 days from receipt

delay:  within 21 days from receipt

• Failure to file written notice, no action shall lie against the carrier, save in the case of fraud on his part.

1.       Notice Requirements:

 Public Service Act

1.       Every person that may own, operate, manage, control in the Philippines, for hire/compensation with general/limited clientele whether permanent, occasional, accidental, and done for a general business purpose any common carrier, shipyard, electric light, heat and power and public utility.
2.       Public Utility – business or service engaged in regularly supplying the public with some commodity or service of public consequence such as electricity, gas, water, transportation, telephone or telegraph service.
3.       Prior Operator Rule – before permitting a new operator to invade the territory of another already established, the prior operator must be given an opportunity to extend its service to meet the public needs in the matter of transportation.
4.       Prior Applicant Rule – presupposes a situation where two interested persons apply for a CPC in the same community over which no person has yet been granted a CPC to operate.  If both applicants equal, then the applicant who applied first will be given the CPC.
5.      Distinctions between CPCs and CPCNs

1.       Requirements of CPC and franchise:
   1.       Filipino citizenship
   2.       financial capacity
   3.       public convenience

 Corporation Law

1.       Doctrine of Corporate Opportunity – a director is made to account to his corporation, gains and profits from transactions entered into by him/another competing corporation in which he has substantial interest, which should have been a transaction undertaken by the corporation.  This s a breach of fiduciary relationship.
2.       Doctrine of Piercing the Veil of Corporate Entity – it is to disregard for justifiable reasons by the state the fiction of juridical personality of the corporation separate and distinct from the persons composing it
3.       De Jure Corporation – corporation formed with all the requirements of law
4.       De Facto Corporation – corporation defectively formed from a bona fide attempt to incorporate under the existing law and exercises corporate powers
5.       Corporation by Estoppel – a group of persons which holds itself out as a corporation and enters into a contract with 3^rdpersons on the strength of such appearance cannot be permitted to deny its existence in an action under said contract
6.       Corporation by Prescription – body not lawfully organized as a corporation but has been recognized by immemorial usage as a corporation with rights and duties maintainable by law (ex. Roman Catholic)
7.       Trust Fund Doctrine – the subscribed capital stock of the corporation is a trust fund for the payment of debts of the corporation which the creditors have the right to look up to satisfy their credits.  Corporations may not dissipate this and the creditors may sue the stockholders directly for their unpaid subscriptions
8.       Voting Shares
   1.       Founders Shares – given rights and privileges not enjoyed by owners of other stocks; right to vote/be voted in the election of directors shall not exceed 5 years

Non-Voting Shares

1.       Preferred Shares – issued only with par value; given preference in distribution of assets in liquidation and in payment of dividends and other preferences stated in the articles of incorporation
2.       Redeemable Shares – expressly provided in articles; have to be purchased/taken up upon expiration of period of said shares purchased whether or not there is unrestricted retained earnings
3.       Treasury Stocks – stocks previously issued and fully paid for and reacquired by the corporation through lawful means (purchase, donation, etc.)
4.       Exceptions where holders of non-voting shares may vote:
   1.       amendments of articles of incorporation
   2.       adoption/amendment of by-laws
   3.       increase/decrease of bonded indebtedness
   4.       increase/decrease of capital stock
   5.       sale/disposition of all/substantially all corporate property
   6.         merger/consolidation of corporation
   7.       investment of funds in another corporation/another business purpose
   8.       corporate dissolution
5.   Preferred Cumulative Participating Share of Stock – share entitling its holder to preference in the payment of dividends ahead of common stockholders and to be paid the dividends ahead of common stockholders and to be paid the dividends due for prior years and to participate further with common stockholders in dividend declarations
6.   Promotion Stock for Services Rendered Prior to Incorporation Escrow Stock – stock deposited with a 3^rdperson to be delivered to stockholder/assignor after complying with certain conditions – usually payment of full subscription price
7.   Over-issued Stock – stock issued in excess of authorized capital stock; null and void
8.   Watered Stock – stock issued gratuitously, money/property less than par value, services less than par value, dividends where no surplus profits exist
9.   Certificate of Stock – written acknowledgment by the corporation of the stockholder’s interest in the corporation.  It is the personal property and may be mortgaged/pledged.  Transfer binds the corporation when it is recorded in the corporate books.  A stockholder who does not pay his subscription is not entitled to the issue of a stock certificate.  The total par value of the stocks subscribed by him should first be paid.
10.   Chattel mortgage of shares registered with the Registrar of Deeds need not be registered in corporate books to bind third parties because corporate books only cover absolute transfers.  But the pledgee/mortgagee may not have voting rights unless stated in the contract and registered in the corporate name.
11.   Methods of Collection of Unpaid Subscription
    1.       call, delinquency and sale at public auction of delinquent shares
    2.       ordinary civil action
    3.       collection from cash dividends and other amounts due to stockholders if allowed by by-laws/agreed to by him
12.   A corporation can reacquire stocks in the following cases:
    1.       eliminate fractional shares
    2.       corporate indebtedness arising from unpaid subscriptions
    3.       purchase delinquent shares
    4.       exercise of appraisal right
13.   Right of Appraisal
    1.       amending articles, changing, restricting, enlarging stockholder’s rights/extending, shortening corporate life
    2.       sale/disposition of all/substantially all of corporate assets
    3.       merger and consolidation
    4.       investment of funds in another corporation/for a different purpose
14.   Grounds for Rejection of Registration
    1.       not in prescribed form
    2.       purpose illegal, inimical
    3.       treasurer’s affidavit false
    4.       non-compliance with required Filipino stock ownership
15.   Corporation must organize within 2 years from issuance of certificate of incorporation.

     How to organize?

1.       adoption of by-laws
2.       election of Board of Directors
3.       election of officers

But from issuance of certificate, it acquires juridical personality

1.   Merger – one corporation absorbs the other and remains in existence while the other is dissolved
2.   Consolidation – a new corporation is created and the consolidating corporations are extinguished
3.   Theory of General Capacity – a corporation is said to hold such powers as are not prohibited/withheld from it by general law
4.   Theory of Special Capacity – the corporation cannot exercise powers except those expressly/impliedly given
5.   Concession Theory – a group of persons wanting to create a corporation will have to execute documents and comply with requirements set by the state before being given corporate personality; merely a privilege; state may provide causes for which the privilege may be withdrawn
6.   Acts requiring majority vote of stockholder:
   1.       filing of issue value of no par value share
   2.       adoption, amendment, repeal of by-laws
   3.       compensation and other per diems for directors
7.   Where similar acts have been approved by the directors as a matter of general practice, custom and policy, the general manager may bind the company even without formal authorization of the board of directors
8.   Powers of stockholders:
   1.       a direct participation in management – where his vote is needed to approve certain corporate actions
   2.       indirect participation in management to vote or remove directors
   3.       proprietary rights
   4.       remedial rights
9.   Voting Trust Agreement – an agreement between a group of stockholders and trustee for a term not exceeding 5 years in which control over the stocks is lodged in the trustee.  The purpose is for controlling the voting.
   1.       in writing, notarized and filed with the SEC and the corporation
   2.       period not exceeding 5 years
   3.       cannot be entered into to circumvent the laws against monopolies, illegal combinations in restraint of trade in fraud
10.   Cumulative Voting – the number of votes that a shareholder’s number of shares multiplied by the number of directors may give all said votes to one candidate or he may distribute them as he may deem fit.  Cumulative voting is a matter of right in a stock corporation.  In a non-stock corporation, it cannot be utilized unless allowed by the by-laws/articles
11.   The power of removal of directors that may be exercised with or without cause cannot apply to the director representing the minority shareholders.  He may only be removed with cause.
12.   General Rule:  If surplus profits exceed the requirements the corporation shall declare dividends.  This is compulsory if the surplus is equal/or more than the paid-up capital.

Exceptions:

1.       justified by approved expansion projects
2.       prohibited by creditor to declare dividends
3.       retention is necessary under existing circumstances
4.   Business Judgment Rule – decisions made by a corporation’s management body shall not be interfered with even by the courts unless such acts are oppressive/unconscionable as to violate the rights of the minority
5.   Individual Suit – one brought to assert a right of a stockholder peculiar to himself
6.   Representative Suit – brought by the stockholder in his own behalf and in behalf of other stockholders similarly situated, having common cause against the corporation
7.   Derivative Suit – brought by a stockholder for and in behalf of the corporation to protect/vindicate corporate rights after he has exhausted intra-corporate remedies

Requisites:

1.       cause of action in favor of the corporation
2.       refusal of corporation to sue
3.       injury to the corporation

• Although corporations dissolved have 3 years to wind up, they can convey their properties to a trustee who can continue the suit beyond the 3 year period.  The lawyer who handled the case in the trial court may be considered as trustee for the dissolved corporation with respect to the matter in litigation only even if no appointment was extended to him. (Selano vs. CA)
• In a case filed before dissolution, it may continue even beyond the 3 year period until final determination of litigation.  Otherwise, the corporation in liquidation would lose what justly belongs to them/be exempt from payment of obligations because of a technicality.

1.   Foreign Corporations
   1.       Doing Business – continuity of commercial dealings incident to prosecution of purpose and object of the organization. Isolated, occasional or casual transactions do not amount to engaging in business.  But where the isolated act is not incidental/casual but indicates the foreign corporation’s intention to do other business, said single act constitutes engaging in business in the Philippines
   2.       Instances when unlicensed foreign corporations can sue:

(1)    isolated transactions

(2)    action to protect good name, goodwill, and reputation of a foreign corporation

(3)    contracts provide that Phil. Courts will be venue to controversies

(4)    license subsequently granted enables foreign corporation to sue on contracts executed before the grant of the license

(5)    recovery of misdelivered property

(6)    where the unlicensed foreign corporation has a domestic corporation

1.   Religious Corporations
   1.       Corporation Sole – special form of corporation; associated with the clergy and consists of 1 person only and his successors; incorporated by law giving them legal capacity and advantage
   2.       Close Corporations – one whose articles provide that its shares shall not be held by more than 20 persons; its issued stock shall be subject to one or more restrictions on transfer and shall not be listed in any stock exchange/make public offering
   3.       Non-stock Corporation – one where no part of its income is distributable to its members and shall be used in furtherance of the purpose of which it was organized
2.   SEC Jurisdiction
   1.       original and exclusive jurisdiction

(1)    fraudulent devices and schemes employed by directors detrimental to public interest

(2)    intra-corporate disputes and with the state in relation to their franchise and right to exist as such

(3)    controversies in the election, appointment of directors, trustees, etc.

(4)    petition to be declared in a state of suspension of payments

1.       Grounds for Suspension/Revocation of Certificate of Registration

(1)    fraud in procuring registration

(2)    serious misrepresentation as to objectives of corporation

(3)    refusal to comply with lawful order of SEC

(4)    continuous inoperation for at least 5 years

(5)    failure to file by-laws within the required period

(6)    failure to file reports

(7)    other similar grounds

Revised Securities Act

(Material on the Securities Regulation Code of 2000 to follow)

1.       General Rule:  All securities before being offered for sale/actual sale to the public must first be registered and have the proper permit.

Exception:

1.       exempt securities
2.       securities emanating from exempt transactions
3.       Exempt Securities
   1.       issued by the government subdivisions/instrumentalities
   2.       issued by foreign government which the Philippines has diplomatic relations
   3.       issued by receiver/trustee of an insolvent approved by the court
   4.       issued by building and loan association
   5.       issued by receiver/trustee of an insolvent approved by the court
   6.         policy of insurance issued by insurance corporation supervised by the insurance commission
   7.       security/right/interest in real property including subdivision lot/condominium supervised by the Ministry of Human Settlements
   8.       pension plans regulated by BIR/Insurance Commission
4.       Exempt Transactions
   1.       judicial sale by execution, etc. in insolvency
   2.       sale of pledged property/foreclosed property to liquidate an obligation
   3.       isolated transactions on securities done by owner/agent
   4.       stock transfers emanating from mergers and consolidations
   5.       pre-incorporation subscription
   6.         securities issued by public service operator to broaden equity base
5.       Grounds for Rejection of Registration
   1.       application incomplete/untruthful/omits to state a material fact
   2.       issuer/registrant insolvent, violated code/ SEC rules, engages in fraudulent transactions
   3.       issuer’s business not sound
   4.       officer, director, stockholders of issuers is disqualified
   5.       issue would prejudice the public
6.       Grounds for Revocation
   1.       issuer insolvent
   2.       violated of Code/SEC rules
   3.       fraudulent transaction
   4.       dishonesty by issuer/misrepresented prospectus
   5.       does not conduct business in accordance with law
7.       Acts Prohibited
   1.       manipulation of security prices
   2.       manipulation of deceptive devices
   3.       artificial measures of price control
   4.       fraudulent transactions
   5.       insider trading
   6.         false prospectus, communications, reports

 Secrecy if Back Deposits

1.       Deposits in banks, including government banks, may not be inquired into by any person, except:
   1.       if depositor agrees in writing
   2.       impeachment cases
   3.       by court order in cases of bribery and dereliction of duty against public officials
   4.       deposit is subject of litigation
   5.       anti-graft cases
   6.         general and special examination of bank order of the Monetary Board of bank fraud or serious irregularity
   7.       re-examination made by an independent auditor hired by a bank to conduct its regular trust

Laws on Intellectual Creation

Copyright

1.       What Works are not Protected:
   1.       any idea, procedure, system, method or operation, concept, principle, discovery, or mere data as such, even if they are expressed, explained, illustrated or embodied in a work; news of the day or other miscellaneous facts, having the character of mere items of press information, or any official text of a legislative, administrative or legal nature as well as any official translation thereof
   2.       works of the government
   3.       statutes, rules, and regulations of government agencies and offices
   4.       speeches, lectures, sermons, addresses and dissertations, pronounced or rendered in courts of justices or nay administrative agencies in deliberative assemblies and meetings of public character
2.       Fair Use of a Copyrighted Work is not Infringement
   1.       for criticism, comment, news reporting, teaching, research, scholarship, and similar purposes
   2.       decompilation:  the reproduction of the code and translation of the forms of the computer program with other programs
3.       Factors to Consider in Determining Fair Use:
   1.       purpose and character of the use, including whether such  use is of a commercial nature or for no profit or educational purposes
   2.       nature of the copyrighted work
   3.       amount and substantiality of the portion used in relation to the copyrighted work as a whole
   4.       effect of use upon the potential market for a value of the copyrighted work
4.       Terms of the Protection
   1.       copyrighted work:  lifetime of creator plus 50 years after death (to be computed on the 1^stday of January of the year following the death)
   2.       performances not incorporated in recordings:  50 years from end of year in which the performance took place
   3.       sound or image and sound recordings and performances incorporated therein:  50 years from end of the year in which the recording took place
   4.       broadcasts:  20 years from the date the broadcast took place
5.       Remedies for Infringement
   1.       injunction
   2.       actual damages, including legal costs and other expenses, as he may have incurred due to the infringement as well as the profits the infringer may have made due to such infringement
   3.       impounding of articles during pendency of the action
   4.       destruction of all infringing copies and/or devices
   5.       moral and exemplary damages
6.       Criminal Penalties
   1.       imprisonment of 1 to 3 years plus fine of P50,000 to P150,000 for the first offense
   2.       imprisonment of 3 years and 1 day to 6 years plus fine ranging from P150,000 to P500,000 for the 2^ndoffense
   3.       imprisonment of 6 years and 1 day to 9 years plus fine of P500,000 to P1,000,000 for the 3^rd/subsequent offenses

IN ALL CASES, subsidiary imprisonment in cases of insolvency

1.       Presumptions:
   1.       Presumption of copyright in the work of other subject matter to which the action related
   2.       Plaintiff is presumed to be the owner of the copyright
   3.       The natural person whose name is indicated on a work in the usual manner as the author shall, in the absence of proof to the contrary, be presumed to be the author of the work.  This is applicable even if the name is a pseudonym, where the pseudonym leaves no doubt as to the identity of the author.
2.       Prescription:  No damages may be recovered after 4 years from time the cause of action arose.

