January 2014 Philippine Supreme Court Decisions on Civil Law

Here are select January 2014 rulings of the Supreme Court of the Philippines on civil law:

Civil Code

Bad faith cannot be presumed; it is a question of fact that must be proven by clear and convincing evidence. It is worth stressing at this point that bad faith cannot be presumed. “It is a question of fact that must be proven” by clear and convincing evidence. “[T]he burden of proving bad faith rests on the one alleging it.” Sadly, spouses Vilbar failed to adduce the necessary evidence. Thus, this Court finds no error on the part of the CA when it did not find bad faith on the part of Gorospe, Sr. Sps. Bernadette and Rodulfo Vilbar v. Angelito L. Opinion, G.R. No. 176043. January 15, 2014.

Banks; exercise the highest degree of diligence, as well as to observe the high standards of integrity and performance in all its transactions because its business was imbued with public interest. Being a banking institution, DBP owed it to Guariña Corporation to exercise the highest degree of diligence, as well as to observe the high standards of integrity and performance in all its transactions because its business was imbued with public interest. The high standards were also necessary to ensure public confidence in the banking system, for, according to Philippine National Bank v. Pike: “The stability of banks largely depends on the confidence of the people in the honesty and efficiency of banks.” Development Bank of the Philippines (DBP) v. Guariña Agricultural and Realty Development Corporation, G.R. No. 160758. January 15, 2014

Common carrier; cargoes while being unloaded generally remain under the custody of the carrier. It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier. As hereinbefore found by the RTC and affirmed by the CA based on the evidence presented, the goods were damaged even before they were turned over to ATI. Such damage was even compounded by the negligent acts of petitioner and ATI which both mishandled the goods during the discharging operations. Eastern Shipping Lines, Inc. v. BPI/MS Insurance Corp., and Mitsui Sumitomo Insurance Co., Ltd.,G.R. No. 193986, January 15, 2014.

Common carrier; extraordinary diligence.Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods transported by them. Subject to certain exceptions enumerated under Article 1734 of the Civil Code, common carriers are responsible for the loss, destruction, or deterioration of the goods. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them. Owing to this high degree of diligence required of them, common carriers, as a general rule, are presumed to have been at fault or negligent if the goods they transported deteriorated or got lost or destroyed. That is, unless they prove that they exercised extraordinary diligence in transporting the goods. In order to avoid responsibility for any loss or damage, therefore, they have the burden of proving that they observed such high level of diligence. Eastern Shipping Lines, Inc. v. BPI/MS Insurance Corp., and Mitsui Sumitomo Insurance Co., Ltd.,G.R. No. 193986, January 15, 2014.

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January 2014 Philippine Supreme Court Rulings on Remedial Law

Here are select January 2014 rulings of the Supreme Court of the Philippines on remedial law:

Civil Procedure

Action to annul judgment or final order; jurisdiction. In 1981, the Legislature enacted Batas Pambansa Blg.129 (Judiciary Reorganization Act of 1980). Among several innovations of this legislative enactment was the formal establishment of the annulment of a judgment or final order as an action independent from the generic classification of litigations in which the subject matter was not capable of pecuniary estimation, and expressly vested the exclusive original jurisdiction over such action in the CA. The action in which the subject of the litigation was incapable of pecuniary estimation continued to be under the exclusive original jurisdiction of the RTC, which replaced the CFI as the court of general jurisdiction. Since then, the RTC no longer had jurisdiction over an action to annul the judgment of the RTC, eliminating all concerns about judicial stability. To implement this change, the Court introduced a new  procedure to govern the action to annul the judgment of the RTC in the 1997 revision of the Rules of Court under Rule 47, directing in Section 2 thereof that “[t]he annulment may be based only on the grounds of extrinsic fraud and lack of jurisdiction.” Pinausukan Seafood House-Roxas Blvd., Inc. v. Far East Bank and Trust Cp., now Bank of the Philippine Islands, et al., G.R. No. 159926, January 20, 2014.

Action to annul judgment or final order; lack of jurisdiction; types. Lack of jurisdiction on the part of the trial court in rendering the judgment or final order is either lack of jurisdiction over the subject matter or nature of the action, or lack of jurisdiction over the person of the petitioner. The former is a matter of substantive law because statutory law defines the jurisdiction of the courts over the subject matter or nature of the action. The latter is a matter of procedural law, for it involves the service of summons or other process on the petitioner. A judgment or final order issued by the trial court without jurisdiction over the subject matter or nature of the action is always void, and, in the words of Justice Street in Banco Español-Filipino v. Palanca (37 Phil 949 [1918]), “in this sense it may be said to be a lawless thing, which can be treated as an outlaw and slain at sight, or ignored wherever and whenever it exhibits its head.” But the defect of lack of jurisdiction over the person, being a matter of procedural law, may be waived by the party concerned either expressly or impliedly. Pinausukan Seafood House-Roxas Blvd., Inc. v. Far East Bank and Trust Cp., now Bank of the Philippine Islands, et al., G.R. No. 159926, January 20, 2014.

