Review Notes on

Data Privacy Act, Philippine Competition Act, Public Service Act,

Electronic Commerce Act, Access Devices Registration Act
and the Securities Regulation Code
Bar Examinations 2024
Atty. Raiza Nicole G. Mendiola-Ladlad

Data Privacy Act (1) About an individual’s race, ethnic

(Republic Act No. 10173) origin, marital status, age, color, and
religious, philosophical or political
“The world’s most valuable resource is affiliations;
no longer oil, but data” (2) About an individual’s health,
-The Economist education, genetic or sexual life of a
person, or to any proceeding for any
Purpose of the law: (Sec. 2, DPA) offense committed or alleged to have
1. Protect Informational Privacy been committed by such person, the
2. Ensure free flow of information disposal of such proceedings, or the
to promote innovation and sentence of any court in such
growth proceedings;
(3) Issued by government agencies
Covered Information peculiar to an individual which
 Personal Information includes, but not limited to, social
 Sensitive Personal security numbers, previous or current
Information health records, licenses or its denials,
 Privileged Information suspension or revocation, and tax
returns; and
Data subject - is an individual person (4) Specifically established by an
whose personal data information is executive order or an act of Congress
processed. (Sec. 3, DPA) to be kept classified. (Sec. 3, DPA)

Only a natural person can be a data Personal Information

subject.
1. May be a single data –
In case of death or incapacity of the
data subject, the lawful heirs and Examples:
assigns may exercise their rights. 1. Name of the person
(Sec.17, DPA) 2. Cellphone number
3. Facebook Profile Name
Personal information - refers to any 4. TIN
information whether recorded in a 5. Student Number
material form or not, from which the 6. Face
identity of an individual is apparent or
can be reasonably and directly 2. Several data, when put
ascertained by the entity holding the together with other information
information, or when put together with would be directly and certainly
other information would directly and identify an individual.
certainly identify an individual. (Sec.
3, DPA) Examples:
1. 25-year-old, male, with address at
Sensitive personal information Lot 6 Blk 5 St. Jude Subdivision, San
refers to personal information: Felipe Naga City
2. Male, 40 years old, Dean of the
UNC School of Law
 Page 2 of 27

3. Female, student of UNC School of voters and they process the same
Law, with address at No. 45, New for the election
Jersey St., Happy Homes Subdivision, SSS, GSIS, PSO, PAG-IBIG,
Pacol, Naga City BIR, etc.
4. Websites/Apps such as
Personal information controller Facebook, Messenger,
(PIC) – refers to a person or Instagram, Tiktok – they collect
organization who controls the and process personal data such
collection, holding, processing or use as the name, location, email
of personal information, including a address, mobile number,
person or organization who instructs username, etc.
another person or organization to 5. Online Shopping app such as
collect, hold, process, use, transfer or Shoppee, Lazada, Shein – they
disclose personal information on his or collect personal information
her behalf. The term excludes: such as name, address,
cellphone number, birthday, etc.
(1) A person or organization who
performs such functions as instructed Personal information processor
by another person or organization; and (PIP) - any natural or juridical person
qualified to act as such under this Act
(2) An individual who collects, holds, to whom a personal information
processes or uses personal information controller may outsource the
in connection with the individual’s processing of personal data pertaining
personal, family or household to a data subject. (Sec. 3, DPA)
affairs. (Sec. 3, DPA)
Examples of PIPs
Each personal information controller is
responsible for personal information 1. Courier services outsourced by
under its control or custody, including online shopping apps such as
information that have been transferred when Lazada outsourced its
to a third party for processing. (Sec. 21, delivery to NinjaVan.
DPA)
Lazada is considered the PIC and
Examples of PICs Ninja Van is the PIP

1. Schools – they collect and 2. Government Services

process personal information outsourced to private
from enrollees, such as their businesses, such as when the
name, parents name, address, Philippine Statistics Authority
etc. (PSA) allows SM Malls to
2. Hospitals – they collect personal process the application and
information such as names, request for birth certificates.
addresses, and sensitive
personal information such as PSA is the PIC and SM Mall is the
medical histories of the patients PIP
3. Government agencies such as
COMELEC – they collect
personal information such as Phil Statistics Authority- PSA
names, addresses, etc. of the
 Page 3 of 27

Exclusions from the DPA: central monetary authority and law

(BaCLAG-R-Fun) enforcement and regulatory agencies
of their constitutionally and statutorily
(a) Information about any individual mandated functions.
who is or was an officer or employee
of a government institution that relates (f) Information necessary for banks
to the position or functions of the and other financial institutions under
individual, including: the jurisdiction of the independent,
central monetary authority or Bangko
(1) The fact that the individual is or Sentral ng Pilipinas to comply with
was an officer or employee of the Republic Act No. 9510, and Republic
government institution; Act No. 9160, as amended, otherwise
(2) The title, business address and known as the Anti-Money Laundering
office telephone number of the Act and other applicable laws; and
individual;
(3) The classification, salary range and (g) Personal information originally
responsibilities of the position held by collected from residents of foreign
the individual; and jurisdictions in accordance with the
(4) The name of the individual on a laws of those foreign jurisdictions,
document prepared by the individual in including any applicable data privacy
the course of employment with the laws, which is being processed in the
government; Philippines. (Sec. 4, DPA)

(b) Information about an individual Consent is NOT the only lawful basis
who is or was performing service for processing personal information.
under contract for a government Section 12 of the DPA provides for the
institution that relates to the services various criteria for lawful processing.
performed, including the terms of the (NPC Advisory Opinion No. 2022-05)
contract, and the name of the
individual given in the course of the
performance of those services; Lawful Processing Lawful Processing of
of Personal Sensitive Personal
Information Information and
(c) Information relating to any (Sec. 12, DPA) Privileged
discretionary benefit of a financial Information
nature such as the granting of a license (Sec. 13, DPA)
or permit given by the government to The data subject The data subject
an individual, including the name of has given his or has given his or
the individual and the exact nature of her consent; her consent,
the benefit; specific to the
purpose prior to
(d) Personal information processed for the processing, or
journalistic, artistic, literary or in the case of
research purposes; privileged
information, all
(e) Information necessary in order to parties to the
carry out the functions of public exchange have
authority which includes the given their
processing of personal data for the consent prior to
performance by the independent, processing;
 Page 4 of 27

The processing The processing of only confined and

of personal the same is related to the bona
information is provided for by fide members of
necessary and existing laws and these
is related to the regulations: organizations or
fulfillment of a Provided, That their associations:
contract with such regulatory Provided, further,
the data subject enactments That the sensitive
or in order to guarantee the personal
take steps at the protection of the information are
request of the sensitive personal not transferred to
data subject information and third parties:
prior to entering the privileged Provided, finally,
into a contract; information: That consent of
Provided, further, the data subject
That the consent was obtained prior
of the data to processing;
subjects are not The processing The processing is
required by law or is necessary in necessary for
regulation order to respond purposes of
permitting the to national medical
processing of the emergency, to treatment, is
sensitive personal comply with the carried out by a
information or the requirements of medical
privileged public order and practitioner or a
information; safety, or to medical treatment
The processing The processing is fulfill functions institution, and an
is necessary for necessary to of public adequate level of
compliance protect the life and authority which protection of
with a legal health of the data necessarily personal
obligation to subject or another includes the information is
which the person, and the processing of ensured
personal data subject is personal data
information not legally or for the
controller is physically able to fulfillment of its
subject; express his or her mandate;
consent prior to The processing The processing
the processing; is necessary for concerns such
The processing The processing is the purposes of personal
is necessary to necessary to the legitimate information as is
protect vitally achieve the lawful interests necessary for the
important and pursued by the protection of
interests of the noncommercial personal lawful rights and
data subject, objectives of information interests of natural
including life public controller or by or legal persons in
and health; organizations and a third party or court
their associations: parties to whom proceedings, or
Provided, That the data is the establishment,
such processing is disclosed, exercise or
 Page 5 of 27

except where defense of legal attached to an administrative

such interests claims, or when complaint.
are overridden provided to
by fundamental government or JDB claimed that there was unlawful
rights and public authority. processing of personal information,
freedoms of the since there was personal information
data subject stated in the Incident Report and the
which require Affidavits and the processing was done
protection without his consent.
under the
Philippine Issue: Whether or not the processing of
Constitution. personal information is lawful.

