March 2010 Philippine Supreme Court Decisions on Remedial Law

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

Civil Procedure

Actions; action for reformation of instrument; requisites. For an action for reformation of instrument to prosper, the following requisites must concur: (1) there must have been a meeting of the minds of the parties to the contract; (2) the instrument does not express the true intention of the parties; and (3) the failure of the instrument to express the true intention of the parties is due to mistake, fraud, inequitable conduct or accident.  Petitioner having admitted the existence and execution of the instrument, what remains to be resolved is whether the contract expressed the true intention of the parties; if not, whether it was due to mistake, fraud, inequitable conduct or accident.  The onus probandi is upon the party who insists that the contract should be reformed.  Notarized documents, like the deed in question [i.e., “Sale and Transfer of Rights over a Portion of a Parcel of Land”], enjoy the presumption of regularity which can be overturned only by clear, convincing and more than merely preponderant evidence.  This petitioner failed to discharge.  Flordeliza Emilio vs. Bilma Rapal, G.R. No. 181855, March 30, 2010.

Actions; annulment of judgment. The Court finds that petitioner properly availed of the remedy of a petition for annulment of judgment in challenging the Manila RTC Decision.  In his petition with the appellate court, he did not limit his ground to extrinsic fraud, as he invoked as well the Manila RTC’s lack of jurisdiction to annul the proceedings in the Pagadian RTC which is a court of co-equal and coordinate jurisdiction.  Since petitioner’s petition raised lack of jurisdiction, he did not have to allege that the ordinary remedies of new trial, reconsideration or appeal were no longer available through no fault of his.  This is so because a judgment rendered or final order issued by the RTC without jurisdiction is null and void and may be assailed any time either collaterally or in a direct action, or by resisting such judgment or final order in any action or proceeding whenever it is invoked.  Jose Cabaral Tiu v. First Plywood Corporation/Jose Cabaral Tiu vs. Timber Exports, Inc. Angel Domingo, Country Bankers Ins. Corp., Perfecto Mondarte, Jr. and Cesar Dacal, G.R. No. 176123/G.R. No.  185265, March 10, 2010

Actions; attack on title. The petitioners contend that this action for quieting of title should be disallowed because it constituted a collateral attack on OCT No. RO-9969-(O-20449), citing Section 48 of Presidential Decree No. 1529, viz:

Section 48. Certificate not subject to collateral attack.– A certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law.

The petitioners’ contention is not well taken.  An action or proceeding is deemed an attack on a title when its objective is to nullify the title, thereby challenging the judgment pursuant to which the title was decreed.  The attack is direct when the objective is to annul or set aside such judgment, or enjoin its enforcement. On the other hand, the attack is indirect or collateral when, in an action to obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof.  Teofisto Oño, et al. vs. Vicente N. Lim, G.R. No. 154270, March 9,  2010

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How Board Meetings Are Conducted

The board of directors of a corporation exercise the powers of the corporation. Under the Corporation Code, the corporate powers of a corporation, all business conducted and all property of a corporation are generally controlled and held by the board of directors.

The validity of a corporate act is predicated on the following requisites:

(1)      meeting of the directors;

(2)      presence of the required quorum;

(3)     decision of majority of the quorum, or in other cases, a majority of the board (or the vote requirement provided in the by-laws);

(4)      meeting at the time, place, and manner provided in the by-laws. (see Corporation Code, sec. 25; see Corporation Code of the Philippines Annotated, p. 267 [2006]).

A typical agenda for a board meeting is as follows:

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March 2010 Philippine Supreme Court Decisions on Labor Law and Procedure

Here are selected March 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Labor law

Cancellation of union registration. Art. 234(c) of the Labor Code requires the mandatory minimum 20% membership of rank-and-file employees in the employees’ union. Twenty percent (20%) of 112 rank-and-file employees in Eagle Ridge would require a union membership of at least 22 employees (112 x 205 = 22.4).  When the EREU filed its application for registration on December 19, 2005, there were clearly 30 union members.  Thus, when the certificate of registration was granted, there is no dispute that the Union complied with the mandatory 20% membership requirement. Accordingly, the retraction of six union members who later severed and withdrew their union membership cannot cause the cancellation of the union’s registration.

