April 2014 Philippine Supreme Court Decisions on Commercial Law

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

Corporate officers; liability. On  the  issue  of  the  solidary  obligation  of  the  corporate officers impleaded vis-à-vis the corporation for Mapua’s illegal dismissal, “[i]t is hornbook principle that personal liability of corporate directors, trustees or officers attaches only when: (a) they assent to a patently unlawful act of the corporation,  or  when  they  are  guilty  of  bad  faith  or  gross  negligence  in directing  its  affairs,  or  when  there  is  a  conflict  of  interest resulting  in damages  to  the  corporation,  its  stockholders  or  other  persons; (b)  they consent to the issuance of watered down stocks or when, having knowledge of  such  issuance,  do  not  forthwith  file  with  the  corporate  secretary  their written objection; (c) they agree to hold themselves personally and solidarily liable with the corporation; or (d) they are made by specific provision of law personally answerable fortheir corporate action.SPI Technologies, Inc., et al. v. Victoria K. Mapua,G.R. No. 199022, April 7, 2014.

Corporate officers; liability. A corporation has a personality separate and distinct from its officers and board of directors who may only be held personally liable for damages if it is proven that they acted with malice or bad faith in the dismissal of an employee. Absent any evidence on record that petitioner Bautista acted maliciously or in bad faith in effecting the termination of respondent, plus the apparent lack of allegation in the pleadings of respondent that petitioner Bautistaacted in such manner, the doctrine of corporate fiction dictates that only petitioner corporation should be held liable for the illegal dismissal of respondent. Mirant (Philippines) Corporation, et al. v. Joselito A. Caro,G.R. No. 181490, April 23, 2014.

Corporations; merger; concept. Merger is a re-organization of two or more corporations that results in their consolidating into a single corpor ation, which is one of the constituent corporations, one disappearing or dissolving and the other surviving.  To put it another way, merger is the absorption of one or more corporations by another existing corporation, which retains its identity and takes over the rights, privileges, franchises, properties, claims, liabilities and obligations of the absorbed corporation(s).  The absorbing corporation continues its existence while the life or lives of the other corporation(s) is or are terminated. Bank of Commerce v. Radio Philippines Network, Inc., et al.,G.R. No. 195615, April 21, 2014.

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March 2014 Philippine Supreme Court Decisions on Criminal law and Procedure

Here are select March 2014 rulings of the Supreme Court of the Philippines on criminal law and procedure:

1. REVISED PENAL CODE

Conspiracy; liability of conspirators. Assuming that the prosecution witnesses failed to identify exactly who inflicted the fatal wounds on Joey during the commotion, Erwin’s liability is not diminished since he and the others with him acted with concert in beating up and ultimately killing Joey. Conspiracy makes all the assailants equally liable as co-principals by direct participation. Since about 15 men, including accused Erwin, pounced on their one helpless victim, relentlessly bludgeoned him on the head, and stabbed him on the stomach until he was dead, there is no question that the accused took advantage of their superior strength. The Supreme Court thus affirmed the decision of the lower courts finding accused Erwin guilty of murder. People of the Philippines v. Erwin Tamayo y Bautisa, G.R. No. 196960, March 12, 2014.

Rape; rape victim with a mental disability either deprived of reason or demented. Article 266-A, paragraph 1 of the Revised Penal Code, as amended, provides for two circumstances when having carnal knowledge of a woman with a mental disability is considered rape, to wit: paragraph 1(b) – when the offended party is deprived of reason; and paragraph 1(d) – when the offended party is demented. Under paragraph 1(d), the term demented refers to a person who has dementia, which is a condition of deteriorated mentality, characterized by marked decline from the individual’s former intellectual level and often by emotional apathy, madness, or insanity. On the other hand, under paragraph 1(b), the phrase deprived of reason has been interpreted to include those suffering from mental abnormality, deficiency, or retardation. People of the Philippines v. Ernesto Ventura Sr., G.R. No. 205230, March 12, 2014.

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March 2014 Philippine Supreme Court Decisions on Legal and Judicial Ethics

Here are select March 2014 rulings of the Supreme Court of the Philippines on legal and judicial ethics:

Attorney; Disbarment cases; Initiation. Complainants who are members of the Congressional Village Homeowner’s Association, Inc. filed a Complaint for Disbarment against Atty. Jimenez for violating Rule 12.03, Canon 12, Canon 17, Rule 18.03, and Canon 18 of the Code of Professional Responsibility for his negligence in handling an appeal in a case involving the Association and willful violation of his duties as an officer of the court.

