November 2011 Philippine Supreme Court Decisions on Political Law

Here are selected November 2011 rulings of the Supreme Court of the Philippines on political law.

Constitutional Law

Agrarian reform; control over agricultural lands.  Upon review of the facts and circumstances, the Court concluded that the farm worker beneficiaries (FWBs) will never have control over the agricultural lands as long as they remain as stockholders of HLI.  Since control over agricultural lands must always be in the hands of the farmers, the Court reconsidered its earlier ruling that the qualified FWBs should be given an option to remain as stockholders of HLI, inasmuch as these qualified FWBs will never gain control given the present proportion of shareholdings in HLI.  A revisit of HLI’s Proposal for Stock Distribution under CARP and the Stock Distribution Option Agreement upon which the proposal was based reveals that the total assets of HLI is PhP590,554,220, while the value of the 4,915.7466 hectares is PhP196,630,000.  Consequently, the share of the farmer-beneficiaries in the HLI capital stock is 33.296% (196,630,000 divided by 590,554.220); 118,391,976.85 HLI shares represent 33.296%. Thus, even if all the holders of the 118,391,976.85 HLI shares unanimously vote to remain as HLI stockholders, which is unlikely, control will never be placed in the hands of the farmer-beneficiaries.  Control, of course, means the majority of 50% plus at least one share of the common shares and other voting shares. Applying the formula to the HLI stockholdings, the number of shares that will constitute the majority is 295,112,101 shares (590,554,220 divided by 2 plus one HLI share).  The 118,391,976.85 shares subject to the SDP approved by PARC substantially fall short of the 295,112,101 shares needed by the FWBs to acquire control of HLI.  Hence, control can never be attained by the FWBs.  There is even no assurance that 100% of the 118,391,976.85 shares issued to the FWBs will all be voted in favor of staying in HLI, taking into account the previous referendum among the farmers where said shares were not voted unanimously in favor of retaining the SDP.  In light of the foregoing consideration, the option to remain in HLI granted to the individual FWBs will have to be recalled and revoked.  Moreover, bearing in mind that with the revocation of the approval of the SDP, HLI will no longer be operating under SDP and will only be treated as an ordinary private corporation; the FWBs who remain as stockholders of HLI will be treated as ordinary stockholders and will no longer be under the protective mantle of RA 6657.  Hacienda Luisita Incorporated vs. Presidential Agrarian Reform Council, et al., G.R. No. 171101. November 22, 2011.

November 2011 Philippine Supreme Court Decisions on Legal and Judicial Ethics

Here are selected November 2011 rulings of the Supreme Court of the Philippines on legal and judicial ethics:

Attorney; aiding illegal practice of law.  It has been established that Dela Rosa who is not a member of the Bar misrepresented herself as respondent’s collaborating counsel.  There was also sufficient evidence to prove that respondent allowed Dela Rosa to illegally practice law, appear in court, and give legal assistance to respondent’s client.  This is in violation of Canon 9 of the Code of Professional Responsibility which states that “[a] lawyer shall not, directly or indirectly, assist in the unauthorized practice of law.”  The term “practice of law” implies customarily or habitually holding oneself out to the public as a lawyer for compensation as a source of livelihood or in consideration of his services.  Holding one’s self out as a lawyer may be shown by acts indicative of that purpose, such as identifying oneself as attorney, appearing in court in representation of a client, or associating oneself as a partner of a law office for the general practice of law.  Atty. Edita Noe-Lacsamana v. Atty. Yolando F. Busmente.  A.C. No. 7269.  November 23, 2011.

Attorney; competence and diligence required.  Respondent attorneys were engaged to represent complainant and his son in in a civil case for forcible entry and damages.  However, respondents failed to file an answer within the 10-day period required by the summons and the Rules of Court.  Respondents claimed that, to their mind, the civil case was actually for possession, notwithstanding that its title is for forcible entry, and that they mistakenly assumed that the court would first issue an order stating that the case falls under the rules on summary procedure before requiring their clients to answer. They further claimed that  when no such order was issued by the court, they again incorrectly assumed that the regular rules of procedure will apply and that they have fifteen days to answer.  All these, without seeking a clarification from the court or ascertaining exactly when the answer should be filed and despite the summons issued and served stating a ten day period to file an answer.  The Supreme Court did not find respondents’ defenses acceptable as it betrayed a lack of necessary competence and diligence.  The respondents had in fact been negligent, or worse, had failed to exercise the required competence and diligence in filing the answer to the complaint.    Pursuant to Rule 18.03 of the Code of Professional Responsibility, a lawyer is expected to be acquainted with the rudiments of law and legal procedure, and a client who deals with him has the right to expect not just a good amount of professional learning and competence but also a whole-hearted fealty to the client’s cause.  Rogelio F. Estavillo v. Attys. Gemmo G. Guillermo and Erme S. Labayog.  A.C. No. 6899. November 16, 2011.