Besides, it cannot be argued that the affidavits of retraction retroacted to the time of the application for union registration or even way back to the organizational meeting. Before their withdrawal, the six employees in question were bona fide union members. They never disputed affixing their signatures beside their handwritten names during the organizational meetings.  While they alleged that they did not know what they were signing, their affidavits of retraction were not re-affirmed during the hearings of the instant case rendering them of little, if any, evidentiary value. In any case, even with the withdrawal of six union members, the union would still be compliant with the mandatory membership requirement under Art. 234(c) since the remaining 24 union members constitute more than the 20% membership requirement of 22 employees.  Eagle Ridge Gold & Country Club vs. Court of Appeals, et al., G.R. No. 178989, March 18, 2010.

Cessation of operations; financial assistance.  Based on Article 283, in case of cessation of operations, the employer is only required to pay his employees a separation pay of one month pay or at least one-half month pay for every year of service, whichever is higher. That is all that the law requires.

In the case at bar, petitioner paid respondents the following: (a) separation pay computed at 150% of their gross monthly pay per year of service; and (b) cash equivalent of earned and accrued vacation and sick leaves. Clearly, petitioner had gone over and above the requirements of the law. Despite this, however, the Labor Arbiter ordered petitioner to pay respondents an additional amount, equivalent to one month’s salary, as a form of financial assistance.

The award of financial assistance is bereft of legal basis and serves to penalize petitioner who had complied with the requirements of the law. The Court also point out that petitioner may, as it has done, grant on a voluntary and ex gratia basis, any amount more than what is required by the law, but to insist that more financial assistance be given is certainly something that the Court cannot countenance. Moreover, any award of additional financial assistance to respondents would put them at an advantage and in a better position than the rest of their co-employees who similarly lost their employment because of petitioner’s decision to cease its operations. SolidBank Corporation vs. National Labor Relations Commission, et al., G.R. No. 165951, March 30, 2010.

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March 2010 Philippine Supreme Court Decisions on Criminal Law and Procedure

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

Criminal Law

1.     Revised Penal Code

Acts of lasciviousness; elements. The crime of Acts of Lasciviousness, as defined in Article 336 of the Revised Penal Code, has the following elements: (1) that the offender commits any act of lasciviousness or lewdness; (2) that it is done under any of the following circumstances: (a) by using force or intimidation; or (b) when the offended party is deprived of reason or otherwise unconscious; or (c) when the offended party is under 12 years of age; and (3) that the offended party is another person of either sex. Salvador Flordeliz y Abenojar v. People of the Philippines, G.R. No. 186441, March 3, 2010.

Arson; categories. There are actually two categories of arson, namely: Destructive Arson under Article 320 of the Revised Penal Code and Simple Arson under Presidential Decree No. 1316. Said classification is based on the kind, character and location of the property burned, regardless of the value of the damage caused. Article 320 contemplates the malicious burning of structures, both public and private, hotels, buildings, edifices, trains, vessels, aircraft, factories and other military, government or commercial establishments by any person or group of persons.  On the other hand, Presidential Decree No. 1316 covers houses, dwellings, government buildings, farms, mills, plantations, railways, bus stations, airports, wharves and other industrial establishments. People of the Philippines v. Jessie Villegas Murcia, G.R. No. 182460, March 9, 2010.

Arson; evidence. In the prosecution for the crime of arson, proof of the crime charged is complete where the evidence establishes: (1) the corpus delicti, that is, a fire because of criminal agency; and (2) the identity of the defendant as the one responsible for the crime. In arson, the corpus delicti rule is satisfied by proof of the bare fact of the fire and of it having been intentionally caused. People of the Philippines v. Jessie Villegas Murcia,  G.R. No. 182460, March 9, 2010.