 Patents

1.       Patentable Inventions – any technical solution of a problem in any field o human activity that is new, involve an inventive step and is industrially applicable shall be patentable.  It may be or may relate to as product, or process or an improvement of any of the foregoing.
2.       Non-Patentable Inventions
   1.       discoveries, scientific theories and mathematical methods
   2.       schemes, rules and methods of performing mental acts, playing games or doing business, and programs for computers
   3.       methods for treatment of the human or animal body by surgery or therapy and diagnostic methods practiced on the human or animal body

Exception:  products and composition for use in any of these methods

1.       plant varieties or animal breeds or essentially biological process for the production of plants and animals

Exception:  micro-organisms and non-biological and micro-biological processes

1.       aesthetic creations
2.         contrary to public order or morality
3.       Requisites of Patentability
   1.       new, novelty
   2.       involves an inventive step;
   3.       is industrially applicable
4.       Novelty

The novelty requirement in the Code is absolute.  Thus, an invention is not considered new if it forms part of a prior art.  A prior art consists of:

1.       anything which has been made available to the public anywhere in the world before the filing date or the priority date of the application, or
2.       the whole contents of an application for a patent, utility model, or industrial design registration, published in the IPO gazette, filed or effective in the Philippines, with a filing or priority date that is earlier than the filing or priority date of the application, provided that the application which has validly claimed the filing date of an earlier application (priority date) is prior art with effect as of the filing date of such earlier application, and provided further, that the applicant and the inventor identified in both applications are not one and the same
3.       Inventive Step – an invention involves an inventive step, if having regard to the prior art, it is not obvious to a person skilled in the art at the time of the filing date of priority date of the application claiming the invention
4.       Industrial Applicability – an invention is considered industrially applicable if it can be produced and used in the industry
5.       The First-to-File System – if 2 or more persons have made the invention separately and independently of each other, the right to the patent belongs to the person who filed an application for such invention, or where 2 or more applications are filed for the same invention, the right of the patent belongs to the person who has the earliest filing date or the earliest priority date

Under this system, the patent is granted to the inventor who filed his patent application earlier than others thus simplifying the determination of who is entitled to own the patent.

The First-to-File System increases the rights of the inventor by:

1.       guaranteeing the confidentiality of the application prior to its publication
2.       giving the inventor inchoate rights against an infringer after the publication of the application and before the grant of the patent and
3.       expanding the rights of the inventor to institute cancellation proceedings for the duration of the term of the patent.  Cancellation proceedings may be filed at any time during the term of the patent.

Under this system, the applicant declared by final court order as having the right to the patent may:

1.       prosecute the application as his own application in place of the original applicant
2.       file a new patent application in respect of the same invention
3.       request that the application be refused or
4.       seek the cancellation of the patent, if one has already been issued
5.       What is the difference between novelty in patents and originality in copyright?

Novelty in Patents – even if you do not know of any previous creation, as long as a patent on the same creation has already been published anywhere in the world, you cannot claim novelty.  No access tot he other creation is no defense.

Originality in Copyright – even if there is same creation, as long as you do not copy your own creation, it is still considered an original creation.  No access to the previous creation is a defense.

1.       Non-Prejudicial Disclosure

The disclosure of information contained in the application during the 12 months preceding the filing date or the priority date of the application shall not prejudice the applicant on the ground of lack of novelty if such disclosure was made by (a) inventor; (b) a patent office and the information was contained

1.   Term of Patent – 20 years from the filing date of the application
2.   Grounds for Compulsory Licensing:
   1.       national emergency or other circumstances of extreme urgency
   2.       where public interest, national security, health or the development of other vital sectors of the national economy as determined by the appropriate agency of the government so requires
   3.       where a judicial or administrative body has determined that the manner of exploitation by the owner of the patent or his licensee is anti-competitive
   4.       in case of public non-commercial use of the patent by the patentee, without satisfactory reason
   5.       if not being worked in the Philippines on a commercial scale
3.   In case of Compulsory Licensing of Patents involving Semi-conductor Technology, the license may be granted only in case of public non-commercial use or to remedy a practice determined after judicial or administrative process to be anti-competitive
4.   Utility Models – an invention qualifies for registration as a utility model if it is new and industrially applicable

- no inventive step required for registration

- no search and examination required

1.   Term Protection – 7 years after the filing date of application without possibility of renewal
2.   Industrial Design – any composition of lines or colors or any 3 dimensional form, whether or not associated with lines or colors

Industrial Designs essentially dictated by technical or functional considerations to obtain a technical result or those that are contrary to public order, health or morals shall not be protected

1.   Term of Protection – 5 years from filing date of application, renewable for not more than 2 consecutive periods of 5 years each

 Insolvency Law

1.      Distinguish Suspension of Payment and Insolvency

1.       Fraudulent Preference – any act of insolvent which gives rise/has tendency to give preference to a creditor to the assets of the insolvent prejudicial to the right of other creditors of said insolvent
2.       Effect on Actions Upon Adjudication of Insolvency
   1.       suits pending in court

(1)    secured obligations suspended until assignee appointed

(2)    unsecured obligations terminated except to fix amount of obligation

(3)    foreclosure suits pending continue

1.       suit not yet filed – cannot be filed anymore, but claims may be presented to assignee
2.       Debts and Obligations not Affected by Discharge of Insolvent
   1.       assessments due to national and local government
   2.       debts due to fraud/embezzlement
   3.       debts in which he is bound solidarily
   4.       alimony
   5.       corporate debts
   6.         debts not included in the schedule submitted by debtor

Chattel Mortgage Law

1.       The law primarily governs chattel mortgage.  Provisions on pledge of NCC in so far as not in conflict with CML also govern chattel mortgages.
2.       Chattel Mortgage may be rescinded for being in fraud of creditors.
3.       Growing fruits are covered by chattel mortgage but they may not be pledged.
4.       Machinery placed on plant or building owned by another can be the object of chattel mortgage.
5.       General Rule:  Chattel Mortgage cannot cover debts subsequently contracted.
6.       Rules:  Chattel Mortgage cannot cover debts subsequently contracted
   1.       registered in place where mortgagor resides and where property (chattel) is located.  If mortgagor resides abroad, register in place where property is located.
   2.       Motor Vehicles:  register also in Land Transportation Office
   3.       Shares of Stock:  place of domicile of corporation and shareholder.  No need for notation in books of corporation
   4.       Vessels:  Phil. Coastguard
7.       To be valid against 3^rdpersons:
   1.       affidavit of good faith
   2.       contract must be registered
8.       General Rule: In Chattel Mortgage, there is recovery of deficiency judgment.

  Exception:  when Recto Law applies

1.      Requisites of CML:
   1.       constituted to secure the fulfillment of principal obligation
   2.       mortgagor is absolute owner of the thing mortgaged
   3.       persons constituting the mortgage have the free disposal of the property and in the absence thereof, they be legally authorized for the purpose
   4.       recorded to bind 3^rdpersons
2.   Formal Requisites of CM:
   1.       substantial compliance with form in Sec. 5 of CML
   2.       signed by at least 2 witnesses
   3.       must contain an affidavit of good faith
   4.       certificate of oath (notarial acknowledgment)
3.   Affidavit of Good Faith – where the parties severally swear that the mortgage is made for the purpose of securing the obligation specified and for no other purpose and that the same is a just and valid obligation and not one entered into for fraud

- property given in CM must be described to enable the parties or any other person after reasonable inquiry and investigation to identify it

1.   Future property may not be covered by CM but when such property is a:
   1.       renewal of, or in substitution for goods on hand when the mortgage was executed, or
   2.       purchased with proceeds (not of your own money) of said goods, said property may be covered by CM
2.   Criminal Acts – removal of chattel to another city or province without written consent of mortgagee, selling property already pledged, or mortgaged without written consent of mortgagee
3.   A chattel mortgage may be foreclosed judicially or extra-judicially, in the latter case, before a notary or sheriff, or creditor or mortgagee when stipulated, even without need of notice (when mortgagee forecloses)

15.  Pactum Commissorium applies to Chattel Mortgage.

Reference:

Commercial Law Memory Aid

Ateneo Central Bar Operations 2001

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Addendum to Sectrans

DEC 19

Posted by Magz

ADDENDUM TO SECTRANS

PROVISIONS COMMON TO PLEDGE AND MORTGAGE (Art 2085-2123)

PLEDGE (definition) – A contract by virtue of which the debtor delivers to the creditor or to a third person a movable or document evidencing incorporeal rights for the purpose of securing the fulfillment of a principal obligation with the understanding that when the obligation is fulfilled, the thing delivered shall be returned with all its fruits and accessions.

Essential Requisites to Contracts of Pledge and Mortgage

1. constituted to secure the fulfillment of a principal obligation
2. pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged
3. the persons constituting the pledge or mortgage have the free disposal of their property, and in the absence thereof, that they be legally authorized for the purpose
4. cannot exist without a valid obligation
5. when the principal obligation becomes due, the thing in which the pledge or mortgage consists may be alienated for the payment to the creditor.
   • third persons not parties to the principal obligation may secure the latter  by pledging or mortgaging their own property
   • but may be constituted to secure fulfillment of a voidable or unenforceable or natural obligation
   • in case of pledge, the thing pledged must be delivered to the creditor or to a third person by common agreement
   • in case of mortgage, as a general rule, the mortgagor retains he possession of the property mortgaged

Kinds of Pledge:

1. Voluntary or conventional – created by agreement of the parties
2. Legal -  created by operation of law

Characteristics of Pledge:

1. real  – perfected   by delivery
2. accessory  – has no independent existence of its own
3. unilateral – creates obligation solely on the part of the creditor to return the thing subject upon the fulfillment of the principal obligation
4. subsidiary – obligation incurred does not arise until the fulfillment of the principal obligation

Cause or Consideration in Pledge

1. principal obligation – in so far as the pledgor is concerned
2. compensation stipulated for the pledge or mere liberality of the pledgor – if pledgor is not the debtor

Important Points:

1. future property cannot be pledged or mortgaged
2. pledge or mortgage executed by one  who is not the owner of the property pledged or mortgaged is without legal existence and registration cannot validate it.
3. mortgage of a conjugal property by one of the spouses is valid only as to ½ of the entire property
4. in case of property covered by Torrens title a mortgagee has the right to rely upon what appears in the certificate of title and does not have to inquire further.
5. pledgor or mortgagor has free disposal of property
6. thing pledged or mortgaged  may be alienated.
7. creditor not required to sue to enforce his credit
8. pledgor or mortgagor may be third person

Right of Creditor where Debtor fails to Comply with his Obligation

1. creditor is merely entitled to move for the sale of the thing pledged or mortgaged with the formalities required by law in order to collect
2. creditor cannot appropriate to himself the thing nor can he dispose of the same as owner.

Prohibition against pactum commissorium

1. stipulation is null and void -  stipulation where thing  or mortgaged shall automatically become the property of the creditor in the event of nonpayment of the debt within the term fixed
2. Requisites of pactum commissorium:
   1. there should be a pledge or mortgage
   2. there should be a stipulation for an automatic appropriation by the creditor of the property in the event of nonpayment
3. Effect on Security Contract

-nullity of the stipulation does not affect validity and efficacy of the principal  contract.

Permissible Stipulations with regard to pactum commissorium:

1. subsequent modification of original contract by agreement of parties
2. subsequent voluntary act of the debtor making cession of property in payment of the debt
3. promise to assign or sell said property in payment of the obligation if, upon its maturity, it is not paid
4. authorizing the mortgagee to take possession of the mortgaged premises upon the foreclosure of a mortgage
5. if after the first and second auctions, the thing is not sold

Important Points:

1. debtor-owner bears the risk of loss of the property
2. pledge or mortgage is indivisible:
   1. every portion of the property is answerable for the whole obligation
   2. when several things are pledged or mortgaged, all of them are liable for the totality of the debt. Creditor does not have to divide his action by distributing the debt, among the various things pledged or mortgaged
   3. the debtor’s heir who has paid a part of the debt cannot ask for the proportionate extinction of the pledge or mortgage nor can the creditor’s heir who has received his share of the debt return the pledge or cancel the mortgages if the debt is not yet completely satisfied
   4. EXCEPTIONS  to the rule of INDIVISIBILITY:
3. where  each one of several things guarantees determinate portion of credit
4. where only portion of loan was released
5. where there was failure of consideration
6. rule that real property, consisting of several lots should be sold separately, applies to sales in execution, and not to foreclosure of mortgages
7. the mere embodiment of a real estate mortgage and a chattel mortgage in one document does not have the effect of fusing both securities into an indivisible whole
8. contract of pledge or mortgage may secure all kinds of obligation, be they pure or subject to a suspensive or resolutory condition
9. a promise to constitute pledge or mortgage creates no real right, only a personal right biding upon the parties, only right of action to compel the fulfillment of the promise but there is no pledge or mortgage yet
10. under RPC, estafa is committed  by a person  who, pretending to be the owner of any real property, shall convey, sell, encumber or mortgage the same knowing that the real property is encumbered shall dispose of the same as unencumbered. It is essential that fraud or deceit be practiced upon the vendee at the time of the sale.

Provisions Applicable Only to Pledge

1. transfer of possession to the creditor or to third person by common agreement is essential in pledge

- ACTUAL DELIVERY is important

- CONSTRUCTIVE delivery or symbolic delivery of the key to the warehouse is sufficient to show that the depositary appointed by common  consent of the parties was legally placed in possession.

2. all movables within commerce of men may be pledged as long as susceptible of possession
3. incorporeal right, evidenced by:
   1. negotiable instruments;
   2. bills of lading;
   3. shares of stock;
   4. bonds;
   5. warehouse receipts ;and
   6. similar documents

may be pledged. The instruments pledged shall be delivered to the creditor and if negotiable, must be indorsed.

4. pledge shall take effect against 3^rdpersons only if the ff appears in a public instrument:
5. description of the thing pledged
6. date of the pledge
7. shall take care of the thing pledged with the diligence of a good father of a family.
8. has the right to the reimbursement of the expenses made for its preservationis liable  for its loss or deterioration by reason of fraud, negligence, delay or violation of the terms of the contract, and not due to fortuitous event
9. may bring the actions which pertain to the owner of the thing in order to recover it from, or defend it against a 3^rdperson
10. cannot use the thing without the authority of the owner, and if he should do so, or misuse the thing, the owner may ask that it be judicially or extra-judicially deposited.
11. may use the thing if it is necessary for the preservation of the thing
12. may either claim another thing in pledge or demand immediate payment of the principal obligation if he is deceived on the substance or quality of the thing.
13. cannot deposit the thing pledged with a third person, unless there is a stipulation authorizing him to do so
14. is responsible for the acts of his agents or employees with respect to the thing pledged.
15. has  no right to use the thing or to appropriate the fruits without the authority of the owner can apply the  fruits, income , dividends or interest earned or produced by the thing pledged to the payment of the interest, and thereafter to the principal of his credit. Unless there is stipulation to the contrary, the interest and earnings of the right pledged and in case of animals, their offsprings are included in the pledge.
16. may cause public sale of the thing pledged if, without fault on his part, there is danger of destruction, impairment or diminution in value of the thing. The proceeds of the auction shall be a security for the principal obligation.
17. has the responsibility for flaws of the thing pledged.
18. cannot ask for the return of the thing against the will of the creditor, unless and until he has paid the debt and its interest, with expenses in a proper case
19. is allowed to substitute  the thing which is in danger of destruction or impairment without any fault on the part of the pledgee, with another thing of the same kind and quality
20. may require that  the thing be deposited with a 3^rdperson if through the negligence or willful act of the pledgee the thing is in danger of being lost or impaired
21. thing pledged may be alienated by the pledgor or owner only if with the consent of the pledgee. Ownership of the thing pledged is transmitted to the vendee or transferee as soon as the pledgee consents to the alienation, butt he latter shall continue in possession
22. contract of pledge gives right to the creditor to retain the thing in his possession or in that of a third person to whim it has been delivered, until the debt is paid
23. creditor :
24. pledgee:
25. pledgor :

Extinguishment of Pledge

• If the thing pledged is returned by the pledgee to the pledgor or owner, pledge is extinguished
• A statement in writing by the pledgee that he renounces or abandons the pledge is sufficient to extinguish. For t his purpose, neither the acceptance by the pledgor o owner, nor the return of the thing pledged is necessary, the pledgee becoming a depositary.
• If subsequent to the perfection of the pledge, the thing is in the possession of the pledgor or owner, there is prima facie presumption that the thing has been returned by the pledgee
• If the thing is in the possession of 3^rdperson who has received it from the pledgor or owner after the constitution of the pledge, there is prima facie presumption that the thing has been returned by the pledgee.

Formalities required Sale by a Creditor if credit not paid in due time:

1. the debt is due and unpaid
2. the sale must be at a public auction
3. there must be notice to the pledgor and owner, stating the amount due, and
4. the sale must be made with the intervention of a notary public the th
   • The pledgee may appropriate the thing if  after the first and second auctions, the thing is not sold.
   • At the public auction, the pledgor or owner may bid.
   • Pledgor or owner  shall have a better right if he should offer the same terms as the highest bidder
   • Pledgee may also bid, but his offer shall not be valid if he is the only bidder. All bids at the public auction shall ofer to pay the purchase price at once.  BIDS MUST BE FOR CASH. If any other bid is accepted, the pledgee is deemed to have received the purchase price, as far as the pledgor or owner is concerned.

Effect of the Sale of the Thing Pledged

1. extinguishes the principal obligation whether the price of the sale is more or less than the amount due
2. if  the price is more than  amount due, the debtor is not entitled to the excess unless the contrary is provided
3. if the price of the sale is less, neither is the creditor entitled to recover the deficiency. Contrary stipulation is void.

