June 2011 Philippine Supreme Court Decisions on Civil Law

Here are selected June 2011 rulings of the Supreme Court of the Philippines on civil law:

Civil Code

Agency; agency by estoppel. The doctrine of estoppel is based upon the grounds of public policy, fair dealing, good faith and justice, and its purpose is to forbid one to speak against his own act, representations, or commitments to the injury of one to whom they were directed and who reasonably relied thereon. The doctrine of estoppel springs from equitable principles and the equities in the case. It is designed to aid the law in the administration of justice where without its aid injustice might result. It has been applied by this Court wherever and whenever special circumstances of a case so demand.

Based on the events and circumstances surrounding the issuance of the assailed orders, this Court rules that MEGAN is estopped from assailing both the authority of Atty. Sabig and the jurisdiction of the RTC. While it is true, as claimed by MEGAN, that Atty. Sabig said in court that he was only appearing for the hearing of Passi Sugar’s motion for intervention and not for the case itself, his subsequent acts, coupled with MEGAN’s inaction and negligence to repudiate his authority, effectively bars MEGAN from assailing the validity of the RTC proceedings under the principle of estoppel. Megan Sugar Corporation v. Regional Trial Court of Iloilo, Br. 68, Dumangas, Iloilo; New Frontier Sugar Corp., et al.,  G.R. No. 170352. June 1, 2011

Agency; doctrine of apparent authority. The Court finds that the signature of Abcede is sufficient to bind PRHC. As its construction manager, his very act of signing a letter embodying the P 36 million escalation agreement produced legal effect, even if there was a blank space for a higher officer of PHRC to indicate approval thereof. At the very least, he indicated authority to make such representation on behalf of PRHC. On direct examination, Abcede admitted that, as the construction manager, he represented PRHC in running its affairs with regard to the execution of the aforesaid projects. Abcede had signed, on behalf of PRHC, other documents that were almost identical to the questioned letter-agreement. PRHC does not question the validity of these agreements; it thereby effectively admits that this individual had actual authority to sign on its behalf with respect to these construction projects. Philippine Realty and Holding Corp. vs. Ley Const. and Dev. Corp./Ley Cons. and Dev. Corp. vs. Philippine Realty and Holding Corp., G.R. No. 165548/G.R. No. 167879. June 13, 2011

January 2011 Philippine Supreme Court Decisions on Civil Law

Here are selected January 2011 rulings of the Supreme Court of the Philippines on civil law:

Civil Code

Common carriers; standard of diligence. Under Article 1732 of the Civil Code, common carriers are persons, corporations, firms, or associations engaged in the business of carrying or transporting passenger or goods, or both by land, water or air for compensation, offering their services to the public. A common carrier is distinguished from a private carrier wherein the carriage is generally undertaken by special agreement and it does not hold itself out to carry goods for the general public.  The distinction is significant in the sense that the rights and obligations of the parties to a contract of private carriage are governed principally by their stipulations, not by the law on common carriers.

Loadmasters and Glodel, being both common carriers, are mandated from the nature of their business and for reasons of public policy, to observe the extraordinary diligence in the vigilance over the goods transported by them according to all the circumstances of such case, as required by Article 1733 of the Civil Code.  When the Court speaks of extraordinary diligence, it is that extreme measure of care and caution which persons of unusual prudence and circumspection observe for securing and preserving their own property or rights.  This exacting standard imposed on common carriers in a contract of carriage of goods is intended to tilt the scales in favor of the shipper who is at the mercy of the common carrier once the goods have been lodged for shipment. Thus, in case of loss of the goods, the common carrier is presumed to have been at fault or to have acted negligently. This presumption of fault or negligence, however, may be rebutted by proof that the common carrier has observed extraordinary diligence over the goods.

October 2010 Philippine Supreme Court Decisions on Civil Law

Here are selected October 2010 rulings of the Supreme Court of the Philippines on civil law:

Agency. The sale of the DMCI shares made by EIB is null and void for lack of authority to do so, for petitioners never gave their consent or permission to the sale. Moreover, Article 1881 of the Civil Code provides that “the agent must act within the scope of his authority.” Pursuant to the authority given by the principal, the agent is granted the right “to affect the legal relations of his principal by the performance of acts effectuated in accordance with the principal’s manifestation of consent.”  In the case at bar, the scope of authority of EIB as agent of petitioners is “to retain, apply, sell or dispose of all or any of the client’s [petitioners’] property,” if all or any indebtedness or other obligations of petitioners to EIB are not discharged in full by petitioners “when due or on demand in or towards the payment and discharge of such obligation or liability.” The right to sell or dispose of the properties of petitioners by EIB is unequivocally confined to payment of the obligations and liabilities of petitioners to EIB and none other. Thus, when EIB sold the DMCI shares to buy back the KKP shares, it paid the proceeds to the vendees of said shares, the act of which is clearly an obligation to a third party and, hence, is beyond the ambit of its authority as agent. Such act is surely illegal and does not bind petitioners as principals of EIB. Pacific Rehouse Corporation, et al. vs. EIB Securities, Inc.;G.R. No. 184036, October 13, 2010.