In the determination of a legitimate In this case, JME asserted that the

interest, the personal information purpose of the Affidavit was to support
controller (PIC) must consider the the administrative complaint filed by
following: MDG against JDB. Given that Section
13 (f) of the DPA may refer to the legal
1. Purpose test – The existence of a claims of persons other than those who
legitimate interest must be clearly processed the personal information,
established, including a determination the act of JME in issuing the Affidavit
of what the particular processing to support MDG legal claim can,
operation seeks to achieve; therefore, be considered as lawful
processing.
2. Necessity test – The processing of
personal information must be General Privacy Principles
necessary for the purpose of the (TraLP)
legitimate interest pursued by the PIC 1. Transparency
or third party to whom personal 2. Legitimate Purpose
information is disclosed, where such 3. Proportionality
purpose could not be reasonably
fulfilled by other means; and Personal information must, be:

3. Balancing test – The fundamental (a) Collected for specified and

rights and freedoms of data subjects legitimate purposes determined and
must not be overridden by the declared before, or as soon as
legitimate interests of the PIC or third reasonably practicable after collection,
party, considering the likely impact of and later processed in a way
the processing on the data subjects. compatible with such declared,
specified and legitimate purposes only;
JDB vs JME
NPC 21-032 (b) Processed fairly and lawfully;

Facts: JDB and JME are public school (c) Accurate, relevant and, where
teachers. They had a confrontation necessary for purposes for which it is
about their working area. JME narrated to be used the processing of personal
about the incident in an Incident information, kept up to date;
Report and an Affidavit, which were inaccurate or incomplete data must be
 Page 6 of 27

rectified, supplemented, destroyed or allowed the Grab Driver to message

their further processing restricted; MLF.

(d) Adequate and not excessive in Issue: Whether Grab has legitimate
relation to the purposes for which they purpose in sharing the personal
are collected and processed; information of MLF to the grab driver.

(e) Retained only for as long as Ruling: It is clearly enumerated in his

necessary for the fulfillment of the contract with Grab Philippines,
purposes for which the data was however, that aside from providing
obtained or for the establishment, services to MLF, Grab Philippines
exercise or defense of legal claims, or may share his personal data to other
for legitimate business purposes, or as users to enable the communication
provided by law; and between them, for any reason
whatsoever. Grab Philippines
(f) Kept in a form which permits specifically declared this legitimate
identification of data subjects for no purpose to MLF.
longer than is necessary for the
purposes for which the data were Grab Philippines did not process
collected and processed: Provided, that MLF’s personal information for a
personal information collected for different purpose that is neither
other purposes may lie processed for covered by the authority given by him
historical, statistical or scientific nor otherwise authorized by the DPA
purposes, and in cases laid down in law or existing laws.
may be stored for longer periods:
Provided, further, that adequate The processing of MLF’s information
safeguards are guaranteed by said laws remains in accordance with Grab
authorizing their processing. Philippines’ legitimate purpose of
enabling communications between the
MLF vs Grab Philippines driver and the passenger to facilitate
NPC 19-142 the transaction of a Grab ride.

Facts: MLF booked a car ride from UP Given that the processing of MLF’s
Town Center and was assigned to a personal information did not go
Grab driver (ADB). MLF alleged that, beyond what he consented, it being
after approximately three to ten (3-10) within the ambit of the declared and
minutes from booking the ride, the specified purpose, commission.
Grab Driver told him that “it’s traffic
and asked MLF to cancel the trip.” The Commission finds that, in relation
Grab Philippines penalizes riders who to the obligations of Grab Philippines
cancels trips. So MLF responded to the under the DPA, Grab Philippines did
driver that “I will not cancel the trip not commit any privacy violation
but he can if he wants.” After which because these exchanges remain
the Grab Driver cursed MLF with the within the legitimate purpose
words ‘tang inamo’. Then cancelled consented to by MLF.
the trip.
As such, the driver’s profanity
MLF alleged there was unauthorized continues to be within the context of
use of his data when Grab Philippines the whole general purpose of the
 Page 7 of 27

communication to fulfill a Grab ride of proportionality requires that the

transaction, especially since the processing is adequate, relevant,
exchanges were made only within suitable, and necessary processing that
Grab Philippines’ app and in the is not excessive in relation to the
process of discussing the details of the declared and specified purpose.
booking. The utterance of a foul
statement does not, by itself, place it Given this, processing is deemed
outside of the original legitimate proportional when (1) processing is
purpose from which it stemmed. In adequate, relevant, and necessary to
effect, contrary to MLF’s claim, the in- the declared and specified purpose;
app chat and the messages exchanged and (2) the means by which processing
therein never ceased to be for the is performed is the least intrusive
purpose of coordinating a ride. means available.
Therefore, the exchanges continue to
be for the legitimate purpose of In this case, Shopee’s act of taking the
transacting official business. son’s photo as proof of delivery is
disproportional to the declared and
MAF vs Shopee Inc. specified purpose. The act of taking
NPC 21-167 the son’s photo is not necessary to the
declared and specified purpose and the
Facts: MAF alleged that her minor means is not the least intrusive means
child’s picture was used as “proof of available. Shopee could have fulfilled
delivery.” The courier service took his the declared and specified purpose of
picture “without his consent and was securing proof of delivery with less
not told of the purpose.” intrusive means such as by taking a
picture of an arm with the package.
She contended that instead of the rider
taking a picture of her son as proof of Rights of a Data Subject
delivery, the rider should have at least (File-PARODIE)
taken a picture of his arm and package
or have done the geotagging as said in 1. File a complaint
their guidelines. She claimed that 2. data portability
when the seller asked for proof of 3. Access
delivery, Shopee forwarded her son’s 4. Rectify
photo to the seller and was sent to her 5. Object
as proof of delivery. 6. Damages
7. Informed
She also claimed that she requested 8. Erasure and blocking
Shopee “to remove her son’s photo out
of their system” but Shopee refused her Right to be Informed - the data
request. subject has the right to know when his
or her personal data shall be, are being,
Issue: Did Shopee violate the general or have been processed.
privacy principle of proportionality?
The data subjects must be informed,
Ruling: Shopee violated the through a privacy notice, that the
proportionality principle when the establishment is being monitored by a
PIP’s rider took the photo as proof of CCTV camera.
delivery. The general privacy principle
 Page 8 of 27

Right to Access - data Subject has the household affairs is not considered a
right to demand from entity possessing personal information controller as
any personal data to provide the data defined under the DPA.
subject with a description of such data
in its possession, as well as the The DPA also treats as special cases
purposes for which they are to be or are processing for journalistic, artistic,
being processed. literary or research purposes.