• After public auction, the pledgee shall promptly advise the pledgor or owner of the result.
• Any third person who has any right in the thing may satisfy the principal obligation as soon as the latter becomes due and demandable.
• The right of choice given to the pledgee as to which of the things pledged he shall cause to be sold is limited only by stipulation. After sufficient property has been sold to satisfy the obligation plus interest and expenses, no more shall be sold.
• A 3^rdperson who is not a party to the principal obligation may secure the latter by pledging his own property. He has the same as a guarantor and he cannot be prejudiced by any waiver of defense by the principal obligor

Legal Pledges:

1. Necessary  expenses shall be refunded to every possessor, but only possessor in good faith may retain the thing until he has been reimbursed.

Useful expenses shall be refunded only to the possessor I n good faith with the same right  of retention, the person who has defeated him in the possession having the option of refunding  the amount of the expenses or of paying the increase in value which the thing may have acquired and by reason thereof (art 546)

1. He who has executed work upon a movable has a right to retain it by way of pledge until he is paid.  (art 1731)
2. The agent may retain the things which are the objects of agency until the principal effects the reimbursement and pays the indemnity. (art 1914)
3. The laborer’s wages shall be a lien on the goods manufactured or the work done (art 1707).

Special Laws apply to pawnshops and establishment which are engaged in making loans secured by pledges. Provisions of the Civil Code shall apply subsidiarily.

REAL MORTGAGE (Arts. 2124-2131) – It is a contract whereby the debtor secures to the creditor the fulfillment of a principal obligation, specially subjecting to such security immovable property or real rights over immovable property in case the principal obligation is not complied with at the time stipulated.

Objects of Real Mortgage

1. immovables
2. alienable real rights in accordance with the laws, imposed upon immovables

* future property cannot be object of mortgage.

Important Points:

1. As a general rule, the mortgagor retains possession of the property he may deliver said property to the mortgagee without altering the nature of the contract of mortgage.
2. It is not an essential requisite that the principal of the credit bears interest, or that the interest as compensation for the use of the principal and the enjoyment of its fruits be in the form of a certain percent thereof.

Kinds of Mortgage:

1. voluntary
2. legal
3. equitable – one which, although it lacks the proper formalities of a mortgage shows the intention of the parties to make the property as a security for a debt

(provisions governing equitable mortgage – arts 1365, 1450, 1454, 1602, 1603, 1604 and 1607).

Essential Requisites of Mortgage

1. constituted to secure the fulfillment of a principal obligation
2. pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged
3. the persons constituting the pledge or mortgage have the free disposal of their property, and in the absence thereof, that they be legally authorized for the purpose
4. cannot exist without a valid obligation
5. when the principal obligation becomes due, the thing in which the pledge or mortgage consists may be alienated for the payment to the creditor.
6. appears in a public document duly recorded in the Registry of Property to be validly constituted

*legal mortgage – the persons in whose favor the law establishes a mortgage have on other right than to demand the execution and the recording of the document in which the mortgage is formalized.

Incidents of Registration of Mortgage

1. Mortgagee entitled to registration of mortgage as a matter of right
2. Proceedings for registration do not determine validity of mortgage or its effect
3. Registration is without prejudice to better right of third parties
4. Mortgage deed once duly registered forms part of the records for the registration of the property mortgaged
5. Mortgage by surviving spouse of his/her undivided share of conjugal property can be registered.

Effect of Invalidity of Mortgage on principal obligation:

1. principal obligation remains valid
2. mortgage deed remains as evidence of a personal obligation

Effect of Mortgage:

1. creates real rights, a lien inseparable from the property mortgaged, enforceable against the whole world
2. creates merely an encumbrance

Extent of Mortgage

a. the natural accessions

b.to the improvements,

1.    growing fruits
2. the rents or income not yet received when the obligation becomes due,

e. to the amount of the indemnity granted or owing to the proprietor from the insurers of the property,

1.    in virtue of expropriation for public use, with the declarations, amplifications and limitations established by law, whether the estate remains in the possession of the mortgagor, or it passes into the hands of  a third person.

Important Points:

1. Stipulation in mortgage contract including after-acquired properties is valid.
2. Attachment of lien is retroactive
3. Stipulation is necessary for mortgage to secure future advancements

Mortgage is a continuing security until the full amount of advances are paid.

4. Mortgage credit may be alienated or assigned to a third person, in whole or in part, with the formalities required by law.

a. Alienation or assignment is valid even if not registered. Registration is necessary only to affect 3^rd persons.

5. Creditor may claim from a 3^rdperson in possession of the property the payment of the part of the credit secured by the property
6. Stipulation forbidding the owner from alienating the immovable mortgaged shall be void.

Laws governing Mortgage:

1. New Civil Code
2. PD 1952
3. Revised Administrative Code
4. RA 4882 , as regards aliens becoming mortgages

Foreclosure of Mortgage -    It is the remedy available to the mortgagee by which he subjects the mortgaged property to the satisfaction of the obligation to secure which the mortgage was given.

Kinds of Foreclosure

1. judicial
2. extrajudicial

• both should be distinguished from execution sale which is governed by Rule 39 of the Rules of Court

Judicial Foreclosure (governed by Rule 68 of Rules of Court)

1. May be availed of by bringing an action in the proper court which has jurisdiction over the area wherein the real property involved or  apportion thereof is situated
2. If the  court finds the complaint to be well-founded, it shall order the mortgagor to pay the amount due with interest and other charges within a period of not less than 90 days nor more than 120 days from the entry of judgment.
3. If the mortgagor fails to pay at time directed, the court, upon motion, shall order the property to be sold to the highest bidder at a public auction.
4. Upon confirmation of the sale by the  court, also upon motion, it shall operates to divest the rights of all parties to the action and to vest their rights to the purchaser subject to such rights of redemption as may be allowed by law
5. Before the confirmation, the court retains control of the proceedings.
6. The proceeds of the sale shall be applied to the payment of the:

a. Costs of the sale;

b.Amount due the mortgagee;

1.    Claims  of junior encumbrancers or persons holding subsequent mortgages in the order of their priority; and
2. the balance, if any shall be paid to the mortgagor
3. Sheriff’s certificate is executed, acknowledged and recorded to complete the foreclosure

Nature of Judicial Foreclosure Proceedings:

1. quasi in rem action
2. foreclosure is only the result or incident of the failure to pay debt
3. survives death of mortgagor

Extrajudicial Foreclosure (governed by Act No, 3135, as amended)

1. express authority to sell is given to the mortgagee.
2. authority is not extinguished by death of mortgagor or mortgagee
3. public sale should be made after proper notice
4. surplus proceeds of foreclosure sale belong to the mortgagor
5. debtor has the right to redeem the property sold within 1 year from and after the date of sale
6. remedy of party aggrieved by foreclosure is a petition to set aside sale and cancellation of writ of possession.

Right of Mortgage to Recover Deficiency

1. Mortgagee is entitled to recover deficiency
2. If the deficiency is embodied in a judgment, it is referred to as deficiency judgment.
3. Action for recovery of deficiency may be filed even during redemption period.
4. Action to recover prescribes after 10 years from the time the right of action accrues.

Nature of Power of Foreclosure by Extrajudicial Sale

1. conferred for mortgagee’s protection
2. an ancillary stipulation
3. a prerogative of the mortgagee

Note: Stipulation of upset price in mortgage contract is void.

Effect of Inadequacy of Price in Foreclosure Sale

1. Where there is right to redeem

a. GR: Inadequacy of price is immaterial because the judgment debtor may redeem the property

b.EXCEPTION: the price is so inadequate as to shock the conscience of the court taking into consideration the peculiar circumstances

2. Property may be sold for less than its fair market value upon the theory that the lesser the price the easier for the owner to redeem.
3. The value of the mortgaged property has no bearing on the bid price at the public auction, provided that the public auction was regularly and honestly conducted.

Waiver of Security by Creditor

1. Mortgagee may waive right to foreclose his mortgage and maintain a personal action for recovery of theindebetness.
2. Mortgagee cannot have both remedies

Note: Foreclosure retroacts to the date of registration of mortgage

Redemption – It is a transaction by which the mortgagor reacquires the property which may have passed under the mortgage or divests the property of the lien which the mortgage may have created.

Kinds of Redemption

1. equity of redemption

-    right of the mortgagor to redeem the mortgaged property after his default in the performance of the conditions of the mortgage but before the sale of the mortgaged property or confirmation of sale

2. right of redemption

-    right of the mortgagor to redeem the property within a certain period after it was soldfor the satisfaction of the debt.

Equity of Redemption

1. exercised before confirmation of sale
2. second mortgagee acquires only the equity of redemption vested in the mortgagor
3. taking physical possession not necessary for levy

can be levied upon by means of writ of execution.

4. remedy of mortgagee to obtain possession is to bring a civil action either to recover possession as a preliminary step to the sale or to obtain judicial foreclosure.

Right of Redemption

1. may be exercised within 1 year from and after the date of registration of the certificate of sale with the appropriate Registry of Deeds.
2. if no redemption is made within prescribed period, the purchaser has the absolute right to a writ of possession which is the final process to consummate extrajudicial foreclosure
3. effect of seasonable redemption is not to recover ownership which was never lost  but the elimination from his title the lien created by the levy or attachment.
4. sale by the mortgagor to a 3^rdperson during redemption period transfers only the right to redeem the property and the right to possess, use and enjoy the same during said period.
5. if sale to a 3^rdperson is not registered and made without the consent of the mortagee, buyer was not validly substituted as a debtor thus has no right to redeem
6. if extrajudicial foreclosure if effected with fraud, it is null nad void ab initio.

CHATTEL MORTGAGE (Arts. 2140-2141) – It is a contract by virtue of which a  personal property is recorded in the Chattel Mortgage Register as security for the performance of an obligation.

Note: If the movable, instead of being recorded is delivered to the creditor, it is pledge and not chattel mortgage.

Laws governing Chattel Mortgage:

1. Chattel Mortgage Law, Act No. 1508, as amended
2. Civil Code
3. Revised Administrative Code
4. Revised Penal Code
5. Ship Mortgage Decree of 1978 (PD 1521) governs mortgage of vessels of domestic ownership

Important points:

The provisions of Civil Code on pledge shall be applicable to chattel mortgage only insofar as they are not in conflict with the Chattel Mortgage Law

Subject matter of Chattel mortgage must be described and identified.

Extent of Chattel Mortgage – It is deemed to cover only the property described and not like or substituted property thereafter acquired by the mortgagor and placed in the same depositary as the property originally mortgaged, anything in the mortgage to the contrary notwithstanding.

Effect of Registration

1. creates real rights
2. adds nothing to mortgage

Note: Registration of assignment of mortgage is not required

Right of Redemption

1. when the condition of a chattel mortgage is broken, the ff may redeem:

a. mortgagor;

b.person holding a subsequent mortgage;

1.    subsequent attaching creditor.
2. an attaching creditor who so redeems shall be subrogated to the rights of the mortgagee and entitled to foreclose the mortgage in the same manner that the mortgagee could foreclose it
3. the redemption is made by paying or delivering o the mortgagee the amount due on such mortgage and the costs and expenses incurred by such breach of condition before the sale.

Foreclosure of Chattel Mortgage

1. public sale
2. private sale – there is nothing illegal, immoral or against public order in an agreement for the private sale of the personal properties covered by chattel mortgage.

Period to Foreclosure

1. After 30 days from the time of the condition is broken
2. The 30-day period is the minimum period after violation of the mortgage condition for the creditor to cause the sale at public auction with at least 10 days notice to the mortgagor and posting of public notice of time, place, and purpose of such sale, and is a period of grace for the mortgagor, to discharge the obligation.
3. After the sale at public auction, the right of redemption is no longer available to the mortgagor.

Civil Action to Recover Credit

1. independent action not required
2. mortgage lien deemed abandoned by obtaining a personal judgment

Right of Mortgage to Recover Deficiency

1. where mortgage foreclosed

- Creditor may maintain action for deficiency although Chattel Mortgage Law is silent on this point. Reason is chattel mortgage is only given as a security and not as payment of the debt.

2. where mortgage constituted as security for purchase of personal property payable in installments

- No deficiency judgment can be asked and any agreement to the contrary shall be void

3. where mortgaged property subsequently attached and sold

- Mortgagee is entitle to deficiency judgment in an action for specific performance.

Application of Proceeds of Sale

1. costs and expenses of keeping and sale
2. payment of the obligation
3. claims of persons holding subsequent mortgages in their order
4. balance, if any, shall be paid to the mortgagor, or person holding under him.

CONCURRENCE AND PREFERENCE OF CREDITS (Arts. 2236-2251) –

Concurrence of credit – It implies possession by two or more creditors of equal right or privileges over the same property or all of the property of a debtor.

Preference of Credit – It is the right held by a creditor to be preferred in the payment of his claim above other out of the debtor’s assets.

General Provisions:

1. the debtor is liable with all his property, present and future, for the fulfillment of his obligations, subjects to exemptions provided by law

-    exempt property:

1. present property
2. family home (Arts 152, 153 & 155, NCC)
3. right to receive support as well as money or property obtained by such support shall not be levied  upon on attachment or execution (Art 205, NCC)
4. Sec 13, Rule 39, Rules of Court
5. Sec 118, the public Land Act,( CA No. 141, as amended)
   1. future property

- a debtor who obtains a discharge from his debts on account of insolvency, is not liable for the unsatisfied claims of his creditors with said property (Secs. 68 & 69, Insolvency Law, Act No. 1956

1. property in custodia legis and of public dominion
2. insolvency shall be governed by the Insolvency Lae (Act No. 1956, as amended)
3. Exemption of conjugal property or absolute community or property provided that:

a. Partnership or community subsists

b.Obligations of the insolvent spouse have not redounded to the benefit of the family

4. if there is co-ownership, and one of the co-owners is the insolvent debtor, his undivided share or interest in the property shall be possessed by the assignee in insolvency proceedings because it is part of his assets
5. property held by the insolvent debtor as a trustee of an express or implied trust, shall be excluded from the insolvency proceedings.

Classification of Credits

1. Special preferred credits (Arts 2241 & 2242 of NCC)

a. considered as mortgages or pledges of real or personal property or liens within the purview of legal provisions governing insolvency

b.taxes due to the State shall first be satisfied

2. Ordinary preferred credits (Art 2244)

- preferred in the order given by law

3. Common credits (Art 2245)

-    credits of any other kind or class, or by any other right or title not comprised in Arts 2241-2244 shall enjoy  no preference.

Order of Preference of Credit

1. Credits which enjoy preference with respect to specific movables, exclude all others to the extent of the value of the personal property to which the preference refers.
2. If there are 2 or more credits with respect to the same specific movable property, they shall be satisfied pro rata, after the payment of duties, taxes and fees due the State or any subdivision thereof
3. Those credits which enjoy preference in relation to specific real property or real rights, exclude all others to the extent of the value of the immovable or real right to which the preference refers.
4. If there are 2 or more credits with respect to the same specific real property or real rights, they shall be satisfied pro rata, after the payment of the taxes and assessment of the taxes and assessments upon the immovable property or real right.
5. The excess, if any, after the payment of the credits which enjoy preference with respect to specific property, real or personal, shall be added to the free property which the debtor may have, for the payment of other credits.
6. Those credits which do not enjoy any preference with respect to specific property, and those which enjoy preference, as to the amount not paid, shall be satisfied according to the following rules:

-    order established by Art 2244

-    common credits referred to in Art 2245 shall be paid pro rata regardless of dates.

Reference: 

Security Transactions Memory Aid Ateneo Central Bar Operations

Pre-Bar Quizzer in Political Law – Part I: Constitution of Government 111-118

Pre-Bar Quizzer in Political Law – Part I: Constitution of Government 111-118

111. May a school punish its students for illegal acts committed outside the school premises and beyond school hours but within the semester where they are enrolled?

                   Yes because they still carry the name of the school and their actuations affect the reputation of the school. ( ANGELES VS. SISON, 112 SCRA 26) This rule was reiterated in the cased of DE LA SALLE UNIVERSITY VS. CA (2008) where a rumble between two fraternities took place outside the school campus but the students involved were EXPELLED by the school. The Supreme Court, however, while conceding the power of the school over its students held that the penalty of expulsion is too harsh a penalty. It should be EXCLUSION, meaning, they are not allowed to enroll at the De La sale but they should be given transfer credentials so that they may enroll in another school.

          112. What are the underlying principles behind the constitutional proscription that the State cannot be sued without its consent?

          By reason of public policy (if every citizen is allowed to sue the government, it will be distracted from performing its functions to serve the people and it will be left just answering cases in court), by reason of sovereignty (the people shall not be allowed to sue the very entity that gives it said right;) and by reason of consent (when the people ratified the Constitution which includes the provision that the State cannot be sued without its consent, it has consented or waived said right to sue).

113. How may the State gives its consent to be sued?

Expressly when there is a law allowing it and impliedly when it enters into a contract with an individual because in the latter, it descended to the level of an individual making it susceptible to counterclaims or suits.

