August 2012 Philippine Supreme Court Decisions on Civil Law

Here are select August 2012 rulings of the Supreme Court of the Philippines on civil law:

Civil Code

Accion reivindicatoria.  Article 434 of the Civil Code provides that in an action to recover, the property must be identified, and the plaintiff must rely on the strength of his title and not on the weakness of the defendant’s claim.

The first requisite is the identity of the land. In an accion reinvindicatoria, the person who claims that he has a better right to the property must first fix the identity of the land he is claiming by describing the location, area and boundaries thereof. Anent the second requisite, i.e., the claimant’s title over the disputed area, the rule is that a party can claim a right of ownership only over the parcel of land that was the object of the deed. It is settled that what really defines a piece of land is not the area mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits. We have held, however, that in controversial cases where there appears to be an overlapping of boundaries, the actual size of the property gains importance. Leonardo Notarte et al. v. Godofredo Notarte, G.R. No. 180614, August 29, 2012.

Damages; actual and moral damages; factual and legal support required. Article 2199 of the Civil Code is the statutory basis for the award of actual damages, which entitles a person to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. As such, actual damages if allowed by the RTC, being bereft of factual support, are speculative and whimsical. Without the clear and distinct findings of fact and law, the award amounts only to an ipse dixit on the part of the RTC, and do not attain finality.

Absent a clear and distinct statement of the factual and legal support for the award of moral damages, the award is thus also speculative and whimsical. Moral damages constitute another judicial ipse dixit, the inevitable consequence of which is to render the award of moral damages incapable of attaining finality. In addition, the grant of moral damages in that manner contravenes the law that permit the recovery of moral damages as the means to assuage “physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.” Moral damages are not intended to enrich the plaintiff at the expense of the defendant, but to restore the plaintiff to his status quo ante as much as possible. University of the Philippines, et al. v. Hon. Agustin Dizon et al., G.R. No. 171182, Aug. 23, 2012.

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August 2012 Philippine Supreme Court Decision on Tax Law

National Internal Revenue Code; Value Added Tax; claim for credit or refund of input value-added tax; printing of “zero-rated.”. Section 244 of the National Internal Revenue Code (NIRC) explicitly grants the Secretary of Finance the authority to promulgate the necessary rules and regulations for the effective enforcement of the provisions of the tax code. Consequently, the following invoicing requirements enumerated in Section 4.108-1 of the Revenue Regulations (RR) 7-95 must be observed by all VAT-registered taxpayers: (1) the name, TIN and address of seller; (2) date of transaction; (3) quantity, unit cost and description of merchandise or nature of service; (4) the name, TIN, business style, if any, and address of the VAT-registered purchaser, customer or client; (5) the word “zero-rated imprinted on the invoice covering zero-rated sales; and the invoice value or consideration. The need for taxpayers to indicate in their invoices and receipts the fact that they are zero-rated or that its transactions are zero-rated became more apparent upon the integration of the abovementioned provisions of RR No. 7-95 in Section 113 of the NIRC enumerating the invoicing requirements of VAT-registered persons when the NIRC was amended by Republic Act No. 9337. The Court has consistently ruled that the absence of the word “zero-rated” on the invoices and receipts of a taxpayer will result in the denial of the claim for tax refund. Eastern Telecommunications Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 168856, August 29, 2012.

(Caren thanks Ma. Luisa D. Manalaysay for assisting in the preparation of this post.)

August 2012 Philippine Supreme Court Decisions on Legal and Judicial Ethics

Here are select August 2012 rulings of the Supreme Court of the Philippines on legal and judicial ethics:

Attorney; failure to account for money.  The Code of Professional Responsibility provides:

Canon 16-A lawyer shall hold in trust all moneys and properties of his client that may come into his possession.

Rule 16.01-A lawyer shall account for all money or property collected or received for or from the client.

Rule 16.02-A lawyer shall keep the funds of each client separate and apart from his own and those of others kept by him.

Rule 16.03-A lawyer shall deliver the funds and property of his client when due or upon demand.

Money entrusted to a lawyer for a specific purpose but not used for the purpose, should be immediately returned. A lawyer’s failure to return upon demand the funds held by him on behalf of his client gives rise to the presumption that he has appropriated the same for his own use in violation of the trust reposed in him by his client. Such act is a gross violation of general morality as well as of professional ethics. It impairs public confidence in the legal profession and deserves punishment. Emilia O. Dhaliwal vs. Atty. Abelardo B. Dumaguing. A.C. No. 9390, August 1, 2012.