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January 2014 Philippine Supreme Court Rulings on Political Law

Here are select January 2014 rulings of the Supreme Court of the Philippines on political law:

Absence of motion of reconsideration; effect of. The omission of the filing of a motion for reconsideration poses no obstacle for the Court’s review of its ruling on the whole case since a serious constitutional question has been raised and is one of the underlying bases for the validity or invalidity of the presidential action. If the President does not have any constitutional authority to discipline a Deputy Ombudsman and/or a Special Prosecutor in the first place, then any ruling on the legal correctness of the OP’s decision on the merits will be an empty one. In other words, since the validity of the OP’s decision on the merits of the dismissal is inextricably anchored on the final and correct ruling on the constitutional issue, the whole case – including the constitutional issue – remains alive for the Court’s consideration on motion for reconsideration. Emilio A. Gonzales III v. Office of the President, etc., et al./Wendell Bareras-Sulit v. Atty. Paquito N. Ochoa, Jr., et al., G.R. No. 196231/G.R. No. 196232, January 28, 2014.

Congress; power to determine modes of removal from office of public officers; must be consistent with the core constitutional principle of independence of the Office of the Ombudsman. The intent of the framers of the Constitution in providing that “all other public officers and employees may be removed from office as provided by law, but not by impeachment” in the second sentence of Section 2, Article XI is to prevent Congress from extending the more stringent rule of “removal only by impeachment” to favoured public officers. Contrary to the implied view of the minority, in no way can this provision be regarded as blanket authority for Congress to provide for any ground of removal it deems fit. While the manner and cause of removal are left to congressional determination, this must still be consistent with constitutional guarantees and principles, namely: the right to procedural and substantive due process; the constitutional guarantee of security of tenure; the principle of separation of powers; and the principle of checks and balances. The authority granted by the Constitution to Congress to provide for the manner and cause of removal of all other public officers and employees does not mean that Congress can ignore the basic principles and precepts established by the       Constitution. Emilio A. Gonzales III v. Office of the President, etc., et al./Wendell Bareras-Sulit v. Atty. Paquito N. Ochoa, Jr., et al., G.R. No. 196231/G.R. No. 196232, January 28, 2014.

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January 2014 Philippine Supreme Court Decisions on Commercial Law

Here are select January 2014 rulings of the Supreme Court of the Philippines on commercial law:

Corporations; liability of corporate officers. As a general rule, the officer cannot be held personally liable with the corporation, whether civilly or otherwise, for the consequences his acts, if acted for and in behalf of the corporation, within the scope of his authority and in good faith. Rodolfo Laborte, et al. v. Pagsanjan Tourism Consumers’ Cooperative, et al., G.R. No. 183860, January 15, 2014.

Banks; degree of diligence. Being a banking institution, DBP owed it to Guariña Corporation toexercise the highest degree of diligence, as well as to observe the high standards of integrity and performance in all its transactionsbecause its business was imbued with public interest. The high standards were also necessary to ensure public confidence in the banking system. Development Bank of the Philippines (DBP) v. Guariña Agricultural and Realty Development Corporation, G.R. No. 160758. January 15, 2014.

(Hector thanks Camille Maria L. Castolo for her assistance to Lexoterica.)

Old Problem, New Solution: NTC to Require Internet Service Providers to Block Child Pornography Websites

Timely Solution. This is the appropriate description for the latest issuance of the National Telecommunications Commission (“NTC”), the government agency that regulates Philippines’ telecommunications infrastructure and services. On January 30, 2014, the NTC issued Memorandum Circular (the “Circular”) Number 01-01-2014 providing guidelines for Internet Service Providers (ISPs) in the implementation of the Anti-Child Pornography Act of 2009 (Republic Act No. 9775). The release of the Circular came at an opportune time after the Philippines was reportedly included by the Virtual Global Taskforce – an international alliance of law enforcement agencies against online child abuse – as among the top ten countries with rampant cyber pornographic activities involving boys and girls between ten to fourteen years.[1]  The said report might have been the catalyst that triggered the NTC to fulfill its mandate under Section 9 of R.A. No. 9775, “to promulgate rules and regulations… which shall include among others, the installation of filtering software that will block access to or transmission of any form of child pornography.”