114. May the government be sued in the exercise of its governmental functions?

Yes if the government agency has a charter which allows it to be sued.  (RAYO VS. CFI OF BULACAN, 110 SCRA 456). Also, the government is not allowed to invoke its immunity from suit if by doing so, it will be causing an injustice to its citizens. (MINISTERIO VS. CFI of Cebu, 40 SCRA and SANTIAGO VS. REPUBLIC, 87 SCRA 294)

115. Is the US Government also immune from suit in the Philippines in connection with the exercise of its governmental functions?

Yes. This was the ruling in  U.S. VS. RUIZ, 136 SCRA where it was held that even if there is a contract entered into by the US Government but the same involves its “jusre imperii”  functions (governmental functions”, it cannot be sued. It is only when the contract involves its “jus gestiones” or business or proprietary functions that it may be sued.

          116. Are local governments also entitled to invoke immunity from suit?

          Yes.

          117. May a municipality be held liable for damages as a result of the death of a person arising from the collapse of a stage constructed by the local government in connection with its town fiesta?

               No, a town fiesta I a business or proprietary function since no law requires any town, city, province or barangay to hold an annual fiesta. (TORIO VS. FONTANILLA, 85 SCRA 599)

          118. May the government still be held liable to a private individual if the contract it entered into is void but the other party had already complied with his obligations under said agreement?

          Yes, because the government shall not enrich itself at the expense of its citizens.(DEPARTMENT OF HEALTH VS. C.V. CANCHELA, et al., 475 SCRA 218)

Reference:

Pre-Bar Quizzer in Political Law (Doctrinal Rulings, Requisites and Definitions)

Pre-Bar Quizzer in Political Law – Part I: Constitution of Government 100-110

Pre-Bar Quizzer in Political Law – Part I: Constitution of Government 100-110

101. What are the requirements for a valid change of residence for purposes of the requirement on “residence” under the Local Government Code?

In the case of DUMPIT-MICHELENA VS. COMELEC, it was held that to validly effect a change of residence, there must be animus manendi coupled with animus non revertendi. The intent to remain in the new domicile of choice must be for an indefinite period of time,   must be voluntary and the residence at  the   new domicile must be actual.

102. Is the 3-term limit of elected local officials applicable to a term acquired through succession?

No, the 3-term limit applies only if the official was DULY ELECTED to the said position for three (3) consecutive terms, not by succession. (BENJAMIN BORJA VS. COMELEC, and JOSE T. CAPCO, JR., G.R. No. 133495, September 3, 1998)

103. In the creation of a new  province, city, municipality or barangay or when it will be  divided, merged or abolished, or its boundary substantially altered, who shall vote in the plebiscite to be conducted?

All the residents of the political units affected, i.e., former and new local government unit to be formed, must participate in the plebiscite. (TAN VS. COMELEC, 142 SCRA 727 and Padilla vs. COMELEC, 214 SCRA 735 abandoning the doctrines in PAREDES VS. EXECUTIVE SECRETARY, 128 SCRA 6 and LOPEZ VS. METRO MANILA COMMISSION,  136 SCRA 633)

          104. What are the grounds for impeachment?

Only for  “Culpable violation of the constitution, treason, bribery, graft and corruption, other high crimes, or betrayal of public trust”.

          105. What is the extent of a judgment in impeachment cases?

Judgment in cases of impeachment shall not extend further than removal from office and disqualification to hold any other office under the Republic of the Philippines but shall nevertheless be liable to prosecution, trial and punishment according to law.

        106. When is an impeachment complaint deemed “initiated” to bar another complaint within a period of one year?

As held in FRANCISCO VS. SPEAKER JOSE DE VENECIA, ET AL, 415 SCRA 44, November 10,  2003,  an impeachment complaint deemed “initiated” to be a bar to the filing of another complaint within a 1-year period upon its [a]  filing; and  [b] COUPLED WITH CONGRESS TAKING INITIAL ACTION OF SAID COMPLAINT.”

          107.  Who investigates and prosecutes public officials for crimes committed in the performance of their official duties? Exception:

It is the Office of the Ombudsman and the Office of the Special Prosecutor except if the offense is in violation of election laws, rules and regulations wherein only the COMELEC has the power to investigate and to file the appropriate information in court. (Corpuz vs.  Tanodbayan, 149 SCRA 281)

108. What is covered by the “academic freedom” provision of the 1987 Constitution?

It covers   not only academic freedom on the part of the school but also those of the teachers, professors and the students because the provision states that “Academic freedom shall be enjoyed in all institutions of higher learning” while under the 1973 Constitution, only institutions of higher learning enjoy academic freedom because the provision then states that “all institutions of higher learning shall enjoy academic freedom (Art. XV, Section 8 [1], 1973 Constitution.”

 109. What is the extent of academic freedom on the part of schools?

It includes the power to determine:

a.     who may teach,

b.      what may be taught,

c.      how it shall be taught, and

d.     who may be admitted to study”‘ (Emphasis supplied; citing Sinco, Philippine Political Law, 491, (1962) and the concurring opinion of Justice Frankfurter in Sweezy v. New Hampshire (354 US 234 [1957], GARCIA VS. FACULTY ADMISSION, 68 SCRA 277).

110. Does academic freedom on the part of the school carries with it the power to revoke a degree or honor it has bestowed to its students?

Yes. As held in UP BOARD OF REGENTS VS.  CA, August 31, 1999, “academic Freedom includes the power of a University to REVOKE a degree or honor it has conferred to a student after it was found out that the student’s graduation was obtained through fraud. Academic freedom is given a wide sphere of authority. If an institution of higher learning can decide on who can and cannot study in it, it certainly can also determine on whom it can confer the honor and distinction of being its graduates.

Reference:

Pre-Bar Quizzer in Political Law (Doctrinal Rulings, Requisites and Definitions)

Pre-Bar Quizzer in Political Law – Part 2: Constitution of Liberty 1-10

Pre-Bar Quizzer in Political Law – Part 2: Constitution of Liberty 1-10

1. Define Police Power.

It is the power vested in the legislature by the Constitution to make, ordain, establish all manner of wholesome and reasonable laws for the good and welfare of the State and its people. (ERMITA MALATE HOTEL VS. CITY MAYOR, July 31, 1967)

2. What are the basic purposes/aspects of police power?

     a.  to promote the general welfare, comfort and convenience of the people; (ASSOCIATION OF SMALL LANDOWNERS VS. SECRETARY, 175 SCRA 343; US VS. TORIBIO, 15 Phil. 85

     b.  to promote and preserve public health; (VILLANUEVA VS. CASTANEDA, September 21, 1987; DECS VS. SAN DIEGO, 180 SCRA 533 [NMAT]; LORENZO VS. DIRECTOR OF HEALTH, 50 Phil. 595—apprehend and confine lepers in a leprosarium)

     c.  to promote and protect public safety; (AGUSTIN VS. EDU, 88 SCRA 195; TAXICAB OPERATORS VS. JUINIO, 119 SCRA 897 )

     d.  to maintain and safeguard peace and order; (GUAZON VS. DE VILLA)

     e.  to protect public morals; (DE LA CRUZ VS. PARAS, 123 SCRA 569; ERMITA MALATE HOTEL VS. CITY MAYOR, July 31, 1967; JMM PROMOTIONS VS. CA, 260 SCRA 319; VELASCO VS. VILLEGAS, February 13, 1983)

     f.  to promote the economic security of the people. (ichong vs. hernandez, 101 Phil. 11155)

3. Distinguish Police Power with Power of Eminent Domain.

The distinctions are:

1. The power of eminent domain is the inherent right of the State to condemn or to take private property for public use upon payment of just compensation while police power is the power of the state to promote public welfare by restraining and regulating the use of liberty and property without compensation;
2. In the exercise of police power, enjoyment of a property is restricted because the continued use thereof would be injurious to public welfare. In such case, there is no compensable taking provided none of the property interests is appropriated for the use or for the benefit of the public. Otherwise, there should be compensable taking if it would result to public use.
3. Properties condemned under police power are usually noxious or intended for noxious purpose; hence , no compensation shall be paid. Likewise, in the exercise of police power, property rights of private individuals are subjected to restraints and burdens in order to secure the general comfort, health and prosperity of the state.(Didipio earth savers multi purpose association vs. denr sec. Elisea gozu, et al., 485 scra 586)

4. What are the tests for a valid exercise of police power?

1. the interests of the public, not mere particular class, require the exercise of police power; (LAWFUL SUBJECT)
2. the means employed is reasonably necessary for the accomplishment of the purpose and not unduly oppressive to individuals. (LAWFUL MEANS). In short, the end does not justify the means.

5. Define Due Process.

Due process is a law which hears before it condemns, which proceeds upon inquiry and renders judgment only after trial (Per Daniel Webster in the DARTMOUTHCOLLEGE CASE)

6. What are the Kinds of Due Process?

1. Substantive due process -  requires the intrinsic validity of the law in interfering with the rights of the person to life, liberty or property. In short, it is to determine whether it has a valid governmental objective like for the interest of the public as against mere particular class.
2. Procedural due process -  one which hears before it condemns, or the procedure as pointed out by Daniel Webster.

7. What are the requisites of “Judicial Due Process”?

As held in BANCO ESPANOL VS. PALANCA, 37 Phil. 921. The requisites are:

1. There must be an impartial court or tribunal clothed with judicial power to hear and decide the matter before it;
2. Jurisdiction must be lawfully acquired over the person of the defendant or over the property subject of the proceedings;
3. The defendant must be given the opportunity to be heard;
4. Judgment must be rendered only after lawful hearing.

 8. What are the requisites of Due Process before administrative bodies?

As held in TIBAY VS. CIR, 69 Phil. 635, the requisites are:

1. the right to a hearing which includes the right to present evidence;
2. the tribunal must consider the evidence presented;
3. the decision must have something to support itself;
4. the evidence must be substantial;
5. the decision must be based on the evidence presented during the hearing;
6. the tribunal or body must act on its own independent consideration of the law or facts;
7. the board or body shall in all controversial questions, render its decision in such a manner that the parties to the proceedings can know the various issues involved.

9. If an accused was represented by a non-lawyer during the trial of his criminal case, what right of the said accused was violated? Is he entitled to a new trial?

If an accused was represented by a non-lawyer during the trial (though he thought that he was a lawyer), his right to due process was violated and therefore entitled to a new trial. (DELGADO VS. CA, November 10, 1986)

10. What are the requisites of Procedural Due Process in disciplinary actions against students?

As held in GUZMAN VS. NU, 142 SCRA 706, the requisites are:

1.   the students must be informed in writing of the nature and cause of any accusation against them;

2.   they shall have the right to answer the charges against them, with the assistance of counsel;

3.   they shall be informed of the evidence against them;

4.   they shall have the right to adduce evidence in their own behalf;

5.   the evidence must be duly considered by the investigating committee or official designated by the school authorities to hear and decide the case.

11. What are the requisites of Due Process before an employee may be dismissed from his work?

          The requisites of Due Process before the NLRC are:

1. Notice; and
2. Hearing

12. Is Due Process satisfied in administrative proceedings if the respondent is not assisted by counsel?

          There is no law, whether the Civil Service Act or the Administrative Code of 1987, which provides that a respondent in an administrative case should be assisted by counsel in order that the proceedings therein is considered valid. Not only, that, petitioner herein was given the opportunity several times to engage the services of a lawyer to assist him but he confidently informed the investigators that he could protect himself. (LUMIQUED VS. EXENEA, 282 SCRA 125)

 13. What are the requisites for a valid classification?

              As held in People vs. Cayat, 68 Phil. 12, the requisites are:

1. There must be real and substantial distinctions;
2. It must be germane tot he purposes of the law;
3. It must not be limited to existing conditions only; and
4. It must apply equally to all members of the same class.

 14. Is there violation of the equal protection clause if policemen who are charged of a criminal offense punishable for more than six (6) years will remain suspended until after the his acquittal unlike other public officers whose maximum suspension even when facing graft and corrupt charges is only three (3) months?

      No, there is no violation. In HIMAGAN VS. PEOPLE, the Supreme Court held that the fact that policemen charged with a criminal offense punishable by more than 6 years are to be suspended during the entire duration of the case unlike other government employees is valid since it rests on valid classification because policemen carry weapons and the badge of the law which can be used to harass or intimidate witnesses against them.

 15. What are the requisites of a valid Search Warrant or Warrant of Arrest?

          No search warrant or warrant of arrest shall issue except upon probable cause to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be searched and the persons or things to be seized. (Section 2, Art. III).

          In addition, Rule 126 of the Rules on Criminal Procedure requires that no warrant shall be issued for more than one (1) specific offense and that in the implementation of a search warrant when the respondent is not present, witnesses are required. Finally, a Circular issued by the Supreme Court requires that no warrant or warrant of arrest shall be implemented during the night, week-ends or holidays, except in exceptional circumstances.

NOTE: Under the Human Security Act/Anti-Terrorism Law, Republic Act No. 9372, Approved on March 6, 2007 and effective on July 15, 2007 (This Law shall be automatically suspended one (1) month before and two (2) months after the holding of any election) a person may be taken into custody by the police if there is a written authorization by the Anti-Terrorism Council and such detention may be extended upon written approval of the Commission of Human Rights in case of actual or imminent terrorist attack.

          ***Sec. 18. Period of detention without judicial warrant of arrest.- The provisions of Article 125 of the Revised Penal Code, notwithstanding, any police or law enforcement personnel, who, having been duly authorized in writing by the Anti-Terrorism Council has taken custody of a person charged with or suspected of the crime of terrorism or the crime of conspiracy to commit terrorism shall, WITHOUT INCURRING ANY CRIMINAL LIABILITY FOR DELAY IN THE DELIVERY OF DETAINED PERSONS TO THE PROPER JUDICIAL AUTHORITIES, DELIVER SAID CHARGED OR SUSPECTED PERSON TO THE PROPER JUDICIAL AUTHORITY WITHIN A PERIOD OF THREE (3) DAYS counted from the moment said charged or suspected person has been apprehended or arrested, detained, and taken into custody by the said police, or law enforcement personnel: Provided, That the arrest of those suspected of the crime of terrorism or conspiracy to commit terrorism must result from the surveillance under Section 7 and examination of bank deposits under Section 27 pf this Act.

          The police or law enforcement personnel concerned shall, before detaining the person suspected of the crime of terrorism, present him or her before any judge at the latter’s residence or office nearest the place where the arrest took place at any time of the day or night. It shall be the duty of the judge, among other things, to ascertain the identity of the police or law enforcement personnel and the person or persons they have arrested and presented before him or her, to inquire of them the reasons why they have arrested the person and determine by questioning and personal observation whether or not the subject has been subjected to any physical, moral or psychological torture by whom and why. The judge shall then submit a written report of what he/she had observed when the subject was brought before him to the proper court that has jurisdiction over the case of the person thus arrested.

          The judge shall forthwith submit his report within 3 calendar days from the time the suspect was brought to his/her residence or office.

          Immediately after taking custody of a person charged with or suspected of the crime of terrorism or conspiracy to commit terrorism, the police or law enforcement personnel shall notify in writing the judge of the court nearest the place of apprehension or arrest; provided, That where the arrest is made during Saturdays, Sundays, holidays or after office hours, the written notice shall be served at the residence of the judge nearest the place where the accused was arrested. The penalty of 10 years and 1 day to 12 years imprisonment shall be imposed upon the police or law enforcement personnel who fails to notify any judge as provided in the preceding paragraph.

          ***Section 19. Period of Detention in the event of an actual or imminent terrorist attack.- In the vent of an actual or imminent terrorist attack,, suspects may not be detained for more than three days without the written approval of a municipal, city, provincial or regional official of a Human Rights Commission, or judge of the municipal, regional trial court, the Sandiganbayan or a justice of the Court of Appeals nearest the place of arrest. If the arrest is made during Saturdays, Sundays or holidays, or after office hours, the arresting police of law enforcement personnel shall bring the person thus arrested to the residence of any of the officials mentioned above that is nearest the place where the accused was arrested. The approval in writing of any of the said officials shall be secured by the police or law enforcement personnel concerned within five days after the date of the detention of the persons concerned; Provided, however, That within three days after the detention the suspects whose connection with the terror attack or threat is not established, shall be released immediately.

16. In case the place to be searched as indicated in the Search Warrant is erroneous because it is different from the place mentioned by the applicants who searched the place indicated by them in their affidavit, are the things seized admissible in evidence?

          No. As held in PEOPLE VS. CA, 291 SCRA 400, WHAT IS MATERIAL IN DETERMINING THE VALIDITY OF A SEARCH IS THE PLACE STATED IN THE WARRANT ITSELF, NOT WHAT THE APPLICANTS HAD IN THEIR THOUGHTS, OR HAD REPRESENTED IN THE PROOFS THEY SUBMITTED TO THE COURT ISSUING THE WARRANT.

17. What are the different instances when a warrantless search and seizure is allowed under our existing jurisprudence?

Warrantless search is allowed in the following instances:

1. customs searches;
2. searches of moving vehicle;
3. seizure of evidence in plain view;
4. consented searches;
5. search incidental to a lawful arrest; and
6. stop and frisk measures. (PEOPLE VS. ARUTA, 288 SCRA 626)

 18. May a judge deputize his Clerk of Court to take the deposition of the applicant for a Search Warrant subject to clarificatory questions after his hearing in other cases?

