Nachura Digests-1st Batch (printer-friendly)

Xerxes Abadiano v. Spouses Martir (July 31, 2008) Subject: Property, Evidence1 Facts: Inocentes Banares and the heirs of his wife, Feliciana Villanueva executed an Agreement of Partition dated June 1, 1922 over Lot No. 1318. The lot was partitioned and distributed to the following: (1) Demetrio Banares (Lot No. 1318-A), (2) Ramon and David Abadiano –grandchildren of Inocentes and Feliciana (Lot No. 1318-B) and (3) Amando Banares (Lot No. 1318-C). The partition is embodied in a notarized Deed of Partition. In 1923, an Original Certificate of Title (OCT) No. 20641 was issued in the name of the spouses. In 1939, David Abadiano, who was absent during the execution of the Agreement of Partition, executed a Deed of Confirmation acknowledging and ratifying the document of partition. OCT No. 20641 was administratively reconstituted in 1962 and in lieu thereof, OCT No. RO-8211 was issued over Lot No. 1318, still in the name of the spouses. The Agreement of Partition and the Deed of Confirmation were annotated at the back of the OCT. In 1957, Demetrio sold his share to his son Leopoldo. The latter then filed a petition praying for confirmation of the Agreement and the Deed of Confirmation and the Deed of Sale between him and his father, and for the issuance of a new title over the property. The Court ordered the issuance of a Transfer Certificate of Title (TCT) in the name of Leopoldo, Amando, and Ramon and David. Petitioner insists that this is the valid and subsisting title over the property and there was no other sale to anyone. Respondents allege however that prior to the issuance of the TCT, Ramon for himself and on behalf of David, had already sold their rights and interests over Lot No. 13181

I won’t be discussing evidence. Wala akong karapatan. The case touches on Rule 130, Section 3 

C to Victor Garde, as evidenced by a notarized document of sale (Compra Y Venta) dated June 3, 1922. They further allege that from the time of sale, Victor Garde and his heirs were in continuous, public, peaceful and uninterrupted possession and occupation in the concept of an owner of the Lot. Victor’s heirs sold the same to Jose Garde who in turn sold it to Lolita Martir in 1979. Alleging that the Abadianos entered the property and harvested sugarcane from it, the spouses filed an Action to Quiet Title and/or Recovery of Possession with Damages in 1982. The trial court ruled for the Martirs, holding that the spouses and their predecessors-ininterest have been in possession of the property for 60 years and the Abadianos therefore were guilty of laches. CA affirmed. Hence, this Petition for Review on Certiorari. Issue: WON the petitioner is guilty of laches Held: No. Under the Property Registration Decree, no title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession. Nonetheless, even if a Torrens title is indefeasible and imprescriptible, the registered landowner may lose his right to recover the possession of his registered property by reason of laches. Laches has been defined as neglect or omission to assert a right, taken in conjunction with lapse of time and other circumstances causing prejudice to an adverse party. The four basic elements are: 1) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation of which complaint is made and for which the complaint seeks a remedy; 2) delay in asserting the complainant’s rights, the complainant having had knowledge or notice of the defendant’s conduct and having been afforded an opportunity to institute suit; 3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit;

and 4) injury or prejudice to the defendant in the event relief is accorded to the complainant or the suit is not held to be barred. Petitioner had reasonable ground to believe that the property, being still in the name of his predecessor in interest, continued to be theirs, especially considering that the annotation of the purported sale was done only in 1982. That the petitioner and his coheirs waited until the death of Amando to try and occupy the land is understandable since any action may sow dissent within the family. In determining whether a delay in seeking to enforce a right constitutes laches, the existence of a confidential relationship between the parties is an important circumstance for consideration, a delay under such circumstances not being so strictly regarded as where the parties are strangers to each other. The doctrine of laches is not strictly applied between near relatives, and the fact that parties are connected by ties of blood or marriage tends to excuse an otherwise unreasonable delay. In addition, several other factors militate against the finding of laches on the part of the petitioner: a) no annotation was made of Compra Y Venta on the OCT or the TCT; b)neither respondents nor any of their predecessors in interest participated in any of the proceedings for the issuance of the OCT or the TCT; and c) the TCT bears out that the fact that the purported Compra Y Venta was annotated thereon only in 1982. It is most telling that respondents, have themselves failed to have the same property transferred in their name or even only to have the sale annotated on the title of the property. Accessories Specialist Inc., a.k.a. Arts 21 Corporation vs. Alabanza July 23, 2008 Nachura, J.

