UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS
POLITICAL LAW
1. Reviewer, p. 44, Commander-in-Chief
Powers [Art. VII, Sec. 18]
ORIGINAL TEXT
Commander-in-Chief Powers [Art. VII, Sec. 18]
(a) x x x
(b) Suspension of Writ of Habeas Corpus-
Only (a) in times of rebellion or invasion AND
(b) when required by public safety
(c) x x x
CORRECTED VERSION
Commander-in-Chief Powers [Art. VII, Sec. 18]
(a) x x x
(b) Suspension of Writ of Habeas Corpus -
Two conditions must concur for the
valid exercise thereof:
(a) there must be invasion or
rebellion, and
(b) public safety must require the
suspension of the privilege. [Lansang
v. Garcia, G.R. No. L-33964 December
11, 1971 and 1987 CONST., ART. III,
Section 15]
(c) x x x
2. Reviewer, p. 181, Test for valid
suspension of the privilege of the writ:
arbitrariness, not correctness
ORIGINAL TEXT
Test for valid suspension of the privilege of
the writ: arbitrariness, not correctness
Conditions for valid suspension:
(a) Presence of invasion, insurrection or
rebellion
(b) Public safety requires it [Lansang v.Garcia
(1971)]
CORRECTED VERSION:
Test for valid suspension of the privilege of
the writ: arbitrariness, not correctness
Conditions for valid suspension:
(a) Existence of invasion or rebellion
(b) Public safety requires it [Lansang v.Garcia
(1971)]
Note: Section 15, ART III and Section 18, ART
VII of the 1987 Constitution no longer include
PAGE 1 OF 35
the existence of “insurrection” as one of the
POLITICAL LAW
conditions for the suspension of the privilege
of the writ of habeas corpus which can be
found in the 1935 and 1973 Constitutions.
3. Reviewer, p. 94, Foreshore Land
ORIGINAL TEXT
Foreshore land is that part of the land which is
between the high and low water, and left dry
by the flux and reflux of the tides. It is part
of the alienable land of the public
domain and may be disposed of only
by lease and not otherwise. [Republic v.
Imperial, supra]
CORRECTED VERSION
Foreshore land is that part of the land which is
between the high and low water, and left dry
by the flux and reflux of the tides. Foreshore
and submerged areas indisputably belong
to the public domain and are
inalienable unless reclaimed, classified as
alienable lands open to disposition, and
further declared no longer needed for public
service. [Chavez v. Public Estates Authority,
G.R. No. 13325, July 9, 2002]
4. Reviewer, p. 139, Content-Based
Restrictions
ORIGINAL TEXT:
B.1 CONTENT-BASED RESTRICTIONS
The regulation is based on the subject
matter of the utterance or speech. It merely
controls time, place, or manner, under well-
defined standards. [Newsounds Broadcasting
v. Dy (2009)]
CORRECTED VERSION:
B.1 CONTENT-BASED RESTRICTIONS
The regulation is based on the subject
matter of the utterance or speech.
Note: Content-neutral restrictions are merely
concerned with the incidents of the speech, or
that merely controls the time, place or
manner, and under well-defined standards.
[Newsounds Broadcasting v. Dy (2009)]
5. Reviewer, p. 164, Just Compensation,
When Determined
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS
ORIGINAL TEXT
When determined
General rule: At the time of the filing of the
case
Exception: If the value of the property
increased because of the use to which the
expropriator has put it, the value is that of the
time of the taking. [NAPOCOR v. CA (1996)]
Legal interest: 6%, time when payment is due
to actual payment
CORRECTED VERSION
General Rule: At the time of the actual
taking by the government. [Republic v. Rural
Bank of Kabacan, G. R. No. 185124, January
25, 2012]
Modified Rule: Plus legal interest of six
percent (6%) per annum on the value of the
land at the time of taking until full payment,
as adequate compensation in the form of
actual or compensatory damages, when
taking of the property is without the benefit of
expropriation proceedings and without
payment of just compensation. [DPWH
Secretary v. Spouses Heracleo, G.R. No. 179334
, July 1, 2013]
Exception: At the time of the filing of the
complaint
- When entry is made without the prior
consent and knowledge of the owners
and when the initiation of the action
preceded the entry into the property,
therefore, the entry was made without
intent to expropriate or was not made
under warrant or color of legal
authority. [NAPOCOR v. CA, G.R. No.
113194, March 11, 1996]
- When entry is made without the
intention of formally expropriating
the land, and without the prior
knowledge and consent of the
owners. [NAPOCOR v. Heirs of
Sangcay, G.R. No. 165828, August 24,
2011]
The reckoning value is the value at the time of
the filing of the complaint. Compensation
that is reckoned on the market value
prevailing at the time either when NPC
entered or when it completed the tunnel, as
NPC submits, would not be just, for it would
compound the gross unfairness already
PAGE 2 OF 35
caused to the owners by NPCs entering
POLITICAL LAW
without the intention of formally
expropriating the land, and without the prior
knowledge and consent of the Heirs of
Macabangkit. NPC’s entry denied elementary
due process of law to the owners since then
until the owners commenced the inverse
condemnation proceedings. The Court is more
concerned with the necessity to prevent NPC
from unjustly profiting from its deliberate acts
of denying due process of law to the owners.
As a measure of simple justice and ordinary
fairness to them, therefore, reckoning just
compensation on the value at the time the
owners commenced these inverse
condemnation proceedings is entirely
warranted. [NAPOCOR v. Heirs of Sangcay,
G.R. No. 165828, August 24, 2011]
6. Reviewer, p. 243, Plunder [Sec. 2, RA
7080]
ORIGINAL TEXT
Plunder [Sec. 2, RA 7080]
Punishable Acts
(1) Any public officer who, by himself or in
connivance with members of his family,
relatives by affinity or consanguinity, business
associates, subordinates or other persons,
amasses, accumulates or acquires ill-gotten
wealth through a combination or series of
overt or criminal acts in the aggregate
amount or total value of at least
P75,000,000.00
CORRECTED VERSION
Punishable Acts
(1) Any public officer who, by himself or in
connivance with members of his family,
relatives by affinity or consanguinity, business
associates, subordinates or other persons,
amasses, accumulates or acquires ill-gotten
wealth through a combination or series of
overt or criminal acts in the aggregate
amount or total value of at least Fifty
million pesos (P50,000,000.00). [As
amended by R.A. No. 7659, approved Dec. 13,
1993]
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS

LABOR LAW B.4.2. Secondary

Shall only receive when the primary
beneficiaries are absent:
1. Reviewer, p. 49 (1) Dependent parents
(2) Legitimate descendants, subject to
E. HOLIDAY PAY/PREMIUM PAY the restrictions on dependent children.
According to the LC, IRR and Memo:
Work on any regular 2. Reviewer, p. 137
holiday, not exceeding Computation
8 hours B. GSIS Beneficiaries
B.3.11. Life Insurance Benefits [Sec. 24]
Work on any regular 200% of regular daily
Note: Judiciary and Constitutional Commissions
holiday, if it exceeds 8 wage (for the 1st 8 are entitled to life insurance only.
hours/overtime hours)

LABOR LAW
+ 30% of hourly rate
3. Reviewer, p. 209
on said day
Work on any regular 200% of regular daily B. NATIONAL LABOR RELATIONS
holiday which falls on wage + 30% of such COMMISSION (NLRC)
the scheduled rest amount
day, not exceeding 8 B.3 Remedies
hours [A]ll references in the amended Section 9 of
Work on any regular Regular holiday-on- B.P. No. 129 to supposed appeals from the
holiday which falls on rest day rate (200% of NLRC to the Supreme Court are interpreted
scheduled rest day, if regular daily wage and hereby declared to mean and refer to
it exceeds 8 plus 30% of such petitions for certiorari under Rule 65.
hours/overtime amount) + 30% of Consequently, all such petitions should hence
hourly rate on said forth be initially filed in the Court of Appeals
day. in strict observance of the doctrine on
the hierarchy of courts as the appropriate
Work on special Regular daily wage + forum for the relief desired. [St. Martin
holiday not exceeding 30% thereof Funeral Home vs. NLRC, 1998]
8 hours
Work on special Regular daily wage + Requisites for Petition for Certiorari
holiday which is a rest 50% thereof on decisions of the NLRC [Rule 65]
day (1) The petition shall:
• Be filed within the reglementary
2. Reviewer, p. 137 period;
• Be verified in the proper court
B. GSIS Beneficiaries • Allege the facts with certainty and
B.3.11. Life Insurance Benefits [Sec. pray that judgment be rendered
24] annulling or modifying the
Note: Judiciary and Constitutional proceedings of the NLRC, and
Commissions are entitled to life insurance granting incidental reliefs as law
only. and justice may require
• Be accompanied by a (a) certified
B.4. Beneficiaries true copy of the judgment, order or
B.4.1. Primary resolution subject thereof; (b)
(1) Dependent spouse – until remarriage; copies of all pleadings and
(2) Dependent children (legitimate, documents relevant and pertinent
legitimated, legally adopted, and illegitimate) thereto; and (c) a sworn certification
– but RA 8291 does not distinguish share of of non-forum shopping as provided
legitimate and illegitimate children. in Section 3, par. 3, Rule 46.