         No. As held in Bache vs. Ruiz, 37 SCRA 823, the examination of the complainant ant the witnesses he may produce must be done personally by the judge. Otherwise, the warrant shall be void. As such, the SC held in PENDON VS. CA, November 16, 1990 that when the questions asked to the applicant for a search warrant was pre-typed, the same is not valid since there could have been no searching questions.

 19. May a Search Warrant be issued for the crimes of Search Warrant for estafa, falsification, tax evasion and insurance fraud?

          No, such would be a “general warrant” and violates the rule that a warrant shall be issued for one (1) specific offense. (Asian Surety vs. Herrera, 54 SCRA 312)

20. What is a “Scatter-shot Warrant”?

          It is a search warrant issued for more than one (1) specific offense like a search warrant issued for more than one specific offense like one for estafa, robbery, theft and qualified theft”. (TAMBASEN VS. PEOPLE, July 14, 1995; PEOPLE VS. CA, 216 SCRA 101)

21. May a judge validly issue a Warrant of Arrest based from the Information and the Resolution of the Prosecutor finding probable cause against the accused?

          No. There will be no basis for the issuance since the Prosecutor is neither the complainant nor the witness to the case. He could not have determined probable cause based from the said documents. (VICENTE LIM,SR. AND MAYOR SUSANA LIMVS.HON. N. FELIX , G.R. NO. 99054-57). As held in the case of Soliven vs. Makasiar, decided under the 1987 Constitution, the Court noted that the addition of the word personally after the word determined and the deletion of the grant of authority by the 1973 Constitution to issue warrants to other respondent officers as to may be authorized by law does not require the judge to personally examine the complainant and his witness in his determination of probable cause for the issuance of a warrant of arrest.What the Constitution underscores is the exclusive and personal responsibility of the issuing judge to satisfy himself of the existence of probable cause. Following established doctrine and procedures, he shall:

               (1) personally evaluate the reports and the supporting documents submitted by the fiscal regarding the existence of probable cause and, on the basis thereof, issue a warrant of arrest;

               (2) If on the basis thereof he finds no probable cause, he may disregard the fiscal's report and require the submission of supporting affidavits of witnesses to aid him in arriving at a conclusion as to the existence of probable cause.

          The case of People vs. Honorable Enrique B. Inting reiterates the following doctrines:

               (1) The determination of probable cause is a function of the judge. It is not for the Provincial Fiscal or Prosecutor nor for the Election Supervisor to ascertain. Only the judge alone makes this determination.

               (2) The preliminary inquiry made by the prosecutor does not bind the judge. It merely assist him to make the determination of probable cause. The judge does not have to follow what the prosecutor's present to him. By itself, the prosecutor's certification of probable cause is ineffectual. It is the report, the affidavits, the transcripts of stenographic notes, and all other supporting documents behind the prosecutor's certification which are material in assisting the judge to make his determination.

               (3) Preliminary inquiry should be distinguished from the preliminary investigation proper. While the former seeks to determine probable cause for the issuance of warrant of arrest, the latter ascertains whether the offender should be held for trial or be released.

 22. As to the requirement that the judge must “personally” determine probable cause, must he examine the complainant and his witnesses face to face in order to comply with the said constitutional provision?

          It depends.

          In connection with the issuance of a SEARCH WARRANT, he must personally examine the complainant and the witnesses, with searching questions, face to face.

          In connection with the issuance of a warrant of arrest, however, the word“personally” after the word determined does not necessarily mean that the judge should examine the complainant and his witnesses personally or face to face before issuing the   warrant of arrest but the exclusive responsibility on the part of said judge to satisfy himself of the existence of probable cause. As such, there is no need to examine the complainant and his witnesses face to face. It is sufficient if the judge is convinced of the existence of probable cause upon reading the affidavits or deposition of the complainant and his witnesses. SOLIVEN VS. MAKASIAR, 167 SCRA 393

23. Is the judge bound by the findings of existence of “probable cause” by the Prosecutor as indicated in his Certification in the information so that the issuance of a warrant of arrest is only ministerial? If not satisfied of the existence of probable cause, may the judge require the Prosecutor to submit additional evidence?

          The judge is not bound by the findings of the Prosecutor because the said finding is only “probable cause” that a crime was committed. Probable cause to justify the issuance of a warrant of arrest is a judicial function vested only in the judge. In fact, he can require the Prosecutor to submit additional evidence if he is not convinced of the existence of probable for the issuance of a warrant of arrest. (P. vs. Villanueva, 110 SCRA 465; Placer vs. Villanueva, 126 SCRA 463).

24. Is "Operation Kapkap" being done by the police because the suspect has something bulging in his waist and keeps on touching his abdomen as if touching a gun valid?

          As held in PEOPLE VS. MENGOTE, G.R. No. 87059, June, 1992, 210 scra 174, “Operation Kapkap” or warrantless search without probable cause is unconstitutional. Such search is valid only if covered by Section 5, Article 113 of the Rules of Court which provides:

          Sec. 5. Arrest without warrant; when lawful.- A peace officer or private person may, without warrant, arrest a person:

          (a) When, in his presence, the person to be arrested has committed, is actually committing, or is attempting to commit an offense;

          (b) When an offense has in fact just been committed, and he has personal knowledge of facts indicating that the person to be arrested has committed it; and

          (c) When the person to be arrested is a prisoner who has escaped from a penal establishment or place where he is serving final judgment or temporarily confined while his case is pending, or has escaped while being transferred from one confinement to another.

          Compare this case to MANALILI VS. PEOPLE, October 9, 1997. The policemen saw several suspicious looking men at dawn who ran when they went near them. As the policemen ran after them, an unlicensed firearm was confiscated. The search was declared valid by the Supreme Court. Note, however, that in MALACAT VS. CA, 283 SCRA 159, the SC held that mere suspicions not sufficient to validate warrantless arrest.

25. May the Iloilo Police arrests without warrant or search the person disembarking from a ship passenger without warrant based solely on an information relayed to them by an informant that the suspect’s bag contains marijuana?

          No. As held in PEOPLE vs. AMMINUIDIN, 163 SCRA 402   a warrantless arrest of the accused was unconstitutional. This was effected while he was coming down the vessel, to all appearances no less innocent than the other disembarking passengers. He had not committed nor was actually committing or attempting to commit an offense in the presence of the arresting officers. He was not even acting suspiciously. In short, there was no probable cause that, as the prosecution incorrectly suggested, dispensed with the constitutional requirement of a warrant.

26. In arrests without warrant based on the fact that a crime has just been committed, what kind of knowledge is required on the part of the arresting officer?

In PEOPLE VS. GALVEZ, 355 SCRA 246, the Supreme Court held that t he policeman arrested the accused-appellant on the basis solely of what Reynaldo Castro had told him and not because he saw the accused-appellant commit the crime charged against him. Indeed, the prosecution admitted that there was no warrant of arrest issued against accused-appellant when the latter was taken into custody. Considering that the accused-appellant was not committing a crime at the time he was arrested nor did the arresting officer have any personal knowledge of facts indicating that accused-appellant committed a crime, his arrest without a warrant cannot be justified.

27. What is the effect on the illegality of the arrest by the subsequent act of the accused in posting bond for his provisional liberty and entering a plea during his arraignment?

          By entering a plea of not guilty during the arraignment, the accused-appellant waived his right to raise the issue of illegality of his arrest. IT IS NOW SETTLED THAT OBJECTION TO A WARRANT OF ARREST OR THE PROCEDURE BY WHICH A COURT ACQUIRES JURISDICTION OVER THE PERSON OF AN ACCUSED MUST BE MADE BEFORE HE ENTERS HIS PLEA, OTHERWISE, THE OBJECTION IS DEEMED WAIVED. THE FACT THAT THE ARREST WAS ILLEGAL DOES NOT RENDER THE SUBSEQUENT PROCEEDINGS VOID AND DEPRIVE THE STATE OF ITS RIGHT TO CONVICT THE GUILTY WHEN ALL THE FACTS POINT TO THE CULPABILITY OF THE ACCUSED. (PEOPLE VS. GALVEZ, 355 SCRA 246)

28. Is a warrantless search and seizure by a private individual valid?

          Yes, since the constitutional provision is not applicable to him. (PEOPLE OF THE PHILIPPINES VS. ANDRE MARTI, G.R. NO. 81561, January 18, 1991; SILAHIS INTERNATIONAL HOTEL, INC. VS. ROGELIO SOLUTA, ET AL., 482 SCRA 660)

29. What are the requisites of a valid search incidental to a valid arrest?

          As held in NOLASCO VS. PANO, 139 SCRA 541, a search incidental to a valid arrest must be done at the place where the accused is arrested. As such, if accused was arrested while inside a jeepney, there is no valid search incidental to a valid arrest if she will be brought to her residence and thereafter search the said place. Or as held in ESPANO VS. CA, 288 SCRA 588, if the accused was arrested in the street during a buy-bust operation, the search of his house nearby is not a valid search incidental to a valid arrest.

30. If the accused was validly arrested without warrant inside a night club for illegal possession of firearm, may the arresting officers validly search his car parked several meters from the place of arrest based on “search incidental to a valid arrest”?

          Where the gun tucked in a person’s waist is plainly visible to the police, no search warrant is necessary and in the absence of any license for said firearm, he may be arrested at once as he is in effect committing a crime in the presence of the police officers. No warrant is necessary in such a situation, it being one of the recognized exceptions under the Rules. As a consequence of the accused’s valid warrantless arrest inside the nightclub, he may be lawfully searched for dangerous weapons or anything which may be used as proof of the commission of an offense, without a search warrant in accordance with Section 12, Rule 126. This is a valid search incidental to a lawful arrest.

          In fact, the subsequent discovery in his car which was parked in a distant place from where the illegal possession of firearm was committed [after he requested that he will bring his car to the Police Station after his warrantless arrest) , of a drug paraphernalia and shabu, CANNOT BE SAID TO HAVE BEEN MADE DURING AN ILLEGAL SEARCH because of his consent, not due to search incidental to a valid arrest. As such, the items do not fall under the exclusionary rule and the unlicensed firearms, drug paraphernalia and the shabu, can be used as evidence against the accused. (PEOPLE VS. GO, 354 SCRA 338)

31. May the police authorities validly search the rented apartment of a suspect without a search warrant or without the consent of the said person BUT WITH THE CONSENT OF THE OWNER OF THE APARTMENT?

          No. PEOPLE VS. DAMASO, 212 SCRA 547 abandoned the ruling in Lopez vs. Commissioner. In order that there is a valid consent to a warrantless search, the consent must come from the person directly affected by said warrantless search.

32. What is the “plain view doctrine” in connection with warrantless search and seizure?

As held in PEOPLE VS. VALDEZ, 341 SCRA 25, the “plain view” doctrine, which may justify a search without warrant, APPLIES ONLY WHERE THE POLICE OFFICER IS NOT SEARCHING FOR EVIDENCE AGAINS THE ACCUSED, BUT INADVERTENTLY COMES ACROSS AN INCRIMINATING OBJECT. As such, “plain view doctrine could not be used to justify the seizure of an unlicensed firearm in People vs. Damaso, supra, which was seen on top of a table after the opening of the apartment’s door without a warrant nor consent of the occupant therein.

33. Define probable cause in connection with the issuance of a search warrant.

The "probable cause" for a valid search warrant, has been defined "as such facts and circumstances which would lead a reasonably discreet and prudent man to believe that an offense has been committed, and that the objects sought in connection with the offense are in the place sought to be searched". (Quintero vs. NBI, June 23, 1988). This probable cause must be shown to be within the personal knowledge of the complainant or the witnesses he may produce and not based on mere hearsay. (P. VS. SY JUCO, 64 PHIL. 667; ALVAREZ VS. CFI, 64 PHIL. 33; US VS. ADDISON, 28 PHIL. 566).

34. What is the “sufficiency test” in connection with applications for a search warrant?

"The true test of sufficiency of a deposition or affidavit to warrant issuance of a search warrant is whether it was drawn in a manner that perjury could be charged thereon and the affiant be held liable for damage caused. The oath required must refer to the truth of the facts within the personal knowledge of the applicant of a search warrant and/or his witnesses, not of the facts merely reported by a person whom one considers to be reliable." (DR. NEMESIO PRUDENTE VS. THE HON. EXECUTIVE JUDGE ABELARDO M. DAYRIT, RTC 33, Manila & People of the Philippines, GR No. 82870, December 14, 1989)

35. May the police and military authorities validly search the citizens without warrant in checkpoints set up by them? What is the extent of the search that they may conduct?

          In RICARDO VALMONTE VS. GEN RENATO DE VILLA, GR No. 83988, September 29, 1989, the Supreme Court held that warrantless searches and seizures in military and police checkpoints are not illegal as these measures to protect the government and safeguards the lives of the people. The checkpoints are legal as where the survival of the organized government is on the balance, or where the lives and safety of the people are in grave peril. However, the Supreme Court clarified that the military officers manning the checkpoints may conduct VISUAL SEARCH ONLY, NOT BODILY SEARCH.

36. Is an unlicensed firearm seized in the house of the accused without warrant by the military authorities, after they were given consent by the said owner of the house for them to search for rebel soldiers, admissible in evidence?

          No. In VEROY VS. LAYAGUE, 210 SCRA 97, the Supreme Court held that the owner of the house allowed the policemen to enter his house because they will be searching for rebel soldiers but when inside the house, they instead seized an unlicensed firearm. As such, there was no consent to search for firearms and as a consequence, the firearm is not admissible as evidence.

37. If the judge finds that there's probable cause, must he issue a warrant of arrest as a matter of course?

          It depends:

1. SAmulde vs. Salvani, September 26, 1988(No because a warrant is issued in order to have jurisdiction of the court over the person of an accused and to assure the court of his presence whenever his case is called in court. As such, if the court believes that the presence of the accused could be had even without a warrant of arrest, then he may not issue said warrant. Note: This case involves a minor offense)
2. GOZO VS. TAC-AN, 300 SCRA 265. If the offense committed is a serious one like that obtaining in this case for murder, the Judge must issue a warrant of arrest after determining the existence of probable cause)

38. If the applicant for a search warrant testifies that his knowledge of the facts and circumstances was derived from a “highly reliable informant”, would such fact sufficient to convince the court of the existence of “probable cause”?

          No, knowledge based on hearsay information does not justify the existence of probable cause. (Prudente vs. Dayrit, supra.) In fact, when the statements in the affidavits of witnesses are mere generalities, mere conclusions of law, and not positive statements of particular acts, the warrant issued by virtue thereof is not valid. Ponsica vs. Ignalaga, July 31,1987)

39. In the seizure of alleged pirated tapes, what must the applicant submit to the court in order that the search warrant to be issued shall be valid?

          In Century Fox vs. CA, 164 SCRA 655 and COLUMBIA PICTURES VS. CA, 261 SCRA 144, it was held that the master copy of the allegedly pirated tape should be presented before the judge in order to convince him of the existence of probable cause)

40. What is the effect on the evidence obtained in violation of Sections 2 and 3 of Article III?

          Any evidence obtained in violation of Sections 2 and 3 of Article III shall be inadmissible for any purpose in any proceeding.

41. Under the Human Security Act/Anti-Terrorism Law, Republic Act No. 9372, Approved on March 6, 2007 and effective on July 15, 2007, may police authorities the listen to, intercept and record, with the use of any mode, form or kind or type of electronic or other surveillance equipment or intercepting and tracking devices, or with the use of any other suitable ways or means for that purpose, any communication, message, conversation, discussion, or spoken or written words of a person without violating the right to privacy?

          Yes under Sections 7 and 8 of the law which provides:

          Section 7. Surveillance of suspects and interception and recording of communications. The provisions of RA 4200 (Anti-Wiretapping Law) to the contrary notwithstanding, a police or law enforcement official and the members of his team may, upon a written order of the Court of Appeals, listen to, intercept and record, with the use of any mode, form or kind or type of electronic or other surveillance equipment or intercepting and tracking devices, or with the use of any other suitable ways or means for that purpose, any communication, message, conversation, discussion, or spoken or written words between members of a judicially declared and outlawed terrorist organization, association, or group of persons or of any person charged with or suspected of the crime of terrorism or conspiracy to commit terrorism.

          Provided, That surveillance, interception and recording of communications between lawyers and clients, doctors and patients, journalists and their sources and confidential business correspondence shall not be authorized.

          Section 8. Formal Application for Judicial Authorization.- The written order of the authorizing division of the Court of Appeals to track down, tap, listen, intercept, and record communications, messages, conversations, discussions, or spoken or written words of any person suspected of the crime of terrorism or the crime of conspiracy to commit terrorism, shall only be granted by the authorizing division of the Court of Appeals UPON AN EX-PARTE written application of a police or law enforcement official who has been duly authorized in writing by the Anti-Terrorism Council created in Section 53 of this Act to file such ex-parte application, and upon examination under oath and affirmation of the applicant and the witnesses who may produce to establish:

• That there is probable cause to believe based on personal knowledge of facts and circumstances that the said crime of terrorism or conspiracy to commit terrorism has been committed, or is being committed, or is about to be committed;
• That there is probable cause to believe based on personal knowledge of facts and circumstances that evidence which is essential to the conviction of any charged or suspected person for, or to the solution or prevention of any such crimes, will be obtained; and
• That there is no other effective means readily available for acquiring such evidence.

