January 2010 Philippine Supreme Court Decisions on Remedial Law

Here are selected January 2010 rulings of the Supreme Court of the Philippines on remedial law:

Civil Procedure

Appeal; factual findings of administrative agencies. We stress the settled rule that the findings of fact of administrative bodies, such as the SEC, will not be interfered with by the courts in the absence of grave abuse of discretion on the part of said agencies, or unless the aforementioned findings are not supported by substantial evidence.  These factual findings carry even more weight when affirmed by the CA.  They are accorded not only great respect but even finality, and are binding upon this Court, unless it is shown that the administrative body had arbitrarily disregarded or misapprehended evidence before it to such an extent as to compel a contrary conclusion had such evidence been properly appreciated.  By reason of the special knowledge and expertise of administrative agencies over matters falling under their jurisdiction, they are in a better position to pass judgment thereon. A review of the petition does not show any reversible error committed by the appellate court; hence, the petition must be denied.  Petitioner failed to present any argument that would convince the Court that the SEC and the CA made any misappreciation of the facts and the applicable laws such that their decisions should be overturned. Catmon Sales International Corporation vs. Atty. Manuel D. Yngson, Jr. as Liquidator of Catmon Sales International Corporation, G.R. No. 179761, January 15, 2010.

Appeal; factual findings of administrative agencies. No matter how hard it tries to learn the technical intricacies of certain highly regulated human activities, the Supreme Court will always be inadequately equipped to identify the facts that matter when resolving issues involving such activities.  Invariably, the Court must respect the factual findings of administrative agencies which have expertise on matters that fall within their jurisdiction.  Here, since the HLURB has the expertise in applying zonal classifications on specific properties and since petitioner GEA fails to make out a clear case that it has erred, the Court must rely on its finding that respondent EGI’s land site does not, for the purpose of applying height restrictions, adjoin an R-1 zone. Greenhills East Association, Inc. vs. E. Ganzon, Inc., G.R. No. 169741, January 22, 2010.

Appeal; factual findings of lower courts. In the case at bench, the issues raised by the petitioners are essentially factual matters, the determination of which are best left to the courts below.  Well-settled is the rule that the Supreme Court is not a trier of facts.  Factual findings of the lower courts are entitled to great weight and respect on appeal, and in fact accorded finality when supported by substantial evidence on the record. Substantial evidence is more than a mere scintilla of evidence.  It is that amount of relevant evidence that a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.  But to erase any doubt on the correctness of the assailed ruling, we have carefully perused the records and, nonetheless, arrived at the same conclusion.  We find that there is substantial evidence on record to support the Court of Appeals and trial court’s conclusion that the signatures of Julian and Guillerma in the Deed of Absolute Sale were forged. Spouses Patricio and Myrna Bernales vs. Heirs of Julian Sambaan, et al., G.R. No. 163271, January 15, 2010.

Appeal; factual findings of lower courts. Conclusions and findings of fact by the trial court are entitled to great weight on appeal and should not be disturbed unless for strong and cogent reasons because the trial court is in a better position to examine real evidence, as well as to observe the demeanor of the witnesses while testifying in the case.  The fact that the CA adopted the findings of fact of the trial court makes the same binding upon this court.  In Philippine Airlines, Inc. v. Court of Appeals, we held that factual findings of the CA which are supported by substantial evidence are binding, final and conclusive upon the Supreme Court.  A departure from this rule may be warranted where the findings of fact of the CA are contrary to the findings and conclusions of the trial court, or when the same is unsupported by the evidence on record.  There is no ground to apply the exception in the instant case, however, because the findings and conclusions of the CA are in full accord with those of the trial court. Spouses Patricio and Myrna Bernales v. Heirs of Julian Sambaan, et al., G.R. No. 163271, January 15, 2010.

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How to draft by-laws

In addition to articles of incorporation, a corporation must have by-laws.  The by-laws contain provisions for the corporation’s internal government and for the government of its stockholders as well as those having the direction, management and control of the corporation.  (see Corporation Code of the Philippines Annotated, p. 441 [2006].)

Under the Corporation Code, the corporation must adopt the by-laws within one month after receipt of official notice of the issuance of its certificate of incorporation by the Securities and Exchange Commission (SEC). (Corporation Code, sec. 46).  In practice, the incorporators of a corporation usually submit the articles of incorporation and the by-laws for approval by the SEC at the same time.

For the adoption of by-laws after incorporation, the approval of stockholders representing at least majority of the outstanding capital stock must be obtained.  The approval of the majority of the directors must also be obtained.  (see Corporation Code, sec. 46).