Labor Law. Promissory estoppel may arise from the making of a promise, even though without consideration, if it was intended that the promise should be relied upon, as in fact it was relied upon, and if a refusal to enforce it would virtually sanction the perpetration of fraud or would result in other injustice. The principle of promissory estoppel is a recognized exception to the three-year prescriptive period enunciated in Article 291 of the Labor Code. Labor Law. The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the Labor Arbiter. The filing of the bond is not only mandatory but also a jurisdictional requirement that must be complied with in order to confer jurisdiction upon the NLRC. Facts: On September 27, 2002, respondent Alabanza filed a complaint against petitioners Arts 21 and Hashimoto for and in behalf of her husband for non-payment of salaries, separation pay and 13th month pay. Respondent’s husband was the VicePresident, Manager and Director of Arts 21 and had been with the company from 1975 to 1997. He was compelled by the owner, Hashimoto, to file his involuntary resignation on October 17, 1997 on the ground that Arts 21 allegedly suffered losses. Respondent’s husband demanded payment of his money claims upon resignation but was told that rank and file employees will be paid first and thus waited for his turn. Respondent’s husband made several demands but Arts 21 just kept on assuring him that he will be paid his money claims. Respondent’s husband died on August 5, 2002 with his claims still unpaid. Petitioners invoke Art. 291 of the Labor Code and contend that respondent’s husband voluntarily resigned in October, 1997, thus the cause of action has already

prescribed since the case was filed in 2002 only, beyond the three-year-period within which money claims should be filed. The Labor Arbiter rendered a decision ordering petitioner to pay respondent over P4M. Petitioners filed an appeal along with a motion to reduce bond, attaching receipts for cash bond amounting to P290K and appeal fee for P170.00. The motion was denied and petitioners were given 10 days within which to file the required bond. Petitioners filed a motion for reconsideration which the NLRC denied ordering the dismissal of the appeal for non-perfection thereof due to non-compliance with the bond requirement. The resolution became final and executory and a writ of execution was issued by the Labor Arbiter upon motion by respondent. Petitioners filed a petition for certiorari with the Court of Appeals praying for the issuance of a TRO and a writ of preliminary injunction. The petition was dismissed. Issue No. 1: WON the cause of action of respondent has already prescribed/ Held: NO. Ratio: Based on the findings of facts of the Labor Arbiter, it was petitioner Arts 21 which was responsible for the delay in the institution of the complaint. When petitioner’s husband filed his resignation he immediately asked for the payment of his money claims. However, the management of Arts 21 promised him that he would be paid immediately after the claim of the rank-andfile employees had been paid. Jones relied on this representation. Promissory estoppel may arise from the making of a promise, even though without consideration, if it was intended that the promise should be relied upon, as in fact it was relied upon, and if a refusal to enforce

it would virtually sanction the perpetration of fraud or would result in other injustice. The principle of promissory estoppel is a recognized exception to the three-year prescriptive period enunciated in Article 291 of the Labor Code. In order to make out a claim of promissory estoppel, a party bears the burden of establishing the following elements: (1) a promise was reasonably expected to induce action or forbearance; (2) such promise did, in fact, induce such action or forbearance; and (3) the party suffered detriment as a result. All the requisites are present in this case. The Court, therefore, finds ample justification not to follow the prescriptive period imposed under Art. 291 of the Labor Code. Great injustice will be committed if respondent’s claims will be brushed aside on a mere technicality, especially when it was petitioner’s own action that prevented respondent from interposing the claims within the required period. Issue No. 2: WON the posting of the complete amount of the bond in an appeal from the decision of the Labor Arbiter to the NLRC is an indispensable requirement for the perfection of the appeal despite the filing of a motion to reduce the amount of the appeal bond. Held: YES. Ratio: Article 223 of the Labor Code mandates that in case of a judgment of the Labor Arbiter involving a monetary award, an appeal by the employer to the NLRC may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission, in the amount equivalent to the monetary award in the judgment appealed from.

The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the Labor Arbiter.

Subjects: Agency and Partnership, Torts and Damages

The filing of the bond is not only mandatory but also a jurisdictional requirement that must be complied with in order to confer jurisdiction upon the NLRC. Non-compliance therewith renders the decision of the Labor Arbiter final and executory. This requirement is intended to assure the workers that if they prevail in the case, they will receive the money judgment in their favour upon the dismissal of the employer’s appeal. It is intended to discourage employers from using an appeal to delay or evade their obligation to satisfy their employees’ just and lawful claims.

Facts: In 1988, the spouses Vaca executed a real estate mortgage in favor of petitioner bank over their parcel of land in Quezon City. For failure of the spouses Vaca to pay their obligation, the subject property was sold at public auction with the petitioner as the highest bidder. TCT was issued to petitioner. The spouses Vaca however commenced an action for the nullification of the real estate mortgage and the foreclosure sale. Petitioner filed a petition for a writ of possession. The cases reached the SC, which eventually decided that the petitioner has a right to possess the property.