          Section 9. Classification and Contents of the Order of the Court. The written order granted by the authorizing division of the Court of Appeals as well as its order, if any, to extend or renew the same, the original application of the applicant, including his application to extend or renew, if any, and the written authorizations of the Anti-Terrorism Council shall be deemed and are hereby declared as classified information: Provided, That the person being surveilled or whose communications, letters, papers, messages, conversations, discussions, spoken or written words and effects have been monitored, listened to, bugged or recorded by law enforcement authorities has the right to be informed of the acts done by the law enforcement authorities in the premises or to challenge, if he or she intends to do so, the legality of the interference before the Court of Appeals which issued said written order. The written order of the authorizing division of the court of Appeals shall specify the following:

• The identity, such as name and address, if known, of the charged of suspected persons whose communications, messages, conversations, discussions, or spoken or written words are to be tracked down, tapped, listened to, intercepted or recorded and, in case of radio, electronic, or telephone (whether wireless or otherwise) communications, messages, conversations, discussions, or spoken or written words, the electronic transmission systems or the telephone numbers to be tracked down, tapped, listened to, intercepted, and recorded and their locations if the person suspected of the crime of terrorism or conspiracy to commit terrorism is not fully known, such person shall be subject to continuous surveillance provided there is reasonable ground to do so;
• The identity (name and address, and the police or law enforcement organization) of the members of his team judicially authorized to track down, tap, listen to, intercept, and record the communications, messages, conversations, discussions, or spoken or written words;
• The offense or offenses committed, or being committed, or sought to be prevented; and
• The length of time which the authorization shall be used or carried out.

          Section. 10. Effective Period of Judicial Authorization. Any authorization granted by the authorizing division of the court of Appeals…shall only be effective for the length of time specified in the written order of the authorizing division of the Court of Appeals, which shall not exceed 30 days from the date of receipt of the written order of the authorizing division of the court of Appeals by the applicant police or law enforcement official.

          The CA may extend or renew the said authorization for another non-extendible period, which shall not exceed 30 days from the expiration of the original period…The ex-parte application for renewal has been duly authorized by the Anti-terrorism Council in writing.

42. Under the Human Security Act/Anti-Terrorism Law, Republic Act No. 9372, Approved on March 6, 2007 and effective on July 15, 2007, may police authorities examine the bank accounts of individuals without violating their right to privacy?

          Yes under Sections 27 and 28 of the said law. It provides:  

          Section 27. Judicial authorization required to examine bank deposits, accounts and records.

          The justices of CA designated as special court to handle anti-terrorism cases after satisfying themselves of the existence of probable cause in a hearing called for that purpose that:

• A person charged with or suspected of the crime of terrorism or conspiracy to commit terrorism;
• Of a judicially declared and outlawed terrorist organization or group of persons;
• Of a member of such judicially declared and outlawed organization, association or group of persons, may authorize in writing any police or law enforcement officer and the members of his team duly authorized in writing by the anti-terrorism council to:
  1. examine or cause the examination of, the deposits, placements, trust accounts, assets, and records in a bank or financial institution; and
  2. gather or cause the gathering of any relevant information about such deposits, placements, trust accounts, assets, and records from a bank or financial institution. The bank or financial institution shall not refuse to allow such examination or to provide the desired information, when so ordered by and served with the written order of the Court of Appeals.

          Sec. 28. Application to examine deposits, accounts and records.

          The written order of the CA authorizing the examination of bank deposits, placements, trust accounts, assets and records:

• A person charged with or suspected of the crime of terrorism or conspiracy to commit terrorism;
• Of a judicially declared and outlawed terrorist organization or group of persons;
• Of a member of such judicially declared and outlawed organization, association or group of persons, in a bank or financial institution-

          SHALL ONLY BE GRANTED BY THE AUTHORIZING DIVISION OF THE CA UPON AN EX-PARTE APPLICATION TO THAT EFFECT OF A POLICE OR LAW ENFORCEMENT OFFICIAL who has been duly authorized by the Anti-Terrorism Council to file such ex-parte application and upon examination under oath or affirmation of the applicant and his witnesses he may produce to establish the facts that will justify the need and urgency of examining and freezing the bank deposits, placements, trust accounts, assets and records:

• Of A person charged with or suspected of the crime of terrorism or conspiracy to commit terrorism;
• Of a judicially declared and outlawed terrorist organization or group of persons;
• Of a member of such judicially declared and outlawed organization, association or group of persons.

43. May a wife validly seize the diaries, checks and greeting cards of the alleged paramours of her husband and use the same as evidence in a legal separation case between them?

          As held in ZULUETA VS. CA, February 10, 1996, the evidence obtained by the wife who forcibly opened the drawers at the clinic of her doctor-husband and took diaries, checks and greeting cards of his alleged paramours is inadmissible as evidence.   This is so because the intimacies of husband and wife does not justify the breaking of cabinets to determine marital infidelity.

43. Is the freedom of speech and expression affected by the Human Security Act?

          Yes, under Section 26 of the law, it provides that persons who have been charged with terrorism or conspiracy to commit terrorism---even if they have been granted bail because evidence of guilt is not strong—can be: “Prohibited from using any cellular phones, computers, or other means of communications with people outside their residence.”

44. What is the rule on criticisms on the acts of public officers?

          A public official should not be too onion-skinned with reference to comments upon his official acts. The interest of the government and the society demands full discussion of public affairs. (US vs. Bustos, 37 Phil. 731)

45. May the above rule applicable to private individuals who are public figures or private individuals who are candidates for public office?

         As held by the Supreme Court in the case of BAGUIO MIDLAND COURIER & CECILLE AFABLE VS. COURT OF APPEALS & RAMON LABO, JR., 444 SCRA 28 [November 25, 2004 , the article involving a private individual running for Mayor of Baguio City is still within the mantle of protection guaranteed by the freedom of expression provided in the Constitution since it is the public’s right to be informed of the mental, moral and physical fitness of candidates for public office. This was recognized as early as the case of US VS. SEDANO, 14 Phil. 338 [1909] and the case of NEW YORK TIMES VS. SULLIVAN, 376 U.S. 254 where the US Supreme Court held:

          "It is of the utmost consequence that the people should discuss the character and qualifications of candidates for their suffrages. The importance to the State and to society of such discussions is so vast, and the advantages derived so great, that they more than counterbalance the inconvenience of private persons whose conduct may be involved, and occasional injury to the reputations of individuals must yield to the public welfare, although at times such injury may be great. The public benefit from publicity is so great and the chance of injury to private character so small, that such discussion must be privileged."

                   Clearly, the questioned articles constitute fair comment on a matter of public interest as it dealt with the character of the private respondent who was running for the top elective post in Baguio City at that time.

46. May the COMELEC validly prohibit columnists, radio announcers and TV commentator for commenting for or against any issue during the plebiscite period since they can air their views in a program sponsored by the COMELEC itself?

No, such would be an undue interference on the freedom of expression. IT IS STILL A RESTRICTION ON THE COLUMNIST, ANNOUNCER OR COMMENTATOR’S CHOICE OF THE FORUM WHERE HE MAY EXPRESS HIS VIEW. Plebiscite issues are matters of public concern and importance. The people's right to be informed and to be able to freely and intelligently make a decision would be better served by access to an unabridged discussion of the issues, INCLUDING THE FORUM. The people affected by the issues presented in a plebiscite should not be unduly burdened by restrictions on the forum where the right to expression may be exercised. (PABLITO V. SANIDAD VS. COMELEC, G.R. NO. 90878, January 29, 1990)

47. What are the requisites that a newspaper must comply in order that its news item on an ongoing trial in court will not be actionable for being libelous?

          In Elizalde vs. Gutierrez,76 SCRA 448, it was held that in order that any news item relating to a judicial proceeding will not be actionable, the same must be [a] a true and fair report of the actual proceedings; [b] must be done in good faith; and [c] no comments nor remarks shall be made by the writer}

48. What are the tests of obscenity?

          The three (3) tests as held in Miller vs. California, 37 L. Ed. 2d 419 are:

1. Whether the average person applying to contemporary community standards would find the work appeals to prurient interest;
2. Whether the work depicts or describes a patently offensive sexual conduct;
3. Whether the work as a whole lacks serious literary , artistic, political or scientific value.

49. May the City Mayor order the confiscation without a search warrant magazines which he believes to be obscene? What is the correct procedure for him to follow?

          No.   (Pita vs. CA, 178 SCRA 362). A City Mayor may not order the warrantless seizure of magazines which he believes to be obscene; otherwise, he will become the complainant, prosecutor and judge at the same time. He should obtain a search warrant from a judge by following the procedure laid down by the Rules on how to secure a search warrant.

50. May public school teachers validly file mass leaves, instead of going on strike, after their demand to the government was not met.

          In GESITE et al. vs. COURT OF APPEALS, 444 SCRA 51 held that “these mass actions were to all intents and purposes a strike; they constituted a concerted and unauthorized stoppage of, or absence from, work which it was the teachers’ duty to perform, undertaken for essentially economic reasons.” It is undisputed fact that there was a work stoppage and that petitioners’ purpose was to realize their demands by withholding their services. The fact that the conventional term “strike” was not used by the striking employees to describe their common course of action is inconsequential, SINCE THE SUBSTANCE OF THE SITUATION, AND NOT ITS APPEARANCE, WILL BE DEEMED CONTROLLING.

          The right of government employees to organize IS LIMITED TO THE FORMATIONS OF UNIONS OR ASSOCIATIONS ONLY, WITHOUT INCLUDING THE RIGHT TO STRIKE. (Bangalisan vs. CA, 276 SCRA 619)

61. Is the right to travel affected by the Human Security Act?

          Yes, Section 26 provides that persons who have been charged with terrorism or conspiracy to commit terrorism---even if they have been granted bail because evidence of guilt is not strong—can be:

• Detained under house arrest;
• Restricted from traveling; and/or

     Upon application of the prosecutor, the suspect’s right to travel shall be limited to the municipality or city where he resides or where the case is pending, in the interest of national security and public safety. Travel outside of said municipality or city, without the authorization of the court, shall be deemed a violation of the terms and conditions of the bail which shall then be forfeited as provided in the Rules of Court.

     These restrictions shall be terminated upon acquittal of the accused; or the dismissal of the case filed against him; or earlier upon the discretion of the court or upon motion of the prosecutor.

62. May President Marcos validly compel the government to issue him his travel papers in order that he could return to the Philippines from his US exile?

          No. (FERDINAND MARCOS, ET AL. VS. HON. RAUL MANGLAPUS, ET AL., G.R. NO. 88211, September 15, 1989 and the Resolution of the Motion for Reconsideration dated October 27, 1989). What is provided by the Philippine Constitution is the right to travel and not the right to return. These two (2) rights are different under the Universal Declaration of Human Rights and International Covenant on Civil and Political Rights. THE RIGHT TO RETURN TO ONE'S COUNTRY IS NOT AMONG THE RIGHTS SPECIFICALLY GUARANTEED BY THE BILL OF RIGHTS, WHICH TREATS ONLY OF THE LIBERTY OF ABODE AND THE RIGHT TO TRAVEL, BUT IT IS OUR WELL-CONSIDERED VIEW THAT THE RIGHT TO RETURN MAY BE CONSIDERED AS A GENERALLY ACCEPTED PRINCIPLE OF INTERNATIONAL LAW, UNDER OUR CONSTITUTION, IS PART OF THE LAW OF THE LAND.

63. What is the “residual power” of the President?

It is the power of the President in  balancing the general welfare and the common good against the exercise of rights of certain individuals. The power involved is the President's RESIDUAL POWER to protect the general welfare of the people.

64. May a person out on bail be validly allowed to travel abroad?

            Yes, subject to the following requisites ( Manotoc vs. CA, 142 SCRA 149):

          He must however [1] convince the courts of the urgency of his travel, [2] the duration thereof, and [3] that his sureties are willing to undertake the responsibility of allowing him to travel.

65. Is the right to information on matters of public concern absolute?

          No. While the right of the people to information on matters of public concern shall be recognized and access to official records…shall be afforded the citizen, it must be subject to such limitations as may be provided by law as well as reasonable conditions imposed by public officials in custody of said records like the payment of the expenses of reproduction of public documents; the request must be done during office hours, etc.

66. May the COMELEC be compelled to publish the names of the nominees of the different party-list groups for the May 14, 2007 elections despite the prohibition on such publication as embodied by the Party-List Act?

            Yes, the COMELEC must publish the same despite the prohibition in the law. Such prohibition violates the right to information on matters of public concern on the part of the citizen. (bantay republic vs. comelec, may 4, 2007)

67. May the President validly prohibit members of her Cabinet as well as other officers in the executive department from attending investigations in aid of legislation by Congress?

          No. Such would violate the right of the people to information on matters of public concern. It is only through said investigations that the people will be informed of the workings of the different departments of the government. (SENATE OF THE PHILIPPINES, represented by SENATE PRESIDENT FRANKLIN DRILON, ET AL., VS. EXEC. SEC. EDUARDO ERMITA, ET AL., G.R. No. 16977, April 20, 2006 )

68. May a Barangay validly exercise the power of eminent domain?

          Yes, subject to the approval by the President.( Barangay Matictic vs. Elbinias, 148 SCRA 83)

69. What are the requisites before an expropriator may validly obtain a writ of possession to take over possession of the expropriated property?

          It depends:

1. If the expropriation is for a “National government projects” or “national infrastructure projects”, like those covered by the “Build-Operate-Transfer”, RA 8974 shall be followed. This means that there must be a [a] Complaint for expropriation which is sufficient in form and in substance; and [2] the 100% of the market value of the property sought to be expropriated must first be paid to the owner of the property. (REPUBLIC OF THE PHILIPPINES VS. JUDGE GINGOYON, 478 SCRA 474)
2. In ordinary expropriation cases, the rule is that in the case of BIGLANG-AWA VS. JUDGE BACALLA, 354 SCRA 562. It provides:

          Pursuant to Section 2, Rule 67 of the 1997 Rules of Civil Procedure and the doctrine laid down IN THE ROBERN DEVELOPMENT CASE, the only requisites for the immediate entry by the government in expropriation cases are:

• the filing of a complaint for expropriation sufficient in form and substance; and
• the making of a deposit equivalent to the ASSESSED VALUE OF THE PROPERTY SUBJECT TO EXPROPRIATION.

3. If the expropriation is being done by a Local Government Unit, the Supreme Court decision in the case of THE CITY OF ILOILO VS. JUDGE LEGASPI, RTC 22, ILOILO CITY, 444 SCRA 269, shall be complied with:
4. the complaint for expropriation filed in court is sufficient in form and substance; and
5. the expropriator must deposit the amount equivalent to 15% of the fair market value of the property to be expropriated based on its current tax declaration.

70. Who determines the just compensation in expropriation cases? What are the factors to be considered in determining the same?

          Determination of just compensation is a judicial function with the assistance or recommendation of the court-appointed commissioners. (Manotok vs. CA, May 21,1987)

          The factors to be considered in determining the just compensation/market value are:

                   1. cost of acquisition;

                   2. the current value of like proerties;

                   3. its actual or potential uses;

                   4. particular case of lands;

                   5. their size, shape, location; and

                   6. the tax declarations thereon.

          Finally, note that as held in the case of Republic vs. Santos, 141 SCRA 30, the market value as recommended by the board of commissioners appointed by the court were at best only ADVISORY AND PERSUASIVE AND BY NO MEANS FINAL OR BINDING. (BERKENKOTTER, INC. VS. COURT OF APPEALS AND REPUBLIC OF THE PHILIPPINES, December 14, 1992).

71. What are the requisites of “taking” in expropriation cases?

The Requisites of taking are:

1. the expropriator must enter the property;
2. the entrance must not be for just a momentary period;
3. the entry must be under warrant of color or title;
4. the property must be devoted for public use; and
5. the owner must be ousted from beneficial use of his land. (Rep. vs. Castellvi, 58 SCRA 336)

72. May a private property already used as a private cemetery be expropriated for a public purpose?

No, a private property which is already devoted to public use may not be expropriated for another public purpose. (City of Manila vs. Chinese Community, 40         Phil. 349).

73. What are the rights of a person under custodial investigation under the “Mahinay doctrine” or the “Expanded Miranda Doctrine”?