November 2011 Philippine Supreme Court Decisions on Labor Law and Procedure

Here are selected November 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Award of attorney’s fees; concepts.  There are two commonly accepted concepts of attorney’s fees – the ordinary and extraordinary.  In its ordinary concept, an attorney’s fee is the reasonable compensation paid to a lawyer by his client for the legal services the former renders; compensation is paid for the cost and/or results of legal services per agreement or as may be assessed.  In its extraordinary concept, attorney’s fees are deemed indemnity for damages ordered by the court to be paid by the losing party to the winning party.  This is payable not to the lawyer but to the client, unless the client and his lawyer have agreed that the award shall accrue to the lawyer as additional or part of his compensation.  Article 111 of the Labor Code, as amended, contemplates the extraordinary concept of attorney’s fees.  Although an express finding of facts and law is still necessary to prove the merit of the award, there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages.  Thus the SC concluded that the CA erred in ruling that a finding of the employer’s malice or bad faith in withholding wages must precede an award of attorney’s fees under Article 111 of the Labor Code.  To reiterate, a plain showing that the lawful wages were not paid without justification is sufficient.  Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone Union and Eduardo Borela, etc. vs. Manila Water Company, Inc., G.R. No. 174179. November 16, 2011.

Award of attorney’s fees; Article 111.  One of the issues of this case involved the effect of the Memorandum of Agreement provision that attorney’s fees shall be deducted from the amelioration allowance (AA) and CBA receivables.  In this regard, the CA held that the additional grant of 10% attorney’s fees by the NLRC violates Article 111 of the Labor Code, considering that the MOA between the parties already ensured the payment of 10% attorney’s fees deductible from the AA and CBA receivables of the Union’s members.  In the present case, the Union bound itself to pay 10% attorney’s fees to its counsel under the MOA and also gave up the attorney’s fees awarded to the Union’s members in favor of their counsel.  The award by the NLRC cannot be taken to mean an additional grant of attorney’s fees, in violation of the ten percent (10%) limit under Article 111 of the Labor Code since it rests on an entirely different legal obligation than the one contracted under the MOA.  Simply stated, the attorney’s fees contracted under the MOA do not refer to the amount of attorney’s fees awarded by the NLRC; the MOA provision on attorney’s fees does not have any bearing at all to the attorney’s fees awarded by the NLRC under Article 111 of the Labor Code.  Based on these considerations, it is clear that the CA erred in ruling that the LA’s award of attorney’s fees violated the maximum limit of ten percent (10%) fixed by Article 111 of the Labor Code.  Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone Union and Eduardo Borela, etc. vs. Manila Water Company, Inc., G.R. No. 174179. November 16, 2011.

November 2011 Philippine Supreme Court Decisions on Criminal Law and Procedure

Here are selected November 2011 rulings of the Supreme Court of the Philippines on criminal law and procedure:

1.         REVISED PENAL CODE

Malversation of public funds; elements.The elements of the crime of malversation of public funds are as follows: (a) that the offender is a public officer; (b) that he had the custody or control of funds or property by reason of the duties of his office; (c) that those funds or property were public funds or property for which he was accountable; and (d) that he appropriated, took, misappropriated or consented or, through abandonment or negligence, permitted another person to take them. In this case, all the elements are present and proven by the prosecution. With respect to the first three elements, it was established that petitioner was a revenue collection agent of the BIR. He was a public officer who had custody of public funds for which he was accountable. Anent the fourth element, such was established when the PNB confirmed that there was a discrepancy in the amounts actually received by the PNB and the amounts stated in the receipts reported by petitioner. Guillermo E. Cua v. People of the Philippines, G.R. No. 166847, November 16, 2011.

Rape; elements.  Proof of hymenal laceration is not an element of rape. An intact hymen does not negate a finding that the victim was raped. Penetration of the penis by entry into the lips of the vagina, even without laceration of the hymen, is enough to constitute rape, and even the briefest of contact is deemed rape. People of the Philippines v. Bernabe Pangilinan y Crisostomo, G.R. No. 183090, November 14, 2011.

November 2011 Philippine Supreme Court Decisions on Commercial Law

Here are selected November 2011 rulings of the Supreme Court of the Philippines on commercial law:

Corporations; piercing the corporate veil.  Piercing the veil of corporate fiction is warranted only in cases when the separate legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, such that in the case of two corporations, the law will regard the corporations as merged into one.  As succinctly discussed by the Court in Velarde v. Lopez, Inc.:

Petitioner argues nevertheless that jurisdiction over the subsidiary is justified by piercing the veil of corporate fiction. Piercing the veil of corporate fiction is warranted, however, only in cases when the separate legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, such that in the case of two corporations, the law will regard the corporations as merged into one. The rationale behind piercing a corporation’s identity is to remove the barrier between the corporation from the persons comprising it to thwart the fraudulent and illegal schemes of those who use the corporate personality as a shield for undertaking certain proscribed activities.

In applying the doctrine of piercing the veil of corporate fiction, the following requisites must be established: (1) control, not merely majority or complete stock control; (2) such control must have been used by the defendant to commit fraud or wrong, to perpetuate the violation of a statutory or other positive legal duty, or dishonest acts in contravention of plaintiff’s legal rights; and (3) the aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of. (Citations omitted.)

Nowhere, however, in the pleadings and other records of the case can it be gathered that respondent has complete control over Sky Vision, not only of finances but of policy and business practice in respect to the  transaction attacked, so that Sky Vision had at the time of the transaction no separate mind, will or existence of its own. The existence of interlocking directors, corporate officers and shareholders is not enough justification to pierce the veil of corporate fiction in the absence of fraud or other public policy considerations.

Hacienda Luisita Incorporated vs. Presidential Agrarian Reform Council, G.R. No. 171101, November 22, 2011.