October 2009 Philippine Supreme Court Decisions on Remedial Law

Here are selected October 2009 Philippine Supreme Court decisions on remedial law:

Action;  forum shopping. The essence of forum-shopping is the filing of multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment. Forum-shopping has been defined as the act of a party against whom an adverse judgment has been rendered in one forum, seeking and possibly getting a favorable opinion in another forum, other than by appeal or the special civil action of certiorari, or the institution of two or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition.

Although the factual antecedents of the cases brought before this Court are the same, they involve different issues. The petition for Mandamus with Injunction and Damages, docketed as Civil Case No. 13013, and raised before this Court as G.R. No. 177795, challenged respondents’ refusal to recognize petitioners’ appointments and to pay petitioners’ salaries, salary adjustments, and other emoluments. The petition only entailed the applications for the issuance of a writ of mandamus and for the award of damages. The present case docketed as G.R. No. 181559, on the other hand, involves the merits of petitioners’ appeal from theinvalidation and revocation of their appointments by the CSC-Field Office, which was affirmed by the CSC-Regional Office, CSC en banc, and the Court of Appeals.  Leah M. Nazareno, et al. vs. City of Dumaguete, et al.,  G.R. No. 181559, October 2, 2009.

Action; forum shopping. The essence of forum shopping is the filing of multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment. This is not the case with respect to the ejectment suit vis-à-vis the action for damages.  Manuel Luis S. Sanchez vs. Republic of the Philippines, Represented by the Department of Education, Culture and Sports,  G.R. No. 172885, October 9, 2009.

Action;  lis pendens. The filing of a notice of lis pendens has a two-fold effect: (1) to keep the subject matter of the litigation within the power of the court until the entry of the final judgment in order to prevent the final judgment from being defeated by successive alienations; and (2) to bind a purchaser, bona fide or not, of the land subject of the litigation to the judgment or decree that the court will promulgate subsequently.

While the trial court has an inherent power to cancel a notice of lis pendens, such power is to be exercised within the express confines of the law. As provided in Section 14, Rule 13 of the 1997 Rules of Civil Procedure, a notice of lis pendens may be cancelled on two grounds: (1) when the annotation was for the purpose of molesting the title of the adverse party, or (2) when the annotation is not necessary to protect the title of the party who caused it to be recorded.  Heirs of Jose Sy Bang, Heirs of Julian Sy and Oscar Sy vs. Rolando Sy, et al./Iluminada Tan, et al. vs. Bartolome Sy, et al,  G.R. No. 114217G.R. No. 150979. October 13, 2009

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Prescriptive period for annulment of contract

How is the prescriptive period computed for the annulment of a contract entered into because of alleged threats and intimidation committed by cronies of then President Marcos?

Under the Civil Code, the action must be brought within four years from the “time the defect of the consent ceases.”  It provides:

Art. 1391. An action for annulment shall be brought within four years.

This period shall begin: In case of intimidation, violence or undue influence, from the time the defect of the consent ceases.

In case of mistake or fraud, from the time of the discovery of the same.

And when the action refers to contracts entered into by minors or other incapacitated persons, from the time the guardianship ceases.

In Associated Bank vs. Spouses Justiniano S. Montano, Sr. and Ligaya Montano, et al, G.R. No. 166383, October 16, 2009, the previous owners of the property claimed that the sale of property was made after their relatives were intimidated and threatened by Marcos cronies. The sale was done in 1976 and an action for reconveyance was filed in 1989.

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October 2009 Philippine Supreme Court Decisions on Legal and Judicial Ethics

Here are selected October 2009 Philippine Supreme Court decisions on legal and judicial ethics:


Confidential information. It is settled that the mere relation of attorney and client does not raise a presumption of confidentiality. The client must intend the communication to be confidential. Since the proposed amendments to the by-laws must be approved by at least a majority of the stockholders, and copies of the amended by-laws must be filed with the SEC, the information could not have been intended to be confidential. Thus, the disclosure made by respondent during the stockholders’ meeting could not be considered a violation of his client’s secrets and confidence within the contemplation of Canon 21 of the Code of Professional Responsibility.  Rebecca J. Palm vs. Atty. Felipe Iledan, Jr., A.C. No. 8242, October 2, 2009.

Conflict of interest. In Quiambao v. Bamba, the Court enumerated various tests to determine conflict of interests. One test of inconsistency of interests is whether the lawyer will be asked to use against his former client any confidential information acquired through their connection or previous employment. The Court has ruled that what a lawyer owes his former client is to maintain inviolate the client’s confidence or to refrain from doing anything which will injuriously affect him in any matter in which he previously represented him.

There is no conflict of interest when respondent represented Soledad in a case filed by Comtech. The case where respondent represents Soledad is an Estafa case filed by Comtech against its former officer. There was nothing in the records that would show that respondent used against Comtech any confidential information acquired while he was still Comtech’s retained counsel. Further, respondent made the representation after the termination of his retainer agreement with Comtech. A lawyer’s immutable duty to a former client does not cover transactions that occurred beyond the lawyer’s employment with the client. The intent of the law is to impose upon the lawyer the duty to protect the client’s interests only on matters that he previously handled for the former client and not for matters that arose after the lawyer-client relationship has terminated.  Rebecca J. Palm vs. Atty. Felipe Iledan, Jr., A.C. No. 8242, October 2, 2009.

Indirect contempt. It is reasonable to conclude that the two lawyers crafted the complaint and incorporated therein all the unfounded accusations against the respondent in order to conceal their inadequacies in the handling of their client’s cases. To say the least, the complaint was most unfair to the respondent who, as the record shows, was simply keeping faith with her avowed objective of expediting the proceedings in her court by, among other measures, requiring lawyers to be prepared at all times and to be fair and candid in their dealings with the court.  Juan Pablo P. Bondoc vs. Judge Divina Luz P. Aquino-Simbulan, etc., A.M. No. RTJ-09-2204, October 26, 2009.

