January 2011 Philippine Supreme Court Decisions on Civil Law

Here are selected January 2011 rulings of the Supreme Court of the Philippines on civil law:

Civil Code

Common carriers; standard of diligence. Under Article 1732 of the Civil Code, common carriers are persons, corporations, firms, or associations engaged in the business of carrying or transporting passenger or goods, or both by land, water or air for compensation, offering their services to the public. A common carrier is distinguished from a private carrier wherein the carriage is generally undertaken by special agreement and it does not hold itself out to carry goods for the general public.  The distinction is significant in the sense that the rights and obligations of the parties to a contract of private carriage are governed principally by their stipulations, not by the law on common carriers.

Loadmasters and Glodel, being both common carriers, are mandated from the nature of their business and for reasons of public policy, to observe the extraordinary diligence in the vigilance over the goods transported by them according to all the circumstances of such case, as required by Article 1733 of the Civil Code.  When the Court speaks of extraordinary diligence, it is that extreme measure of care and caution which persons of unusual prudence and circumspection observe for securing and preserving their own property or rights.  This exacting standard imposed on common carriers in a contract of carriage of goods is intended to tilt the scales in favor of the shipper who is at the mercy of the common carrier once the goods have been lodged for shipment. Thus, in case of loss of the goods, the common carrier is presumed to have been at fault or to have acted negligently. This presumption of fault or negligence, however, may be rebutted by proof that the common carrier has observed extraordinary diligence over the goods.

November 2010 Philippine Supreme Court Decisions on Civil Law

Here are selected November 2010 rulings of the Supreme Court of the Philippines on civil law:

Civil Code

Damages; attorney’s fees.  On the award of attorney’s fees, attorney’s fees and expenses of litigation were awarded because Alfredo was compelled to litigate due to the unjust refusal of Land Bank to refund the amount he paid. There are instances when it is just and equitable to award attorney’s fees and expenses of litigation.  Art. 2208 of the Civil Code pertinently states:

In the absence of stipulation, attorney’s fees and expenses of litigation, other than judicial costs, cannot be recovered, except:

x x x x

(2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest.

Given that Alfredo was indeed compelled to litigate against Land Bank and incur expenses to protect his interest, we find that the award falls under the exception above and is, thus, proper given the circumstances. Land Bank of the Philippines vs. Alfredo Ong, G.R. No. 190755, November 24, 2010.

Damages; attorney’s fees.  Regarding the grant of attorney’s fees, the Court agrees with the RTC that said award is justified. Losin refused to pay Vitarich despite the latter’s repeated demands.  It was left with no recourse but to litigate and protect its interest. We, however, opt to reduce the same to P10,000.00 from P20,000.00. Vitarich Corporation vs. Chona Locsin, G.R. No. 181560, November 15, 2010.

Damages; for loss of earning capacity.  The award of damages for loss of earning capacity is concerned with the determination of losses or damages sustained by respondents, as dependents and intestate heirs of the deceased. This consists not of the full amount of his earnings, but of the support which they received or would have received from him had he not died as a consequence of the negligent act. Thus, the amount recoverable is not the loss of the victim’s entire earnings, but rather the loss of that portion of the earnings which the beneficiary would have received.

Indemnity for loss of earning capacity is determined by computing the net earning capacity of the victim as follows:

Net Earning Capacity = life expectancy x (gross annual income -reasonable and necessary living expenses).

Life expectancy shall be computed by applying the formula (2/3 x [80 - age at death]) adopted from the American Expectancy Table of Mortality or the Actuarial of Combined Experience Table of Mortality. On the other hand, gross annual income requires the presentation of documentary evidence for the purpose of proving the victim’s annual income. The victim’s heirs presented in evidence Señora’s pay slip from the PNP, showing him to have had a gross monthly salary of P12,754.00. Meanwhile, the victim’s net income was correctly pegged at 50% of his gross income in the absence of proof as regards the victim’s living expenses. Constancia G. Tamayo, et al. vs. Rosalia Abad Señora, et al., G.R. No. 176946, November 15, 2010.