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December 2013 Philippine Supreme Court Decisions on Civil Law

Here are seclect December 2013 rulings of the Supreme Court of the Philippines on civil law:

Civil Code

Contracts; concept of contracts. A contract is what the law defines it to be, taking into consideration its essential elements, and not what the contracting parties call it. The real nature of a contract may be determined from the express terms of the written agreement and from the contemporaneous and subsequent acts of the contracting parties. However, in the construction or interpretation of an instrument, the intention of the parties is primordial and is to be pursued. The denomination or title given by the parties in their contract is not conclusive of the nature of its contents. ACE Foods, Inc. v. Micro Pacific Technologies Co., Ltd., G.R. No. 200602,  December 11, 2013.

Contracts; contract of loan; interest stipulated; reduced for being iniquitous and unconscionable. Parties to a loan contract have wide latitude to stipulate on any interest rate in view of the Central Bank Circular No. 905 s. 1982 which suspended the Usury Law ceiling on interest effective January 1, 1983. It is, however, worth stressing that interest rates whenever unconscionable may still be declared illegal. There is nothing in the circular which grants lenders carte blanche authority to raise interest rates to levels which will either enslave their borrowers or lead to a hemorrhaging of their assets.In Menchavez v. Bermudez, the interest rate of 5% per month, which when summed up would reach 60% per annum, is null and void for being excessive, iniquitous, unconscionable and exorbitant, contrary to morals, and the law. Florpina Benvidez v. Nestor Salvador, G.R. No. 173331, December 11, 2013.

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December 2013 Philippine Supreme Court Decisions on Legal and Judicial Ethics

Here are select December 2013 rulings of the Supreme Court of the Philippines on legal and judicial ethics:

Attorney; Applicability of the Code of Professional Responsibility to lawyers in government service in the discharge of their official tasks. Private respondents were charged before the Court of Tax Appeals for violation of the Tariff and Customs Code of the Philippines, as amended. However, the CTA dismissed the case since the prosecution failed to present certified true copies of the documentary evidence submitted contrary to Section 7, Rule 130 and Section 127, Rule 132 of the Rules of Court. The Run After the Smugglers (RATS) Group, Revenue Collection Monitoring Group (RCMG), as counsel for the BOC, filed a petition for certiorari but the petition was filed beyond the reglementary period.

The Supreme Court held that the display of patent violations of even the elementary rules shows that the case against respondents was doomed by design from the start. This stance taken by the lawyers in government service rouses the Court’s vigilance against inefficiency in the administration of justice. Verily, the lawyers representing the offices under the executive branch should be reminded that they still remain as officers of the court from whom a high sense of competence and fervor is expected. The Court will not close its eyes to this sense of apathy in RATS lawyers, lest the government’s goal of revenue enhancement continues to suffer the blows of smuggling and similar activities. The Court reminded the lawyers in the BOC that the canons embodied in the Code of Professional Responsibility equally apply to lawyers in government service in the discharge of their official tasks. Thus, RATS lawyers should exert every effort and consider it their duty to assist in the speedy and efficient administration of justice. People of the Philippines v. The Hon. Juanito C. Castaneda, Jr., et al., G.R. No. 208290, December 11, 2013.

Attorney; Champertous contract. Complainants engaged the legal services of Atty. Bañez, Jr. in connection with the recovery of their properties from Fevidal. Complainants signed a contract of legal services, where they would not pay acceptance and appearance fees to Atty. Bañez Jr., but that the docket fees would instead be shared by the parties. Under the contract, complainants would pay him 50% of whatever would be recovered of the properties. Later, however, complainants terminated his services and entered into an amicable settlement with Fevidal. Atty. Bañez, Jr. opposed the withdrawal of their complaint in court. Thus, complainants filed a case against him alleging that the motion of Atty. Baez, Jr. for the recording of his attorney’s charging lien was the “legal problem” preventing them from enjoying the fruits of their property.

Section 26, Rule 138 of the Rules of Court allows an attorney to intervene in a case to protect his rights concerning the payment of his compensation. According to the discretion of the court, the attorney shall have a lien upon all judgments for the payment of money rendered in a case in which his services have been retained by the client. In this case, however, the contract for legal services is in the nature of a champertous contract – an agreement whereby an attorney undertakes to pay the expenses of the proceedings to enforce the client’s rights in exchange for some bargain to have a part of the thing in dispute. Such contracts are contrary to public policy and are thus void or inexistent. They are also contrary to Canon 16.04 of the Code of Professional Responsibility, which states that lawyers shall not lend money to a client, except when in the interest of justice, they have to advance necessary expenses in a legal matter they are handling for the client. Thus, the Court held that Atty. Bañez, Jr. violated Canon 16.04 of the Code of Professional Responsibility. Conchita Baltazar,et al. v. Atty. Juan B. Bañez, Jr., A.C. No. 9091, December 11, 2013.

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