What provisions should be included in the by-laws?  Section 47 of the Corporation Code lists some of the matters that may be included in the by-laws:

1.     The time, place and manner of calling and conducting regular or special meetings of the directors or trustees;

2.     The time and manner of calling and conducting regular or special meetings of the stockholders or members;

3.     The required quorum in meetings of stockholders or members and the manner of voting therein;

4.     The form for proxies of stockholders and members and the manner of voting them;

5.     The qualifications, duties and compensation of directors or trustees, officers and employees;

6.     The time for holding the annual election of directors of trustees and the mode or manner of giving notice thereof;

7.     The manner of election or appointment and the term of office of all officers other than directors or trustees;

8.     The penalties for violation of the by-laws;

9.     In the case of stock corporations, the manner of issuing stock certificates; and

10.   Such other matters as may be necessary for the proper or convenient transaction of its corporate business and affairs.

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January 2010 Philippine Supreme Court Decisions on Legal and Judicial Ethics

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

Bar discipline case;  cases against judge. Pursuant to A.M. No. 02-9-02-SC (Re: Automatic Conversion of Some Administrative Cases Against Justices of the Court of Appeals and the Sandiganbayan, Judges of Regular and Special Courts, and Court Officials Who Are Lawyers as Disciplinary Proceedings Against Them Both as Officials and as Members of the Philippine Bar), this administrative case shall also be considered as a disciplinary proceeding against him as a member of the bar. Office of the Court Administrator vs. Judge Harun B. Ismael, A.M. No. RTJ-07-2045, January 19, 2010.

Delay;  rendering an order. A delay of nearly three years of a Court of Appeals Justice in resolving a Motion for Inhibition directed against her constitutes undue delay in rendering an order.

Article VIII, Section 15(1) of the Constitution directs that “All cases or matters filed after the effectivity of this Constitution must be decided or resolved within twenty-four months from the date of submission for the Supreme Court, and unless reduced by the Supreme Court, twelve months for all lower collegiate courts, and three months for all other lower courts.”

Respondent’s justification for the delay in resolving the motion for inhibition – in deference to the authority of the SC to resolve the issues raised in the petition for certiorari does not impress. Section 7 of Rule 65 of the Rules of Court provides that a petition for certiorari shall not interrupt the course of the principal case unless a temporary restraining order or a writ of preliminary injunction has been issued against the public respondent from further proceeding with the case. This rule must be strictly adhered to by appellate and lower courts notwithstanding the possibility that the proceedings undertaken by them tend to or would render nugatory the pending petition before the SC.

But even gratuitously crediting respondent’s justification for the delay, since the Court resolved the complainant’s petition for certiorari on April 7, 2007, still given the nature and history of the cases, respondent unduly delayed the resolution of a mere motion for inhibition – only on October 8, 2008, after the Court referred the present complaint to the appellate court and after complainant filed a reiterative motion.

Under Section 9(1) of Rule 140 of the Rules of Court, undue delay in rendering a decision or order is a less serious charge. Ramon C. Gonzales vs. Court of Appeals Associate Justice Amelita G. Tolentino, A.M. No. CA-10-49-J, January 28, 2010.

Delay; resolution of cases. Article VIII, Section 15(1) of the Constitution provides that lower courts have a period of 90 days only within which to decide or resolve a case from the time it is submitted for decision. In this case, more than three years beyond the 90-day reglementary period lapsed before the case was decided by Judge Cruz.

The reasons proffered by the said judge failed to persuade the Court. First, he claims that his illness primarily caused the delay in the disposition of the case. However, the case was submitted for decision before he claimed to be indisposed. There was also no showing that respondent judge was continually ill from the time that the case was submitted for decision until the promulgation of the judgment. Removal of cataract from both eyes does not entail prolonged confinement. Besides, granting that his illness hindered the efficient performance of his functions, all respondent judge had to do was request for an extension of time within which to decide the case. Second, he claims that the delay was partly due to heavy pressure of work. Precisely, a judge is mandated to resolve cases with dispatch. Section 5, Canon 6 of the New Code of Judicial Conduct categorically exhorts all judges to “perform all judicial duties, including the delivery of reserved decisions, efficiently, fairly and with reasonable promptness.”