Right to Object - The data subject has In cases like these, the affected data
the choice of refusing to consent, and subject is entitled to suspend,
the choice to withdraw consent, as withdraw or order the blocking,
regards collection and processing. removal or destruction of his or her
personal information upon discovery
Right to Erasure or Blocking - and substantial proof that the personal
Allows the data subject to suspend, information is unlawfully obtained,
withdraw or order the blocking, used for unauthorized purposes or are
removal, destruction of his or her no longer necessary for the purposes
personal information from the personal for which they were collected. (NPC
information controller’s filing system ADVISORY OPINION NO. 2018-051)
upon discovery and substantial proof
that the personal information is Right to Rectify - allows the data
incomplete, outdated, false, unlawfully subject to dispute any inaccuracy or
obtained, used for unauthorized error in the personal information
purposes or are no longer necessary for processed, and to have the personal
the purposes for which they were information controller correct it
collected. immediately.

Q: Harry took a picture of Ron in a MSH vs RSF

public place. Harry posted the picture NPC 18-142
in his Facebook account without the
consent of Ron. Is Harry liable under Facts: Complaint filed by MSH
the DPA? (Student) against TCC (School), and
A: Yes. A person’s data privacy rights the School President for the alleged
do not cease even when one is in a violation of Republic Act No. 10173,
public space. The act in the given or the Data Privacy Act of 2012
scenario may be considered as (DPA). MSH is a graduate of TCC,
unauthorized processing, depending with a degree of Bachelor of
on circumstances of the case. Elementary Education.

The DPA penalizes persons who From the records of the case, TCC
process personal information without issued two (2) TORs in the name of
the consent of the data subject, or MSM. In the first TOR, dated 23 May
without being authorized under the Act 2008, the course stated was Bachelor
or any existing law. This is subject to of Secondary Education, instead of
other provisions of the DPA. For Bachelor of Elementary Education.
instance, an individual who collects,
holds, processes or uses personal TCC issued a corrected TOR,
information in connection with the Discrepancy underlined. However,
individual’s personal, family or there was still an error in the CHED
 Page 9 of 27

S.O. number. MSH alleged that due to JV vs JR and SM Store Bicutan

these discrepancies, her employer, San NPC CASE NO. 17-047
Francisco Parish School (SFPS),
conducted a background check and Facts: JV requested and paid for a copy
concluded that her credentials were of his birth certificate from the
fake, to her “grave shame and public Philippine Statistics Authority (PSA)
humiliation”. through the Customer Service Center
of the SM Store at SM Bicutan. Upon
Issue: Is TCC liable for violation of the payment, the cashier collected the
DPA? complainant’s name, address, and
phone number. JV claims he does not
Data subject has the right to know why this information is
rectification. Being a PIC, the school necessary, and that no one let him
had the obligation to ensure that know who can process that
MSH’s personal information was information further.
accurate and up to date. MSH acted in
the exercise of her right to rectification When JV returned for his birth
due to the inaccurate and false certificate, he noted the SM personnel
information stated in the two (2) pulled his birth certificate from a
TORs. folder on her desk. He also noted that
his birth certificate was kept together
DPA allows for indemnification in with the birth certificates of other
favor of the data subject when it is people and that another person’s
shown that there were damages Certificate of No Marriage was lying
sustained, and the cause of the injury on another table, accessible to any of
was due to “inaccurate, incomplete, the other personnel of SM Store.
outdated, false, unlawfully obtained or
unauthorized use of personal The SM personnel, JH, then handed
information.” the complainant his birth certificate
uncovered and in plain sight. JH was
As discussed, the Commission finds the only person at the counter. The
that damages were sustained by MSH, complainant then asked for an
despite TCC’s subsequent rectification envelope for his birth certificate. JH
of the inaccurate personal information. told JV that no envelopes were to be
given, as the PSA did not provide
Right to Data Portability - enables envelopes for the purpose.
the data subject to obtain and
electronically move, copy, transfer JV brought this to the respondent’s
personal data for further use. attention, the respondent informed the
complainant that all customer service
Right to File a Complaint - with the counters in all SM Stores throughout
National Privacy Commission affords the country do not provide individual
a remedy to any data subject who envelopes for their clients’ birth
“feels that his or her personal certificates.
information has been misused,
maliciously disclosed, or improperly Nevertheless, the respondent placed
disposed. the complainant’s birth certificate in an
envelope and handed over the birth
certificate to the complainant. At this
 Page 10 of 27

point, the complainant was taking personnel aware of the nature of the
photos and videos of JH and the data they are handling before they are
respondent, over their objections. assigned at the customer service
counter. These personnel should also
Issue: Was there a violation of the be oriented on the existing measures
DPA? adopted and implemented by SM
Bicutan.
It is undisputed that the birth certificate
of the complainant contains personal SM Store, as an accredited partner of
information and sensitive personal PSA, should always be mindful that
information as defined under the Data the Data Privacy Act specifically
Privacy Act. One of the criteria provides that any doubt in the
provided under Sections 12 and 13 of interpretation of any provision of the
the Act for the lawful processing of law shall be liberally interpreted in a
both personal and sensitive personal manner mindful of the rights and
information is consent of the data interests of the individual about whom
subject. personal information is processed.

This consent must be specific to the Philippine Competition Act

purpose declared prior to the (R.A. 10667)
processing. A person requesting his
birth certificate from the PSA is asked Purpose:
to fill out an application form for the 1. Promote free and fair
issuance of his birth certificate. In the competition
application form, the requester 2. Prevent economic concentration
signifies his consent for the processing 3. Penalize all forms of anti-
of his birth certificate for the purpose competitive agreements, abuse
of releasing it to him. of dominant position and anti-
competitive mergers and
SM Store is a partner of PSA in acquisitions.
accepting and releasing the requested
certificates. PSA, a personal Prohibited Acts
information controller, outsources the (AgDoM)
services of SM Store in SM Bicutan
and other SM locations to process the 1. Anti-Competitive Agreements
personal data of the requesting data 2. Abuse of Dominant Position
subjects. The processing covers the 3. Anti-Competitive Mergers and
filing of requests and releasing of the Acquisition
certificates, containing personal data,
of the data subjects. SM Store is Philippine Competition Commission
considered as a personal information (PCC) – an independent quasi-judicial
processor. body created to implement the national
competition policy and attain the
While SM Store already has existing objectives and purposes.
reasonable and appropriate measures,
this Commission finds that said Coverage of the PCA
establishment is not strictly
implementing these measures. The  Local trade, industry and
management should make their commerce
 Page 11 of 27

 International trade with rather than independently setting their

foreseeable effects in any trade respective prices.
industry and commerce in the
Philippines Bid-rigging - fixing prices at an
auction or any form of bidding. It is
Relevant Product Market- comprises when the parties participating in a
all goods and services which are tender coordinate their bids rather than
regarded as interchangeable and submit independent proposals.
substitutable by consumer by reason of
the goods/services’ characteristics, Examples:
their prices and their intended use.
1. When two bidders agree on the
Examples: maximum price of the bid.
2. When bidders take turns in
Tide vs Surf winning in the bidding.
Jollibee vs McDonalds
Nike vs Adidas The following agreements, between or
Mega Sardines vs 555 Sardines among competitors which have the
SM Malls vs Robinson Malls object or effect of substantially
Globe vs Smart preventing, restricting or lessening
competition shall be prohibited:
Single Economic Unit Rule - entities
that control or are controlled, have (1) Setting, limiting, or controlling
common interests and are not able to production, markets, technical
act independently of each other are not development, or investment;
competitors. (2) Dividing or sharing the market,
whether by volume of sales or
Anti-Competitive Agreements – purchases, territory, type of goods or
any type or form of contract or services, buyers or sellers or any other
agreement, understanding, collective, means;
recommendation, or concerted action,
whether formal or informal, explicit or Supply Restriction - agreement
tacit, written or oral. between competing businesses to set or
The following agreements, between or limit production levels to create an
among competitors, are per se artificial supply shortage, thereby
prohibited: raising prices.