Attorney’s fees. It is settled that the award of attorney’s fees is the exception rather than the general rule; counsel’s fees are not awarded every time a party prevails in a suit because of the policy that no premium should be placed on the right to litigate. Attorney’s fees, as part of damages, are not necessarily equated to the amount paid by a litigant to a lawyer. In the ordinary sense, attorney’s fees represent the reasonable compensation paid to a lawyer by his client for the legal services he has rendered to the latter; while in its extraordinary concept, they may be awarded by the court as indemnity for damages to be paid by the losing party to the prevailing party. Attorney’s fees as part of damages are awarded only in the instances specified in Article 2208 of the Civil Code. As such, it is necessary for the court to make findings of fact and law that would bring the case within the ambit of these enumerated instances to justify the grant of such award, and in all cases it must be reasonable. Filomena R. Benedicto vs. Antonio Villaflores; G.R. No. 185020. October 6, 2010.

Attorney’s fees. We have stressed that the award of attorney’s fees is the exception rather than the rule, as they are not always awarded every time a party prevails in a suit because of the policy that no premium should be placed on the right to litigate.  Attorney’s fees as part of damages is awarded only in the instances specified in Article 2208 of the Civil Code. Financial Building Corporation vs. Rudlin International Corporation, et al./Rudlin International Corporation, et al.  vs. Financial Building Corporation; G.R. No. 164186/G.R. No. 164347. October 4, 2010.

Attorney’s fees. An award of attorney’s fees is the exception rather than the rule.  The right to litigate is so precious that a penalty should not be charged on those who may exercise it erroneously.  It is not given merely because the defendant prevails and the action is later declared to be unfounded unless there was a deliberate intent to cause prejudice to the other party. Spouses Ramy and Zenaida Pudadera vs. Ireneo Magallanes and the late Daisy Teresa cortel Magallanes, substituted by her children, Nelly M. Marquez, et al.;G.R. No. 170073, October 18, 2010.

Compensation; partial set-off. Under the circumstances, fairness and reason dictate that we simply order the set-off of the petitioners’ contractual liabilities totaling P575,922.13 against the repair cost for the defective gutter, pegged at P717,524.00, leaving the amount of P141,601.87 still due from the respondent. Support in law for this ruling for partial legal compensation proceeds from Articles 1278, 1279, 1281, and 1283 of the Civil Code. In short, both parties are creditors and debtors of each other, although in different amounts that are already due and demandable. Spouses Victoriano chung and Debbie Chung vs. Ulanday Construction, Inc.;G.R. No. 156038, October 11, 2010.

July 2010 Philippine Supreme Court Decisions on Civil Law

Here are selected July 2010 rulings of the Supreme Court of the Philippines on civil law:

Civil Code

Agency; doctrine of apparent authority. The doctrine of apparent authority in respect of government contracts, has been restated to mean that the government is NOT bound by unauthorized acts of its agents, even though within the apparent scope of their authority. Under the law on agency, however, “apparent authority” is defined as the power to affect the legal relations of another person by transactions with third persons arising from the other’s manifestations to such third person such that the liability of the principal for the acts and contracts of his agent extends to those which are within the apparent scope of the authority conferred on him, although no actual authority to do such acts or to make such contracts has been conferred.

Apparent authority, or what is sometimes referred to as the “holding out” theory, or doctrine of ostensible agency, imposes liability, not as the result of the reality of a contractual relationship, but rather because of the actions of a principal or an employer in somehow misleading the public into believing that the relationship or the authority exists. The existence of apparent authority may be ascertained through (1) the general manner in which the corporation holds out an officer or agent as having the power to act or, in other words, the apparent authority to act in general, with which it clothes him; or (2) the acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof, whether within or beyond the scope of his ordinary powers. It requires presentation of evidence of similar act(s) executed either in its favor or in favor of other parties.

Easily discernible from the foregoing is that apparent authority is determined only by the acts of the principal and not by the acts of the agent. The principal is, therefore, not responsible where the agent’s own conduct and statements have created the apparent authority.

In this case, not a single act of respondent, acting through its Board of Directors, was cited as having clothed its general manager with apparent authority to execute the contract with it. Sargasso Construction & Development Corporation / Pick & Shovel, Inc./Atlantic Erectors, Inc./ Joint Venture vs. Philippine Ports Authority, G.R. No. 170530, July 5, 2010.