Delay in the disposition of cases not only deprives litigants of their right to speedy disposition of their cases, but also tarnishes the image of the judiciary. Procrastination among members of the judiciary in rendering decisions and taking appropriate actions on the cases before them not only causes great injustice to the parties involved but also invites suspicion of ulterior motives on the part of the judge, in addition to the fact that it erodes the faith and confidence of our people in the judiciary, lowers its standards and brings it into disrepute.  Luminza Delos Reyes vs. Judge Danilo S. Cruz and Clerk of Court vs. Godolfo R. Gundran, Both of Reginal Trial Court, Branch 152, Pasig City, A.M. No. RTJ-08-2152, January 18, 2010.

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January 2010 Philippine Supreme Court Decisions on Political Law

Here are selected January 2010 rulings of the Supreme Court of the Philippines on political law:

Constitutional Law

Eminent domain;  prompt payment of just compensation. The concept of just compensation contemplates  just and timely payment; it embraces not only the correct determination of the amount to be paid to the landowner, but also the payment of the land within a reasonable time from its taking. Without prompt payment, compensation cannot, as Land Bank of the Philippines v. Court of Appeals instructs, be considered “just,” for the owner is made to suffer the consequence of being immediately deprived of his land while being made to wait for years before actually receiving the amount necessary to cope with his loss.  Land Bank of the Philippines vs. Department of Agrarian Reform Adjudication Board and Heirs of Vicente Adaza, Heirs of Romeo Adaza, Heirs of Cesar Adaza, represented by Russel Adaza, G.R. No. 183279, January 25, 2010.

Judicial review; creation of city. On the OSG’s contention that Congress’ choice of means to comply with the population requirement in the creation of a legislative district is non-justiciable, suffice it to say that questions calling for judicial determination of compliance with constitutional standards by other branches of the government are fundamentally justiciable. The resolution of such questions falls within the checking function of this Court under the 1987 Constitution to determine whether there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.

Even under the 1935 Constitution, this Court had already ruled, “The overwhelming weight of authority is that district apportionment laws are subject to review by the courts.” Compliance with constitutional standards on the creation of legislative districts is important because the “aim of legislative apportionment is ‘to equalize population and voting power among districts.’”  Victorino Aldaba, et al. vs. Commission on Elections, G.R. No. 188078, January 25, 2010.

Local government;  creation of city. RA 9591 is unconstitutional for being violative of Section 5(3), Article VI of the 1987 Constitution and Section 3 of the Ordinance appended to the 1987 Constitution.

The 1987 Constitution requires that for a city to have a legislative district, the city must have “a population of at least two hundred fifty thousand.” The only issue here is whether the City of Malolos has a population of at least 250,000, whether actual or projected, for the purpose of creating a legislative district for the City of Malolos in time for the 10 May 2010 elections. If not, then RA 9591 creating a legislative district in the City of Malolos is unconstitutional.

There is no official record that the population of the City of Malolos will be at least 250,000, actual or projected, prior to the 10 May 2010 elections, the immediately following election after the supposed attainment of such population. Thus, the City of Malolos is not qualified to have a legislative district of its own under Section 5(3), Article VI of the 1987 Constitution and Section 3 of the Ordinance appended to the 1987 Constitution.  Victorino Aldaba, et al. vs. Commission on Elections, G.R. No. 188078, January 25, 2010.
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Execution by agent of mortgage agreement on behalf of principal

Several cases decided by the Supreme Court indicate that the agent should be very careful in the manner he or she signs a mortgage contract on behalf of the principal; otherwise, the mortgage may be binding upon the agent only.

In Far East Bank and Trust Company (Now Bank of the Philippine Islands) and Rolando Borja, Deputy Sherrif vs. Sps. Ernesto and Leonor C. Cayetano, G.R. No. 179909, January 25, 2010, the principal executed a special power of attorney in favor of her daughter authorizing her to contract a loan from a bank and to mortgage the principal’s two lots. The principal also executed an affidavit of non-tenancy for the approval of the loan. The bank granted a loan secured by two promissory notes and a real estate mortgage over the principal’s two lots. The mortgage document was signed by the agent and her husband as mortgagors in their individual capacities, without stating that the agent was executing the mortgage contract for and in behalf of the principal.

The bank foreclosed the mortgage due to non-payment of the loan. A notice of public auction sale was sent to principal. The latter’s lawyer responded with a letter to the bank requesting that the public auction be postponed. The letter went unheeded and the public auction was held as scheduled wherein the mortgaged properties were sold to the bank. Subsequently, the bank consolidated its title and obtained new titles in its name after the redemption period lapsed without the principal taking any action.