(1) Restricting competition as to price, Market Sharing - competing

or components thereof, or other terms businesses enter into agreement to
of trade; divide the market. Not limited to
(2) Fixing price at an auction or in any division of territory, includes division
form of bidding including cover of customers, volume of sales, and
bidding, bid suppression, bid rotation type of goods or services, among other
and market allocation and other considerations.
analogous practices of bid
manipulation; Cartel - is an association of businesses
in the same industry colluding with
Price Fixing- when competitors agree one another to substantially prevent,
on the prices of the goods or services, restrict, or lessen competition.
 Page 12 of 27

demographic, sales volume or type,

Q: Harry and Hagrid are owners of creating local monopolies that deprive
Aircon Cleaning Services in Naga consumers of choice.
City. They decided to create and
association called the Naga Aircon In this case, since the Naga City Aircon
Cleaners Association (NACA). They Cleaners Association agreed on the
invited all entities who have the same division of territory, it is considered an
business to become members of the Anti-Competitive Agreement called
association. During the meeting, the market sharing, therefore, there was a
members agreed to the following: violation of the Philippine
Competition Act.
1. Fixed minimum and maximum
price for their services, for Abuse of Dominant Position
uniformity.
2. Territory that each of the Dominant Position – position of
members may serve. They economic strength that an entity or
divided the Barangays of Naga entities hold which makes it capable of
City among themselves. controlling the relevant market
independently from any combination
Was there a violation of the Philippine of the following: competitors,
Competition Act? customers, suppliers, or consumers.

A: As to the first agreement, yes. The It is not illegal to be dominant provided

members of the Naga City Aircon businesses do not abuse their
Cleaners are liable under the dominance.
Philippine Competition Act. The
Philippine Competition Act prohibits PCC vs Urban Deca Homes
price fixing wherein businesses agree PCC Decision No. 01-E-001/2019
to directly or indirectly fix purchase or
selling price, instead of letting supply PCC filed a case against Deca for
and demand determine the prices of entering into a contractual
goods and services. arrangement that resulted in a situation
wherein the internet service of their (9)
In this case, the members of Naga condominium units would be provided
Aircon Cleaners Association are ONLY by FIBER.
considered competitors. Agreeing to a
minimum and maximum price is PCC found that there was ABUSE OF
considered an Anti-Competitive DOMINANT POSITION. Entity’s
Agreement called price fixing and dominance in a market is not per se
prohibited under the Philippine anti-competitive. However, the PCA
Competition Act. prohibits abuse of such dominance that
would substantially prevent, restrict, or
As to the second agreement, it was also lessen competition.
a violation of the Philippine
Competition Act. The Philippine Market dominant entity bears a
Competition Act prohibits market “special responsibility, irrespective of
sharing wherein businesses divide the the causes of that position, not to
market and claim dominance allow its conduct to impair genuine
according to territory, customer
 Page 13 of 27

undistorted competition” in the under the Philippine Competition Act

relevant market. for Abuse of Dominant Position.

Examples of acts that constitute abuse Imposing barrier - to entry or

of Dominant Position: preventing competitors from growing
within the market in an anti-
Predatory Pricing – pricing of goods competitive manner.
or services at a low level that other
suppliers cannot compete and are Example:
forced to leave the market to drive out Imposing “lock-in periods” for 10
the competition. years of a telecom provider may be
considered abuse of dominant position.
Price Discrimination- selling strategy
that charges customers different prices Imposing unreasonable conditions-
for the same product or service based making a transaction subject to
on what the seller thinks they can get acceptance by the other parties of other
the customer to agree to. obligations which, by their nature or
according to commercial usage, have
Tying – an illegal arrangement where no connection with the transaction.
in order to buy one product, the
customer must purchase another Refusal to Deal - imposing restrictions
product that exists in a separate on the lease or contract for sale or trade
market. of goods or services concerning where,
to whom, or in what forms goods or
Q: Hogwarts Inc., is the only water services may be sold or traded, such as
refilling station in Bamban, Camarines fixing prices, giving preferential
Sur. Hogwarts Inc. does not sell water discounts or rebate upon such price, or
to customers if the customer would not imposing conditions not to deal with
buy microwaves from their store. Is competing entities, where the object or
Hogwarts Inc. liable under the effect of the restrictions is to prevent,
Philippine Competition Act? restrict or lessen competition.
A: Yes, Hogwarts Inc. is liable under
the Philippine Competition Act. Monopsony - directly or indirectly
Tying and bundling is one of the imposing unfairly low purchase prices
abuses on the dominant position for the goods or services of, among
wherein it is the illegal arrangement others, marginalized producers or
where in order to buy one product, the providers.
customer must purchase another
product that exists in a separate Example:
market.
The only rice dealer in the area buys
In this case, there is abuse of dominant palay from farmer at a very low price.
position through tying and bundling This is considered abuse of dominant
since Hogwarts Inc. has a dominant position.
position and it abused its dominant
position by tying and bundling water
with another product which is the
microwave. Hogwarts Inc. is liable
 Page 14 of 27

Anti-Competitive Mergers and under the law. They are mergers and
Acquisitions acquisitions consisting of successive
transactions which shall take place
Not all M&As are prohibited. The within a one-year period. Notification
PCA prevents M&As only if the shall be from the binding preliminary
merger or acquisition agreement agreement.
substantially prevents, restricts, or
lessens the competition in the relevant Merger between Robinsons Bank and BPI
market or in the market for goods and MAO Case No. M-2023-001
services as may be determined by the
PCC. Although BPI is one of the largest
banks in the country, its post-
The PCC conducts merger review to transaction market share is insufficient
predict a proposed M&A’s to substantially lessen market
competitive impact. The review competition. The presence of
process involves rigorous economic remaining market players, including
analysis and investigation to determine bigger banks, pose sufficient
whether a transaction might harm competitive pressure on the surviving
consumers. entity.