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October 2009 Philippine Supreme Court Decisions on Civil Law

Here are selected October 2009 Philippine Supreme Court decisions on civil law and related laws:

Civil Code

Contract; binding effect. Article 1311 of the New Civil Code states that, “contracts take effect only between the parties, their assigns and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law.” In this case, the rights and obligations between petitioner and Alfonso are transmissible. There was no mention of a contractual stipulation or provision of law that makes the rights and obligations under the original sales contract for Lot 3, Block 4, Phase IIintransmissible . Hence, Alfonso can transfer her ownership over the said lot to respondents and petitioner is bound to honor its corresponding obligations to the transferee or new lot owner in its subdivision project.

Having transferred all rights and obligations over Lot 3, Block 4, Phase II to respondents, Alfonso could no longer be considered as an indispensable party. An indispensable party is one who has such an interest in the controversy or subject matter that a final adjudication cannot be made in his absence, without injuring or affecting that interest. Contrary to petitioner’s claim, Alfonso no longer has an interest on the subject matter or the present controversy, having already sold her rights and interests on Lot 3, Block 4, Phase II to herein respondents.   Sta. Lucia Realty & Development, Inc. vs. Spouses Francisco & Emelia Buenaventura, as represented by Ricardo Segismundo, G.R. No. 177113, October 2, 2009.

Contract; compromise agreement. A compromise agreement is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced. It contemplates mutual concessions and mutual gains to avoid the expenses of litigation; or when litigation has already begun, to end it because of the uncertainty of the result.

The validity of a compromise agreement is dependent upon its fulfillment of the requisites and principles of contracts dictated by law; and its terms and conditions must not be contrary to law, morals, good customs, public policy and public order. Gov. Antonio P. Calingin vs. Civil Service Commission and Grace L. Anayron, G.R. No. 183322, October 30, 2009.

Contract;  contract to sell. The very essence of a contract of sale is the transfer of ownership in exchange for a price paid or promised.

In contrast, a contract to sell is defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the property despite delivery thereof to the prospective buyer, binds himself to sell the property exclusively to the prospective buyer upon fulfillment of the condition agreed,i.e., full payment of the purchase price. A contract to sell may not even be considered as a conditional contract of sale where the seller may likewise reserve title to the property subject of the sale until the fulfillment of asuspensive condition, because in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not occur. Delfin Tan vs. Erlinda C. Benolirao, Andrew C. Benolirao, Romano C. Benolirao, Dion C. Benolirao, Sps. Reynaldo Taningco and Norma D. Benolirao, Evelyn T. Monreal and Ann Karina Taningco, G.R. No. 153820, October 16, 2009.

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World financial crisis as force majeure

Is the world financial crisis a “force majeure” that would allow Dow Chemical to walk away from a contract or require the extension of maturity of a construction loan guaranteed by Donald Trump?  BusinessWeek reports:

Is the economic crisis akin to an earthquake or an act of war? Under force majeure, a long-standing legal doctrine, companies can argue that natural disasters or other calamities should excuse them from living up to the terms of a deal. Now, a growing number are contending in lawsuits that the economic crisis should similarly let them off the hook.

In a Feb. 3 filing in Delaware Chancery Court, Dow Chemical (DOW) said “a cascading sequence of market failures of historic proportions” justifies its effort to walk away from a July 2008 agreement to acquire Rohm & Haas (ROH). Rohm sued the chemical giant in January to force the $15.4 billion deal to go through, and a trial is scheduled for Mar. 9. Dow Chemical, which lost Kuwaiti funding for the deal in December, says in a statement that “the economic reality of late December and early 2009 is far worse than in July 2008.” A Rohm spokesperson says her company firmly believes that “Dow has the means to finance the deal.”

By most accounts, Dow Chemical faces an uphill fight. Judges rejected nearly every effort to revise or rescind deals after the oil price shocks of the early 1970s and the Asian economic collapse in 1997. Robert E. Scott, an expert in business transactions at Columbia Law School, says courts tend to dismiss economic force majeure cases because they “don’t want to let parties get out of contracts too easily.” And Scott doesn’t think the current downturn will lead to different results.

Still, lawyers say they expect more businesses to cite the meltdown as an excuse to dodge obligations. Luc A. Despins, a bankruptcy attorney at Paul, Hastings, Janofsky & Walker in New York, says he already has seen several companies use that argument in negotiations with creditors.

Business contracts often contain force majeure clauses, which detail events that can allow a company to delay or cancel what it has agreed to do. Events such as fires, floods, riots, strikes, and terrorism are typically specified. A construction loan pact between Donald Trump and Deutsche Bank (DB) also includes the unusually broad phrase “any other event or circumstance not within the reasonable control” of the borrower. Trump is now arguing in a New York State court that the “calamitous economy” falls under that definition and should preclude Deutsche Bank from collecting $40 million on a loan that he personally guaranteed for a hotel and condominium tower in Chicago. “A lot of people are starting to say that we’re in a depression,” says Trump, “but it’s a lot better if you have the language in your contract.” Deutsche Bank declined to comment on the pending lawsuit.

In Megaworld Globus Asia, Inc. vs. Mila S. Tanseco, G.R. No. 181206, October 9, 2009, Megaworld failed to deliver a pre-sold condominium unit on the stipulated delivery date of the unit. In its Answer to the complaint filed by the buyer, Megaworld attributed the delay to the 1997 Asian financial crisis.

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