PAGE 3 OF 35
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS

4. Reviewer, pp. 220-221

Complete Table
SUMMARY OF UNION REGISTRATION
Worker’s association
National Union or
Independent Union Chartered Local Worker’s Association operating in more
Federation
than one region
Requirements (1) Name of labor union (1) Name of federation (1) Charter certificate (1) Name of association Same as worker’s
for application and its principal and its principal issued by national and its principal association
address addresses union or federation address +
Name of its officers Name of its officers Name of officers (7) Resolution of
and their respective and their respective Other requirements (to and their respective membership of
addresses addresses be entitled to all other addresses each member
rights and privileges of association, duly
Approximate number (2) Minutes of (2) Minutes of
LLO) approved by its
of employees in the organizational organizational
(a) Names of board of
bargaining unit where meetings and list of meetings and list of
local/chapter’s directors
participating participating
it seeks to operate officers and their
employees members
Statement that it is not addresses
(3) Annual financial (3) Annual financial
a chartered local of any Principal office of
reports (if it has been reports (if it has
federation or nat’l in existence for more local/chapter been in existence
union than one year) or (b) Chapter’s CBL, or for more than one
(2) Minutes of statement that no statement that year) or statement
organizational collection has been chapter has adopted that no collection
meetings and list of made the CBL of federation has been made
participating (4) CBL, minutes of its or national union (4) CBL, minutes its of
employees adoption and (c) Certification under adoption and
(3) Name of all its ratification, and list oath by secretary ratification, list of
members comprising of participating and attestation by participating
at least 20% of employees (list may President members, and date
employees in BU be dispensed with if of ratification
(4) Annual financial ratification was done (unless ratification
reports (if it has been during was done during
in existence for more organizational organizational
than 1 year) or meeting) meeting)

PAGE 4 OF 35
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS

SUMMARY OF UNION REGISTRATION

Worker’s association
National Union or
Independent Union Chartered Local Worker’s Association operating in more
Federation
than one region
statement that no (5) Resolution of (5) Registration fee
collection has been affiliation of at least (P50.00)
made 10 LLOs (6) Certification under
(5) CBL, minutes of its (independent or oath by Secretary or
adoption and chartered locals) treasurer and
ratification, and list of which are the SEBA attestation by
participating EEs in their BU President
(which can be (6) Names and
dispensed with if CBL addresses of
adopted during companies where
organizational affiliates operate and
meeting) list of all members of
(6) Registration Fee affiliates in each
(P50.00) company involved
(7) Certification under (7) Registration fee
oath by secretary or (P50.00)
treasurer and (8) Certification under
attestation by oath by secretary or
President of all the treasurer and
requirements attestation by
President of all the
requirements

PAGE 5 OF 35
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS

CIVIL LAW o Consumable only for display

or advertising (lease ad
Supplement on Lease o
pompam et ostentionem)
Goods are accessory to an
industrial establishment, e.g.
I. General Concept of Lease coal in a factory (Art. 1645).

A. CHARACTERISTICS OF EVERY • Main distinctions from:

LEASE o Sale: only use and enjoyment
• Temporary duration transferred, not ownership;
• Onerous o Usufruct: not a real right
except when lease is
• Price is fixed according to the
registered and for a period of
duration of the contract
more than 1 year, whereas
usufruct is a real right; lessor
B. KINDS OF LEASE (ART. 1642) need not be owner of the
thing and the use is limited to
1) Lease of things
that in the contract, whereas
• Movables and immovables a usufruct generally includes
• One of the parties binds himself to all possible uses and manner
give to another the enjoyment or use of enjoyment of property;
of a thing for a price certain, and for a o Commodatum: essentially
period which may be definite or onerous, whereas a
indefinite, but not to exceed 99 years commodatum is essentially
(Art. 1643). gratuitous

CIVIL LAW
• Special provisions for lease of rural
and urban lands • Period of Lease
o Cannot be perpetual – there
2) Lease of work or services (Art. 1700- must always be a period,
1712) 1 whether definite or indefinite.
• Household help o If at the end of the contract
• Contract of Labor (Art. 1713-1731) the lessee should continue
• Lease of services of common carrier enjoying the thing leased for
(Art. 1732-1763) fifteen days with the
acquiescence of the lessor,
II. Lease of Things and unless a notice to the
contrary by either party has
previously been given, it is
A. GENERAL CONCEPT understood that there is an
implied new lease, not for the
Art. 1643. In the lease of things, one of the period of the original
parties binds himself to give to another the contract, but for the time
enjoyment or use of a thing for a price certain, established in articles 1682
and for a period which may be definite or and 1687. The other terms of
indefinite. However, no lease for more than the original contract shall be
ninety-nine years shall be valid. revived (Art. 1670).
o The lease of a piece of rural
• The subject matter must be within the land, when its duration has
commerce of man. not been fixed, is understood
• Consumable things cannot be the to have been for all the time
subject matter of lease, except: necessary for the gathering of
the fruits which the whole
estate leased may yield in one
1
Excluded from Bar Coverage: 1) Household Service; 2) year, or which it may yield
Contract of Labor; 3) Contract for Piece of Work
PAGE 6 OF 35
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS
once, although two or more
years have to elapse for the
purpose (Art. 1682).
o If the period for the lease has
not been fixed, it is
understood to be from year to
year, if the rent agreed upon
is annual; from month to
month, if it is monthly; from
week to week, if the rent is
weekly; and from day to day,
if the rent is to be paid daily.
However, even though a
monthly rent is paid, and no
period for the lease has been
set, the courts may fix a
longer term for the lease after
the lessee has occupied the
premises for over one year. If
the rent is weekly, the courts
may likewise determine a
longer period after the lessee
has been in possession for
over six months. In case of
daily rent, the courts may also
fix a longer period after the
lessee has stayed in the place
for over one month (Art. 1687).
• Assignment of Lease – The lessee
cannot assign the lease without the
consent of the lessor, unless there is a
stipulation to the contrary (Art. 1649).
• Sublease – When in the contract of
lease of things there is no express
prohibition, the lessee may sublet the
thing leased, in whole or in part,
without prejudice to his responsibility
for the performance of the contract
toward the lessor (Art. 1650).
o Distinguished from
assignment: In assignment,
there is a transfer to a third
person of the rights and
obligations arising from the
lease contract, whereas in a
sublease, there is another
contract of lease where the
original lessee becomes a
lessor, and the original lease
contract remains binding on
the lessee.
PAGE 7 OF 35
o Under the House Rental Law
(R.A. No. 887), there is a
presumption that there would
be no sublease unless the
lessor allows it.
o Obligation of sublessee to
lessor – Without prejudice to
his obligation toward the
sublessor, the sublessee is
bound to the lessor for all acts
which refer to the use and
preservation of the thing
leased in the manner
stipulated between the lessor
and the lessee (Art. 1651).
o For rents - The sublessee is
subsidiarily liable to the lessor
for any rent due from the
lessee. However, the
sublessee shall not be
responsible beyond the
amount of rent due from him,
in accordance with the terms
of the sublease, at the time of
the extra-judicial demand by
the lessor. Payments of rent in
CIVIL LAW
advance by the sublessee
shall be deemed not to have
been made, so far as the
lessor's claim is concerned,
unless said payments were
effected in virtue of the
custom of the place (Art.
1652).
B. RIGHTS AND OBLIGATIONS
i) Obligations of Lessor
Art. 1654. The lessor is obliged:
(1) To deliver the thing which is the
object of the contract in such a
condition as to render it fit for the use
intended;
(2) To make on the same during the lease
all the necessary repairs in order to
keep it suitable for the use to which it
has been devoted, unless there is a
stipulation to the contrary;
(3) To maintain the lessee in the peaceful
and adequate enjoyment of the lease
for the entire duration of the contract.
Art. 1661. The lessor cannot alter the form of
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS
the thing leased in such a way as to impair
the use to which the thing is devoted under
the terms of the lease.
Art. 1664. The lessor is not obliged to answer
for a mere act of trespass which a third
person may cause on the use of the thing
leased but the lessee shall have a direct
action against the intruder.
There is a mere act of trespass when the third
person claims no right whatever.
Art. 1653. The provisions governing warranty,
contained in the Title on Sales, shall be
applicable to the contract of lease.
In the cases where the return of the price is
required, reduction shall be made in
proportion to the time during which the
lessee enjoyed the thing.
ii) Obligations of Lessee
Art. 1657. The lessee is obliged:
(1) To pay the price of the lease
according to the terms stipulated;
(2) To use the thing leased as a diligent
father of a family, devoting it to the
use stipulated; and in the absence of
stipulation, to that which may be
inferred from the nature of the thing
leased, according to the custom of the
place;
(3) To pay expenses for the deed of lease.
Art. 1658. The lessee may suspend the
payment of the rent in case the lessor fails to
make the necessary repairs or to maintain the
lessee in peaceful and adequate enjoyment of
the property leased.
Art. 1662. If during the lease it should become
necessary to make some urgent repairs upon
the thing leased, which cannot be deferred
until the termination of the lease, the lessee is
obliged to tolerate the work, although it may
be very annoying to him, and although during
the same, he may be deprived of a part of the
premises.
If the repairs last more than forty days the
rent shall be reduced in proportion to the
time - including the first forty days - and the
PAGE 8 OF 35
part of the property of which the lessee has
been deprived.
When the work is of such a nature that the
portion which the lessee and his family need
for their dwelling becomes uninhabitable, he
may rescind the contract if the main purpose
of the lease is to provide a dwelling place for
the lessee.
Art. 1663. The lessee is obliged to bring to the
knowledge of the proprietor, within the
shortest possible time, every usurpation or
untoward act which any third person may
have committed or may be openly preparing
to carry out upon the thing leased.
He is also obliged to advise the owner, with
the same urgency, of the need of all repairs
included in No. 2 of Article 1654.
In both cases the lessee shall be liable for the
damages which, through his negligence, may
be suffered by the proprietor.
If the lessor fails to make urgent repairs, the
CIVIL LAW
lessee, in order to avoid an imminent danger,
may order the repairs at the lessor’s cost.
Art. 1665. The lessee shall return the thing
leased, upon the termination of the lease, as
he received it, save what has been lost or
impaired by the lapse of time, or by ordinary
wear and tear, or from an inevitable cause.
Art. 1667. The lessee is responsible for the
deterioration or loss of the thing leased,
unless he proves that it took place without his
fault. This burden of proof does not apply
when the destruction is due to earthquake,
flood, storm or other natural calamity.
Art. 1668. The lessee is liable for any
deterioration caused by members of his
household and by guests and visitors.
iii) Rights of Purchaser of Leased Land
Art. 1676. The purchaser of a piece of land
which is under a lease that is not recorded in
the Registry of Property may terminate the
lease, save when there is a stipulation to the
contrary in the contract of sale, or when the
purchaser knows of the existence of the lease.
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS
If the buyer makes use of this right, the lessee
may demand that he be allowed to gather the
fruits of the harvest which corresponds to the
current agricultural year and that the vendor
indemnify him for damages suffered.
If the sale is fictitious, for the purpose of
extinguishing the lease, the supposed vendee
cannot make use of the right granted in the
first paragraph of this article. The sale is
presumed to be fictitious if at the time the
supposed vendee demands the termination of
the lease, the sale is not recorded in the
Registry of Property.
Art. 1677. The purchaser in a sale with the
right of redemption cannot make use of the
power to eject the lessee until the end of the
period for the redemption.
C. REMEDIES
i) Ejectment
Art. 1673. The lessor may judicially eject the
lessee for any of the following causes:
(1) When the period agreed upon, or that
which is fixed for the duration of
leases under Articles 1682 and 1687,
has expired;
(2) Lack of payment of the price
stipulated;
(3) Violation of any of the conditions
agreed upon in the contract;
(4) When the lessee devotes the thing
leased to any use or service not
stipulated which causes the
deterioration thereof; or if he does not
observe the requirement in No. 2 of
Article 1657, as regards the use
thereof.
The ejectment of tenants of agricultural lands
shall be governed by special laws.
ii) Right to Ask for Writ of Preliminary
Mandatory Injunction in Unlawful Detainer
Cases
Art. 1674. In ejectment cases where an appeal
is taken the remedy granted in Article 539,
second paragraph, shall also apply, if the
higher court is satisfied that the lessee's
PAGE 9 OF 35
appeal is frivolous or dilatory, or that the
lessor's appeal is prima facie meritorious. The
period of ten days referred to in said article
shall be counted from the time the appeal is
perfected.
Art. 539. Every possessor has a right to be
respected in his possession; and should he be
disturbed therein he shall be protected in or
restored to said possession by the means
established by the laws and the Rules of
Court.
A possessor deprived of his possession
through forcible entry may within ten days
from the filing of the complaint present a
motion to secure from the competent court, in
the action for forcible entry, a writ of
preliminary mandatory injunction to restore
him in his possession. The court shall decide
the motion within thirty (30) days from the
filing thereof.
D. LEASE OF RURAL AND URBAN
LANDS
CIVIL LAW
1) Distinction
• The purpose of the property is the
controlling factor in determining
whether the land is rural or urban.
• Urban: principal purpose if dwelling;
Rural: principal purpose is exploitation of the
soil.
2) Useful improvements in good faith
made by lessee
Art. 1678. If the lessee makes, in good faith,
useful improvements which are suitable to
the use for which the lease is intended,
without altering the form or substance of the
property leased, the lessor upon the
termination of the lease shall pay the lessee
one- half of the value of the improvements at
that time. Should the lessor refuse to
reimburse said amount, the lessee may
remove the improvements, even though the
principal thing may suffer damage thereby.
He shall not, however, cause any more
impairment upon the property leased than is
necessary.
With regard to ornamental expenses, the
lessee shall not be entitled to any
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS
reimbursement, but he may remove the
ornamental objects, provided no damage is
caused to the principal thing, and the lessor
does not choose to retain them by paying
their value at the time the lease is
extinguished.
3) Special Rules for Lease of Rural/Urban
Lands
Special Provisions for Lease of Rural Lands
Art. 1680. The lessee shall have no right to a
reduction of the rent on account of the
sterility of the land leased, or by reason of the
loss of fruits due to ordinary fortuitous events;
but he shall have such right in case of the loss
of more than one-half of the fruits through
extraordinary and unforeseen fortuitous
events, save always when there is a specific
stipulation to the contrary.
Extraordinary fortuitous events are
understood to be: fire, war, pestilence,
unusual flood, locusts, earthquake, or others
which are uncommon, and which the
contracting parties could not have reasonably
foreseen.
Article 1681. Neither does the lessee have any
right to a reduction of the rent if the fruits are
lost after they have been separated from their
stalk, root or trunk.
Article 1682. The lease of a piece of rural land,
when its duration has not been fixed, is
understood to have been for all the time
necessary for the gathering of the fruits which
the whole estate leased may yield in one year,
or which it may yield once, although two or
more years have to elapse for the purpose.
Article 1683. The outgoing lessee shall allow
the incoming lessee or the lessor the use of
the premises and other means necessary for
the preparatory labor for the following year;
and, reciprocally, the incoming lessee or the
lessor is under obligation to permit the
outgoing lessee to do whatever may be
necessary for the gathering or harvesting and
utilization of the fruits, all in accordance with
the custom of the place.
Article 1684. Land tenancy on shares shall be
PAGE 10 OF 35
governed by special laws, the stipulations of
the parties, the provisions on partnership and
by the customs of the place.
Article 1685. The tenant on shares cannot be
ejected except in cases specified by law.
Special Provisions for Lease of Urban Lands
Art. 1686. In default of a special stipulation,
the custom of the place shall be observed
with regard to the kind of repairs on urban
property for which the lessor shall be liable. In
case of doubt it is understood that the repairs
are chargeable against him.
Article 1687. If the period for the lease has not
been fixed, it is understood to be from year to
year, if the rent agreed upon is annual; from
month to month, if it is monthly; from week to
week, if the rent is weekly; and from day to
day, if the rent is to be paid daily. However,
even though a monthly rent is paid, and no
period for the lease has been set, the courts
may fix a longer term for the lease after the
lessee has occupied the premises for over one
CIVIL LAW
year. If the rent is weekly, the courts may
likewise determine a longer period after the
lessee has been in possession for over six
months. In case of daily rent, the courts may
also fix a longer period after the lessee has
stayed in the place for over one month.
Article 1688. When the lessor of a house, or
part thereof, used as a dwelling for a family,
or when the lessor of a store, or industrial
establishment, also leases the furniture, the
lease of the latter shall be deemed to be for
the duration of the lease of the premises.
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS

MERCANTILE LAW • Rationale for the exception:

The public does not need
protection from the
government itself. The
Supplement on the government will always be
solvent to pay its
Securities Regulation obligations because of its
ability to raise revenues
Code (SRC) through taxation.
(b) Any security issued or guaranteed by
I. State Policy the government of any country with
which the Philippines maintains
diplomatic relations, or by any state,
Section 2. Declaration of State Policy province or political subdivision
The State shall thereof on the basis of reciprocity:
(1) Establish a socially conscious, free Provided, That the Commission may
market that regulates itself; require compliance with the form and
(2) Encourage the widest participation of content for disclosures the
ownership in enterprises; Commission may prescribe;
(3) Enhance the democratization of • Rationale: This is rooted in
wealth; comity among nations.
(4) Promote the development of the (c) Certificates issued by a receiver or by
capital market; a trustee in bankruptcy duly approved
(5) Protect investors; by the proper adjudicatory body;
(6) Ensure full and fair disclosure about
• Rationale: This is not a
securities;
public offering. Besides,
(7) Minimize if not totally eliminate
protection is already
insider trading and other fraudulent
afforded by that “proper
or manipulative devices and practices
adjudicatory body” and
which create distortions in the free
additional SEC protection is
market
not necessary.
(d) Any security or its derivatives the sale
or transfer of which, by law, is under
II. Securities Required to be the supervision and regulation of the
Office of the Insurance Commission,
Registered Housing and Land Use Rule

MERCANTILE
Regulatory Board, or the Bureau of
General Rule: Securities shall not be sold or Internal Revenue.
offered for sale or distribution to the public • Rationale: The issuers are
within the Philippines, without a registration governmental agencies