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Making GOCCs relevant

After more than a year of absence, we are back with a blog on new laws passed by Congress. With the impeachment proceedings of the old Chief Justice over and done with, it is time for Congress to focus on making new laws. But, before we write on new laws passed by Congress, it may be worthwhile looking back at one important legislation last year– Republic Act No. 10149 or the “GOCC Governance Act of 2011” enacted by Congress on June 6, 2011

In recent years, there have been various reports about high-ranking officers of government owned and controlled corporations (GOCCs) being charged with graft for misappropriation of government resources, dispensation of bloated salaries, unauthorized purchase of assets, and abuse of power.

In a move to try to address these ills, the GOCC Governance Act of 2011 was passed to provide greater transparency, periodic disclosure and evaluation of operations and finances, creation of appropriate remuneration schemes, and clear separation between the regulatory and proprietary activities of GOCCs.

The Act actually also applies to Government Instrumentalities with Corporate Powers/Government Corporate Entities, which are instrumentalities or agencies of the government that are neither corporations nor agencies integrated within the departmental framework but are vested by law with special functions or jurisdiction, and government financial institutions and their subsidiaries. The Act however does not cover the Bangko Sentral ng Pilipinas, state universities and colleges, cooperatives, local water districts, economic zone authorities and research institutions (Sec. 4).

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August 2012 Philippine Supreme Court Decisions on Civil Law

Here are select August 2012 rulings of the Supreme Court of the Philippines on civil law:

Civil Code

Common carrier; damages. The operator of a. school bus service is a common carrier in the eyes of the law. He is bound to observe extraordinary diligence in the conduct of his business. He is presumed to be negligent when death occurs to a passenger. His liability may include indemnity for loss of earning capacity even if the deceased passenger may only be an unemployed high school student at the time of the accident. Spouses Teodorico and Nanette Pereña v. Spouses Nicolas and Teresita L. Zarate, et al.; G.R. No. 157917. August 29, 2012.

Contracts; rescission; consequences are restitution and in this case, each party will bear its own damage.  As correctly observed by the RTC, the rescissory action taken by GSIS is pursuant to Article 1191 of the Civil Code. In cases involving rescission under the said provision, mutual restitution is required. The parties should be brought back to their original position prior to the inception of the contract. “Accordingly, when a decree of rescission is handed down, it is the duty of the court to require both parties to surrender that which they have respectively received and to place each other as far as practicable in [their] original situation.” Pursuant to this, Goldloop should return to GSIS the possession and control of the property subject of their agreements while GSIS should reimburse Goldloop whatever amount it had received from the latter by reason of the MOA and the Addendum.

Relevant also is the provision of Article 1192 of the Civil Code which reads: “In case both parties have committed a breach of the obligation, the liability of the first infractor shall be equitably tempered by the courts. If it cannot be determined which of the parties first violated the contract, the same shall be deemed extinguished, and each shall bear his own damages.” (Emphasis suppied.)

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August 2012 Philippine Supreme Court Decisions on Labor Law and Procedure

Here are select rulings of the Philippine Supreme Court on labor law and procedure:

Disability benefits; entitlement. Entitlement of seafarers to disability benefits is governed not only by medical findings but also by contract and by law. By contract, Department Order No. 4, series of 2000, of the Department of Labor and Employment and the parties’ Collective Bargaining Agreement bind the seafarer and the employer. By law, the Labor Code provisions on disability apply with equal force to seafarers. The seafarer, upon sign-off from his vessel, must report to the company-designated physician within three (3) days from arrival for diagnosis and treatment. For the duration of the treatment but in no case to exceed 120 days, the seaman is on temporary total disability as he is totally unable to work. He receives his basic wage during this period until he is declared fit to work or his temporary disability is acknowledged by the company to be permanent, either partially or totally, as his condition is defined under the POEA Standard Employment Contract and by applicable Philippine laws. If the 120 days initial period is exceeded and no such declaration is made because the seafarer requires further medical attention, then the temporary total disability period may be extended up to a maximum of 240 days, subject to the right of the employer to declare within this period that a permanent partial or total disability already exists. The seaman may of course also be declared fit to work at any time such declaration is justified by his medical condition.

From the time Tomacruz was repatriated on November 18, 2002, he submitted himself to the care and treatment of the company-designated physician. When the company-designated physician made a declaration on July 25, 2003 that Tomacruz was already fit to work, 249 days had already lapsed from the time he was repatriated. As such, his temporary total disability should be deemed total and permanent, pursuant to Article 192 (c)(1) of the Labor Code and its implementing rule. Philasia Shipping Agency Corporation, et al. vs. Andres G. Tomacruz. G.R. No. 181180, August 15, 2012.

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