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Philippine Laws: March 2010

Here are summaries of some of the new laws that were approved or became effective in March 2010:

1.     Republic Act No. 10023 – An Act Authorizing the Issuance of Free Patents to Residential Lands.

This Act was passed by the House of Representatives and the Senate on December 18, 2009, and was approved by the President on March 9, 2010. The Act was published in two newspapers of general circulation on March 19, 2010.

Under the Act, a Filipino citizen, who is an actual occupant of a public residential land, may apply for a Free Patent Title, provided that (a) the land shall not exceed 200 square meters in highly urbanized cities, 500 square meters in other cities, 750 square meters in first class and second class municipalities, and 1,000 square meters in other municipalities, and (b) the land is not needed for public service or public use.

The application shall be filed with the Community Environment and Natural Resources Office (CENRO) of the Department of Environment and Natural Resources (DENR). The application shall be supported by (i) a map based on an actual survey conducted by a licensed geodetic engineer and approved by the DENR, (ii) a technical description of the land, and (iii) supporting affidavits of two disinterested persons residing in the same baranggay attesting to the truth of the facts stated in the application that the applicant has actually resided on, and continually possessed and occupied, the land under a bona fide claim of acquisition of ownership, by himself or through his predecessor-in-interest, for at least 10 years, and has complied with the requirements of an applicant.

The CENRO is mandated to process the application within 120 days, and shall give its recommendation to the Provincial Environment and Natural Resources Office (PENRO). The PENRO shall have 5 days to approve or disapprove the recommendation. In case of conflicting claims, the parties may seek proper judicial remedies.

Public land actually occupied and used for public schools, municipal halls, public plazas or parks, and other governmental institutions for public use or purpose, may be issued special patents in the name of the national agency or local government unit concerned. However, these lands shall not be disposed of unless sanctioned by Congress if owned by a national agency, or by the sanggunian if owned by a local government unit.

The Director of Land Management Bureau of the DENR shall promulgate the implementing rules and regulations for this Act.

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March 2010 Philippine Supreme Court Decisions on Legal and Judicial Ethics

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

Court personnel; administrative proceedings; desistance. Complainant Plaza manifested before the Court his intention to desist from pursuing the case.  However, we remind complainant that the discretion whether to continue with the proceedings rests exclusively with the Court, notwithstanding the complainant’s intention to desist.  This Court looks with disfavor at affidavits of desistance filed by complainants, especially if done as an afterthought.  Contrary to what the parties might have believed, withdrawal of the complaint does not have the legal effect of exonerating respondent from any administrative disciplinary sanction.  It does not operate to divest this Court of jurisdiction to determine the truth behind the matter stated in the complaint.  The Court’s disciplinary authority cannot be dependent on or frustrated by private arrangements between parties.  An administrative complaint against an official or employee of the judiciary cannot simply be withdrawn by a complainant who suddenly claims a change of mind.  Otherwise, the prompt and fair administration of justice, as well as the discipline of court personnel, would be undermined. Ryan S. Plaza, Clerk of Court, Municipal Trial Court, Argao, Cebu vs. Atty. Marcelina R. Amamio, Clerk of Court, Genoveva R. Vasquez, Legal Researcher and Floramay Patalinhug, Court Stenographer, all of the Regional Trial Court, Branch 26, Argao, Cebu, A.M. No. P-08-2559, March 19, 2010.

Court personnel; dishonesty. Complainant stated that respondent Atty. Cariño may not have disclosed to the Supreme Court, in the course of her application as Clerk of Court, her pending administrative and criminal cases before the Ombudsman. Respondent Atty. Cariño vehemently denied the allegations against her.  She claimed that she was just being truthful when she answered “No” to item number 37(a) of her Personal Data Sheet (PDS) which states:  “Have you ever been formally charged?”  She admitted that she was aware of the two (2) complaints filed against her and her former Regional Election Director before the Ombudsman.  She, however, pointed out that these cases are still in the preliminary investigation and pre-charge stages, since probable cause has yet to be determined by the investigating officers and as such, should not be considered as formal charges yet.

