June 2014 Philippine Supreme Court Decisions on Commercial Law

Here are select June 2014 ruling of the Supreme Court of the Philippines on commercial law:

Corporations; capacity to sue  of dissolved corporations. The trustee of a corporation may continue to prosecute a case commenced by the corporation within three years from its dissolution until rendition of the final judgment, even if such judgment is rendered beyond the three-year period allowed by Section 122 of the Corporation Code. However, there is nothing in the said cases which allows an already defunct corporation to initiate a suit after the lapse of the said three-year period. On the contrary, the factual circumstances in the abovecited cases would show that the corporations involved therein did not initiate any complaint after the lapse of the three-year period. In fact, as stated above, the actions were already pending at the time that they lost their corporate existence.

In the present case, petitioner filed its complaint not only after its corporate existence was terminated but also beyond the three-year period allowed by Section 122 of the Corporation Code. Thus, it is clear that at the time of the filing of the subject complaint petitioner lacks the capacity to sue as a corporation. To allow petitioner to initiate the subject complaint and pursue it until final judgment, on the ground that such complaint was filed for the sole purpose of liquidating its assets, would be to circumvent the provisions of Section 122 of the Corporation Code. Alabang Development Corporation v. Alabang Hills Village Association and Rafael Tinio, G.R. No. 187456, June 2, 2014.

Corporations; refusal to allow inspection is a criminal offense. We find inaccurate the pronouncement of the RTC that the act of refusing to allow inspection of the stock and transfer book is not a punishable offense under the Corporation Code. Such refusal, when done in violation of Section 74( 4) of the Corporation Code, properly falls within the purview of Section 144 of the same code and thus may be penalized as an offense. Aderito Z. Yujuico and Bonifacio C. Sumbilla v. Cezar T. Quiambao and Eric C. Pilapil, G.R. No. 180416, June 2, 2014.

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June 2014 Philippine Supreme Court Decisions on Legal and Judicial Ethics

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

Attorney; Disbarment; Effect of withdrawal. A disbarment case was filed by Quiachon against her lawyer Atty. Ramos who represented her in a labor case before NLRC and a special proceeding case before the RTC. During the pendency of the proceedings, complainant withdrew the disbarment case. The Supreme Court held that the withdrawal of a disbarment case against a lawyer does not terminate or abate the jurisdiction of the IBP and of this Court to continue an administrative proceeding against a lawyer-respondent as a member of the Philippine Bar. The complainant in a disbarment case is not a direct party to the case, but a witness who brought the matter to the attention of the Court. In this case, Atty. Ramos violated Canon Rules 18.03 and 18.04 of the Code of Professional Responsibility. Thus, the appropriate penalty should be imposed despite the desistance of complainant or the withdrawal of the charges. Adelia V. Quiachon v. Atty. Joseph Ador A. Ramos, A.C. No. 9317, June 4, 2014.

Attorney; Quantum of proof in administrative cases. An administrative complaint for dishonesty was filed against Atty. Molina for having advised his clients to enforce a contract on complainant’s client who was never a party to the agreement. The Supreme Court in dismissing the complaint held that when it comes to administrative cases against lawyers, two things are to be considered: quantum of proof, which requires clearly preponderant evidence; and burden of proof, which is on the complainant. Here, the complaint was without factual basis. The allegation of giving legal advice was not substantiated in this case, either in the complaint or in the corresponding hearings. Bare allegations are not proof. Even if Atty. Molina did provide his clients legal advice, he still cannot be held administratively liable without any showing that his act was attended with bad faith or malice. The default rule is presumption of good faith. Atty. Alan F. Paguia v. Atty. Manuel T. Molina, A.C. No. 9881, June 4, 2014.

Court personnel; Dishonesty. Ampong was dismissed from the Civil Service Commission for dishonesty, however, remained employed in the RTC. The Supreme Court has already held in its August 26, 2008 Decision that Ampong was administratively liable for dishonesty in impersonating and taking the November 1991 Civil Service Eligibility Examination for Teachers on behalf of one Decir. Under section 58(a) of the Uniform Rules on Administrative Cases in the Civil Service (URACCS), the penalty of dismissal carries with it the following administrative disabilities: (a) cancellation of civil service eligibility; (b) forfeiture of retirement benefits; and (c) perpetual disqualification from re-employment in any government agency or instrumentality, including any government-owned and controlled corporation or government financial institution. Ampong should be made to similarly suffer the same. Every employee of the Judiciary should be an example of integrity, uprightness, and honesty. Court personnel are enjoined to adhere to the exacting standards of morality and decency in their professional and private conduct in order to preserve the good name and integrity of the courts of justice. Here, Ampong failed to meet these stringent standards set for a judicial employee and does not, therefore, deserve to remain with the Judiciary. Office of the Court Administrator v. Sarah P. Ampong, etc., A.M. No. P-13-3132, June 4, 2014.