LAW
statement duly filed with and approved by the covered by exception (a)
Commission (Sec. 8.1) above. SEC protection would
- The Securities Regulation Code (SRC) be a duplication.
regulates public offering within the (e) Any security issued by a bank except
Philippines. its own shares of stock (Sec. 9.1)
• Rationale: Banks are under
Exceptions: the supervision of the
(1) Exempt securities (Sec. 9) Bangko Sentral. SEC
(a) Any security issued or guaranteed by protection is a duplication.
the Government of the Philippines/ its (f) Any class of security with respect to
political subdivision or agency/its which the SEC finds that registration
instrumentality/ or any person is not necessary in the public interest
controlled or supervised thereby; and for the protection of investors
(Sec. 9.2)
PAGE 11 OF 35
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS
• NOTE: The exemption of
securities by the SEC must be
made through the issuance of a
rule or regulation (Sec. 9.2)
(2) Exempt transactions
(a) At any judicial sale, or sale by an
executor, administrator, guardian or
receiver or trustee in insolvency or
bankruptcy.
- Rationale for exclusion: A
court will presumably not
order the sale if the public
will be prejudiced thereby.
(b) By or for the account of a pledge
holder, or mortgagee or any of a
pledge lien holder selling or offering
for sale or delivery in the ordinary
course of business and not for the
purpose of avoiding the provision of
this Code, to liquidate a bona fide
debt, a security pledged in good faith
as security for such debt.
- Rationale: This is not a
voluntary sale
contemplated by the SRC.
(c) An isolated transaction in which any
security is sold, offered for sale,
subscription or delivery by the owner
thereof, or by his representative for
the owner’s account, such sale or
offer for sale, subscription or delivery
not being made in the course of
repeated and successive transaction
of a like character by such owner, or
on his account by such representative
and such owner or representative not
being the underwriter of such
security.
- Rationale: Isolated and
not meant to be an ongoing
public offering.
(d) The distribution by a corporation
actively engaged in the business
authorized by its articles of
incorporation, of securities to its
stockholders or other security holders
as a stock dividend or other
distribution out of surplus.
- Rationale: The offerees are
not the public but
shareholders already
familiar with their com pany.
PAGE 12 OF 35
(e) The sale of capital stock of a
corporation to its own stockholders
exclusively, where no commission or
other remuneration is paid or given
directly or indirectly in connection
with the sale of such capital stock.
- Rationale: Same as (d)
above.
(f) The issuance of bonds or notes
secured by mortgage upon real estate
or tangible personal property, when
the entire mortgage together with all
the bonds or notes secured thereby
are sold to a single purchaser at a
single sale.
- Rationale: This is not a
public sale.
(g) The issue and delivery of any security
in exchange for any other security of
the same issuer pursuant to a right of
conversion entitling the holder of the
security surrendered in exchange to
make such conversion: Provided, That
the security so surrendered has been
registered under this Code or was,
when sold, exempt from the provision
of this Code, and that the security
issued and delivered in exchange, if
sold at the conversion price, would at
the time of such conversion fall within
the class of securities entitled to
registration under this Code. Upon
such conversion the par value of the
security surrendered in such
exchange shall be deemed the price
at which the securities issued and
delivered in such exchange are sold.
MERCANTILE
- Rationale: The SEC has
already registered the
convertible security and
presumably also passed
LAW
upon the security to be
issued upon conversion.
(h) Broker’s transaction, executed upon
customer’s orders, on any registered
Exchange or other trading market.
- Rationale: If broker’s
transactions are registered
each time, the transactions
on the exchange will be
unduly hampered. Besides,
the brokers are subject to a
“code of conduct” protective
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS
of the interest of the
investors.
(i) Subscriptions for shares of the
capitals stocks of a corporation prior
to the incorporation thereof or in
pursuance of an increase in its
authorized capital stocks under the
Corporation Code, when no expense is
incurred, or no commission,
compensation or remuneration is paid
or given in connection with the sale or
disposition of such securities, and
only when the purpose for soliciting,
giving or taking of such subscription is
to comply with the requirements of
such law as to the percentage of the
capital stock of a corporation which
should be subscribed before it can be
registered and duly incorporated, or
its authorized capital increased.
- Rationale: This is not a
public offering. Besides, the
SEC is involved in the
subscription process, as a
regulator.
(j) The exchange of securities by the
issuer with the existing security
holders exclusively, where no
commission or other remuneration is
paid or given directly or indirectly for
soliciting such exchange.
- Rationale: This is not a
public offering.
(k) The sale of securities by an issuer to
fewer than twenty (20) persons in the
Philippines during any twelve-month
period.
- Rationale: This is not a
public offering but a private
placement.
(l) The sale of securities to any number
of the following qualified buyers:
(i) Bank;
(ii) Registered investment house;
(iii) Insurance company;
(iv) Pension fund or retirement
plan maintained by the
Government of the
Philippines or any political
subdivision thereof or
managed by a bank or other
persons authorized by the
Bangko Sentral to engage in
trust functions;
PAGE 13 OF 35
(v) Investment company or;
(vi) Such other person as the
Commission may by rule
determine as qualified buyers,
on the basis of such factors as
financial sophistication, net
worth, knowledge, and
experience in financial and
business matters, or amount
of assets under management.
(Sec. 10.1)
- Rationale: These are
sophisticated investors that
could fend for themselves.
(m) Any transaction with respect to which
the SEC finds that registration is not
necessary in the public interest and
protection of investors such as by the
reason of the small amount involved
or the limited character of the public
offering (Sec. 10.2)
NOTE: Application for exemption under
Section 10 must be accompanied by:
(1) A notice identifying the exemption
relied upon;
(2) Payment of fee equivalent to 1/10 of
1% of the maximum value aggregate
price or issued value of the securities.
SEC v. PROSPERITY.COM, INC. (2012):
[This case involves the application of
the Howey test in order to determine if a
particular transaction is an investment
contract.] The sole issue is whether or not
Prosperity.com Inc.’s (PCI) scheme constitutes
an investment contract that requires
MERCANTILE
registration under the SRC.
The SRC treats investment contracts as
“securities” that have to be registered with
LAW
the SEC before they can be distributed and
sold. An investment contract is a contract,
transaction, or scheme where a person invests
his money in a common enterprise and is led
to expect profits primarily from the efforts of
others.
Apart from the definition which the IRR
provides, Philippine jurisprudence has so far
not done more to add to the same. Of course,
the United States Supreme Court, grappling
with the problem, has on several occasions
discussed the nature of investment
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS
contracts. That court’s rulings, while not
binding in the Philippines, enjoy some degree
of persuasiveness insofar as they are logical
and consistent with the country’s best
interests.
The US SC held in Securities and
Exchange Commission v. W.J. Howey
Co. (1946) that, for an investment contract to
exist, the following elements, referred to as
the HOWEY TEST must concur:
(1) a contract, transaction, or scheme;
(2) an investment of money;
(3) investment is made in a common
enterprise;
(4) expectation of profits; and
(5) profits arising primarily from the efforts of
others.
Thus, to sustain the SEC position in this case,
PCI’s scheme or contract with its buyers must
have all these elements.
POWER HOMES UNLIMITED
CORPORATION v. SEC and MANERO
(2008):
An investment contract is defined in the
Amended IRR of R.A. No. 8799 (SRC) as a
“contract, transaction or scheme (collectively
‘contract’) whereby a person invests his
money in a common enterprise and is led to
expect profits primarily from the efforts of
others.”
Although the proponents must establish all
four elements, the US Supreme Court
stressed that the Howey Test “embodies a
flexible rather than a static principle, one that
is capable of adaptation to meet the
countless and variable schemes devised by
those who seek the use of the money of others
on the promise of profits.”
After Howey came the 1973 US case of SEC v.
Glenn W . Turner Enterprises, Inc. et
al. In this case, the 9th Circuit of the US Court
of Appeals ruled that the element that profits
must come “solely” from the efforts of others
should not be given a strict interpretation. It
held that a literal reading of the
requirement “solely” would lead to unrealistic
results. It reasoned out that its flexible
reading is in accord with the statutory policy
of affording broad protection to the public.
Our RA 8799 (SRC) appears to follow this
PAGE 14 OF 35
flexible concept for it defines an investment
contract as a contract, transaction or scheme
whereby a
person invests his money in a common
enterprise and is led to expect profits no
t solely but primarily from the efforts of
others.
Thus, to be a security subject to regulation by
the SEC, an investment contract in our
jurisdiction must be proved to be: (1) an
investment of money, (2) in a common
enterprise, (3) with expectation of profits,
(4) primarily from efforts of others.
III. Procedure for
Registration of Securities
(1) Filing of a sworn registration
statement with the SEC (Sec. 12.1)
• Shall include any prospectus required
or permitted to be delivered under
Subsections 8.2, 8.3, and 8.4 (Sec. 12.1)
Chapter III, Section 8. Requirem ent of
Registration of Securities
x x x
8.2 The Commission may conditionally
approve the registration statement under
such terms as it may deem necessary.
8.3 The Commission may specify the terms
and conditions under which any written
communication, including any summary
MERCANTILE
prospectus, shall be deemed not to constitute
an offer for sale under this Section.
8.4. A record of the registration of securities
LAW
shall be kept in Register of Securities in which
shall be recorded orders entered by the
Commission with respect to such securities.
Such register and all documents or
information with respect to the securities
registered therein shall be open to public
inspection at reasonable hours on business
days.
• Shall include the effect of the securities
issue on ownership, on the mix of
ownership, especially foreign and local
ownership (Sec. 12.3)
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS
• Shall be signed by the issuer’s
executive officer, its principal operating
officer, its principal financial officer, its
comptroller, its principal accounting
officer, its corporate secretary, or
persons performing similar functions
accompanied by a duly verified
resolution of the board of directors of
the issuer corporation (Sec. 12.4)
• Shall be accompanied by:
(a) Written consent of the expert
named as having certified any
part of the registration
statement or any document
used in connection therewith;
and
(b) Where the registration
statement includes shares to
be sold by selling
shareholders - a written
certification by such selling
shareholders as to the
accuracy of any part of the
registration statement
contributed to by such selling
shareholders (Sec. 12.4).
(2) Payment to the SEC of a fee of
not more than one-tenth (1/10)
of one per centum (1% ) of the
maximum aggregate price at
which such securities are
proposed to be offered (Sec.
12.5a)
(3) Publication of the notice of the
filing of registration statem ent.
(Sec. 12.5b)
• The publication must be in two (2)
newspapers of general circulation
in the Philippines, once a week for
two (2) consecutive weeks, or in
such other manner as the
Commission by the rule shall
prescribe (Sec. 12.5b)
(4) Declaration by the SEC whether
the registration statement is
effective or rejected.
• Declaration is made within 45
days from filing of the registration
statement or on such later date to
which the issuer has consented
unless applicant has been
PAGE 15 OF 35
allowed to amend the registration
statement under Sec. 14 (Sec.
12.6).
NOTE: Grounds for: (1)
rejection/revocation of registration
statement and (2) refusal of
registration/revocation of securities
thereunder:
(a) The issuer:
(i) Has been judicially declared
insolvent;
(ii) Has violated any of the provision
of this Code, the rules
promulgated pursuant thereto, or
any order of the Commission of
which the issuer has notice in
connection with the offering for
which a registration statement
has been filed
(iii) Has been or is engaged or is
about to engage in fraudulent
transactions;
(iv) Has made any false or misleading
representation of material facts in
any prospectus concerning the
issuer or its securities;
(v) Has failed to comply with any
requirements that the
Commission may impose as a
condition for registration of the
security for which the registration
statement has been filed; or
(b) The registration statement is on its
face incomplete or inaccurate in any
material respect or includes any
untrue statements of a material fact
MERCANTILE
required to be stated therein or
necessary to make the statement
therein not misleading; or
(c) The issuer, any officer, director or
LAW
controlling person performing similar
functions, or any under writer has
been convicted, by a competent
judicial or administrative body, upon
plea of guilty, or otherwise, of an
offense involving moral turpitude and
/or fraud or is enjoined or restrained
by the Commission or other
competent or administrative body for
violations of securities, commodities,
and other related laws (Sec. 13.1)
(d) If any issuer shall refuse to permit an
examination to be made by the
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS
Commission (Sec. 13.3)
NOTE: A registration statement may be
withdrawn by the issuer only with the
consent of the Commission (Sec. 13.6).
(5) Statement under oath by the
issuer in all prospectus that:
(a) registration requirements
have been met and
(b) all information are true and
correct as represented by the
issuer or the one making the
statement.
• Statement under oath must be
made upon effectivity of the
registration statement. (Sec. 12.7)
IV. Prohibitions on Fraud,
Manipulation and Insider
Trading
A. MANIPULATION OF SECURITY
PRICES
It shall be unlawful for any person acting for
himself or through a dealer or broker, directly
or indirectly:
(a) To create a false or misleading
appearance of active trading in any listed
security traded in an Exchange of any
other trading market ("Exchange"):
(i) By effecting any transaction in such
security which involves no change in
the beneficial ownership thereof;
(ii) By entering an order or orders for the
purchase or sale of such security with
the knowledge that a simultaneous
order or orders of substantially the
same size, time and price, for the sale
or purchase of any such security, has
or will be entered by or for the same
or different parties; or
(iii) By performing similar act where there
is no change in beneficial ownership.
(b) To affect, alone or with others, securities
or transactions in securities that:
(i) Raises their price to induce the
purchase of a security, whether of the
same or a different class of the same
PAGE 16 OF 35
issuer or of controlling, controlled, or
commonly controlled company by
others; or
(ii) Creates active trading to induce such
a purchase or sale through
manipulative devices such as marking
the close, painting the tape,
squeezing the float, hype and dump,
boiler room operations and such
other similar devices.
(c) To circulate or disseminate information
that the price of any security listed in an
Exchange will or is likely to rise or fall
because of manipulative market
operations of any one or more persons
conducted for the purpose of raising or
depressing the price of the security for the
purpose of inducing the purchase or sale
of such security.
(d) To make false or misleading statement
with respect to any material fact, which
he knew or had reasonable ground to
believe was so false or misleading, for the
purpose of inducing the purchase or sale
of any security listed or traded in an
Exchange.
(e) To effect, either alone or others, any
series of transactions for the purchase
and/or sale of any security traded in an
Exchange for the purpose of pegging,
fixing or stabilizing the price of such
security; unless otherwise allowed by this
Code or by rules of the Commission (Sec.
24.1)
MERCANTILE
B. SHORT SALES
• The SEC is regulating transactions
wherein the seller does not yet own or
LAW
have the securities he is selling. He is
required to show that he has made
arrangements to effect delivery of such
securities on settlement date; otherwise,
the sale will not be allowed.
(a) No person shall use or employ, in
connection with the purchase or sale
of any security any manipulative or
deceptive device or contrivance.
(b) No short sale shall be effected nor
any stop-loss order be executed in
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS
connection with the purchase or sale
of any security except if allowed by
the SEC (Sec. 24.2)
NOTE: The SEC may allow certain acts or
transactions under Sec. 24 (on
Manipulation of Security Prices and Short
Sales), for public interest and protection
of investors (Sec. 24.3)
C. FRAUDULENT TRANSACTIONS
It shall be unlawful for any person, directly or
indirectly, in connection with the purchase or
sale of any securities to:
(a) Employ any device, scheme, or artifice
to defraud; (Sec. 26.1)
(b) Obtain money or property by means
of any untrue statement of a material
fact of any omission to state a
material fact necessary in order to
make the statements made, in the
light of the circumstances under
which they were made, not
misleading (Sec. 26.2)
(c) Engage in any act, transaction,
practice or course of business which
operates or would operate as a fraud
or deceit upon any person (Sec. 26.3)
D. INSIDER TRADING
• What is sought to be addressed here is
the asymmetry in information about a
“public company” (such as a company
listed on the Philippine Stock
Exchange) between insiders and
outsiders.
• Insiders could have material
information not yet known to the
public about the company, and they
might use this information to benefit
themselves at the expense of the
outsiders or the public. Therefore, they
must not trade in the shares of the
company pending the disclosure of
such information to the public.
PAGE 17 OF 35
An INSIDER means:
(a) The issuer;
(b) A director or officer (or any person
performing similar functions) of, or a person
controlling the issuer; gives or gave him
access to material information about the
issuer or the security that is not generally
available to the public;
(c) A government employee, director, or
officer of an exchange, clearing agency
and/or self-regulatory organization who has
access to material information about an
issuer or a security that is not generally
available to the public; or
(d) A person who learns such information by a
communication from any foregoing insiders
(Sec. 3.8)
‘Material non-public information’
means:
(a) It has not been generally disclosed to the
public and would likely affect the market
price of the security after being disseminated
to the public and the lapse of a reasonable
time for the market to absorb the information;
or
(b) Would be considered by a reasonable
person important under the circumstances in
determining his course of action whether to
buy, sell or hold a security (Sec. 27.2)
• It shall be unlawful for an insider:
(a) To sell or buy a security of the issuer,
while in possession of material
information with respect to the issuer
MERCANTILE
or the security that is not generally
available to the public, unless:
(1) The insider proves that the
information was not gained from
LAW
such relationship; or
(2) If the other party selling to or
buying from the insider (or his
agent) is identified, the insider
proves:
(i) That he disclosed the
information to the other
party, or
(ii) That he had reason to
believe that the other party
otherwise is also in
possession of the
information (Sec. 27.1)
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS
NOTE: Presumption that purchase or sale
is effected while in possession of material
non-public information arises:
(1) If the purchase or sale is
transacted after such information
came into existence but prior to
dissemination of such information
to the public; and
(2) The lapse of a reasonable time for
market to absorb such
information.
Presumption may be rebutted by
showing of purchaser’s or seller’s
awareness of the material non-public
information at the time of purchase or
sale (Sec. 27.1)
(b) To communicate material nonpublic
information about the issuer or the
security to any person who, by virtue of
the communication, becomes an insider
where the insider communicating the
information knows or has reason to
believe that such person will likely buy or
sell a security of the issuer while in
possession of such information (Sec. 27.3)
V. Protection of Investors
A. TENDER OFFER RULE
• This protects the minority shareholders.
• If a person or a group of persons (acting
in concert) intends and is in discussion
with certain shareholders of a public
company (normally, the controlling
shareholders) to acquire a substantial
stake in such company (now, the
threshold is 35% of the outstanding
class of shares in a public company), the
acquirer must make an offer to all the
shareholders of the company to tender
their shares at the price being offered to
the controlling shareholders.
• Before, the minority
shareholders are left out; so,
the acquirer only dealt with
the controlling shareholders
and disregarded the minority.
PAGE 18 OF 35
When a tender offer has commenced or is
about to commence, It shall be unlawful for:
(a) Any person (except the tender
offeror) who is in possession of
material nonpublic information
relating to such tender offer, to buy or
sell the securities of the issuer that
are sought or to be sought by such
tender offer if:
(i) Such person knows or has
reason to believe that the
information is nonpublic and
has been acquired directly or
indirectly from the tender
offeror, those acting on its
behalf, the issuer of the
securities sought or to be
sought by such tender offer,
or any insider of such issuer
(b) Any tender offeror, those
acting on its behalf, the issuer of the
securities sought or to be sought by
such tender offer, and any insider of
such issuer to communicate material
nonpublic information relating to the
tender offer to any other person
where such communication is likely to
result in a violation of (a) (Sec. 27.4).
CEMCO HOLDINGS, INC. v. NATIONAL
LIFE INSURANCE COMPANY OF THE
PHILIPPINES, INC. (2007):
Tender offer is a publicly announced intention
by a person acting alone or in concert with
other persons to acquire equity securities of a
public company. Stated differently, a tender
MERCANTILE
offer is an offer by the acquiring person to
stockholders of a public company for them to
tender their shares therein on the terms
specified in the offer. Tender offer is in place
to protect minority shareholders against any LAW
scheme that dilutes the share value of their
investments. It gives the minority
shareholders the chance to exit the company
under reasonable terms, giving them the
opportunity to sell their shares at the same
price as those of the majority shareholders.
The coverage of the mandatory tender offer
rule covers not only direct acquisition but also
indirect acquisition or “any type of
acquisition.”
[Case at bar: The indirect acquisition by
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS

CEMCO Holdings of 36% of UCC shares

through the acquisition of the non-listed
UCHC shares is covered by the mandatory
tender offer rule.]
The legislative intent of Section 19 of the
Securities Regulation Code is to regulate
activities relating to acquisition of control of
the listed company and for the purpose of
protecting the minority stockholders of a
listed corporation. Whatever may be the
method by which control of a public company
is obtained, either through the direct
purchase of its stocks or through an
INDIRECT means, mandatory tender offer
applies.
W hat is decisive is the determination
of the power of control. The legislative
intent behind the tender offer rule makes
clear that the type of activity intended to be
regulated is the acquisition of control of the
listed company through the purchase of
shares. Control may [be] effected through a
direct and indirect acquisition of stock, and
when this takes place, irrespective of the
means, a tender offer must
occur. The bottom line of the law is to give
the shareholder of the listed company the
opportunity to decide whether or not to sell in
connection with a transfer of control.
B. RULES ON PROXY
SOLICITATION
Proxies shall be:
(a) Issued in accordance with SEC rules
A broker or dealer shall:
(a) Not give any proxy, consent or any
authorization, in respect of any security
carried for the account of the customer, to
a person other than the customer,
without written authorization of such
customer (Sec. 20.4)
(b) If he holds or acquires the proxy for at
least ten percent (10%) or such
percentage as the Commission may
prescribe of the outstanding share of such
issuer, submit a report identifying the
beneficial owner within ten days after
such acquisition, for its own account or
customer, to the issuer of security, to the
exchange where the security is traded and
to the Commission (Sec. 20.5)
C. DISCLOSURE RULE
Issuers, equity holders, and insiders are
required to disclose certain information to the
SEC.
C. 1. DISCLOSURE BY THE ISSUER
(1) To the SEC
• Every issuer shall file with the
Commission:
(a) Annual Report within one
hundred thirty-five (135) days,
after the end of the issuer’s fiscal
year, or such other time as the
Commission may prescribe
(b) Such other periodical reports for
interim fiscal periods and current
reports on significant
developments of the issuer as the
Commission may prescribe as

