June 2010 Philippine Supreme Court Decisions on Remedial Law

Here are selected June 2010 Philippine Supreme Court decisions on remedial law:

Civil Procedure

Annulment of judgment; direct recourse to this remedy not allowed if other appropriate remedies are available.  Sections 1 and 2 of Rule 47 of the Rules of Court impose the conditions for the availment of the remedy of annulment of judgment, viz.:

Section 1. Coverage.- This Rule shall govern the annulment by the Court of Appeals of judgments or final orders and resolutions in civil actions of Regional Trial Courts for which the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of the petitioner.

Section 2. Groundsfor annulment. – The annulment may be based only on the grounds of extrinsic fraud and lack of jurisdiction.

Extrinsic fraud shall not be a valid ground if it was availed of, or could have been availed of, in a motion for new trial or petition for relief.

Section 1, Rule 47 provides that it does not allow a direct recourse to a petition for annulment of judgment if other appropriate remedies are available, such as a petition for new trial, appeal or a petition for relief.  If petitioner fails to avail of these remedies without sufficient justification, she cannot resort to the action for annulment of judgment under Rule 47, for otherwise, she would benefit from her inaction or negligence.

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Regulations Update: Freeport Area of Bataan Act of 2009

The Rules and Regulations Implementing the Provisions of Republic Act No. 9728, Otherwise Known as “The Freeport Area of Bataan Act of 2009” was among the implementing rules and regulations published in June 2010 to implement the various laws passed by the Fourteenth Congress. Republic Act No. 9728 was passed by both houses of Congress in September 2009 and lapsed into law on October 23, 2010 without the signature of the President.

Republic Act No. 9728 converted the existing Bataan Economic Zone located in Mariveles, Bataan into a special economic zone to be known as the Freeport Area of Bataan (FAB). Under the Implementing Rules, the FAB is a separate customs territory consisting of the Bataan Economic Zone and the entire Municipality of Mariveles. As such, all articles may be imported by FAB enterprises into the FAB free of customs and import duties and national internal revenue taxes.

FAB enterprises enjoy the incentives under the Special Economic Zone Act of 1995 or the Omnibus Investments Code of 1987. Registration as FAB enterprise is open to nationals and business enterprises of any country in any area of economic activity, except those where the Constitution limits the ownership to Filipinos or Philippine nationals. FAB enterprises, however, must not source more than 30% of its income from the Customs Territory (or the area of the Philippines outside the FAB); otherwise, all of its income shall be subject to the tax laws of the Customs Territory and customs duties and taxes must be paid for sale of articles to the Customs Territory.

It is interesting that the Board of Directors of the Authority of the Freeport Area of Bataan (AFAB) shall be composed of nine members, with two representatives from the National Government, one representative from the Province of Bataan, to be nominated by the Provincial Board, one representative from the Congressional District to be nominated by the Congressman, one representative from the Municipality of Mariveles, to be nominated by the Municipal Council, and one representative each from the domestic investors, the foreign investors and the workers working within the FAB.

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How to determine the nationality of a corporation

The Constitution and various laws reserve certain areas of activities to Philippine citizens or to corporations that have a minimum percentage of Filipino ownership.  For example, with respect to corporations, ownership of land is limited to corporations “at least sixty per centum of whose capital is owned” by Philippine citizens.  If 60% of the capital of a Philippine corporation is owned by individuals who are Philippine citizens, then there would be no issue on whether the Philippine corporation is a Philippine national qualified to own land.  On the other hand, an issue would arise if 60% of the capital of the Philippine corporation is owned, in turn, by another Philippine corporation that has foreign stockholders.

If a Philippine corporation has corporate stockholders, how does one determine whether such Philippine corporation is a Philippine national?  Two tests have been employed in the Philippines:  (a)  the grandfather rule;  and (b)  the control test.

To illustrate how these tests are applied, let’s take a Philippine corporation (called “Corporation X”) with the following ownership structure:

(a) non-Philippine citizens own 40% of the capital stock outstanding and entitled to vote of Corporation X;

(b) another Philippine corporation (called “Corporation Y”) owns 60% of the capital stock outstanding and entitled to vote of Corporation X.

On other hand, Corporation Y has the following ownership structure:

(a) non-Philippine citizens own 40% of the capital stock outstanding and entitled to vote of Corporation Y;

(b) Philippine citizens own 60% of the capital stock outstanding and entitled to vote of Corporation Y.

Let’s also assume that Philippine citizens constitute at least 60% of the members of the board of directors of each of Corporation X and Corporation Y.