October 2010 Philippine Supreme Court Decisions on Civil Law

Here are selected October 2010 rulings of the Supreme Court of the Philippines on civil law:

Agency. The sale of the DMCI shares made by EIB is null and void for lack of authority to do so, for petitioners never gave their consent or permission to the sale. Moreover, Article 1881 of the Civil Code provides that “the agent must act within the scope of his authority.” Pursuant to the authority given by the principal, the agent is granted the right “to affect the legal relations of his principal by the performance of acts effectuated in accordance with the principal’s manifestation of consent.”  In the case at bar, the scope of authority of EIB as agent of petitioners is “to retain, apply, sell or dispose of all or any of the client’s [petitioners’] property,” if all or any indebtedness or other obligations of petitioners to EIB are not discharged in full by petitioners “when due or on demand in or towards the payment and discharge of such obligation or liability.” The right to sell or dispose of the properties of petitioners by EIB is unequivocally confined to payment of the obligations and liabilities of petitioners to EIB and none other. Thus, when EIB sold the DMCI shares to buy back the KKP shares, it paid the proceeds to the vendees of said shares, the act of which is clearly an obligation to a third party and, hence, is beyond the ambit of its authority as agent. Such act is surely illegal and does not bind petitioners as principals of EIB. Pacific Rehouse Corporation, et al. vs. EIB Securities, Inc.;G.R. No. 184036, October 13, 2010.

Attorney’s fees. It is settled that the award of attorney’s fees is the exception rather than the general rule; counsel’s fees are not awarded every time a party prevails in a suit because of the policy that no premium should be placed on the right to litigate. Attorney’s fees, as part of damages, are not necessarily equated to the amount paid by a litigant to a lawyer. In the ordinary sense, attorney’s fees represent the reasonable compensation paid to a lawyer by his client for the legal services he has rendered to the latter; while in its extraordinary concept, they may be awarded by the court as indemnity for damages to be paid by the losing party to the prevailing party. Attorney’s fees as part of damages are awarded only in the instances specified in Article 2208 of the Civil Code. As such, it is necessary for the court to make findings of fact and law that would bring the case within the ambit of these enumerated instances to justify the grant of such award, and in all cases it must be reasonable. Filomena R. Benedicto vs. Antonio Villaflores; G.R. No. 185020. October 6, 2010.

Attorney’s fees. We have stressed that the award of attorney’s fees is the exception rather than the rule, as they are not always awarded every time a party prevails in a suit because of the policy that no premium should be placed on the right to litigate.  Attorney’s fees as part of damages is awarded only in the instances specified in Article 2208 of the Civil Code. Financial Building Corporation vs. Rudlin International Corporation, et al./Rudlin International Corporation, et al.  vs. Financial Building Corporation; G.R. No. 164186/G.R. No. 164347. October 4, 2010.

Attorney’s fees. An award of attorney’s fees is the exception rather than the rule.  The right to litigate is so precious that a penalty should not be charged on those who may exercise it erroneously.  It is not given merely because the defendant prevails and the action is later declared to be unfounded unless there was a deliberate intent to cause prejudice to the other party. Spouses Ramy and Zenaida Pudadera vs. Ireneo Magallanes and the late Daisy Teresa cortel Magallanes, substituted by her children, Nelly M. Marquez, et al.;G.R. No. 170073, October 18, 2010.

Compensation; partial set-off. Under the circumstances, fairness and reason dictate that we simply order the set-off of the petitioners’ contractual liabilities totaling P575,922.13 against the repair cost for the defective gutter, pegged at P717,524.00, leaving the amount of P141,601.87 still due from the respondent. Support in law for this ruling for partial legal compensation proceeds from Articles 1278, 1279, 1281, and 1283 of the Civil Code. In short, both parties are creditors and debtors of each other, although in different amounts that are already due and demandable. Spouses Victoriano chung and Debbie Chung vs. Ulanday Construction, Inc.;G.R. No. 156038, October 11, 2010.