There are three triggers of merger To determine whether a transaction

review: will increase the ability or incentive of
a merged entity to engage in input and
1. Notification by merger parties customer foreclosure, it must be
2. Motu proprio established that the merged firm will
3. Third party complaints occupy a dominant position, post
transaction.
Thresholds for Compulsory
Notifications of Mergers and Acquisition of AIA of Shares of Medicard
Commission Decision No. 06-M-003-2022
Acquisitions
In its market analysis, the PCC
 Size of Entity Test – Aggregate
Mergers and Acquisitions Office also
annual gross revenues exceeds 7
found that customers are able to switch
billion
easily to other health or medical
 Size of Transaction Test – the
coverage firms, since majority of
value of the Transaction exceeds 2.4
HMO plans run only for a year and
billion
policyholders are not barred from
switching providers.
BOTH TESTS must APPLY for the
COMPULSORY Notification to the
Moreover, with information on their
PCC to exist.
product offerings readily available to
the public, and agents constantly
Failure to give notice when required:
jockeying to secure a sale, customers
Agreement is VOID and there is a
can easily switch to another provider.
penalty for failure to notify PCC.
This low barrier to switch to different
competing firms is indicative of a
Creeping Transaction - series of
competitive market.
transactions that become a covered
transaction if their totality is covered
 Page 15 of 27

Acquisition of GlaxoSmithKline to Pfizer operate a public utility without owning

Commission Decision No. 20-M-005/2019 the facilities used to serve the public.
The PCC found that the merged entity
will gain ability to exercise market
Public Utility
power but will not have enhanced (STraP PWD)
incentive to increase prices in the
market and there are sufficient 1. Seaports
competitive constraints remain from 2. Transmission of Electricity
other market participants. 3. Petroleum and Petroleum Products
Transmission System
4. Public Utility Vehicles
5. Water pipeline Distribution system,
Public Service Act
Wastewater Pipeline System
Commonwealth Act No. 146, as
6. Distribution of Electricity
amended by RA No. 11659
(Section 13 of Commonwealth Act No. 146, as
amended by RA 11659)
1987 Constitution, ARTICLE XII
National Economy and Patrimony: Distribution of Electricity - refers to
the conveyance of electric power by a
SECTION 11. No franchise, distribution utility through its
certificate, or any other form of distribution system.
authorization for the operation of a
public utility shall be granted except Transmission of Electricity - refers to
to citizens of the Philippines or to the conveyance of electricity through
corporations or associations the high voltage backbone system.
organized under the laws of the
Philippines at least sixty per centum Petroleum and petroleum Product
of whose capital is owned by such Pipeline Transmission Systems -
citizens, nor shall such franchise, refer to the operation and maintenance
certificate, or authorization be of pipeline transmission systems to
exclusive in character or for a longer ensure an uninterrupted and adequate
period than fifty years. xxx supply and transmission of petroleum
and petroleum products to the public;
Tatad vs Garcia and excludes petroleum pipeline
G.R. No. 114222 April 6, 1995 systems operated exclusively for
private or own use, or incidental to the
In law, there is a clear distinction operations of a distinct business.
between the "operation" of a public
utility and the “ownership of the Water Pipeline Distribution Systems
facilities and equipment” used to and Wastewater Pipeline Systems -
serve the public. refer to the operation and maintenance
of water pipeline distribution systems
The right to operate a public utility to ensure an uninterrupted and
may exist independently and adequate supply and distribution of
separately from the ownership of the potable water for domestic and other
facilities thereof. One can own said purposes and the operation and
facilities without operating them as a maintenance of wastewater pipeline
public utility, or conversely, one may systems, except desludging companies
 Page 16 of 27

and septic tanks, to ensure public route, freight or any other car
health and safety. service, express service
7. steamboat or steamship line
Seaport - refers to a place where ships 8. ferries
may anchor or tie up for the purpose of 9. small water craft, such as
shelter, repair, loading or discharge of lighters, pontines, lorchas, and
passengers or cargo, or for other such others, engaged in the
activities connected with water-borne transportation of passengers or
commerce, and including all the land cargo
and water areas and the structures, 10. shipyard
equipment and facilities related to 11. marine railway
these functions. 12. marine repair shop
13. public warehouse
Public Utility Vehicles (PUVs) - refer 14. wharf, or dock not under the
to internal combustion engine vehicles jurisdiction of the Insular
that carry passengers and/or domestic Collector of Customs
cargo for a fee, offering services to the 15. ice
public, namely trucks-for-hire, UV 16. refrigeration
express service, public utility buses 17. canal
(PUBs), public utility jeepneys (PUJs), 18. irrigation
tricycles, filcabs, and taxis: Provided, 19. pipe line
that transport vehicles accredited with 20. gas
and operating through transport 21. electric light
network corporations shall not be 22. heat
considered as public utility vehicles. 23. power
24. water
All Public Utilities Are Public 25. oil
Services BUT not all Public Services 26. sewer
Are Public Utilities. 27. telephone
28. wire or wireless, telegraph
Public Service - include every system, plant or equipment
individual, copartnership, association, 29. broadcasting stations
corporation, or joint-stock company, 30. or any other entities.
whether domestic or foreign, their
lessees, trustees, or receivers Domestic Corporation vs. Foreign
appointed by any court whatsoever, or Corporation
any municipality, province, or other
department of the Government of the Domestic Corporations are those
Philippines, that now or hereafter may which are formed, organized or
own, operate, manage, or control in the existing under Philippine laws
Philippines, for hire or compensation, (RCCP).
any:
1. common carrier Foreign Corporations are those
2. railroad which are formed, organized or
3. street railway existing under any laws other than
4. traction railway Philippine laws.
5. subway
6. freight and/or passenger motor Q: Can a Foreign Corporation Operate
vehicles, with or without fixed Public Services and Public Utilities?
 Page 17 of 27

A: No. The Public Service Act Those Public Services not defined as
provides that any certificate Public Utilities may be operated by
authorizing the operation, Domestic Corporations owned by
management or control of a public 100% foreign nationals.
service shall only be issued to
Corporations, partnerships, Q: Hagrid Inc. is a domestic
associations or joint stock companies corporation. 100% of its capital stock
that are constituted and organized is owned by German Citizens. Can
under the laws of the Philippines. Hagrid Inc., operate an Electricity
Transmission Corporation here in the
Only domestic corporations can Philippines?
operate public services and public A: No. Transmission of Electricity is
utilities. But foreign corporations may considered as Public Utility as defined
engage in other businesses here in the in the Public Service Act. The
Philippines except Public Service. Constitution provides that only
Citizens of the Philippines or Domestic
Q: Can a Domestic Corporation be Corporations with at least 60% of the
owned entirely by Foreign Nationals? capital is owned by Filipino Citizens
A: Yes. If the Foreign Nationals may operate Public Utilities.
incorporated under the Law of the
Philippines (RCCP) and it was issued In this case, since Hagrid Inc. is owned
a Certificate of Incorporation by the by 100% foreign nationals, it cannot
SEC. operate an Electricity Transmission
Corporation.
Q: Can a Domestic Corporation owned Q: Hogwarts, Inc. is a domestic
by 100% foreign nationals operate corporation. 100% of the
Public Utilities? Outstanding Capital Stock of
A : No. The Constitution provides that Hogwarts, Inc. is owned by French
no franchise, certificate, or any other Nationals. Can Hogwarts, Inc. own
form of authorization for the operation and operate an Airport in the
of a public utility shall be granted Philippines?
except to citizens of the Philippines or A: Yes. While an airport may be
to corporations or associations considered Public Service, it is not a
organized under the laws of the Public Utility as defined in the Public
Philippines at least sixty per centum of Service Act. Therefore, the
whose capital is owned by such constitutional provision on operation
citizens. of Public Utilities does not apply.
Hogwarts, Inc., the domestic
Q: Can a Domestic Corporation owned corporation owned by 100% foreign
by 100% foreign nationals operate nationals is allowed to own and
Public Service? operate an airport.
A: Y e s . The Public Service Act as
amended defined and enumerated the Critical Infrastructure - Any public
coverage of Public Utilities. Therefore, service which owns, uses, or operates
only the Public Utilities enumerated systems and assets, whether physical
under the law are limited to Filipino or virtual, so vital to the Republic of
Citizens and 60% Filipino owned the Philippines that the incapacity or
corporations. destruction of such systems or assets
would have a detrimental impact on
 Page 18 of 27