Around five years later, the principal filed a complaint for annulment of mortgage and extrajudicial foreclosure of the properties with damages with the regional trial court (RTC) of Naga City. The principal sought nullification of the real estate mortgage and extrajudicial foreclosure sale, as well as the cancellation of the bank’s title over the properties.

The RTC rendered judgment in favor of the principal, holding that the principal cannot be bound by the real estate mortgage executed by the agent unless it is shown that the same was made and signed in the name of the principal; hence, the mortgage will bind the agent only.

The Court of Appeals (CA) affirmed the RTC’s ruling. It held that it must be shown that the real estate mortgage was executed by the agent on behalf of the principal, otherwise the agent may be deemed to have acted on his own and the mortgage is void. However, the CA further declared that the principal loan agreement was not affected, which had become an unsecured credit.

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January 2010 Philippine Supreme Court Decisions on Criminal Law and Procedure

Here are selected January 2010 rulings of the Supreme Court of the Philippines on criminal law and procedure:

Criminal law

1.     Revised Penal Code

Malicious prosecution; elements. To entitle petitioners to damages for malicious prosecution, they needed to prove the following elements: (1) that the respondent had caused their prosecution; (2) that the criminal action ended in their acquittal; (3) that, in bringing the action, the respondent had no probable cause; and (4) that it was impelled by legal malice—an improper or a sinister motive. The burden in suits for malicious prosecution is being able to prove the complainant’s deliberate initiation of a criminal action knowing the charge to be false and groundless. Here, the complainant did not concoct from thin air the criminal charge for theft of electricity against petitioners. It filed the case based on the result of an investigation carried out at petitioner’s premises which indicated a tampering of the electric meter. It is not enough to say that, since the Supreme Court sustained the Secretary of Justice’s finding that no probable cause for electricity theft existed against petitioners, a case for malicious prosecution already exists against the respondent. Limanch-O Hotel and Leasing Corporation, et al. vs. City of Olongapo, et al., G.R. No. 185121, January 18, 2010.

Murder; exemplary damages. The Supreme Court modified appellant’s conviction for attempted murder and awarded P25,000 exemplary damages to the victim since the qualifying circumstance of treachery was proven even though this qualifying circumstance was not alleged in the information. If an aggravating circumstance, either qualifying or generic, accompanies the crime, an award of P25,000 as exemplary damages is justified under Article 2230 of the Civil Code. This serves as deterrent to serious wrong doings, and as vindication for undue sufferings and wanton invasion of the rights of an injured person or punishment for those guilty of outrageous conduct. Ronnie Sumbillo, et al. vs. People of the Philippines, G.R. No. 167464, January 21, 2010.

Rape; defense. The victim’s failure to shout for help does not vitiate the credibility of her account as she was only 10 years old at the time of the rape and, thus, inexperienced in the ways of the world. Minors could be easily intimidated and cowed into silence even by the mildest threat against their lives. Although an older person may have shouted for help under the same circumstances, the young victim in the instant case might have been overcome by fear and was not able to shout for help. Indeed, AAA declared in open court that she was afraid when asked why she failed to shout when accused-appellant pulled down her underwear. Be that as it may, the absence of struggle or an outcry from the victim is immaterial to the rape of a child below 12 years of age. The law presumes that such a victim, on account of her tender age, does not and cannot have a will of her own. The People of the Philippines vs. Manuel BagosG.R. No. 177152, January 6, 2010.

Rape; defense. The sweetheart defense of the accused is shallow, if not, incredulous. For a young mother, to initiate sexual intercourse with a liquor-smelling man and then suggest eloping with him, thus leaving her two minor children behind, is contrary to the common nature and experience of man. No woman would concoct a story of defloration, allow an examination of her private parts, and thereafter pervert herself by being subjected to a public trial if she was not motivated solely by the desire to have the culprit apprehended. People of the Philippines vs. Christopher De Jesus, G.R. No. 181591, January 21, 2010.

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How to draft articles of incorporation

In order to form a corporation, the incorporators must submit the articles of incorporation to the Securities and Exchange Commission (SEC).

While sample form articles of incorporation are available from the SEC, it is advisable that the incorporators request their legal counsel to draft (or review) the articles of incorporation prior to submission to the SEC, especially if the incorporators wish to add special provisions not found in the sample SEC form.  Review by the incorporators’ legal counsel is also important because the filling up of the sample SEC form requires knowledge of certain provisions of the Corporation Code.

What information will the lawyer need from his client to draft the articles of incorporation? Read the sample articles of incorporation below (taken from Section 15 of the Corporation Code) and find out.  I inserted my annotation after each provision.

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