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April 2014 Philippine Supreme Court Decisions on Legal and Judicial Ethics

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

Court personnel; simple misconduct. An administrative case was filed against Melchor Tiongson, a Court of Appeals (CA) employee who was assigned to be the head watcher during the 2011 bar examinations. The complaint alleged that she brought a digital camera inside the bar examination rooms, in violation of the Instructions to Head Watchers. The Court held that in administrative proceedings, substantial evidence is the quantum of proof required for a finding of guilt, and this requirement is satisfied if there is reasonable ground to believe that the employee is responsible for the misconduct. Misconduct means transgression of some established and definite rule of action, more particularly, unlawful behavior or gross negligence by an employee. Any transgression or deviation from the established norm of conduct, work related or not, amounts to a misconduct. In this case, there was substantial evidence to prove that Tiongson committed a misconduct. Tiongson was held liable for simple misconduct only, because the elements of grave misconduct were not proven with substantial evidence, and Tiongson admitted his infraction before the Office of the Bar Confidant. As a CA employee, Tiongson disregarded his duty to uphold the strict standards required of every court employee, that is, to be an example of integrity, uprightness and obedience to the judiciary. Re: Melchor Tiongson, Head Watcher, During the 2011 Bar Examinations, B.M. No. 2482, April 1, 2014.

Judges; bias and partiality must be proven by clear and convincing evidence. The Court held that the truth about Judge Austria’s alleged partiality cannot be determined by simply relying on the verified complaint. Bias and prejudice cannot be presumed, in light especially of a judge’s  sacred  obligation  under  his  oath  of  office  to  administer  justice without respect to the person, and to give equal right to the poor and rich. There should be clear and convincing evidence to prove the charge; mere suspicion of partiality is not enough. In this case, aside from being speculative and judicial in character, the circumstances cited by the complainant were grounded on mere opinion and surmises. The complainant also failed to adduce proof indicating the judge’s predisposition to decide the case in favor of one party. Antonio M. Lorenzana v. Judge Ma. Cecilia I. Austria, RTC, Br. 2, Batangas City, A.M. No. RTJ-09-2200, April 2, 2014.

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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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April 2014 Philippine Supreme Court Decisions on Legal and Judicial Ethics

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

Court personnel; simple misconduct. An administrative case was filed against Melchor Tiongson, a Court of Appeals (CA) employee who was assigned to be the head watcher during the 2011 bar examinations. The complaint alleged that she brought a digital camera inside the bar examination rooms, in violation of the Instructions to Head Watchers. The Court held that in administrative proceedings, substantial evidence is the quantum of proof required for a finding of guilt, and this requirement is satisfied if there is reasonable ground to believe that the employee is responsible for the misconduct. Misconduct means transgression of some established and definite rule of action, more particularly, unlawful behavior or gross negligence by an employee. Any transgression or deviation from the established norm of conduct, work related or not, amounts to a misconduct. In this case, there was substantial evidence to prove that Tiongson committed a misconduct. Tiongson was held liable for simple misconduct only, because the elements of grave misconduct were not proven with substantial evidence, and Tiongson admitted his infraction before the Office of the Bar Confidant. As a CA employee, Tiongson disregarded his duty to uphold the strict standards required of every court employee, that is, to be an example of integrity, uprightness and obedience to the judiciary. Re: Melchor Tiongson, Head Watcher, During the 2011 Bar Examinations, B.M. No. 2482, April 1, 2014.

Judges; bias and partiality must be proven by clear and convincing evidence. The Court held that the truth about Judge Austria’s alleged partiality cannot be determined by simply relying on the verified complaint. Bias and prejudice cannot be presumed, in light especially of a judge’s  sacred  obligation  under  his  oath  of  office  to  administer  justice without respect to the person, and to give equal right to the poor and rich. There should be clear and convincing evidence to prove the charge; mere suspicion of partiality is not enough. In this case, aside from being speculative and judicial in character, the circumstances cited by the complainant were grounded on mere opinion and surmises. The complainant also failed to adduce proof indicating the judge’s predisposition to decide the case in favor of one party. Antonio M. Lorenzana v. Judge Ma. Cecilia I. Austria, RTC, Br. 2, Batangas City, A.M. No. RTJ-09-2200, April 2, 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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