February 2010 Philippine Supreme Court Decisions on Remedial Law

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

Civil Procedure

Actions; prescription/laches. Petitioners contend that it is error on the part of the CA to rule that their cause of action has been barred by prescription and laches. According to them, since the OCT from which ALI derived its title is void for want of a duly approved survey plan, their cause of action did not prescribe. However, as discussed above, the conclusion of the trial court that OCT No. 242 is void was not sufficiently borne out by the evidence on record. Verily, the premise upon which petitioners build their theory of imprescriptibility of their action did not exist.

In sum, we find no reason to disturb the CA’s finding that:  “As previously emphasized, OCT No. 242 of ALI’s predecessor-in-interest was issued on May 7, 1950, or forty-five (45) years before plaintiffs-appellees filed their complaint on March 10, 1995.  As such, it is the Court’s firmly held view that plaintiffs-appellees’ claim is barred not only by prescription, but also by laches.

Aside from the fact that OCT No. 242 had become incontrovertible after the lapse of one (1) year from the time a decree of registration was issued, any action for reconveyance that plaintiffs-appellees could have availed of is also barred.  Although plaintiffs-appellees’ complaint was for quieting of title, it is in essence an action for reconveyance based on an implied or constructive trust, considering that plaintiffs-appellees were alleging in said complaint that there was a serious mistake, if not fraud, in the issuance of OCT No. 242 in favor of ALI’s predecessor-in-interest.  It is now well-settled that an action for reconveyance, which is a legal remedy granted to a landowner whose property has been wrongfully or erroneously registered in another’s name, must be filed within ten years from the issuance of the title, since such issuance operates as a constructive notice.  Since ALI’s title is traced to an OCT issued in 1950, the ten-year prescriptive period expired in 1960.

By laches is meant the negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it.  It does not involve mere lapse or passage of time, but is principally an impediment to the assertion or enforcement of a right, which has become under the circumstances inequitable or unfair to permit.  In the instant case, plaintiffs-appellees, as well as their predecessor-in-interest, have not shown that they have taken judicial steps to nullify OCT No. 242, from which ALI’s title was derived, for forty-five (45) years.  To allow them to do so now, and if successful, would be clearly unjust and inequitable to those who relied on the validity of said OCT, the innocent purchasers for value, who are protected by the precise provisions of P.D. 1529”. Spouses Morris Carpo and Socorro Carpo vs. Ayala Land, Incorporated, G.R. No. 166577, February 3, 2010.

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How Stockholders’ Meetings Are Conducted

In general, all corporate powers are exercised by the board of directors;  stockholders’ approval for corporate acts is usually not required. However, the Corporation Code requires (and the by-laws of the corporation may require) stockholders’ approval for certain corporate acts. Stockholders’ approval is usually given during a stockholders’ meeting where the matter is submitted to the stockholders for approval.

Let’s run through a typical agenda for a stockholders’ meeting:

1.     Call to Order

During this part of the meeting, the person authorized to call the meeting states that he is calling the meeting to order. Unless otherwise provided in the by-laws, the President of the corporation has authority to preside at all meetings of stockholders (Corporation Code, sec. 54). Hence, the President would normally call the meeting to order.

If the person entitled to preside is not present at the time the meeting is convened, the stockholders present may request a stockholder to temporarily preside at the meeting (Corporation Code of the Philippines Annotated, p. 480).

After the presiding officer calls the meeting to order, the presiding officer will usually note that the Corporate Secretary will record the proceedings. The Corporate Secretary prepares the minutes of meeting, which he will co-sign with the presiding officer of the meeting.

2.      Certification of Quorum

A quorum is necessary in order that business can be transacted during the stockholders’ meeting. During this part of the meeting, Corporate Secretary certifies that a quorum exists for the transaction of business by the stockholders. Unless otherwise provided in the Corporation Code or in the by-laws, a quorum consists of stockholders representing a majority of the outstanding capital stock.

If notice of the meeting was not given within the period provided in the by-laws, the Corporate Secretary will also certify whether the stockholders have waived the notice requirement.