national security, such as: entity, therefore, it cannot engage in

Telecommunication and other such the operation of telecommunication.
vital services as may be declared by the
President of the Philippines. Q: Harry Potter Inc., is a corporation
owned by 100% Singaporean
An entity controlled by or acting on Nationals. It is not owned by the
behalf of the foreign government or government of Singapore nor is a state
foreign state-owned enterprises shall controlled entity. Can it engage in the
be prohibited from owning capital in business of telecommunications here
any public service classified as public in the Philippines?
utility or critical infrastructure. A: It depends. The Public Service
Prospective Application: that the Act provides that Foreign Nationals
prohibition shall apply only to shall not be allowed to own more than
investments made after the effectivity fifty percent (50%) of the capital of
of this Act: Provided, further, that entities engaged in the operation and
foreign state-owned enterprises which management of critical infrastructure
own capital prior to the effectivity of unless the country of such foreign
this law are prohibited from national accords reciprocity to
investing in additional capital upon Philippine Nationals. If Singapore
the effectivity of this Act. (Sec 24, RA No. accords reciprocity to the Philippines,
11659) then Harry Potter Inc., may engage in
the business of telecommunications.
Reciprocity Clause
Q: Lovegood Inc. is a domestic
Foreign nationals shall not be allowed corporation owned 100% by
to own more than fifty percent (50%) Indonesian Citizens. Indonesia does
of the capital of entities engaged in the not have a reciprocity agreement with
operation and management of critical the Philippines on the operation of
infrastructure unless the country of public services. Can Lovegood Inc.,
such foreign national accords engage in the business of operating an
reciprocity to Philippine Nationals as ice plant here in the Philippines?
may be provided by foreign law, treaty A: Yes. The reciprocity of a foreign
or international agreement. country is required only if the entity
Foreign Ownership in entities engaged would engage in the operation of
in the Operation of Critical critical infrastructure. In the instant
Infrastructure. (Sec. 25, RA No. 11659) case, while an ice plant is considered
public service, it is not considered
Q: Dobby Inc., is a Domestic critical infrastructure, therefore,
Corporation 100% owned by the Lovegood Inc., may engage in the
Chinese Government. Can Dobby Inc. operation of an ice plant.
engage in the business of
telecommunication? Powers of the President to Suspend
A: No. The Public Service Act or Prohibit Transaction or
provides that a foreign state-owned Investment
entity shall be prohibited from owning
capital in critical infrastructure. In the interest of national security, the
Telecommunication is considered President, after review, evaluation and
critical infrastructure. In this case, recommendation of the relevant
Dobby Inc., is a foreign state-owned government department or
 Page 19 of 27

Administrative Agency, may, within

sixty (60) days from the receipt of such If the signature of a person is affixed
recommendation, suspend or prohibit manually, it could not be considered as
any proposed merger or acquisition information electronically received,
transaction, or any investment in a recorded, transmitted, stored,
public service that effectively results in processed, retrieved or produced.
the grant of control, whether direct or Thus, it is not an electronic document.
indirect, to a foreigner or a foreign In this case, since the document was
corporation. (Sec. 23, RA No. 11659) printed, then the parties manually
affixed their signature, the document is
Electronic Commerce Act not considered an Electronic
RA 8792 Document under the Electronic
Commerce Act.
Electronic document - refers to
information or the representation of Electronic signature - refers to any
information, data, figures, symbols or distinctive mark, characteristic and/or
other modes of written expression, sound in electronic form, representing
described or however represented, by the identity of a person and attached to
which a right is established or an or logically associated with the
obligation extinguished, or by which a electronic data message or electronic
fact may be proved and affirmed, document or any methodology or
which is received, recorded, procedures employed or adopted by a
transmitted, stored, processed, person and executed or adopted by
retrieved or produced electronically. such person with the intention of
(Sec. 5, R.A. No. 8792) authenticating or approving an
electronic data message or electronic
Electronic Document vs. Paper-based document.
Document
An electronic signature on the
What differentiates them is the manner electronic document shall be
by which the information is processed. equivalent to the signature of a person
If the information contained in an on a written document if the signature
electronic document is received, is an electronic signature and proved
recorded, transmitted, stored, by showing that a prescribed
processed, retrieved or produced procedure, not alterable by the parties
electronically – it is considered an interested in the electronic document:
electronic document.
a.) method is used to identify the party
If the signature of a person is affixed sought to be bound and to indicate said
manually, it could not be considered as party’s access to the electronic
information electronically received, document necessary for his consent or
recorded, transmitted, stored, approval through the electronic
processed, retrieved or produced. signature;
Thus, it is not an electronic document. b.) Said method is reliable and
Facsimile transmission is not an appropriate for the purpose for which
electronic document. the electronic document was generated
or communicated, in the light of all
NPC vs Codilla, circumstances, including any relevant
G.R. No. 170491, 4 April 2007 agreement;
 Page 20 of 27

c.) It is necessary for the party sought buyer here. Please deliver it today.
to be bound, in order to proceed further Here is my address.
with the transaction, to have executed
or provided the electronic signature; Voldemort said: I’m on my way
and
d.) The other party is authorized and When Voldemort arrived in the house
enabled to verify the electronic of Dumbledore, the latter said that the
signature and to make the decision to sale is not valid since it was done
proceed with the transaction through messenger only. Can
authenticated by the same. (Sec. 8, RA Dumbledore deny the enforceability of
8792) the sale on the ground that it was done
through fb messenger only?
Presumptions relating to Electronic
Signatures A: No. The Electronic Commerce Act
provides that an information shall not
a.) The electronic signature is the be denied validity or enforceability
signature of the person to whom it solely on the ground that it is in the
correlates; and form of an electronic data message
b.) The electronic signature was purporting to give rise to such legal
affixed by that person with the effect. In this case, Dumbledore cannot
intention of signing or approving the deny validity and enforceability of the
electronic document unless the person contract of sale on the sole ground that
relying on the electronically signed it was done electronically, through FB
electronic document knows or has Messenger.
notice of defects in or unreliability of
the signature or reliance on the Where the law requires a document to
electronic signature is not reasonable be in writing, that requirement is met
under the circumstances. (Sec. 9, RA by an electronic document if the said
8792) electronic document maintains its
integrity and reliability and can be
Information shall not be denied authenticated so as to be usable for
validity or enforceability solely on the subsequent reference, in that —
ground that it is in the form of an
electronic data message purporting to (i) The electronic document has
give rise to such legal effect, or that it remained complete and unaltered,
is merely incorporated by reference in apart from the addition of any
that electronic data message. (Sec. 6, endorsement and any authorized
RA 8792) change, or any change which arises in
the normal course of communication,
Q: Voldemort posted a picture of his storage and display; and
shoes with the following caption:
(ii) The electronic document is reliable
For sale Nike Jordan Basketball Shoes, in the light of the purpose for which it
P5000 only, Size 11, rfs: need funds was generated and in the light of all
for hospitalization. Legit buyers only. relevant circumstances. (Sec. 7, RA
Free delivery. Message me. 8792)

Dumbledore messaged Voldemort Q: Dobby and Luna are friends. Dobby

through his messenger and said: Legit sent Luna P50,000.00 through Gcash.
 Page 21 of 27