September 2010 Philippine Supreme Court Decisions on Legal and Judicial Ethics

Here are selected September 2010 rulings of the Supreme Court of the Philippines on legal and judicial ethics:

Attorney; mistake binding on client. Petitioner cannot simply harp on the mistakes and negligence of his lawyer allegedly beset with personal problems and emotional depression.   The negligence and mistakes of counsel are binding on the client.  There are exceptions to this rule, such as when the reckless or gross negligence of counsel deprives the client of due process of law, or when the application of the general rule results in the outright deprivation of one’s property or liberty through a technicality. However, in this case, we find no reason to exempt petitioner from the general rule. The admitted inability of his counsel to attend fully and ably to the prosecution of his appeal and other sorts of excuses should have prompted petitioner to be more vigilant in protecting his rights and replace said counsel with a more competent lawyer.  Instead, petitioner continued to allow his counsel to represent him on appeal and even up to this Court, apparently in the hope of moving this Court with a fervent plea for relaxation of the rules for reason of petitioner’s age and medical condition.  Verily, diligence is required not only from lawyers but also from their clients. Gregorio Dimarucot y Garcia vs.. People of the Philippines, G.R. No. 183975,September 20, 2010.

Attorney; mistake binding on client. Considering the initial 15-day extension granted by the CA and the injunction under Sec. 4, Rule 43 of the 1997 Rules of Civil Procedure against further extensions “except for the most compelling reason”, it was clearly inexcusable for petitioner to expediently plead its counsel’s heavy workload as ground for seeking an additional extension of 10 days within which to file its petition for review.  To our mind, petitioner would do well to remember that, rather than the low gate to which parties are unreasonably required to stoop, procedural rules are designed for the orderly conduct of proceedings and expeditious settlement of cases in the courts of law.  Like all rules, they are required to be followed and utter disregard of the same cannot be expediently rationalized by harping on the policy of liberal construction which was never intended as an unfettered license to disregard the letter of the law or, for that matter, a convenient excuse to substitute substantial compliance for regular adherence thereto.  When it comes to compliance with time rules, the Court cannot afford inexcusable delay. J. Tiosejo Investment Corporation vs.. Sps. Benjamin and Eleanor Ang, G.R. No. 174149, September 8, 2010.

Attorney’s fees. It is settled that a claim for attorney’s fees may be asserted either in the very action in which a lawyer rendered his services or in a separate action.  But enforcing it in the main case bodes well as it forestalls multiplicity of suits.  The intestate court in this case, therefore, correctly allowed Atty. Siapian to interject his claim for attorney’s fees in the estate proceedings against some of the heirs and, after hearing, adjudicate the same on April 3, 1997 with an order for Arturo, et al to pay Atty. Siapian the fees of P3 million due him.  Since the award of P3 million in attorney’s fees in favor of Atty. Siapian had already become final and executory, the intestate court was within its powers to order the Register of Deeds to annotate his lien on the Estate’s titles to its properties.  The Estate has no cause for complaint since the lien was neither a claim nor a burden against the Estate itself.  It was not enforceable against the Estate but only against Arturo, et al, who constituted the majority of the heirs. Heirs and/or Estate of Atty. Rolando P. Siapian, represented by Susan S. Mendoza vs. Intestate Estate of the Late Eufrocina G. Mackay as represented by Dr. Roderick Mackay, et al., G.R. No. 184799, September 1, 2010.

September 2010 Philippine Supreme Court Decisions on Civil Law

Here are selected September 2010 rulings of the Supreme Court of the Philippines on civil law:

Civil Code

Assignment of credits. Was Reyes’ sale of the property to the Vegas binding on PDC (one of Reyes’ creditors) which tried to enforce the judgment credit against Reyes in its favor on the property? The CA ruled that Reyes’ assignment of the property to the Vegas did not bind PDC, which had a judgment credit against Reyes, since such assignment neither appeared in a public document nor was registered with the register of deeds as Article 1625 of the Civil Code required. Article 1625 reads:

Art. 1625. An assignment of a credit, right or action shall produce no effect as against third persons, unless it appears in a public instrument, or the instrument is recorded in the Registry of Property in case the assignment involves real property. (1526)

But Article 1625 referred to assignment of credits and other incorporeal rights. Reyes did not assign any credit or incorporeal right to the Vegas. She sold the Vegas her house and lot. They became owner of the property from the time she executed the deed of assignment covering the same in their favor. PDC had a judgment for money against Reyes only. A court’s power to enforce its judgment applies only to the properties that are indisputably owned by the judgment obligor. Here, the property had long ceased to belong to Reyes when she sold it to the Vegas in 1981. Sps. Antonio and Leticia Vega vs. Social Security System, et al., G.R. No. 181672, September 20, 2010