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Philippine Laws: June 2010

The last month of President GMA’s term saw her approving 19 laws, all on June 3, 2010. Of these, only Republic Act No. 10123 seem particularly significant as it created 5 additional branches of the Regional Trial Court in the 11th Judicial Region to be stationed at the Province of Sarangani. Unfortunately, there is not much to discuss here except to note that the Province of Sarangani is home of our world-renowned boxing hero-turned- Congressman. The other laws approved involved the naming of National Roads (6) and National High Schools (11), and the renaming of a library. Here’s hoping the new administration will pass more interesting and society-changing legislation.

June 2010 Philippine Supreme Court Decisions on Legal and Judicial Ethics

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

Attoney; grossly immoral act. Respondent’ acts of converting his secretary into a mistress; contracting two marriages with Shirley and Leny, are grossly immoral which no civilized society in the world can countenance. The subsequent detention and torture of the complainant is gross misconduct which only a beast may be able to do. In fine, by engaging himself in acts which are grossly immoral and acts which constitute gross misconduct, respondent has ceased to possess the qualifications of a lawyer. Rosario T. Mecaral vs. Atty. Danilo S. Velasquez, A.C. No. 8392, June 29, 2010.

Attorney; representation within bounds of the law. Canon 19 of the Code provides that a lawyer shall represent his client with zeal within the bounds of the law. For this reason, Rule 15.07 of the Code requires a lawyer to impress upon his client compliance with the law and principles of fairness. A lawyer must employ only fair and honest means to attain the lawful objectives of his client. It is his duty to counsel his clients to use peaceful and lawful methods in seeking justice and refrain from doing an intentional wrong to their adversaries. Rural Bank of Calape, Inc. (RBCI), Bohol vs. Atty. James Benedict Florido, A.C. No. 5736, June 18, 2010.

Court personnel; dishonesty and falsification of public document. Dishonesty is defined as intentionally making a false statement on any material fact in securing one’s examination, appointment, or registration. Dishonesty is a serious offense which reflects a person’s character and exposes the moral decay which virtually destroys honor, virtue, and integrity. It is a malevolent act that has no place in the judiciary, as no other office in the government service exacts a greater demand for moral righteousness from an employee than a position in the judiciary. A birth certificate, being a public document, serves as prima facie evidence of filiation. The making of a false statement therein constitutes dishonesty and falsification of a public document. Anonymous vs. Emma B. Curamen, A.M. No. 08-2549. June 18, 2010.

Court personnel; gross misconduct. Pagulayan indeed committed the transgression Judge Beltran charged. What Pagulayan did is the nightmare of every decisionmaker and magistrate who is usually the last to know that somebody has used his or her name to ask for money – “para kay Fiscal o para kay Judge” as mulcters reputedly always say. Pagulayan’s misconduct, it must be stressed, brought dishonor to the administration of justice in particular and, to the public service in general. Indeed, Pagulayan failed to live up to the standards of honesty and integrity required in the public service. In the words of the Constitution, public office is a public trust and Pagulayan betrayed this trust. Under Civil Service rules, gross misconduct is a grave offense and punishable by dismissal. Judge Orlando D. Beltran vs. Vilma C. Pagulayan, Interpreter III, RTC, Branch 2, Tuguegarao City, Cagayan, A.M. No. P-05-2014, June 29, 2010.

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June 2010 Philippine Supreme Court Decisions on Criminal Law and Procedure

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

Criminal Law

1. Revised Penal Code

Aggravating circumstance; evident premeditation. In order for evident premeditation to be appreciated, the following requisites must be proven: (1) the time when the offender determined to commit the crime; (2) an act manifestly indicating that the culprit has clung to his determination; and (3) a sufficient lapse of time between the determination and execution, to allow him to reflect upon the consequences of his act and to allow his conscience to overcome the resolution of his will. In the instant case, appellant uttered the words “iyang mama na iyan, may araw din siya sa akin.” Even conceding that these utterances were in the form of a threat, it still cannot be presumed that at the time they were made, there was indeed a determination to kill and that appellants had indeed clung to that determination, planning and meditating on how to kill the victim. People of the Philippines vs. Jonel Falabrica Serenas, et al, G.R. No. 188124, June 29, 2010.

Aggravating circumstance; evident premeditation. For evident premeditation to be considered, the following must be established: (1) the time when the accused determined (conceived) to commit the crime; (2) an overt act manifestly indicating that he clung to his determination to commit the crime (kill his victim); and (3) a sufficient lapse of time between the decision to commit the crime and the execution thereof to allow the accused to reflect upon the consequences of his act. Premeditation presupposes a deliberate planning of the crime before executing it. The execution of the criminal act, in other words, must be preceded by cool thought and reflection. In this case, there was a showing of a plan or preparation to kill, or proof that the accused meditated and reflected upon his decision to execute the crime. People of the Philippines vs. Albert Sanchez y Galera, G.R. No. 188610, June 29, 2010.