Dobby sent the screenshot of the service, equipment, or instrumental

transaction to Luna through fb identifier, or other means of account
messenger and said “Happy Birthday, access that can be used to obtain
this is my gift.” Luna replied “thank money, good, services, or any other
you.” thing of value or to initiate a transfer of
The mother of Dobby funds (other than a transfer originated
questioned the validity of the donation solely by paper instrument); (Sec. 3,
stating that the civil code provides that RA 8484)
if the value of the personal property
donated exceeds five thousand pesos, Credit Card - means any card, plate,
the donation and the acceptance shall coupon book, or other credit device
be made in writing. Otherwise, the existing for the purpose of obtaining
donation shall be void. Dobby’s money, goods, property, labor or
mother alleged that since it was done services or anything of value on credit.
merely by fb messenger, the donation (Sec. 3, RA 8484)
is void.
Card Skimming – refers to a type of
A: The donation is valid. The fraud which involves illegal copying of
Electronic Commerce Act provides information from the magnetic stripe
that where the law requires a document of payment card to gain access to
to be in writing, that requirement is customer accounts
met by an electronic document if the
said electronic document maintains Payment Card – refers to any card of
its integrity and reliability and can be whatever material or form including
authenticated. In the case at bar, the any kind of debit card, but not a
donation and the acceptance given credit card, issued by a bank or
through Fb Messenger is considered an business entity that enables a customer
electronic document. Hence, it to access an automated teller machine
complies with the requirement under in order to perform transactions such
the Civil Code to be in writing. as deposits, cash withdrawals and
Therefore, the donation is valid. obtaining account information. A
payment card shall be considered as an
Any person who obtained access to access device for the purposes of this
any electronic key, electronic data Act.
message or electronic document, book,
register, correspondence, information, Online Banking – refers to the use of
or other material pursuant to any the internet by bank customers in order
powers conferred under this Act, shall to manage their bank accounts and
not convey to or share the same with perform account transactions.
any other person. (Sec. 32, RA 8792)
Counterfeit Access Device - means
any access device that is counterfeit,
Access Devices Regulation Act fictitious, altered, or forged, or an
Republic Act No. 8484 amended by 11449
identifiable component of an access
device or counterfeit device; (Sec. 3, RA
Access Device - Any card, plate, code, 8484)
account number, electronic serial
number, personal identification Unauthorized Access Device - means
number, or other telecommunications any access device that is stolen, lost,
 Page 22 of 27

expired, revoked, canceled, suspended, 9. having in one's possession a copy of

or obtained with intent to defraud. the access device without the consent
(Sec. 3, RA 8484) of the owner

Prohibited Acts Example:

(Sec 9, RA 8484)
A hotel employee requests for a credit
1. Unauthorized use, production, or card to be left in their possession
possession of access devices during the duration of the stay in the
2. Fraudulent use of access devices hotel room. The hotel employee took a
3. Possession of counterfeit access picture of the credit card without the
devices or related paraphernalia consent of the owner.
4. Use, production, or possession of
device-making or altering equipment 10. writing or causing to be written on
5. Inducing another to produce, use, sales slips, approval numbers if there is
traffic in counterfeit access devices, no approval from the merchant.
unauthorized access devices or access 11. Alteration of any amount or other
devices fraudulently applied for information written on the sales slip;
6. multiple imprinting (double swipe) 12. effecting transaction with an access
device issued to another person
Example: 13. Without authorization from the
A cashier in a grocery store issuer, soliciting a person for the
swiped the credit card twice for the purpose of:
same transaction without the consent 1) offering an access device; or
of the credit card owner. 2) selling information
regarding or an application to obtain an
7. disclosing any information access device; or
imprinted on the access device 14. without the authorization of the
8. obtaining money or anything of credit card system member or its agent,
value through the use of an access causing or arranging for another
device, with intent to defraud, with person to present to the member or its
intent to gain and fleeing thereafter. agent, for payment, one or more
evidence or records of transactions
A cardholder who abandons or made by credit card.
surreptitiously leaves the place of 15. Skimming with intent of accessing
employment, business or residence 16. Possession of skimming device
stated in his application for credit card, 17. Accessing online banking account,
without informing the credit card credit card, ATM, debit card in a
company of the place where he could fraudulent manner
actually be found, if at the time of such 18. Hacking
abandonment or surreptitious leaving,
the outstanding and unpaid balance is
past due for at least ninety (90) days The law punishes: consummated,
and is more than Two hundred frustrated, attempted, conspiracy
thousand pesos (₱200,000.00), shall be and accessories.
prima facie presumed to have used
his credit card with intent to defraud.
 Page 23 of 27

Cruz v People
G.R. No. 210266, June 07, 2017 Held: The term "personal property"
under Article 308 of the Revised Penal
Since a credit card is "any card, plate, Code cannot be interpreted beyond its
coupon book, or other credit device seams so as to include
existing for the purpose of obtaining "telecommunication or telephone
money, goods, property, labor or services" or computer services for that
services or anything of value on matter.
credit," it is considered an access
device. A service is generally not considered
property and a theft of service would
A counterfeit access device is "any not, therefore, constitute theft since
access device that is counterfeit, there can be no caption or asportation.
fictitious, altered, or forged, or an Neither is the unauthorized use of the
identifiable component of an access equipment and facilities of PLDT by
device or counterfeit access device.” the petitioner theft under the
Under Section 9(a) and (e) of Republic aforequoted provision of the Revised
Act No. 8484, the possession and use Penal Code. If it was the intent of the
of an access device is not illegal. Philippine Legislature, in 1930, to
Rather, what is prohibited is the include services to be the subject of
possession and use of theft, it should have incorporated the
a counterfeit access device. same in Article 308 of the Revised
Therefore, the corpus delicti of the Penal Code.
crime is not merely the access device,
but also any evidence that proves that Congress passed the Access Devices
it is counterfeit. Regulation Act. Among the prohibited
acts enumerated in Section 9 of the law
Laurel v. Abrogar are the acts of obtaining money or
G.R. No. 155076, February 27, 2006 anything of value through the use of an
access device, with intent to defraud or
Facts: PLDT is the holder of a intent to gain and fleeing thereafter.
legislative franchise to render local and Thus, if an individual steals a credit
international telecommunication card and uses the same to obtain
services. PLDT asserts through the use services, he is liable of the following:
of the telephone lines and other theft of the credit card under Article
auxiliary equipment, Baynet is able to 308 of the Revised Penal Code;
connect an international long distance violation of Republic Act No. 8484;
call from Japan to any part of the and estafa under Article 315(2)(a) of
Philippines and is able to evade the Revised Penal Code with the
payment of access, termination or service provider as the private
bypass charges and accounting rates. complainant.
Officers of Baynet were charged with
theft under Article 308 of the Revised Securities Regulation Code
Penal Code. RA 8799