MERCANTILE
and regulations; Proxy solicitations
shall also be made in accordance with necessary to keep current
the said rules and regulations (Sec. information on the operation of
20.1) the business and financial
(b) In writing (Sec. 20.2) condition of the issuer (Sec. 17.1) LAW
(c) Signed by the stockholder or his duly
authorized representatives (Sec. 20.2) • NOTE: Under this Section, ‘issuer’
(d) Filed before the scheduled meeting includes:
with the corporate secretary (Sec. (a) An issuer which has sold a class
20.2) of its securities pursuant to a
(e) Valid only for the meeting for which it registration under section 12
is intended unless otherwise provided hereof.
in the proxy (Sec. 20.3) • BUT the requirement shall be
suspended for any fiscal year
NOTE: No proxy shall be valid and after the year such
effective for a period longer than five registration became effective
(5) years at one time (Sec. 20.3) if such issuer, as of the first
PAGE 19 OF 35
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS

day of any such fiscal year,
has less than one hundred
(100) holder of such class of
securities or such other
number as the Commission
shall prescribe and it notifies
the Commission of such;
(b) An issuer with a class of securities
listed for trading on an Exchange;
and
(c) An issuer with assets of at least
Fifty million pesos
(50,000,000.00) or such other
amount as the Commission shall
prescribe, and having two
hundred (200) or more holders
each holding at least one
hundred (100) share of a class of
its equity securities.
• The obligation of such issuer
to file report shall be
terminated ninety (90) days
after notification to the
Commission by the issuer that
the number of its holders
holding at least one hundred
(100) shares is reduced to less
than one hundred (100) (Sec.
17.2)
PHILIPPINE VETERANS BANK v.
CALLANGAN (2011):
The ISSUE in this case is whether the Phil.
Veterans Bank qualifies as a “public
company” under Section 17.2 of the
Securities Regulation Code (SRC) in relation
with Rule 3(1)(m) of the Amended
contemplated by the SRC, is not limited to
a company whose shares of stock are publicly
listed; even companies like the Bank, whose
shares are offered ONLY to a specific group of
people, are considered a public company,
PROVIDED they meet the requirements
enumerated [under Sections 17.1 and 17.2 of
the SRC and/or under the Amended IRR of
the SRC].
(2) To the equity holders
• An annual report shall be
furnished by every issuer which
has a class of equity securities
satisfying any of the requirements
in Subsection 17.2 to each holder
of such equity security (Sec. 17.5)
C. 2. DISCLOSURE BY EQUITY HOLDERS
• Any person who acquires directly
or indirectly the beneficial
ownership of more than five of per
centum (5%) of such class or in
excess of such lesser per centum
as the Commission by rule may
prescribe, shall, within ten (10)
days after such acquisition or
such reasonable time as fixed by
the Commission, submit to: (1) the
issuer of the securities; (2) to the
Exchange where the security is
traded; and (3) to the
Commission, the following
information:
(a) The personal background,
identity, residence, and

Implementing Rules and Regulations of the
SRC, required to comply with the
reportorial requirements set forth in
Section 17.1 of the SRC.
Under Rule 3(1)(m) of the Amended
Implementing Rules and Regulations of the
SRC, a “public company” is defined as
“any corporation with a class of equity
securities listed on
Exchange or with assets in excess
P50,000,000.00 and having 200 or more
holders, at least 200 of which are holding at
least 100 shares of a class of its equity
securities.”
It is clear that a “public company,” as
MERCANTILE
citizenship of, and the nature
of such beneficial ownership
by, such person and all other
LAW
persons by whom or on whose
behalf the purchases are
effected; in the event the
beneficial owner is a juridical
person, the line of business of
the beneficial owner shall
an also be reported;
of
(b) If the purpose of the
purchases or prospective
purchases is to acquire
control of the business of the
issuer of the securities, any
plans or proposals which such
PAGE 20 OF 35
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS

persons may have that will (4) Such other information as the
effect a major change in its commission may specify (Sec.
business or corporate 18.3)
structure;
C. 3. DISCLOSURE BY INSIDER
(c) The number of shares of such • An insider has the duty to disclose
security which are beneficially material information with respect
owned, and the number of to the issuer or the security that is
shares concerning which not generally available to the
there is a right to acquire, public (Sec. 27.1)
directly or indirectly, by; (i)
such person, and (ii) each
associate of such person, An INSIDER means:
giving the background, (a) The issuer;
identity, residence, and (b) A director or officer (or any person
citizenship of each such performing similar functions) of,
associate; and or a person controlling the issuer;
gives or gave him access to
(d) Information as to any material information about the
contracts, arrangements, or issuer or the security that is not
understanding with any generally available to the public;
person with respect to any (c) A government employee, director,
securities of the issuer or officer of an exchange, clearing
including but not limited to agency and/or self-regulatory
transfer, joint ventures, loan organization who has access to
or option arrangements, puts material information about an
or call guarantees or division issuer or a security that is not
of losses or profits, or proxies generally available to the public;
naming the persons with or
whom such contracts, (d) A person who learns such
arrangements, or information by a communication
understanding have been from any foregoing insiders (Sec.
entered into, and giving the 3.8)
details thereof.
‘Material non-public
NOTE: If it appears to the SEC that information’ means:
securities were acquired by person in (a) It has not been generally

MERCANTILE
the ordinary course of his business disclosed to the public and would
and were not acquired for the purpose likely affect the market price of
of and do not have the effect of the security after being
changing or influencing the control of disseminated to the public and
the issuer nor in connection with any the lapse of a reasonable time for LAW
transaction having such purpose or the market to absorb the
effect it may permit any person to file information; or
in lieu of the statement required by (b) Would be considered by a
subsection 17.1 hereof, a notice reasonable person important
stating: under the circumstances in
(1) The name of such person; determining his course of action
(2) The shares of any equity whether to buy, sell or hold a
securities subject to security (Sec. 27.2)
Subsection 17.1 which are
owned by him; • A beneficial owner of 10% of a
(3) The date of their acquisition; public company becomes a
and “principal shareholder” required
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 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS
to disclose his interest to the SEC,
the company, and the Philippine
Stock Exchange (if the company is
listed there).
VI. Civil Liability
A. CIVIL LIABILITIES ON ACCOUNT
OF FALSE REGISTRATION STATEMENT
(SEC. 56)
• Civil liabilities arise when the registration
statement or any part thereof contains on
its effectivity:
(1) An untrue statement of a material
fact; or
(2) Omission to state a material fact
required to be stated therein or
necessary to make such
statements not misleading
• Who may be liable?
(a) Issuer and every person who
signed the registration
statement;
(b) Director of/partner in the
issuer at the time of the filing of
the registration statement or any
part, supplement or amendment
thereof;
(c) One who is named in the
registration statement as being or
about to becom e and whose
written consent thereto is filed
with the registration statement;
(d) Auditor/auditing firm named
as having certified any financial
statements used in connection
with the registration statement or
prospectus;
(e) One who, with his written consent
filed with the registration
statement, has been named as
having prepared or certified
any part of the registration
statement/any report or valuation
which is used in connection with
the registration statement;
(f) Selling shareholder who
contributed to and certified as to
the accuracy of a portion of the
registration statement;
PAGE 22 OF 35
(g) Underwriter with respect to such
security (Sec. 56.1)
• Who may sue?
• Any person who acquires the
security AND who suffers damage
o UNLESS it is proved that at
the time of such acquisition
he knew of such untrue
statement or omission (Sec.
56.1)
NOTE: When the security is acquired
AFTER the issuer has made generally
available to its security holders an
INCOME STATEMENT covering a
period of at least twelve (12) months
beginning from the effective date of the
registration statement, the right of
recovery under Section 56 shall be
conditioned on proof that such person
acquired the security RELYING UPON
such untrue statement in the registration
statement or relying upon the registration
statement AND NOT KNOWING of such
income statement (Sec. 56.2).
B. CIVIL LIABILITIES ARISING IN
CONNECTION WITH PROSPECTUS,
COMMUNICATIONS AND REPORTS
(SEC. 57)
B. 1. LIABILITY OF SELLERS/OFFERORS
• Who may be liable?
(a) Offeror or seller of a security in
MERCANTILE
violation of Chapter on Registration of
Securities;
(b) Offeror or seller of a security, whether
LAW
or not exempted by the provisions of
this Code, by means of a
prospectus or other written or
oral com m unication which
includes an:
• untrue statement of a material
fact OR
• omits to state a material fact
necessary in order to make the
statements, in the light of the
circumstances under which they
were made, not misleading (the
purchaser not knowing of such
untruth or omission)
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS
• DEFENSE: No knowledge of
untruth or om ission, despite the
exercise of reasonable care (Sec.
57.1).
• Who may sue?
• Purchaser of the security may
sue to recover:
(1) Consideration paid for such
security with interest thereon,
LESS the amount of any income
received thereon, upon the tender
of such security; or
(2) For damages if he no longer owns
the security (Sec. 57.1).
B. 2. LIABILITY OF MAKERS OF FALSE
MISLEADING STATEMENTS
• Who may be liable?
• Any person who shall make or
cause to be made any
statement in any report, or
document filed pursuant to
this Code or any rule or regulation
thereunder, which statement as
at the time and in the light of the
circumstances under which it was
made false or misleading with
respect to any material fact
• DEFENSE: Good faith and lack
of knowledge of the false and
misleading statement (Sec. 57.2).
• Who may sue?
• Purchaser or seller of security who
purchased or sold at a price
which was affected by such
statement, NOT KNOWING that
such statement was false or
misleading, and RELYING UPON
such statement
• SUE FOR: Damages caused by
such reliance (Sec. 57.2)
C. CIVIL LIABILITY OF FRAUD IN
CONNECTION WITH SECURITIES
TRANSACTIONS (SEC. 58)
• Who may be liable?
PAGE 23 OF 35
• Any person who engages in any
act or transaction in
violation of Sections 19.2
(fraudulent, deceptive, or
manipulative acts or practices in
connection with tender offers), 20
(Proxy Solicitations) or 26
(Fraudulent Transactions), or any
rule or regulation of the
Commission thereunder.
• Who may sue?
• Any person who purchases or
sells any security, grants or
refuses to grant any proxy,
consent or authorization, or
accepts or declines an
invitation for tender of a security
• SUE FOR: Dam ages as a result
of the act or transaction.
D. CIVIL LIABILITY FOR
MANIPULATION OF SECURITY PRICES
(SEC. 59)
• Who may be liable?
• Any person who WILLFULLY
participates in any act or
transaction in Section 24
(Manipulation of Security Prices).
• Who may sue?
• Any person who shall purchase or
sell any security at a price which
MERCANTILE
was affected by such act or
transaction
• SUE FOR: Dam ages as a result
of the act or transaction.
LAW
E. CIVIL LIABILITY WITH RESPECT
TO COMMODITY FUTURES CONTRACTS
AND PRE-NEED PLANS (SEC. 60)
• Who may be liable?
• Any person who engages in any
act or transactions in W ILLFUL
violation of any rule or
regulation promulgated by the
Commission under Section 11 (on
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS
Commodity Future Contracts) or
16 (on Pre-Need Plans) (Sec. 60.1)
• Who may sue?
• Any person sustaining
damages as a result of such act
or transaction (Sec. 60.1)
F. CIVIL LIABILITY ON ACCOUNT
OF INSIDER TRADING
F. 1. LIABILITY FOR NON-DISCLOSURE
• Who may be liable?
(1) Any insider who violates
Subsection 27.1 (on Insider’s
Duty to Disclose When Trading);
and
(2) Any person in the case of a
tender offer who violates
Subsection 27.4 (a)(I), or any
rule or regulation thereunder,
by purchasing or selling a
security while in possession
of m aterial inform ation
not generally available to
the public (Sec. 61.1)
• Who may sue?
• Any investor who,
contemporaneously with the
purchase or sale of securities that
is the subject of the violation,
purchased or sold securities of the
same class
o UNLESS such insider, or such
person in the case of a tender
offer, proves that such
investor KNEW the
information or would have
purchased or sold at the same
price REGARDLESS of
disclosure of the information
to him (Sec. 61.1)
PAGE 24 OF 35
F. 2. LIABILITY FOR COMMUNICATING
NON-PUBLIC INFORMATION ABOUT
ISSUER
• Who may be liable?
(1) An insider who violates
Subsection 27.3;
(2) Any person in the case of a tender
offer who violates Subsection
27.4 (a), or any rule or regulation
thereunder communicating
material nonpublic
information shall be jointly and
severally liable under Subsection
61.1 with, and to the same extent
as, the insider, or person in the
case of a tender offer, to whom
the communication was directed
and who is liable under
Subsection 61.1 by reason of his
purchase or sale of a security (Sec.
61.2).
G. LIABILITIES OF CONTROLLING
PERSONS, AIDER AND ABETTOR AND
OTHER SECONDARY LIABILITY
G. 1. LIABILITY OF CONTROLLING PERSONS
• Who may be liable?
• Every person who controls any
person liable under this Code or
the rules or regulations of the
Commission thereunder, shall
ALSO be liable jointly and
MERCANTILE
severally with and to the
same extent as such controlled
persons to any person to whom
such controlled person is liable
LAW
(Sec. 51.1)
• NOTE: ‘CONTROL’ may be:
(a) By or through stock ownership,
agency, or otherwise, or
(b) In connection with an agreement
or understanding with one or
more other persons (Sec. 51.1)
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS

• DEFENSE: Lack of knowledge of the • whichever is GREATER

existence of facts by reason of which
the liability of the controlled person is
alleged to exist (Sec. 51.1)
G. 2. LIABILITY OF DIRECTOR/OFFICER
FOR DELAY IN THE FILING OF REQUIRED
DOCUMENTS
(Sec. 51.5)
NOTE: It shall be unlawful for any person,
DIRECTLY or INDIRECTLY, to do ANY act or
thing which it would be unlawful for such
person to do under the provisions of this Code
or any rule or regulation thereunder (Sec. 51.2)

• Who may be liable?

• Any director or officer of, or any
owner of any securities issued by,
any issuer required to file any
document, report or other
information under this Code or
any rule or regulation of the
Commission thereunder, who,
without just cause, hinders,
delays or obstructs the making or
filing of any such document,
report, or information (Sec. 51.3)

G. 3. LIABILITY OF AIDER/ABETTOR

• Who may be liable?

• Any person who aids, abets,
counsels, commands, induces or
procures any violation of this
Code, or any rule, regulation or
order of the Commission
thereunder (Sec. 51.4)
• Every person who substantially
assists the act or omission of any
person primarily liable under
Sections 57, 58, 59 and 60 of this
Code, with knowledge or in

MERCANTILE
reckless disregard that such
act or om ission is wrongful
o Jointly and severally liable as
an aider and abettor for
LAW
damages resulting from the
conduct of the person
primarily liable (Sec. 51.5)
o NOTE: An aider and abettor
shall be LIABLE ONLY:
§ To the extent of his
relative contribution in
causing such damages in
comparison to that of the
person primarily liable, or
§ To the extent to which the
aider and abettor was
unjustly enriched thereby
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 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS

Civil Liability Arising … Who may be liable? Who may Sue?

• When the registration
statement or any part
thereof contains on its
effectivity:
o An untrue statement of a
material fact; or
o Omission to state a
material fact required to
be stated therein or
necessary to make such
statements not
misleading
(a) Issuer and every person
who signed the
registration statement;
(b) Director of/partner in
the issuer at the time of the
filing of the registration
statement or any part,
supplement or amendment
thereof;
(c) One who is named in the
registration statement
as being or about to
become (b);
(d) Auditor/auditing firm
named as having certified
any financial statements
used in connection with the
registration statement or
prospectus;
(e) One who, with his written
consent filed with the
registration statement, has
been named as having
prepared or certified
any part of the registration
statement/any report or
valuation which is used in
connection with the
registration statement;
(f) Selling shareholder who
contributed to and certified
as to the accuracy of a
portion of the registration
statement;
(g) Underwriter with
respect to such security (Sec.
Any person who acquires the
security and who suffers
damage unless it is proved
that at the time of such
acquisition he knew of such
untrue statement or omission
(Sec. 56.1)
NOTE: When the security is
acquired after the issuer has
made generally available to its
security holders an income
statement covering a period of
at least twelve (12) months
beginning from the effective
date of the registration
statement, the right of recovery
under this subsection shall be
conditioned on proof that such
person acquired the security
relying upon such untrue
statement in the registration
statement or relying upon the
registration statement and not
knowing of such income
statement (Sec. 56.2)

MERCANTILE
56.1)

LAW

PAGE 26 OF 35
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS
Civil Liability Arising … Who may be liable?
In Connection W ith (a) Offeror or seller of a security
Prospectus, in violation of Chapter on
Communications and Registration of Securities;
Reports (Sec. 57) (b) Offeror or seller of a
security, whether or not
A. Liability of exempted by the provisions
Sellers/Offerors of this Code, by means of a
prospectus or other written
or oral communication
which includes an untrue
statement of a material fact
or omits to state a material
fact necessary in order to
make the statements, in the
light of the circumstances
under which they were
made, not misleading (the
purchaser not knowing of
such untruth or omission).
Defense: No knowledge of
untruth or omission, despite
the exercise of reasonable
care (Sec. 57.1).
In Connection W ith Any person who shall make or
Prospectus, cause to be made any
Communications and statement in any report, or
Reports (Sec. 57) document filed pursuant to this
B. Liability of Makers of Code or any rule or regulation
False Misleading thereunder, which statement as
Statements at the time and in the light of
the circumstances under which
it was made false or misleading
with respect to any material
fact
Defense: Good faith and lack
of knowledge of the false and
misleading statement (Sec.
57.2).
Fraud in Connection with Any person who engages in any
Securities act or transaction in violation of
Transactions (Sec. 58) Sections 19.2, 20 or 26, or any
rule or regulation of the
Commission thereunder
PAGE 27 OF 35
Who may Sue?
Purchaser of the security may
sue to recover:
(1) consideration paid for
such security with interest
thereon, less the amount of
any income received
thereon, upon the tender of
such security; or
(2) for damages if he no
longer owns the security
(Sec. 57.1).
Purchaser or seller of security
who purchased or sold at a
price which was affected by
such statement knowing that
such statement was false or
misleading, and relying upon
such statement may sue for
damages caused by such
reliance (Sec. 57.2).
MERCANTILE
LAW
Any other person who
purchases or sells any security,
grants or refuses to grant any
proxy, consent or
authorization, or accepts or
declines an invitation for
tender of a security who
sustained damages as a result
of the transaction.
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS

Civil Liability Arising … Who may be liable? Who may Sue?

Manipulation of Security Any person who willfully Any person who shall purchase
Prices (Sec. 59) participates in any act or or sell any security at a price
transaction in Section 24 which was affected by such act
(Manipulation of Security or transaction
Prices).
W ith Respect to Any person who engages in any Any person sustaining
Commodity Futures act or transactions in willful damages as a result of such act
Contracts and Pre-need violation of any rule or or transaction (Sec. 60.1)
Plans (Sec. 60) regulation promulgated by the
Commission under Section 11
(on Commodity Future
Contracts) or 16 (on Pre-Need
Plans) (Sec. 60.1)
On Account of Insider (a) Any insider who violates Any investor who,
Trading Subsection 27.1; contemporaneously with the
(b) and any person in the case purchase or sale of securities
A. Liability for non- of a tender offer who violates that is the subject of the
disclosure Subsection 27.4 (a)(I), or any violation, purchased or sold
rule or regulation thereunder, securities of the same class
by purchasing or selling a unless such insider, or such
security while in possession of person in the case of a tender
material information not offer, proves that such investor
generally available to the public knew the information or would
(Sec. 61.1) have purchased or sold at the
same price regardless of
disclosure of the information to
him (Sec. 61.1)
On Account of Insider (a) An insider who violates
Trading Subsection 27.3;
B. Liability for OR
communicating non- (b) any person in the case of a
public information tender offer who violates
about issuer Subsection 27.4 (a), or any rule
or regulation thereunder
communicating material
nonpublic information shall

MERCANTILE
be jointly and severally
liable under Subsection 61.1
with, and to the same extent as,
the insider, or person in the
LAW
case of a tender offer, to whom
the communication was
directed and who is liable under
Subsection 61.1 by reason of his
purchase or sale of a security
(Sec. 61.2).