The Supreme Court held that the complainants have personality to file the disbarment case. In Heck v. Judge Santos, the Court held that “[a]ny interested person or the court motu proprio may initiate disciplinary proceedings.” The right to institute disbarment proceedings is not confined to clients nor is it necessary that the person complaining suffered injury from the alleged wrongdoing. The procedural requirement observed in ordinary civil proceedings that only the real party-in-interest must initiate the suit does not apply in disbarment cases. Disbarment proceedings are matters of public interest and the only basis for the judgment is the proof or failure of proof of the charges. Further, the Supreme Court held that a lawyer engaged to represent a client in a case bears the responsibility of protecting the latter’s interest with utmost diligence. In failing to file the appellant’s brief on behalf of his client, Atty. Jimenez had fallen far short of his duties as counsel as set forth in Rule 12.04, Canon 12 of the Code of Professional Responsibility which exhorts every member of the Bar not to unduly delay a case and to exert every effort and consider it his duty to assist in the speedy and efficient administration of justice.  However, the Supreme Court only suspended Atty. Jimenez from the practice of law for one month. Nestor Figueras and Bienvenido Victoria, Jr. v. Atty. Diosdado B. Jimenez,A.C. No. 9116, March 12, 2014.

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March 2014 Philippine Supreme Court Decisions on Commercial Law

Here are select March 2104 rulings of the Supreme Court of the Philippines on commercial law:

Corporations; piercing the corporate veil. It has  long  been  settled  that  the  law  vests  a  corporation  with a personality distinct and separate from its stockholders or members.  In the same vein, a corporation, by legal fiction and convenience, is an entity shielded by a protective mantle and imbued by law with a character alien to the  persons  comprising  it.  Nonetheless,  the  shield  is  not  at  all  times impenetrable and cannot be extended to a point beyond its reason and policy.  Circumstances  might  deny  a  claim  for  corporate  personality,  under  the “doctrine of piercing the veil of corporate fiction.”

Piercing the  veil  of  corporate  fiction  is  an  equitable  doctrine developed to address situations where the separate corporate personality of a corporation is abused or used for wrongful purposes. Under the doctrine, the corporate existence may be disregarded where the entity is formed or used for non-legitimate purposes, such as to evade a just and due obligation, or to justify a wrong, to shield or perpetrate fraud or to carry out similar or inequitable considerations, other unjustifiable aims or intentions, in which case, the fiction will be disregarded and the individuals composing it and the two corporations will be treated as identical.

In the present case, we see an indubitable link between CBB’s closure and Binswanger’s incorporation. CBB ceased to exist only in name; it re-emerged in the person of Binswanger for an urgent purpose — to avoid payment by CBB of the last two installments of its monetary obligation to Livesey, as well as its other financial liabilities.  Freed of CBB’s  liabilities,  especially  that  owing  to  Livesey,  Binswanger can continue, as it did continue, CBB’s real estate brokerage business. Eric Godfrey Stanley Livesey v. Binswanger Philippines, Inc. and Keith Elliot, G.R. No. 177493, March 19, 2014.

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March 2014 Philippine Supreme Court Decisions on Civil Law

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

CIVIL CODE

Action for quieting of title; trial court had no jurisdiction to determine who among the parties have better right over the disputed property which is admittedly still part of the public domain. Having established that the disputed property is public land, the trial court was therefore correct in dismissing the complaint to quiet title for lack of jurisdiction. The trial court had no jurisdiction to determine who among the parties have better right over the disputed property which is admittedly still part of the public domain. As held in Dajunos v. Tandayag (G.R. Nos. L-32651-52, 31 August 1971, 40 SCRA 449):

x x x The Tarucs’ action was for “quieting of title” and necessitated determination of the respective rights of the litigants, both claimants to a free patent title, over a piece of property, admittedly public land. The law, administration, disposition and alienation of public lands with the Director of Lands subject, of course, to the control of the Secretary of Agriculture and Natural Resources.

In sum, the decision rendered in Civil Case No. 1218 on October 28, 1968 is a patent nullity. The lower court did not have power to determine who (the Firmalos or the Tarucs) were entitled to an award of free patent title over that piece of property that yet belonged to the public domain. Neither did it have power to adjudge the Tarucs as entitled to the “true equitable ownership” thereof, the latter’s effect being the same: the exclusion of the Firmalos in favor of the Tarucs. Heirs of Pacifico Pocido, et al. v. Arsenia Avila and Emelinda Chua, G.R. No. 199146, March 19, 2014.

Action for quieting of title. In an action for quieting of title, the complainant is seeking for “an adjudication that a claim of title or interest in property adverse to the claimant is invalid, to free him from the danger of hostile claim, and to remove a cloud upon or quiet title to land where stale or unenforceable claims or demands exist.” Heirs of Pacifico Pocido, et al. v. Arsenia Avila and Emelinda Chua, G.R. No. 199146, March 19, 2014.