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February 2010 Philippine Supreme Court Decisions on Legal and Judicial Ethics

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

Court personnel; administrative complaint; effect of resignation. Respondent Nuñez has filed his resignation on September 5, 2008, which was subsequently accepted by the Court, subject to the usual clearance requirements and without prejudice to the continuation of the proceedings in the instant administrative case.  Nonetheless, the fact of his resignation and our approval thereof does not render moot the complaint against him.  Our jurisdiction over him is not lost by the mere fact that he resigned during the pendency of the case.  To deprive the Court of authority to pronounce his innocence or guilt of the charges is undoubtedly fraught with injustices and pregnant with dreadful and dangerous implications. What would prevent a corrupt and unscrupulous government employee from committing abuses and other condemnable acts knowing fully well that he would soon be beyond the pale of the law and immune to all administrative penalties?  Resignation should be used neither as an escape nor as an easy way out to evade administrative liability by court personnel facing administrative sanction. If only for reasons of public policy, the Court must assert and maintain its jurisdiction over members of the judiciary and other officials under its supervision and control for acts performed in office which are inimical to the service and prejudicial to the interests of litigants and the general public. If innocent, respondent official merits vindication of his name and integrity as he leaves the government which he served well and faithfully; if guilty, he deserves to receive the corresponding censure and a penalty proper and imposable under the situation.  Judge Delia P. Noel-Bertulfo, Municipal Trial Court, Palompon, Leyte vs. Fyndee P. Nuñez, Court Aide, Municipal Trial Court, Palompon, Leyte, A.M. No. P-10-2758, February 2, 2010.

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Poll result: Can the President legally appoint the next Chief Justice?

After months of heated debate all over the country, the Supreme Court has finally spoken – President Arroyo is not prohibited by the Constitution to appoint the next Chief Justice of the Philippines (see Arturo M. De Castro Vs. Judicial and Bar Council, et al.G.R. No. 191002, G.R. No. 191032, G.R. No. 191057, A.M. No. 10-2-5-SC, G.R. No. 191149, G.R. No. 191342, March 17, 2010).

According to the Supreme Court, President Arroyo can appoint the successor of Chief Justice Puno upon his retirement on May 17, 2010 since the constitutional prohibition against presidential appointments during the two month period before a presidential election does not extend to appointments in the Judiciary.

Many of our readers will likely be surprised with the ruling.  In the poll we conducted among Lexoterica readers during the past several weeks, 78% believe that the President cannot legally appoint the next Chief Justice.  Only 19% believe that the President can legally do so.  For the rest, they “don’t know”.

Have your views changed given the Supreme Court’s ruling?  Let us know by voting at our new poll.  To help you decide, here is a link to the majority opinion penned by Justice Bersamin, the dissenting opinion of Justice Carpio Morales, the separate opinion of Justice Brion and the separate opinion of Justice Nachura.

How Corporate Meetings Are Called

The powers of a corporation are vested in the board of directors and the stockholders as a body and not as individuals  (see Corporation Code of the Philippines Annotated, p. 465). Hence, corporate actions can generally be taken and approved only in properly convened meetings of the stockholders or directors of the corporation.

A meeting of stockholders can either be regular or special.  A regular meeting refers to the yearly meeting of the stockholders on the date fixed in the by-laws, or if not so fixed, on any date in April of every year as determined by the board of directors.  A special meeting of stockholders is one held at any time deemed necessary (as may be provided in the by-laws).

Similarly, a meeting of the board of directors can either be regular or special.  The regular meeting of the board of directors refers to one held on a monthly basis as provided in the Corporation Code (unless the by-laws provide otherwise).  On the other hand, a special meeting of the board is one held at any time upon the call of the President (or as may be provided in the by-laws). (Corporation Code, sec. 53)

The by-laws normally state who are authorized to call meetings of the corporation. The by-laws typically provide that stockholders’ meetings may be called by the President, the Board of Directors or at the written request of stockholders representing a majority of the outstanding capital stock.  For directors’ meetings, by-laws typically provide that the meeting may be called by the Chairman, the President or at the request of a majority of the directors.  If there is no person authorized to call a meeting, the SEC, upon petition of a stockholder and upon showing of good cause, may issue an order to the petitioning stockholder directing him to call a meeting of the corporation by giving proper notice of the meeting.  (Corporation Code, sec. 50)

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February 2010 Philippine Supreme Court Decisions on Criminal Law and Procedure

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

Criminal Law

1.     Revised Penal Code

Criminal liability; exemption. Under Art. 332 of the Revised Penal Code, the relationship by affinity created between the husband and the blood relatives of his wife is not dissolved by the death of one spouse, thus ending the marriage which created such relationship by affinity. The Supreme Court upheld the continuing affinity view, which maintains that the relationship by affinity between the surviving spouse and the kindred of the deceased spouse continues even after the death of the deceased spouse, regardless of whether the marriage produced children or not.