Issue: Whether or not international Purpose of SRC

telephone calls are proper subjects of
theft under Article 308 of the Revised  To protect investors from
Penal Code. brokers and salesmen in selling
 Page 24 of 27

worthless securities or securities

which have no basis. Dealer - means any person who buys
 The SRC provides a system of sells securities for his/her own account
registration, regulation of in the ordinary course of business.
brokers, prohibitions against
manipulations. Q: Lovegood Country Club Inc., is
offering to sell Certificates of
Securities - are shares, participation or Membership to their club. Club
interests in a corporation or in a members would have the right to use
commercial enterprise or profit- the facilities but the club members
making venture and evidenced by a would not receive any income from
certificate, contract, instruments, the corporation. Is the Certificates of
whether written or electronic in Membership sold by Lovegood
character. It includes: Country Club Inc., considered
securities?
(a) Shares of stocks, bonds, A: Yes. The Securities Regulation
debentures, notes evidences of Code provides that certificates of
indebtedness, asset-backed securities; membership, whether proprietary or
non-proprietary are considered
(b) Investment contracts, certificates of securities.
interest or participation in a profit
sharing agreement, certifies of deposit Howey Test
for a future subscription;
Test to determine if a transaction is an
(c) Fractional undivided interests in “investment contract”
oil, gas or other mineral rights;
It is an investment contract if there is
(d) Derivatives like option and ICE-P
warrants; 1. Investment of money
2. In a common enterprise
(e) Certificates of assignments, 3. With expectation of profits
certificates of participation, trust 4. Primarily from the efforts of
certificates, voting trust certificates or others
similar instruments
SEC vs CJH Development Corporation
(f) Proprietary or nonproprietary G.R. 210316, 28 November 2016
membership certificates in
corporations; and CJH is engaged in real estate. CJHDC
is the subsidiary of CJH. CJHDC
(g) Other instruments as may in the developed 2 condotels which it named
future be determined by the as "The Manor" and "The Suites". The
Commission. (Sec. 3, RA 8799) residential units in these condotels
were then offered for sale to the
Issuer - is the originator, maker, general public by means of two
obligor, or creator of the security. schemes.

Broker - is a person engaged in the 1. The first is a straight purchase

business of buying and selling and sale contract where the
securities for the account of others. buyer pays the purchase price
 Page 25 of 27

for the unit bought, enjoys the Kinds of Securities

benefits of full ownership,
subject to payment of Stocks – security that signifies
maintenance dues and utility ownership in a corporation.
fees.
2. The second scheme involved the Bonds – form of debt security.
sale of the unit with an added
option to avail of a "leaseback" Debentures- debt secured only by the
or a "money-back" debtor’s earning power, not by a lien in
arrangement. a specific asset.

"leaseback" arrangement - will receive Notes – promise to pay money.

either a proportionate share in seventy
percent (70%) of the annual income Derivative – financial instrument
derived from the hotel operation of the whose value changes in response to
pooled rooms or a guaranteed eight changes in a specified interest rate,
percent (8%) return on their security price, commodity price,
investment. foreign exchange rate, index of prices
"money-back" arrangement - are or rates, credit rating or credit index, or
entitled to a return of the purchase similar variable or underlying factor.
price they paid for the units by
expiration of the Lease Agreement in Kinds of Derivatives:
2046. 1. Option
2. Warrant
The buyers are given the right to use
their units for thirty (30) days within a Option – contracts that give the buyer
year and they are exempted from the right but not the obligation to buy
paying the monthly dues and utility or sell an underlying security at a
fees. Under this added option, the predetermined price (strike price) at a
buyer pays for the unit bought and, predetermined date (expiry date).
subsequently, surrenders its
possession to the management of Call option – right to buy
CJHDC. The corporation would then Put option – right to sell
create a pool of these units and, in turn,
will offer them to the public as hotel Warrant – right to subscribe or
rooms. purchase new shares or existing shares
in a company on or before a
SEC conducted an investigation into predetermined date.
the operations of the Corporation on
the belief that the "leaseback" or Q: Hagrid Inc. granted Ron an
"money-back" arrangements are option to acquire 20% of the total
investment contracts and covered outstanding capital stock of Hagrid
under the SEC. Inc., at P100 per share, exercisable
within one year from the date of the
SEC: Yes, they are investment grant. Is the option granted by Hagrid
contracts and are considered securities. Inc., to Ron considered a security and
covered by the SRC?
A: Yes. It is considered a
derivative, specifically an option
 Page 26 of 27

contract. An option contract is one that its computer facilities and technical
gives the buyer the right (but not the skills.
obligation) to buy or sell a security for
a predetermined price on a General Rule: All securities are
predetermined date. In this case, required to be registered with the SEC
Hagrid Inc., gave the option to Ron to before they can be sold to the public.
buy shares at a specified time for a
specified price, hence, is considered an Kinds of Securities:
option contract which is a security.
1. Non-Exempt
SEC vs Prosperity.Com 2. Exempt
G.R. No. 164197, 25 January 2012 3. Sold on Exempt transactions

Facts: Prosperity.Com, Inc. sold Exempt Securities

computer software and hosted (Can be Sold without Registration)
websites without providing internet GoCoBaRSS
service. To make a profit, PCI devised
a scheme in which, for the price of 1. Issued by the Government of the
US$294, a buyer could acquire from it Philippines
an internet website of a 15-Mega Byte 2. Issued by the Government of
(MB) capacity. At the same time, by another Country which maintains
referring to PCI his own down-line diplomatic relations with the
buyers, a first-time buyer could earn Philippines
commissions, interest in real estate in 3. Issued by a bank except its own
the Philippines and in the United stocks
States, and insurance coverage worth 4. Certificates issued by a receiver
₱50,000.00. PCI buyer must enlist and (PDIC) or trustee in bankruptcy
sponsor at least two other buyers as his approved by the proper adjudicatory
own down-lines. These second tier of body (Monetary Board)
buyers could in turn build up their own 5. Others added by the SEC
down-lines. For each pair of down- 6. Under supervision of IC, HLURB,
lines, the buyer-sponsor received a BIR.
US$92.00 commission.
Exempt Transactions
Issue: Is prosperity.com engaged in the JEBS Divi BlesS IPI
sale of Securities?
1. Judicial Sale
PCI’s clients do not make such 2. Exchange of secutiries by issuer
investments. They buy a product of with existing security holders
some value to them: An Internet 3. Broker’s transactions on any
website of a 15-MB capacity. registered Exchange
The client can use this website. The 4. Sale of pledged security for
buyers of the website do not invest liquidation of debt
money in PCI that it could use for 5. Distribution of Stock Dividends
running some business that would 6. Sale of securities to banks or
generate profits for the investors. The other persons authorized by the
price of US$234.00 is what the buyer BSP to engage in trust functions.
pays for the use of the website, a
tangible asset that PCI creates, using
 Page 27 of 27

7. Sale to less than 20 persons In this case, the sale of Dobby Inc. does
during any 12-month period not fall within the exempt transactions
(private placements) or exempt securities, hence, Dobby
8. Issuance of security in exchange Inc., is liable under the SRC.
for any other security of the
same issuer pursuant to right of
conversion
9. Sale on isolated transaction by
owner
10. Pre-Incorporation subscription
and subscription to increase
ACS
11. Issuance of bonds or notes
secured by mortgage upon real
estate or tangible personal
property, where the entire
mortgage are sold to a single
purchaser at a single sale.

Q: Hogwarts Inc., is engaged in the

pawnshop business. To expand its
business, it offered to any person who
invests at least P100,000.00 a
“Promissory Note” where it obligated
itself to pay the holder 50% return of
investment within 1 month. Many
individuals invested in the company
but not one of them was able to realize
any profit. Did Hogwarts Inc. violate
the SRC?
A: Yes. Hogwarts Inc. violated the
provisions of the Securities Regulation
Code that prohibits sale of securities
the public without a registration
statement filed and approved the
Securities and Exchange Commission.

Q: Dobby Inc., sold securities to 30

people without registering the
securities with the Securities and
Exchange Commission. Was there a
violation of the SRC?
A: Yes. The SRC provides that
securities shall not be sold or offered to
be sold to the public within the
Philippines unless the securities are
registered and approved by the
Securities and Exchange Commission.