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February 2014 Philippine Supreme Court Decisions on Criminal Law and Procedure

Here are select February 2014 rulings of the Supreme Court of the Philippines on criminal law and procedure:

1. REVISED PENAL CODE

Aiding or abetting; Unsolicited Commercial Communications; Child Pornography. Aiding or abetting has of course well-defined meaning and application in existing laws. When a person aids or abets another in destroying a forest, smuggling merchandise into the country, or interfering in the peaceful picketing of laborers, his action is essentially physical and so is susceptible to easy assessment as criminal in character. These forms of aiding or abetting lend themselves to the tests of common sense and human experience. If such means are adopted, self-inhibition borne of fear of what sinister predicaments await internet users will suppress otherwise robust discussion of public issues. Democracy will be threatened and with it, all liberties. What is more, as the petitioners point out, formal crimes such as libel are not punishable unless consummated. In the absence of legislation tracing the interaction of netizens and their level of responsibility such as in other countries, Section 5, in relation to Section 4(c)(4) on Libel, Section 4(c)(3) on Unsolicited Commercial Communications, and Section 4(c)(2) on Child Pornography, cannot stand scrutiny. Jose Jesus M. Disini Jr., et al v. The Secretary of Justice, et al, G.R. No. 203335, February 11, 2014.

Conspiracy; direct proof. While direct proof is not essential to establish conspiracy as it may be inferred from the collective acts of the accused before, during and after the commission of the crime which point to a joint purpose, design, concerted action, and community of interests, records are, however, bereft of any showing as to how the particular acts of petitioners figured into the common design of taking out the subject volume and inserting the falsified documents therein. It would be a stretch to conclude that the act of Castro of inviting Atibula to Atienza’s party, without any other proof of Castro’s participation, was instrumental or, at the very least, reasonably connected to Atienza and his own alleged participation in the above-stated crimes. Hence, the prosecution’s theory of conspiracy does not deserve any merit. Ricardo L. Atienza and Alfredo A. Castro v. People of the Philippines, G.R. No. 188694, February 12, 2014.

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February 2014 Philippine Supreme Court Decisions on Legal and Judicial Ethics

Here are select February 2014 rulings of the Supreme Court of the Philippines on legal and judicial ethics:

Attorney; Notarization; Importance. An administrative case was filed against Atty. Rinen for falsification of an Extra Judicial Partition with Sale which allowed the transfer to Spouses Durante of a parcel of land. In Bautista v. Atty. Bernabe, the Court held that “[a] notary public should not notarize a document unless the persons who signed the same are the very same persons who executed and personally appeared before him to attest to the contents and truth of what are stated therein. The presence of the parties to the deed will enable the notary public to verify the genuineness of the signature of the affiant.” Notarization is not an empty, meaningless, routinary act. It is invested with substantive public interest, such that only those who are qualified or authorized may act as notaries public. It converts a private document into a public one, making it admissible in court without further proof of its authenticity. Thus, notaries public must observe with utmost care the basic requirements in the performance of their duties. Otherwise, the confidence of the public in the integrity of public instruments would be undermined.

In this case, Atty. Rinen did not deny his failure to personally verify the identity of all parties who purportedly signed the subject document and whom, as he claimed, appeared before him on April 7, 1994. Such failure was further shown by the fact that the pertinent details of the community tax certificates of Wilberto and his sister, as proof of their identity, remained unspecified in the deed’s acknowledgment portion. Clearly, there was a failure on the part of Atty. Rinen to exercise the due diligence that was required of him as a notary public ex–officio. Thus, Atty. Rinen’s notarial commission as revoked and he was disqualified from being commissioned as a notary public for one year. Wilberto C. Talisic v. Atty. Primo R. Rinen, A.C. No. 8761, February 12, 2014.

Attorney; Notarization not an empty act. Complainant charged Atty. Gupana of forgeries and falsifications in the notarization of certain documents. The Supreme Court found Atty. Gupana administratively liable under Section 1 of Public Act No. 2103, otherwise known as the Notarial Law, for violation of his notarial duties when he failed to require the personal presence of Candelaria Magpayo when he notarized the Affidavit of Loss which Candelaria allegedly executed on April 29, 1994.

Under the law, the party acknowledging must appear before the notary public or any other person authorized to take acknowledgments of instruments or documents. In this case, the jurat of the Affidavit of Loss stated that Candelaria subscribed to the affidavit before Atty. Gupana on April 29, 1994, at Mandaue City. Candelaria, however, was already dead since March 26, 1991. Hence, it is clear that the jurat was made in violation of the notarial law. The notarization of a document is not an empty act or routine. A notary public’s function should not be trivialized and a notary public must discharge his powers and duties which are impressed with public interest, with accuracy and fidelity. As a lawyer commissioned as notary public, Atty. Gupana is mandated to subscribe to the sacred duties appertaining to his office, such duties being dictated by public policy impressed with public interest. Thus, the Supreme Court held that Atty. Gupana’s revocation of his notarial commission, disqualification from being commissioned as a notary public for a period of two years and suspension from the practice of law for one year are in order. Carlito Ang v. Atty. James Joseph GupanaA.C. No. 4545. February 5, 2014.

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