The continuing affinity view was adopted by the Supreme Court in interpreting Art. 332 of the Revised Penal Code. First, Art. 332(1) is meant to be beneficial to relatives by affinity within the degree covered under the said provision. This view has been applied in the interpretation of laws in order to benefit step-relatives or in-laws. Second, Art. 332(1) is couched in a general language because the legislative intent is to make no distinction between the spouse of one’s living child and the surviving spouse of one’s deceased child can be drawn from it without doing violence to its language. Third, the continuing affinity view is more in accord with family solidarity and harmony as declared by the Constitution in Section 12, Art. II, and Section 1, Art. 15. Fourth, the fundamental principle of in dubio pro reo (when in doubt, rule for the accused) and rule of lenity, must be applied.  These principles call for the adoption of an interpretation which is more lenient. Since the basic purpose of Art. 332 is to preserve family harmony by providing an absolutory cause, the court should adopt the continuing affinity view. Intestate of Manolita Gonzales vda. De Carungcong, represented by Mediatrix Carungcong as Administratirix vs. People of the Philippines, et al., G.R. No. 181409, February 11, 2010.

Criminal liability; command responsibility. Gen. Esperon and P/Dir Gen. Razon were included in the case on the theory that they, as commanders, were responsible for the unlawful acts allegedly committed by their subordinates against petitioners. While in a qualified sense tenable, the dismissal by the Court of Appeals of the case against them is incorrect if viewed in the light of command responsibility.

“Command responsibility” in its simplest terms, means the “responsibility of commanders for crimes committed by subordinate members of the armed forces or other persons subject to their control in international wars or domestic conflict. In this sense, command responsibility is properly a form of criminal complicity.

The Hague Conventions of 1907 adopted the doctrine of command responsibility, and recently, this doctrine has been codified in the Rome Statute of the International Criminal Court to which the Philippines is a signatory. Section 28 of the Statute imposes individual responsibility on military commanders for crimes committed by forces under their control. However, the country is not yet formally bound by the terms and provisions embodied in this treaty-statute, since the Senate has yet to extend concurrence in its ratification. Thus, while there are several pending bills on command responsibility, there is still no Philippine law that provides for criminal liability under that doctrine.

It may be plausibly contended that command responsibility, as legal basis for criminal liability, may be made applicable to this jurisdiction on the theory that the command responsibility doctrine now constitutes a principle in international law in accordance with the incorporation clause of the Constitution. Still it would be inappropriate to apply to these proceedings this doctrine, as a form of criminal complicity through omission, if any, since the issue of criminal culpability is beyond the reach of a writ of amparo. Lourdes D. Rubrico, et al. vs. Gloria Macapagal-Arroyo, et al., G.R. No. 183871, February 18, 2010.

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February 2010 Philippine Supreme Court Decision on Commercial Law

Corporation; sequestered corporation. Tañada, et al. posit the view that the conversion of shares needs the acquiescence of the 14 CIIF companies.

The SMC shares allegedly owned by the CIIF companies are sequestered assets under the control and supervision of the PCGG pursuant to Executive Order No. 1, Series of 1986.  It is the duty of the PCGG to preserve the sequestered assets and prevent their dissipation. In the exercise of its powers, the PCGG need not seek or obtain the consent or even the acquiescence of the sequestered assets owner with respect to any of its acts intended to preserve such assets. Otherwise, it would be well-nigh impossible for PCGG to perform its duties and exercise its powers under existing laws, for the owner of the sequestered assets will more often than not oppose or resist PCGG’s actions if their consent is a condition precedent. The act of PCGG of proposing the conversion of the sequestered SMC shares to Series 1 Preferred Shares was clearly an exercise of its mandate under existing laws, where the consent of the CIIF Companies is rendered unnecessary.

Additionally, the above contention has been rendered moot with the filing on October 26, 2009 of the Manifestation dated October 23, 2009. Attached to such Manifestation is the Secretary’s Certificate of the 14 CIIF companies approving the conversion of the SMC Common Shares into Series 1 Preferred Shares.  Philippine Coconut Producers Federation, Inc. (COCOFED), et al. vs. Republic of the Philippines, G.R. Nos. 177857-58/G.R. No. 178193/G.R. No. 180705, February 11, 2010.

(Note:  Except for the above case, there is no  February 2010 case that posed a commercial law issue.)