The rights are:

1. The person arrested, detained, invited or under custodial investigation must be informed in a language known to and understood by him of the reason for the arrest and he must be shown a copy of the warrant of arrest, if any; Every other warnings, information or communication must be in a language known to and understood by said person;
2. He must be warned that he has the right to remain silent and that any statement he makes may be used as evidence against him;
3. He must be informed that he has the right to be assisted at all times and have the presence of an independent and competent lawyer, preferably of his own choice;
4. He must be informed that if he has no lawyer or cannot afford the services of a lawyer, one will be provided for him; and that a lawyer may also be engaged by any person in his behalf, or may be appointed by the court upon petition of the person arrested or one acting in his behalf;
5. That whether or not the person arrested has a lawyer, , he must be informed that no custodial investigation in any form shall be conducted except in the presence of his counsel or after a valid waiver has been made;
6. The person arrested must be informed that, at any time, he has the right to communicate or confer by the most expedient means---telephone, radio, letter or messenger---with his lawyer (either retained or appointed), any member of his immediate family; or any medical doctor, priest or minister chosen by him or by any one from his immediate family or by his counsel, or be visited by/confer with duly accredited national or international non-governmental organization. IT SHALL BE THE RESPONSIBILITY OF THE OFFICER TO ENSURE THAT THIS IS ACCOMPLISHED;
7. He must be informed that he has the right to waive any of said rights provided it is made voluntarily, knowingly and intelligently and ensure that he understood the same;
8. In addition, if the person arrested waives his right to a lawyer, he must be informed that it must be done in writing AND in the presence of counsel, otherwise, he must be warned that the waiver is void even if he insist on his waiver and chooses to speak;
9. That the person arrested must be informed that he may indicate in any manner at any time or state of the process that he does not wish to be questioned with the warning that once he makes such indication, the police may not interrogate him if the same had not yet commenced, or the interrogation has begun;
10. The person arrested must be informed that his initial waiver of his right to remain silent, the right to counsel or any of his rights does not bar him from invoking it at any other time during the process, regardless of whether he may have answered some questions or volunteered some information or statements;
11. He must be informed that any statement OR EVIDENCE, as the case may be, obtained in violation of any of the foregoing, whether inculpatory or exculpatory, in whole or in part, SHALL BE INADMISSIBLE IN EVIDENCE.

74. What are the rights of a person under “custodial detention” for one suspected or arrested as a terrorist under the Human Security Act?

The rights are embodied under Section 21 thereof which states:

Section 21. Rights of a person under custodial detention.- The moment a person charged with or suspected of the crime of terrorism or the crime of conspiracy to commit terrorism is apprehended or arrested and detained, he shall forthwith be informed by the arresting police or law enforcement officers to whose custody the person concerned is brought, of his or her right:

1. to be informed of the nature and cause of his arrest, to remain silent and to have competent and independent counsel preferably of his own choice. If the person cannot afford the services of counsel of his or her choice, the police or law enforcement officers concerned shall immediately contact the free legal assistance unit of the IBP or the Public attorney’s office (PAO). It shall be the duty of the free legal assistance unit of the IBP or the PAO’s thus contacted to immediately visit the person detained and provide him with legal assistance. These rights cannot be waived except in writing and in the presence of the counsel of choice;
2. informed of the cause or causes of his detention in the presence of his legal counsel;
3. allowed to communicate freely with his legal counsel and to confer with them at any time without restriction;
4. allowed to communicate freely and privately without restrictions with the members of his family or with his nearest relatives and be visited by them; and
5. allowed freely to avail of the services of a physician or physicians of choice.

75. Are the above rights available to a suspect if he is under investigation but by a private person?

No. (THE PEOPLE OF THE PHILIPPINES VS. JOSE TING LAN UY, JR., et al., 475 SCRA 248). The claim that his affidavit is inadmissible in evidence in accordance with section 12 [1] of the Bill of Rights is not tenable. The “investigation” under said provision refers to “custodial investigation where a suspect has already been taken into police custody and that the investigating officers begin to ask questions to elicit information and confessions or admissions from the suspect. Succinctly stated, custodial investigation refers to the critical pre-trial stage when the investigation ceases to be a general inquiry into an unsolved crime but has began to focus on a particular person as a suspect (People vs. Duenas, Jr., 426 SCRA 666). Clearly, therefore, the rights enumerated by the accused are not available BEFORE GOVERNMENT INVESTIGATORS ENTER THE PICTURE. The protective mantle of section 12, article III does not apply to administrative investigations (People vs. Judge Ayson, 175 SCRA 216); confession to a private individual (Kimpo vs. CA, 232 SCRA 53); verbal admission made to a radio announcer who was not a part of the investigation (People vs. Ordono, 334 SCRA 673); or even to a Mayor approached as a personal confidante and not in his official capacity (People vs. Zuela, 323 SCRA 589). In fact, even a videotaped interview where the accused willingly admit his guilt in the presence of newsmen is not covered by the said provision though the trial courts were warned by the supreme Court to take extreme caution in admitting similar confessions because of the distinct possibility that the police, with the connivance of unscrupulous media practitioners, may attempt to legitimize coerced extrajudicial confessions and place them beyond the exclusionary rule by having an accused admit an offense on television (People vs. Endino, 353 SCRA 307).

76. When is custodial investigation deemed to have started so as to entitle the suspect to be informed of his rights under the Mahinay Doctrine?

Custodial investigation begins when it is no longer a general inquiry into an unsolved crime but starts to focus on a particular person as a suspect, i.e., when the police investigator starts interrogating or exacting confession from the suspect in connection with an alleged offense.

THE PLACE OF INTERROGATION IS NOT DETERMINATIVE OF THE EXISTENCE OR ABSENCE OF CUSTODIAL INVESTIGATION BUT THE TONE AND MANNER OF QUESTIONING BY THE POLICE AUTHORITIES. Thus, there was custodial investigation when the police authorities, upon their arrest of some of the accused, immediately asked them regarding their participation in the commission of the crime , even while they were still walking along the highway on their way to the police station. (PEOPLE VS. BARIQUIT, 341 SCRA 600)

77. Are spontaneous admissions made before a person could be informed of his rights during custodial investigation admissible as evidence?

Yes. Spontaneous statements voluntarily given, as where appellant orally admitted killing the victim before the barangay captain (who is neither a police officer nor a law enforcement agent), do not fall under custodial investigation. Such admission, even without the assistance of a lawyer, does not violate appellant’s constitutional rights AND THEREFORE ADMISSIBLE IN EVIDENCE. (PEOPLE VS. DANO, G.R. NO. 117690, 339 SCRA 515, SEPT. 1, 2000; PEOPLE VS. MAYORGA, G.R. NO. 135405, 346 SCRA 458, NOVEMBER 29, 2000).

78. What are the requisites before an extrajudicial confession is admissible?

To be admissible in evidence, an extrajudicial confession must be: (i) voluntary; (ii) made with the assistance of competent and independent counsel; (iii) express; and (iv) in writing.

A suspect’s confession, whether verbal or non-verbal, when taken without the assistance of counsel, without a valid waiver of such assistance, regardless of the absence of coercion or the fact that it had been voluntarily given, is inadmissible in evidence, even if appellant’s confession were gospel truth. (PEOPLE VS. DANO, G.R. NO. 117690, 339 SCRA 515, SEPT. 1, 2000; PEOPLE VS. SAMOLDE, G.R. NO. 128551, 336 SCRA 632, JUL. 31, 2000).

To be admissible in evidence, an extrajudicial confession must be: (i) voluntary; (ii) made with the assistance of competent and independent counsel; (iii) express; and (iv) in writing.

A suspect’s confession, whether verbal or non-verbal, when taken without the assistance of counsel, without a valid waiver of such assistance, regardless of the absence of coercion or the fact that it had been voluntarily given, is inadmissible in evidence, even if appellant’s confession were gospel truth.

79. Is the presence of a lawyer to assist the suspect during custodial investigation sufficient to comply with the requirements of the Constitution?

          No. As held in PEOPLE VS. PATUNGAN, 354 SCRA 413, the mere presence of a lawyer is not sufficient compliance with the constitutional requirement of assistance of counsel. Assistance of counsel must be effective, vigilant and independent. A lawyer who could just hear the investigation going on while working on another case hardly satisfies the minimum requirements of effective assistance of counsel. Not only was the accused subjected to custodial investigation without counsel, he was likewise denied effective assistance of counsel during the taking of his extra-judicial confession.

80. From what time must the counsel assist the suspect during custodial investigation? Who must choose such counsel?

In PEOPLE V. JIMENEZ, G.R. No. 82604. December 12, 1991, it was held that the counsel must be present from the inception of the custodial investigation not at any time thereafter. Also, the lawyer who assists the suspect under custodial interrogation should be of the latter's own choice, not one foisted on him by the police investigators or other parties. In this case, the former judge whose assistance was requested by the police was evidently not of Marcos Jimenez' own choice; she was the police officers' own choice; she did not ask Marcos if he was willing to have her represent him. This is not the mode of solicitation of legal assistance contemplated by the Constitution. Furthermore, the former judge was not present when Marcos was being interrogated by the police. While she asked him if he had voluntarily given the statements contained in the typewritten document, this is far from being substantial compliance with the constitutional duty of police investigators during custodial interrogation.

81. Is the extrajudicial confession of a suspect obtained without the assistance of a lawyer, but speaks of gospel truth, admissible in evidence?

          No. In PEOPLE VS. GALIT, 135 SCRA 465, PEOPLE VS. PANFILO CABILES, 284 SCRA 199; and PEOPLE VS. TAN, 286 SCRA 207, it was held that even if the confession of the accused speaks the truth, if it was made without the assistance of counsel, it is inadmissible in evidence regardless of the absence of coercion or even if it was voluntarily given.

          In order that a confession is admissible, the following requisites must be present:

1. the confession must be voluntary;
2. the confession must be made with the assistance of a competent and independent counsel;
3. the confession must be express; and
4. the confession must be in writing.

          The above requirements, however, are not applicable when the suspect makes an spontaneous statement, not elicited through questioning by the authorities, BUT GIVEN IN AN ORDINARY MANNER WHEREBY THE ACCUSED ORALLY ADMITTED HAVING COMMITTED THE CRIME. This was the decision of the Supreme Court in the case of PEOPLE VS. ANDAN, March 3, 1997 when the accused made a voluntary and verbal confession to the Municipal Mayor that he committed the crime imputed to him. As such, his uncounselled confession isadmissible in evidence.

82. What are the two (2) kinds of Coerced or Involuntary Confessions under Section 12, Art. III of the Constitution?

The two (2) kinds of Involuntary or Coerced Confessions under Art. III, Section 12 of the Constitution. These are:

1. confession which are the product of third degree methods such as torture, force, violence, threat, intimidation; and
2. those which are given without the benefit of Miranda Warnings. PEOPLE VS. OBRERO, 332 SCRA 190

83. What is the status of coerced confessions as evidence in court?

          Coerced or involuntary confessions are inadmissible as evidence being the “fruit of the poisoned tree.”

84. Is the right to counsel satisfied if the suspect was assisted by the Station Commander of the Western Police District while he was being investigated by the policemen of the same station? How about if the investigation is being conducted by the NBI and the suspect was ordered assisted by a lawyer-applicant therein?

There is no compliance of the constitutional requirement of competent and independent counsel to assist an accused during custodial investigation when the accused was assisted by the Station Commander of the WPD, Atty. De los Reyes, while being investigated by other policemen of the same police station because the interest of the police is naturally adverse to the accused. In fact, the SC in the case of PEOPLE VS. JANUARIO, 267 SCRA 608 held that a lawyer applying for a position in the NBI could not validly assist an accused being investigated then by the NBI. (PEOPLE VS. OBRERO, 332 SCRA 190)

85. Is the Right to Counsel available to a suspect during a police line-up?

         The Supreme Court had conflicting decisions on this aspect but ended up with the rule that since the accused will not be made to make any testimony during the police line-up, then he is not under custodial investigation and therefore, there is no need for him to be assisted by a lawyer. ( P vs. Usman Hassan, 157 SCRA 261; Gamboa vs. Judge Cruz, 162 SCRA 642; DE LA TORRE VS. CA, 294 SCRA 196 and PEOPLE VS. HATTON)

86. Is there a valid custodial investigation if the lawyer who assisted him during custodial investigation is a public attorney who was not chosen by the accused himself but given to him free of charge? Could the Fiscal also represent the accused during custodial investigation to satisfy the requirement of the Constitution that the accused is assisted by counsel?

          The counsel must be the choice of the accused or suspect. (P. vs. Alegria, September 28, 1990) Also, the Fiscal could not have protected the rights of the suspect, even if they are known to each other, since the Fiscal is there for the private complainant. (P. vs. Matos-Viduaya, September 11, 1990)

87. If the extrajudicial admission or confession of the accused is declared inadmissible as evidence, must the accused be acquitted as a matter of right?

          No. In PEOPLE VS. ROLANDO FELIXMINIA y CAMACHO, GR No. 125333, March 20, 2002, the Supreme Court held that though the extrajudicial confession of the accused was declared inadmissible for violation of his right to counsel, if there are evidence sufficient to prove his guilt beyond reasonable doubt, like circumstantial evidence, then he can still be convicted of the crime charged. This is so because [1] the compromising circumstances were duly proven which were consistent with each other and which lead with moral certainty to the conclusion that he was guilty of the crime charged; and [2] the totality of such circumstances eliminated beyond doubt the possibility of his innocence. In People vs. Mahinay, it was held that conviction may be had on circumstantial evidence provided the following requisites are present: [a] there is more than one circumstance; [b] the facts from which the inferences are derived are proven; and [c] the combination of all circumstances is such as to produce a conviction beyond reasonable doubt.

88. May a convicted person be released from jail through recognizance?

          No. In ATTY. JULIANA ADALIM-WHITE VS. JUDGE ARNULFO BUGTAS, RTC 2 BORONGAN, SAMAR, 475 SCRA 175, it was held that respondent Judge is guilty of gross ignorance of the law for ordering the release of Bagaporo pending the approval of his application for parole and before the completion of the minimum period of the sentence imposed upon him. It is patently erroneous to release a convict on recognizance. Section 24, Rule 114 provides that there shall no bail for a convict after final judgment. The only exception is when the convict applies for Probation before he commences to serve his sentence and that the offense and the penalty for the offense is within the purview of the Probation Law.

Sections 5 and 16 of Rule 114 of the Rules of Court (on the different kinds of bail) APPLIES ONLY TO AN ACCUSED UNDERGOING PREVENTIVE IMPRISONMENT DURING TRIAL OR ON APPEAL. THEY DO NOT APPLY TO A PERSON CONVICTED BY FINAL JUDGMENT AND ALREADY SERVING SENTENCE.

89. May a judge require “cash bond” only?

          No. The Rules provides for four (4) ways of posting bond and it is grave abuse of discretion to require cash bond only. (Almeda vs. Villaluz, 66 SCRA 38).

90. May an accused charged of a capital offense and the evidence of guilt is strong be granted bail?

          Yes. The purpose of the bond is to assure the court of the presence of the accused during the trial of his case. If the probability of “flight” is nil, then the accused may be allowed to post bail. (BELTRAN VS. THE SECRETARY OF JUSTICE, April, 2007)

91. May a person subject of extradition from another country and where the cases against him in said country are bailable, be allowed to post bail pending the extradition hearings?

          No. As held in UNITED STATES VS. JUDGE PURUGGANAN & MARK JUMENEZ, November, 2002, a person

3facing extradition proceedings is not entitled to bail even if the crime he was charged of in a foreign country is bailable. This is so because the constitutional provision on the right to bail under Art. III of the 1987 Constitution applies only to criminal cases, not in extradition proceedings. (EDUARDO RODRIGUEZ VS. THE PRESIDING JUDGE, RTC 17, MANILA, 483 SCRA 290). This is so because of the possibility of flight

92. In extradition cases, is the respondent therein entitled to notice and hearing before the issuance of a warrant of arrest against him?

         No. In Secretary of Justice vs. Judge Lantion, 322 SCRA 160 (The Mark Jimenez Case) , the Supreme Court on a 9-6 vote held that the extraditee is entitled to notice and hearing when a request for extradition by another country is still being evaluated. However, on Motion for Reconsideration in the same case, in a 9-6 decision, the Supreme Court held that the prospective extraditee is not entitled to notice and hearing while his case is still under evaluation because this would defeat the purpose of the arrest warrant since it could give warning that respondents would be arrested and even encourage them to flee but entitled to notice and hearing if the case is already filed in court. (EDUARDO RODRIGUEZ VS. THE PRESIDING JUDGE, RTC 17, MANILA, 483 SCRA 290)

          It is a different matter if at first, the extraditee was allowed bail. The cancellation of his bail bond may be made only after notice and hearing. Otherwise, his right to due process of law will be violated.