May 2010 Philippine Supreme Court Decisions on Criminal Law and Procedure

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

Anti-Graft; causing undue injury. The elements of the offense of causing undue injury under R.A. 3019, Sec. 3(e) are as follows: (1) that the accused are public officers or private persons charged in conspiracy with them; (2) that said public officers commit the prohibited acts during the performance of their official duties or in relation to their public positions; (3) that they caused undue injury to any party, whether the Government or a private party; (4) that such injury is caused by giving unwarranted benefits, advantage or preference to such parties; and (5) that the public officers have acted with manifest partiality, evident bad faith or gross inexcusable negligence. In this case, only the first element was proven. The other elements were not. Thus, the presumption of regularity in the performance of one’s function remains unrebutted and enjoyed by petitioners. Anuncio C. Bustillo, et al. vs. People of the Philippines, G.R. No. 160718, May 12, 2010

Arrest; estoppel. An accused is estopped from assailing the legality of his arrest if he fails to raise this issue or to move for the quashal of the information against him on this ground, which should be made before arraignment. In this case, the irregularity of the accused’s arrest was raised only in his appeal before the Court of Appeals. This is not allowed considering that he was already properly arraigned and even actively participated in the proceedings. He is therefore deemed to have waived this alleged defect when he submitted himself to the jurisdiction of the court. People of the Philippines vs. Joseph Amper y Repaso, G.R. No. 172708, May 5, 2010.

Arrest; posting of bail. The erstwhile ruling of this Court was that posting of bail constitutes a waiver of any irregularity in the issuance of a warrant of arrest has already been superseded by Section 26, Rule 114 of the Revised Rule of Criminal Procedure.  The principle that the accused is precluded from questioning the legality of the arrest after arraignment is true only if he voluntarily enters his plea and participates during trial without previously invoking his objections thereto. Section 26, Rule 114 of the Revised Rules on Criminal Procedure is a new one, intended to modify previous rulings of this Court that an application for bail or the admission to bail by the accused shall be considered as a waiver of his right to assail the warrant issued for his arrest on the legalities or irregularities thereon. The new rule has reverted to the ruling of this Court in People v. Red. The new rule is curative in nature because, precisely, it was designed to supply defects and curb evils in procedural rules. Thus, petitioners’ posting of bail bond should not be deemed as a waiver of their right to assail their arrest. Teodoro C. Borlongan, Jr. et al. vs. Magdaleno M. Peña, et al., G.R. No. 143591, May 5, 2010.

May 2010 Philippine Supreme Court Decisions on Tax Law

Here are May 2010 rulings of the Supreme Court of the Philippines on tax law:

Assessment; prescriptive period. The government must assess internal revenue taxes within three years from the last day prescribed by law for the filing of the tax return or the actual date of filing of such return, whichever comes later. An assessment notice issued after the three-year prescriptive period is no longer valid and effective unless falling under the exceptions.     Commissioner of Internal Revenue vs. Kudos Metal Corporation, G.R. No. 178087, May 5, 2010.

Prescriptive period for assessment; exceptions. In the case of a false or fraudulent return with intent to evade tax or of failure to file a return, the tax may be assessed at any time within ten years after the discovery of the falsity, fraud or omission. If before the expiration of the time prescribed in the National Internal Revenue Code (NIRC) for the assessment of the tax, both the Commissioner and the taxpayer have agreed in writing to its assessment after such time, the tax may be assessed within the period agreed upon. The period so agreed upon may be extended by subsequent written agreement made before the expiration of the period previously agreed upon.  Commissioner of Internal Revenue vs. Kudos Metal Corporation, G.R. No. 178087, May 5, 2010.

Prescriptive period for assessment; requirements for a proper waiver. RMO 20-90 and RDAO 05-01 lay down the following procedures for the proper execution of the waiver of the prescriptive period:

(1)     the waiver must be in the proper form prescribed by RMO 20-90; the phrase “but not after ___ 19____,” which indicates the expiry date of the period agreed upon to assess the tax after the regular three-year period of prescription must be filled up;

(2)     the waiver must be signed by the taxpayer himself or his duly authorized representative; in the case of a corporation, the waiver must be signed by any of its responsible officials; if the authority is delegated by the taxpayer to a representative, such should be in writing and duly notarized;

(3)     the waiver should be duly notarized;

(4)     the Commissioner of Internal Revenue (CIR) or the revenue official authorized by him must sign the waiver indicating that the Bureau of Internal Revenue (BIR) has accepted and agreed to the waiver; the date of the BIR’s acceptance should be indicated;  before signing the waiver, the CIR ort he revenue official authorized by him must make sure that the waiver is in the prescribed form, duly notarized, and executed by the taxpayer or his duly authorized representative;

(5)     both the date of execution by the taxpayer and date of acceptance by the BIR should be before the expiration of the period of prescription or before the lapse of the period agreed upon in case a subsequent agreement is executed; and