If we but look at the attachments to the complaint itself, it is evident that at the time respondent Atty. Cariño was applying for the position of Clerk of Court, she had not yet been “formally charged” administratively or criminally. Clearly, there were no final dispositions of the cases yet.  In fact, the complainant even stated in his Complaint that those cases were not yet resolved by the Ombudsman. Thus, it is only after the issuance of the resolution finding probable cause and filing of the information in court that she can be considered formally charged.  In fact, the reckoning point is the filing of the information with the written authority or approval of the Ombudsman. To rule otherwise would subject herein respondent, or any civil servant for that matter, to extreme hardships considering that a government official or employee formally charged is deprived of some rights/privileges, i.e., obtaining loans from the Government Service Insurance System or other government-lending institutions, delay in the release of retirement benefits, disqualification from being nominated or appointed to any judicial post and, in some instances, prohibition to travel. Crisostomo M. Plopinio vs. Atty. Liza Zabala-Cariño, etc., A.M. No. P-08-2458, March 22, 2010.

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March 2010 Philippine Supreme Court Decisions on Commercial Law

Here are selected March 2010 rulings of the Supreme Court of the Philippines on commercial law:

Bank; same day crediting. Based on the records, there is no sufficient evidence to show that BPI conclusively confirmed the same-day crediting of the RCBC check which Suarez’s client deposited late on 16 June 1997.

Clearly, Suarez failed to prove that BPI confirmed the same-day crediting of the RCBC check, or that BPI assured Suarez that he had sufficient available funds in his account. Accordingly, BPI was not estopped from dishonoring the checks for inadequacy of available funds in Suarez’s account since the RCBC check remained uncleared at that time.

While BPI had the discretion to undertake the same-day crediting of the RCBC check, and disregard the banking industry’s 3-day check clearing policy, Suarez failed to convincingly show his entitlement to such privilege. As BPI pointed out, Suarez had no credit or bill purchase line with BPI which would qualify him to the exceptions to the 3-day check clearing policy.

Considering that there was no binding representation on BPI’s part as regards the same-day crediting of the RCBC check, no negligence can be ascribed to BPI’s dishonor of the checks precisely because BPI was justified in dishonoring the checks for lack of available funds in Suarez’s account.  Bank of the Philippines Islands Vs. Reynald R. Suarez, G.R. No. 167750, March 15, 2010.

Corporation;  corporate veil. The doctrine of piercing the corporate veil applies only in three (3) basic instances, namely: a) when the separate and distinct corporate personality defeats public convenience, as when the corporate fiction is used as a vehicle for the evasion of an existing obligation; b) in fraud cases, or when the corporate entity is used to justify a wrong, protect a fraud, or defend a crime; or c) is used in alter ego cases, i.e., where a corporation is essentially a farce, since it is a mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation.

In the absence of malice, bad faith, or a specific provision of law making a corporate officer liable, such corporate officer cannot be made personally liable for corporate liabilities.

In the present case, we see no competent and convincing evidence of any wrongful, fraudulent or unlawful act on the part of PRISMA to justify piercing its corporate veil. While Pantaleon denied personal liability in his Answer, he made himself accountable in the promissory note “in his personal capacity and as authorized by the Board Resolution” of PRISMA. With this statement of personal liability and in the absence of any representation on the part of PRISMA that the obligation is all its own because of its separate corporate identity, we see no occasion to consider piercing the corporate veil as material to the case.  Prisma Construction and Development Corporation and Rogelio S. Pantaleon vs. Arthur F. Menchavez, G.R. No. 160545, March 9, 2010.

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