Aggravating circumstance; treachery. There is treachery when the offender commits any of the crimes against persons, employing means, methods or forms which tend directly and specially to ensure its execution, without risk to himself arising from the defense, which the offended party might make. For treachery to be appreciated, two conditions must concur: (a) the employment of means, methods or manner of execution that would ensure the offender’s safety from any defense or retaliatory act on the part of the offended party; and (b) the offender’s deliberate or conscious choice of means, method or manner of execution. People of the Philippines vs. Albert Sanchez y Galera, G.R. No. 188610, June 29, 2010.

Aggravating circumstance; treachery. The essence of treachery is the sudden attack by an aggressor without the slightest provocation on the part of the victim, depriving the latter of any real chance to defend himself, thereby ensuring the commission of the crime without risk to the aggressor. Jurisprudence teaches that there is treachery when an adult person attacks and causes the death of a child of tender years. As the Supreme Court elucidated in People vs. Cabarrubias, the killing of a child is characterized by treachery even if the manner of assault is not shown. For, the weakness of the victim due to his tender years results in the absence of any danger to the accused. People of the Philippines vs. Albert Sanchez y Galera, G.R. No. 188610, June 29, 2010.

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June 2010 Philippine Supreme Court Decisions on Labor Law and Procedure

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

Labor Law

Acceptance of Benefits, render moot claim under other policies.  As in the case of Capili v. National Labor Relations Commission [273 SCRA 576], a claim for benefit under the company’s retirement plan becomes moot when the employee accepts retirement benefits on the basis of Article 287 of the Labor Code.  By Yuson’s acceptance of her retirement benefits through a compromise agreement entered into with her employer, she is deemed to have opted to retire under Article 287. Korean Air Co., Ltd and Suk Kyoo Kim v. Adelina A.S. Yuson, G.R. No. 170369, June 16, 2010.

Approval for company’s early retirement program; management prerogative.  Approval of applications for the early retirement program (“ERP”) is within the employer’s management prerogatives.  The exercise of management prerogative is valid as long as it is not done in a malicious, harsh, oppressive, vindictive, or wanton manner. In the present case, the Court sees no bad faith on the part of the employer.  The 21 August 2001 memorandum clearly states that petitioner, on its discretion, was offering ERP to its employees.  The memorandum also states that the reason for the ERP was to prevent further losses.  Petitioner did not abuse its discretion when it excluded respondent in the ERP because the latter is already about to retire.  To allow respondent to avail of the ERP would have been contrary to the purpose of the program. Korean Air Co., Ltd and Suk Kyoo Kim v. Adelina A.S. Yuson, G.R. No. 170369, June 16, 2010.

Constructive dismissal; definition; transfer as management prerogative. Constructive dismissal is defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely, or when there is a demotion in rank or a diminution of pay. It exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee leaving him with no option but to forego with his continued employment.

Here, there was no diminution of petitioner’s salary and other benefits.  There was no evidence that she was harassed or discriminated upon, or that respondents made it difficult for her to continue with her other duties.  Absent any evidence of bad faith, it is within the exercise of respondents’ management prerogative to transfer some of petitioner’s duties, if, in their judgment, this would be more beneficial to the corporation.  Estrella Velasco vs. Transit Automotive Supply, Inc. and Antonio de Dios, G.R. No. 171327, June 18, 2010.

Constructive dismissal; off-detailing; resignation; notice requirement. The company evidently placed petitioner on floating status after being relieved of her position.  But, as the Court has repeatedly ruled, such act of “off-detailing” does not amount to a dismissal so long as the floating status does not continue beyond a reasonable time.  In this case, the employee’s floating status ran up to more than six months as of August 16, 2002. For this reason, the company may be considered to have constructively dismissed the employee from work as of that date. Hence, petitioner’s purported resignation on October 15, 2002 could not have been legally possible.

The company claims that it gave petitioner notices on August 23, 2002 and September 2, 2002, asking her to explain her failure to report for work and informing her that the company would treat such failure as lack of interest in her continued employment.  But these notices cannot possibly take the place of the notices required by law as they came more than six months after the company placed her on floating status, at which time, the employee is already deemed to have been constructively dismissed her from work.  Elsa S. Mali-on v. Equitable General Services Inc., G.R. No. 185269, June 29, 2010.

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