Emulsion is considered physically unstable if

1. The internal or dispersed phase upon standing tends to FORM AGGREGATES OR GLOBULES 2. Large globules or aggregates of globules RISE to the top or FALL to the bottom of the emulsion 3. If all or part of the liquid of the internal phase becomes “unemulsified” and forms a distinct layer on the top or bottom of the emulsion as result of the COALESCING of the globules of the internal phase