93. What is the “EQUIPOISE RULE”?

If the evidence in a criminal case is evenly balanced, the constitutional presumption of innocence tilts the scale of justice in favor of the accused and he should be acquitted from the crime charged. Where the inculpatory facts and circumstances are capable of two or more interpretations one of which is consistent with the innocence of the accused and the other consistent with his guilt, then the evidence does not fulfill the test of moral certainty and is not sufficient to support a conviction because of the accused’s constitutional presumption of innocence.(PEOPLE VS. DE LOS SANTOS, 355 SCRA 415)

94. May the court reverse the order of trial in a criminal case?

          No. such would violate the right of the accused to presumption of innocence. To be required to present his evidence first would be making him prove his innocence and not the State proving his guilt. (Alejandro vs. Pepito, 96 SCRA 322) However, if the accused does not object to such a procedure, then a reverse order of trial is allowed by the Rules. (Sacay vs. Sandiganbayan, July 10,l986) In fact it should be noted that under the newly adopted 1985 Rules of Criminal Procedure (Sec. 3e), Rule 119)the said procedure is now expressly sanctioned. Thus:

       "However, when the accused admits the act or omission charged in the complaint or information but interposes a lawful defense, the order of trial may be modified accordingly."

95. What is the extent of the obligation of a counsel de oficio for an accused in a criminal case?

          While an accused may be given a counsel de oficio which is not a lawyer of his own choice because he could not afford the services of a de parte lawyer, only the faithful performance by counsel of his duty towards his client can give meaning and substance to the accused’s right to due process and to be presumed innocent until proven otherwise. Hence, a lawyer’s duty, especially that of a defense counsel, must not be taken lightly. It must be performed with all the zeal and vigor at his command to protect and safeguard the accused’s fundamental rights. The cavalier attitude of Atty. Manolo Brotonel of the PAO cannot go unnoticed. It is discernible in [a] his refusal to cross-examine Oleby Nadera (the complainant for RAPE); [b] the manner in which he conducted Maricris Nadera’s cross-examination; and [c] his failure not only to present evidence for the accused but to inform the accused of his right to do so, if he desires. (PEOPLE VS. NADERA, JR., 324 SCRA 490)

96. If the accused has the right to be present during the trial of his case, can he also refuse to appear during the hearings of his case?

          No. During arraignment, promulgation of the decision and when he is to be identified by the witnesses for the prosecution, he must be present. However, he can validly waive his presence after arraignment when he state in open court or in an affidavit that whenever a witness mentions his name during the presentation of the prosecution’s evidence, he admits that he is the one being referred to. (Aquino vs. Military Commission, 63 SCRA 546; P vs. Judge, 125 SCRA 269)

97. When may “speedy trial” be raised by the accused to cause the dismissal of his case? What kind of delays must occur before the same could be invoked?

         In JAIME BERNAT VS. SANDIGANBAYAN, May 20, 2004, it was held that the right to speedy trial is violated only if the proceedings were attended by vexatious, capricious and oppressive delays. The determination of whether the delays are of said nature is relative and cannot be based on mere mathematical reckoning of time. Particular regard to the facts and circumstances of the case. As held in the case of DE LA PENA VS. SANDIGANBAYAN, certain factors shall be considered and balanced to determine if there is delay, as follows:

     - Length of the delay;

     - Reasons for the delay;

     - Assertion or failure to assert such right by the accused; and

     - Prejudiced caused by the delay.

There is no violation of the right to speedy disposition of his case because petitioner failed to assert his constitutional right to a speedy disposition of his case. During the 8-year period prior to April 19, 2002, petitioner did not complain about the long delay in deciding his case.

98.   May the right to speedy disposition of cases be invoked for the dismissal of cases pending before quasi-judicial bodies like the Office of the Ombudsman?

          Yes, unreasonable delays like failure to decide a complaint against the respondent for more than three (3) years from the time all the pleadings were filed violates the respondent’s right to a speedy disposition of his case and the case must be dismissed. (DUTERTE VS. SANDIGANBAYAN, 289 SCRA 721; ANGCHANGCO VS. OMBUDSMAN, 269 SCRA 301)

The determination of whether an accused had been denied the right to speedy trial depends on the surrounding circumstances of each case. Although it took about 8 years before the trial of this case was resumed, such delay did not amount to violation of petitioner’s right to speedy trial considering that such delay was not attributable to the prosecution.

The factors to consider in determining whether or not such right has been violated:

1. length of delay,
2. reasons for such delay, and
3. assertion or failure to assert such rights by the accused and the prejudice caused by the delay.

(ii) Speedy Trial Act of 1998. The authority of the Secretary of Justice to review resolutions of his subordinates even after an information has already been filed in court does not present an irreconcilable conflict with the 30-day period prescribed in Sec. 7 of the Speedy Trial Act of 1998. (SUMBANG VS. GEN. COURT MARTIAL, G.R. NO. 140188, 337 SCRA 227, AUG. 3, 2000; BLANCO VS. SANDIGANBAYAN, G.R. NOS. 136757 – 58, 346 SCRA 108, NOV. 27, 2000; SOLAR TEAM ENTERTAINMENT, INC. HON. HOW, G.R. NO. 140863, 338 SCRA 51, AUG. 22, 2000).

99. Was the failure of the court to have a sign language expert to inform the accused who is a deaf-mute of the contents of the criminal information fatal to the validity of the proceedings which resulted in the conviction of the said accused?

          Yes because the accused was denied of the right to be informed of the nature and cause of the accusation against him. As such, the entire proceedings is null and void and another trial be conducted in the presence of a sign language expert to inform the accused of the proceedings. (Sales vs. CA, 164 SCRA 717; P vs. Crisologo, 150 SCRA 653)

100. May an accused in a “Homicide” case be convicted of “Murder” without violating his right to be informed of the nature and cause of accusation against him?

          Yes. Even if the Information was captioned “For Homicide” only but the body of the Information alleges “treachery” or “evident premeditation” and the same was read to the accused, he could be convicted of Murder. This is so because it is the body of the Information that is binding, not the caption thereof and therefore, the accused was duly informed of the nature and cause of accusation against him. (P vs. Resavaga, 159 SCRA 426)

101. What is the effect of the testimony of a witness who did not return to court for his cross examination? How about if there is only partial cross-examination?

          A witness who did not return to court for his cross-examination would render his entire testimony inadmissible for being hearsay. It likewise violated the right of confrontation on the part of the accused. (Ortigas, JR. vs. Lufthansa, 64 SCRA 610) If the witness was partially examined, only the portion of his direct testimony where he was cross-examined shall be admissible as evidence.( P vs. Seneris, 99 SCRA 92)

102. What are the requisites of a valid Trial in Absentia? May an accused who jumped bail after arraignment be validly convicted by the trial court?

          The requisites of a valid Trial in Absentia are the following:

• The accused was duly arraigned;
• The accused was notified of the hearing; and
• The accused’s absence [during the trial] is unjustifiable.

103. May an accused compel the trial court to issue subpoena to a Physician who is already working in the United States to testify on his treatment of the accused? Would the failure of said witness to appear and testify for the accused violates his right to subpoena witnesses and the production of evidence in his favor?

          No. Such witness is beyond the jurisdiction of the Philippine Courts. Further, his right to subpoena witnesses and the production of evidence will not be violated since the hospital could produce said records and another physician could testify on the contents thereof. (Cavili vs. Hon. Florendo, 154 SCRA 610; Fajardo vs. Garcia, 98 SCRA 514)

104. May the accused be presented by the prosecution as the latter’s witness?

          No. Such would violate the right of the accused against self-incrimination and if such happened, the proceedings shall be null and void. (Chavez vs. CA, 24 SCRA 663)

105. Generally, to what kind of evidence does the right against self-incrimination applies?

          Generally, it applies only to “testimonial compulsion.” As such, forcing a person to give a sample of his urine to determine whether a woman is pregnant (Villaflor vs. Summers, 41 Phil. 62); whether a person is suffering from sexually transmitted disease (US vs. Tang Teng, 23 Phil. 145) or under the influence of prohibited drugs (PEOPLE VS. BANIHIT, G.R. NO. 132045, 339 SCRA 86, AUG. 25, 2000; PEOPLE VS. CONTINENTE, G.R. NOS. 100801- 02, 339 SCRA 1, AUG. 25, 2000) does not violate the person’s right against self-incrimination. Likewise forcing one to try a pair of shoes, pants or shirt does not fall under the above proscription.

106. How about forcing a person to give a sample of his handwriting?.

          Though the same does not require testimonial compulsion, the right against self-incrimination will be violated by said act. This is so because it involves the use of the intelligence of the person. (Beltran vs. Samson, 50 Phil. 570)

107. Does the right against self-incrimination applicable to civil and administrative cases also?

          Yes but unlike in criminal cases where the accused could not be presented by the prosecution and his right not to take the witness stand is absolute, an adverse party in a civil or administrative cases may be presented by the other party but could refuse to answer only if the question propounded calls for an incriminatory answer.

108. May a court stenographer who had resigned from the government be compelled to transcribe her notes under pain of contempt without violating her right against involuntary servitude?

          Yes. This is so because the testimony was taken while she was still in the government and as such, it was her obligation to transcribe the same, having received her salary for the day when the testimony was taken. (Aclaracion vs. Gatmaitan, 64 SCRA 131)

109. Is the Death Penalty already abolished by the 1987 Constitution?

          While the Supreme Court answered the same in the affirmative in the cases of P vs. Gavarra, 155 SCRa 327; P vs. Masangkay, 155 SCRA 113; P vs. Atencio, 156 SCRA 242; P vs. Intino, September 26, 1988 it held in People vs. Munoz, 170 SCRA 107 that it was merely suspended.

110. Is death as a penalty a cruel or unusual punishment?

         No. (P vs. Estoista, 93 Phil. 647). It is only when the punishment is shocking to the conscience of the community and disproportionate to the offense charged that the penalty becomes cruel and unusual. In fact, the Supreme Court held in ECHEGARAY VS. SECRETARY OF JUSTICE that death through Lethal Injection is the most humane way of implementing the death penalty.

111. What are the requisites before an accused may validly invoke double jeopardy?

There is double jeopardy when there is:

          [1] valid complaint of information;

          [2] filed in a court of competent jurisdiction;

          [3] the accused was validly arraigned; and

          [4] the accused was convicted or acquitted, or the case was dismissed or otherwise terminated without the express content of the accused. (PEOPLE VS. ALMARIO, 355 SCRA 1)

112. If the dismissal was with the express consent of the accused, may the dismissal result in double jeopardy?

          Yes in two (2) instances.

  As a general rule, if the dismissal is through the instance of the accused or with his express consent, there is no double jeopardy. However, this rule admits of two (2) exceptions:

1)    the motion to dismiss is based on insufficiency of evidence; and

2)    the motion to dismiss is based on the denial of the accused's right to Speedy Trial. (PEOPLE VS. ALMARIO, 355 SCRA 1)

          Double Jeopardy has set in. In these two (2) instances, the correct description of what happened is that the accused was   “acquitted” and not “the case was dismissed with his consent”.

It must be pointed out, however, that in PEOPLE VS. TAMPAL, 244 SCRA 202 and PEOPLE VS. LEVISTE, 255 SCRA 238, the SC reversed the dismissal of the criminal case by the trial court based on “speedy trial” since the same was not predicated “on the clear right of the accused to speedy trial.” It is only when there is a clear violation of the accused’s right to speedy trial that the dismissal results in double jeopardy.

113. The accused was charged of theft of electricity based on the City Ordinance of Batangas City. After arraignment, the case was dismissed because it was found out that the same has prescribed because it was filed after more than 60 days. The Fiscal filed another information based on the Revised Penal Code. Has double jeopardy set in?

          Yes. If the accused was charged of “theft of electricity” based on the City Ordinance of Batangas and not based on the Revised Penal Code and later on the case is dismissed by the judge due to the fact that the crime has prescribed, the government can no longer charge the accused of the same crime under the Revised Penal Code since double jeopardy has set in. If an act is punished by law and an ordinance, acquittal or conviction in one shall bar prosecution from the other. (People vs. Relova, 148 SCRA 292)

114. The accused was charged of grave coercion before the MTC and was duly arraigned. The Judge dismissed it without any motion form the accused because the case is allegedly outside the MTC’s jurisdiction. Another information for the same offense was filed with the RTC which was likewise dismissed because of lack of jurisdiction. As such, the Fiscal filed a 3^rd information for grave coercion before the MTC. The accused pleaded double jeopardy. Is he correct?

          Yes. Since the accused was already arraigned in the 1^st information before the MTC which has jurisdiction over the same and the case was subsequently dismissed without his express consent, then double jeopardy has set in.

115. The accused was arraigned of homicide and entered a plea of guilty but prayed that he be given the chance to prove incomplete self-defense which the court granted. After presenting his evidence to prove “incomplete self-defense”, the court acquitted him because what was allegedly proven by him was complete self-defense. May the accused validly invoke double jeopardy if the Prosecutor moves for the reinstatement of the case for him to present the evidence of the prosecution?

          No because one of the requisites of double jeopardy is missing. There was no valid arraignment. This is so because his plea was one of guilty and yet, he was acquitted. In this case, he has to be re-arraigned for him to enter a plea of “not guilty” in order that he could be validly acquitted.

116. The accused was convicted of frustrated murder. Within 15 days from promulgation, he filed a Motion for New Trial based on a “newly-discovered evidence” which was granted by the court. After the presentation of the alleged “newly-discovered evidence”, the accused was acquitted. May the prosecution appeal the acquittal since the evidence presented was not really a newly-discovered evidence but a forgotten one and that even assuming that the same is a newly-discovered evidence, it was insufficient to overturn the evidence of guilt as proven by the prosecution.

          In the case of P vs. Judge Hernando, 108 SCRA 121, the Supreme Court held that indeed, the evidence presented was not “newly-discovered evidence” and that assuming it to be so, it was not sufficient to overturn the evidence of guilt as shown by the prosecution’s evidence. However, though the decision was erroneous, double jeopardy has set in and the government could no longer appeal the decision. So even if the court obviously erred in the appreciation of the evidence resulting in a decision of acquittal instead of conviction, appeal would put the accused in double jeopardy. (Mazo vs. Mun. Court, 113 SCRA 217)

117. May the government appeal a judgment of acquittal or for the increase of the penalty imposed?

No, since double jeopardy has set in. (PEOPLE VS. HON. VELASCO, G.R. NO. 127444, 340 SCRA 207, SEPT. 13, 2000). As mandated by the Constitution, statutes and cognate jurisprudence, an acquittal is final and unappealable on the ground of double jeopardy, whether it happens at the trial court of a judgment of acquittal brought before the Supreme Court on certiorari cannot be had unless there is a finding of mistrial, as in Galman vs. Sandiganbayan.

However, if the accused was the one who appealed the decision of the CFI convicting him of homicide (though he was charged of murder), the appellate court may convict him of murder if the evidence warrants and that the lower court mis-appreciated the evidence. This is so because if the accused appeals the decision, the same will be subject to a complete re-examination of the evidence on record.

118. What is the "Supervening Fact Doctrine."

         It simply provides that an accused’s conviction shall not be a bar to another prosecution for an offense which necessarily includes the offense charged in the former complaint or information when the graver offense developed due to supervening facts arising from the same act or omission constituting the former charge or that the facts constituting the graver charge became known only or were discovered after a plea was entered in the former complaint or information. (Section 7, Rule 117, 2000 Rules of Criminal Procedure; P vs. Tarok, 73 Phil. 260; P vs. Villasis, 46 O.G. 268; Melo vs. People, 85 Phil. 766; P vs. Buling, 107 Phil. 712; P vs. Adil, 76 SCRA 462; P. vs. Tac-an, 182 SCRA 601; and P vs. City Court of Manila, 121 SCRA 637

119. When may the “ex-post facto law” rule be invoked?

      Only if the law sought to be applied is a “criminal law or penal”. Otherwise, the same may not be invoked as when the questioned law involves the jurisdiction of the Sandiganbayan which is not a penal law. Ex post facto law prohibits the retrospectivity of penal laws. RA 8249 is not a penal law. It is a substantive law on jurisdiction which is not penal in character. (PANFILO M. LACSON VS. THE EXECUTIVE SECRETARY, THE SANDIGANBAYAN, ET AL., ROMEO ACOP & FRANCISCO ZUBIA, JR., G.R. No. 128096, January 20, 1999)

120. What are the different forms of ex-post facto law?

          In order that a law is an ex post facto law, the same must be one —

1. which makes an act done criminal before the passing of the law and which was innocent when committed, and punishes such action;
2. which aggravates a crime or makes it greater than when it was committed;
3. which changes the punishment and inflicts a greater punishment than the law annexed to the crime when it was committed;
4. which alters the legal rules of evidence and receives less or different testimony than the law required a the time of the commission of the offense in order to convict the defendant;
5. every law which, in relation to the offense or its consequences, alters the situation of a person to his disadvantage;
6. that which assumes to regulate civil rights and remedies but in effect imposes a penalty or deprivation of a right which when done was lawful;
7. deprives a person accused of a crime of some lawful protection to which he has become entitled, such as the protection of a former conviction or acquittal, or a proclamation of amnesty (KAY VILLEGAS KAMI, 35 SCRA 429; MEJIA VS. PAMARAN, 160 SCRA 457; TAN VS. BARRIOS, 190 SCRA 686; PEOPLE VS. SANDIGANBAYAN, 211 SCRA 241).