Attorney’s fees. Article 2208(2) of the Civil Code allows the award of attorney’s fees in cases where the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. Attorney’s fees may be awarded by a court to one who was compelled to litigate with third persons or to incur expenses to protect his or her interest by reason of an unjustified act or omission of the party from whom it is sought. Metropolitan Bank & trust Company, Inc. vs. The Board of Trustees of Riverside Mills Corp. Provident and Retirement Fund, et al., G.R. No. 176959, September 8, 2010

Conjugal property and sale thereof; various rules. (1) What law applies to a sale or purported sale of a conjugal property entered into after the Family Code’s effectivity? The Family Code, even if the couple owning the conjugal property were married before the Family Code took effect. (2) Under the Family Code, conjugal property can only be sold with the consent of both spouses. (3) For a buyer of conjugal property to be considered a purchaser in good faith, he must observe two kinds of requisite diligence, namely: (a) the diligence in verifying the validity of the title covering the property; and (b) the diligence in inquiring into the authority of the transacting spouse to sell conjugal property in behalf of the other spouse. Sps. Rex and Concepcion Aggabao vs. Dionisio Z. Parulan, Jr. and Ma. Elena Parulan, G.R. No. 165803, September 1, 2010.

July 2010 Philippine Supreme Court Decisions on Legal and Judicial Ethics

Here are selected July 2010 rulings of the Supreme Court of the Philippines on legal and judicial ethics:

Attorney; attorney’s fees. The issue of the reasonable legal fees due to respondent still needs to be resolved in a trial on the merits with the following integral sub-issues: (1) the reasonableness of the 10% contingent fee given that the recovery of Tiwi’s share [in unpaid realty taxes] was not solely attributable to the legal services rendered by respondent, (2) the nature, extent of legal work, and significance of the cases allegedly handled by respondent which reasonably contributed, directly or indirectly, to the recovery of Tiwi’s share, and (3) the relative benefit derived by Tiwi from the services rendered by respondent. The amount of reasonable attorney’s fees finally determined by the trial court should be without legal interest in line with well-settled jurisprudence. Municipality of Tiwi, represented by Hon. Mayor Jaime C. Villanueva and Sangguniang Bayan of Tiwi Vs. Antonio B. Betito, G.R. No. 171873, July 9, 2010.

Attorney; engagement of private counsel by GOCC. In Phividec Industrial Authority v. Capitol Steel Corporation, we listed three (3) indispensable conditions before a GOCC can hire a private lawyer: (1) private counsel can only be hired in exceptional cases; (2) the GOCC must first secure the written conformity and acquiescence of the Solicitor General or the Government Corporate Counsel, as the case may be; and (3) the written concurrence of the COA must also be secured.  Failure to comply with all three conditions would constitute appearance without authority.  A lawyer appearing after his authority as counsel had expired is also appearance without authority.  Rey Vargas, et al. vs. Atty. Michael Ignes, et al., A.C. No. 8096, July 5, 2010.

Attorney; engagement of private counsel by LGU. Pursuant to this provision [Section 444(b)(1)(vi) of the LGC], the municipal mayor is required to secure the prior authorization of the Sangguniang Bayan before entering into a contract on behalf of the municipality. In the instant case, the Sangguniang Bayan of Tiwi unanimously passed Resolution No. 15-92 authorizing Mayor Corral to hire a lawyer of her choice to represent the interest of Tiwi in the execution of this Court’s Decision in National Power Corporation v. Province of Albay. The above-quoted authority necessarily carried with it the power to negotiate, execute and sign on behalf of Tiwi the Contract of Legal Services. Municipality of Tiwi, represented by Hon. Mayor Jaime C. Villanueva and Sangguniang Bayan of Tiwi Vs. Antonio B. Betito, G.R. No. 171873, July 9, 2010.

Attorney; gross misconduct. In Lao v. Medel, we held that the deliberate failure to pay just debts and the issuance of worthless checks constitute gross misconduct for which a lawyer may be sanctioned with one-year suspension from the practice of law. However, in this case, we deem it reasonable to affirm the sanction imposed by the IBP-CBD, i.e., Atty. Valerio was ordered suspended from the practice of law for two (2) years, because, aside from issuing worthless checks and failing to pay her debts, she has also shown wanton disregard of the IBP’s and Court Orders in the course of the proceedings. A-1 Financial Services, Inc. vs. Atty. Laarni N. Valerio, A.C. No. 8390, July 2, 2010.