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 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS

Civil Liability Arising … Who may be liable? Who may Sue?

7. Liabilities of Every person who controls any
Controlling Persons, person liable under this Code or
Aider and Abettor and the rules or regulations of the
Other Secondary Commission thereunder, shall
Liability also be liable jointly and
severally with and to the same
A. Liability of Controlling extent as such controlled
Persons persons to any person to whom
such controlled person is liable
(Sec. 51.1)

NOTE: ‘Control’ may be by or

through stock ownership,
agency, or otherwise, or in
connection with an agreement
or understanding with one or
more other persons (Sec. 51.1)

Defense: Lack of knowledge

of the existence of facts by
reason of which the liability of
the controlled person is alleged
to exist (Sec. 51.1)
7. Liabilities of It shall be unlawful for any
Controlling Persons, director or officer of, or any
Aider and Abettor and owner of any securities issued
Other Secondary by, any issuer required to file
Liability any document, report or other
information under this Code or
B. Liability of any rule or regulation of the
Director/Officer for Commission thereunder,
Delay in the Filing of without just cause, to hinder,
Required Documents delay or obstruct the making or
filing of any such document,
report, or information (Sec. 51.2)

MERCANTILE
LAW

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 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS

Civil Liability Arising … Who may be liable? Who may Sue?

7. Liabilities of It shall be unlawful for any
Controlling Persons, person to aid, abet, counsel,
Aider and Abettor and command, induce or procure
Other Secondary any violation of this Code, or
Liability any rule, regulation or order of
the Commission thereunder
C. Liability of (Sec. 51.3)
Aider/Abettor
Every person who substantially
assists the act or omission of
any person primarily liable
under Sections 57, 58, 59
and 60 of this Code, with
knowledge or in reckless
disregard that such act or
omission is wrongful, shall be
jointly and severally liable
as an aider and abettor for
damages resulting from the
conduct of the person primarily
liable (Sec. 51.4)

BUT an aider and abettor shall

be liable only to the extent of
his relative contribution in
causing such damages in
comparison to that of the
person primarily liable, or the
extent to which the aider and
abettor was unjustly enriched
thereby, whichever is greater
(Sec. 51.4)

NOTE: It shall be unlawful for

any person, directly, or
indirectly, to do any act or

MERCANTILE
thing which it would be
unlawful for such person to do
under the provisions of this
Code or any rule or regulation
LAW
thereunder (Sec. 51.2)

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 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS

REMEDIAL LAW

Differences among Rule 103, Rule 108, and RA 9048

Rule 103 Rule 108 RA 9048
Applicability Substantial Changes in name Substantial changes in (1) Change of First Names or
entries in the civil Nicknames
registry (other than (2) Change brought about by
name) clerical or typographical
errors (includes day and
month in the date of birth
or sex), except nationality,
age, or status
Nature Judicial Judicial Administrative
Who May (1) The person desiring to Natural person having A natural person having direct
File change his name direct and personal and personal interest in the
(2) Some other person on his interest in the change of first name or
behalf correction of error in nickname in the civil register.
an entry in the civil
register
Where Filed RTC of the province in which RTC of the province The local civil registry office of
the person desiring to change where the civil registry the city or municipality where
his name resides. is located the record being sought to be
corrected/changed is kept.

Exceptions:
(1) If the petitioner has
already migrated to
another place in the
country, the petition shall
be filed with local civil
registrar of the place
where the interested party
is presently residing or
domiciled
(2) If the petitioner is a

REMEDIAL
Filipino citizen presently
residing or domiciled in a
foreign country, the LAW
petition shall be filed in
the nearest Philippine
Consulate.
Standing of Not a party to the proceeding Made a party to the
the LCR proceeding as a
respondent
Notice No mention of notice to be sent The court shall cause
requirement reasonable notice to
be given to persons
named in the petition
Contents of Title: In Re: Petition for Facts necessary to
Petition Change of Name of X, also establish the merits of the
PAGE 31 OF 35
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS

Rule 103 Rule 108 RA 9048

known as Y and Z, to ABC. X, petition.
Petitioner.
A showing that the petitioner
Names or Aliases of the is competent to testify to
Applicant (m ust appear in the matters stated.
the caption of the
petition) Particular erroneous
Omission is fatal to the petition entry or entries which are
sought to be corrected and/or
To allow a reader of the the change sought to be
published petition to notice the made.
said aliases

Petitioner has been a

bona fide resident of the
province where the
petition is filed for at
least 3 years prior to the
date of such filing.

Cause for which the

change of the petitioner's
name is sought

Petitioner must show a proper

or compelling reason for the
change of name + the fact that
he will be prejudiced by the use
of his official name.

Name asked for

Form of The petition shall be signed
Petition and verified.
Procedure (1) Filing of petition for
for change of name.
Changing of (2) Court shall promulgate an
Name order fixing a date and
place for hearing the
petition. The date set for
the hearing shall NOT be:
• Within 30 days prior to
an election AND
• Within 4 months after
the last publication of
the notice.
(3) Court shall direct a copy of
the order to be published
before the hearing
• At least once a week for
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Verified petition (1) In the form of an affidavit
(2) Verified
(3) Subscribed and sworn to
before any person
authorized by law to
administer oaths.
(1) Filing of (1) Filing of petition and its
petition supporting papers in 3
(2) Court shall copies to be distributed REMEDIAL
promulgate an to: LAW
order fixing the § The concerned city or
time and place municipal civil registrar
for hearing the or the consul general
petition and § The Office of the Civil
cause Registrar General
reasonable § The petitioner
notice to be given (2) The City or Municipal
to the persons Registrar or the Consul
named in the General shall post the
petition. petition in a conspicuous
place for ten 10
Civil registrar and consecutive days after he
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS
Rule 103
3 successive weeks
• In some newspaper of
general circulation
published in the
province.
(a) Hearing shall be
conducted. (3) Court shall direct
The SolGen or the
proper provincial or city
fiscal shall appear on
behalf of the
Government of the
Republic.
(b) Judgment granting or
denying the change of
name.
(c) Copy of judgments
shall be furnished
the civil registrar of
the municipality or city (4)
where the court issuing
the same is situated,
who shall forthwith
enter the same in the
civil register.
(5)
(6)
(7)
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Rule 108 RA 9048
all persons who finds the petition and its
have or claim any supporting documents
interest which sufficient in form and
would be affected substance.
thereby shall be (3) The petition shall be
made parties to published at least
the proceeding once a week for 2
consecutive weeks in a
a copy of the order newspaper of general
to be published circulation.
before the (4) The City or Municipal
hearing Registrar or the Consul
General shall render a
At least once a decision not later
week for 3 than 5 working days
successive weeks after the completion
of the posting and/ or
In some publication
newspaper of requirement. He shall
general circulation transmit a copy of his
published in the decision together with the
province. records of the proceedings
File opposition to the Office of the Civil
Within 15 days Registrar General within 5
from notice of the working days from the
petition or from date of the decision.
the last date of
publication Where the petition is
Hearing shall be denied by the city or
conducted. municipal civil registrar or
Court may the consul general, the
expedite the petitioner may either
proceedings and appeal the decision to the
also grant civil registrar general or
preliminary file the appropriate
injunction for petition with the proper
preservation of court.
rights of the (5) The Civil Registrar
parties General shall, within 10
Judgment working days from receipt REMEDIAL
granting or of the decision granting a LAW
denying the petition, exercise the
change of name. power to impugn such
Copy of judgments decision by way of an
shall be objection.
furnished the
civil registrar Grounds for objection
concerned who (a) The error is not clerical
shall annotate the or typographical
same in the (b) The correction of an
records entry or entries in the
civil register is
substantial or
 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS

Rule 103 Rule 108 RA 9048

controversial as it
affects the civil status
of a person
(c) The basis used in
changing the first
name or nickname of a
person does not fall
under one of the valid
grounds.

If the civil registrar general

fails to exercise his power
to impugn the decision of
the city or municipal
registrar or of the consul
general within the period,
such decision shall
become final and
executory.
(6) The civil registrar general
shall immediately notify
the city or municipal civil
registrar or the consul
general of the action taken
on the decision.
(7) Upon receipt of the notice
thereof, the city or
municipal civil registrar or
the consul general shall
notify the petitioner of
such action.
(8) Appeal. The petitioner
may seek reconsideration
with the civil registrar
general or file the
appropriate petition with
the proper court.

Opposition Any interested person Civil registrar and any N/A REMEDIAL
person having or Note: The Civil Registrar LAW
claiming interest General is given the power to
under the entry whose object to the decision of the
cancellation or Local Civil Registrar.
correction is sought
Grounds for Republic v. Hernandez (1996) Entries subject to Sec. 4: Grounds for
Change of Valid Grounds for Change of cancellation or Change of First Nam e or
Name Name correction: Nickname
(1) The name is ridiculous, (1) Birth (1) The first name or
tainted with dishonor or (2) Marriage nickname is ridiculous,
extremely difficult to write (3) Death tainted with dishonor or
or pronounce. (4) Legal separation extremely difficult to write
(2) Change results as a legal (5) Judgment of or pronounce.
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 UP LAW BOC 2016 REVIEWER CORRECTIONS AND SUPPLEMENTS

Rule 103 Rule 108 RA 9048

consequence of annulment (2) The new first name or
legitimation (6) Judgment nickname has been
(3) The change will avoid declaring habitually and
confusion. marriage null and continuously used by the
(4) A sincere desire to adopt a void petitioner and he has
Filipino name to erase (7) Legitimation been publicly known by
signs of former alienage (8) Adoption the first name or
[Ang Chay v. Republic, (9) Acknowledgment nickname in the
1970] of natural community.
(5) Having continuously used children (3) The change will avoid
and been known since (10) Naturalization confusion.
childhood by a Filipino (11) Election, loss or
name, having been recovery of
unaware of alien citizenship
parentage [Uy v. Republic, (12) Civil interdiction
1965] (13) Judicial
determination of
filiation
(14) Voluntary
emancipation of
minor
(15) Changes of name

REMEDIAL
LAW

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