The failure of petitioners to comply with the requirement of posting a bond equivalent in amount to the monetary award is fatal to their appeal. Section 6 of the New Rules of Procedure of the NLRC mandates, among others, that no motion to reduce bond shall be entertained except on meritorious grounds and upon the posting of a bond in a reasonable amount in relation to the monetary award. The NLRC has full discretion to grant or deny their motion to reduce the amount of the appeal bond. The finding of the NLRC that petitioners did not present sufficient justification for the reduction thereof is generally conclusive upon the Court absent a showing that the denial was tainted with bad faith.

During their pendency however, the petitioner advertised the property for sale. The spouses Pronstroller offered to purchase the property. Said offer was made through Atty. Soluta, Jr., the bank’s VP, Corporate Secretary and a member of its Board of Directors. Respondents paid P750th or 10% of the purchase price. Petitioner, through Atty. Soluta, and respondents executed a Letter-Agreement containing the terms and conditions of the sale. One of the terms was that the Pronstrollers have to make 10% deposit and balance of P6.75M to be deposited under escrow agreement. This was modified by another letter-agreement which allowed the spouses to pay the balance of the purchase price after the SC resolution of the cases.

Furthermore, appeal is not a constitutional right, but a mere statutory privilege. Parties who seek to avail themselves of it must comply with the statutes or rules allowing it. Petition DENIED.

Associated Bank (United Overseas Bank [Phils.] v. Spouses Pronstroller

(July 14, 2008)

By the end of 1993, petitioner reorganized its management and the new management discovered that the spouses failed to pay the balance of the purchase price. The bank then rescinded the sale and suggested that spouses come up with a new proposal. The parties failed to reach an agreement and the spouses informed the bank that they would be enforcing their second Letter-Agreement. Petitioner countered that it was not aware of the existence of such agreement and Atty.

Soluta was not authorized to represent the bank. Respondents commenced the suit for specific performance. During the pendency of this case, the bank sold the property to spouses Vaca. Trial court ruled in favor of the respondents and applied the doctrine of “apparent authority”. CA upheld the RTC decision. Hence, this petition for review on certiorari. Issue: 1) WON the petitioner is bound by the letter-agreement signed by Atty. Soluta under the doctrine of apparent authority Held: Yes. The general rule is that, in the absence of authority from the board of directors, no person, not even its officers, can validly bind a corporation. The power and responsibility to decide whether the corporation should enter into a contract that will bind the corporation is lodged in the board of directors. However, the board may validly delegate some of its functions and powers to officers, committees and agents. The authority of such individuals to bind the corporation is generally derived from law, corporate by-laws or authorization from the board, either expressly or impliedly, by habit, custom, or acquiescence, in the general course of business. The authority of a corporate officer or agent on dealing with third persons may be actual or apparent. The doctrine of apparent authority with special reference to banks, had long been recognized in this jurisdiction. Apparent authority is derived not merely from practice. Its existence 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 particular nature, with actual or constructive knowledge thereof, within or beyond the scope of his ordinary powers. Accordingly, the authority to act for and to bind a corporation may

be presumed from acts of recognition in other instances, wherein the power was exercised without any objection from its board or shareholders. The bank had previously allowed Atty. Soluta to enter into the first agreement without a board resolution; thus it had clothed him with apparent authority to modify the same via the second letter-agreement. It is not the quantity of similar acts which establishes apparent authority, but the vesting of a corporate officer with the power to bind the corporation. Naturally, the third person has to rely upon the external manifestations of corporate consent. The public has to rely on the trustworthiness of bank officers and their acts. Issue: 2) WON the bank is liable for moral damages Held: Yes. Art. 2209 of the NCC allows the recovery of moral damages in breaches of contract where the party acted fraudulently and in bad faith. As found by the CA, petitioner undoubtedly acted fraudulently and in bad faith in breaching the letteragreements. Despite the pendency of the case in the RTC, it sold the subject property to spouses Vaca. This is apart from its act of unilaterally rescinding the subject contract. Clearly, petitioner’s acts are brazen attempts to frustrate the decision that the court may render in favor of respondents. It is likewise apparent that because of petitioner’s acts, respondents were compelled to litigate justifying the award of attorney’s fees and expenses of litigation.

Ayson vs Spouses Paragas Ynares-Santiago – 2008

Topic: Possession Equitable Mortgage;

and

Ownership;

Facts

The controversy commenced with the filing of an ejectment complaint by petitioner Ayson against respondent-spouses Paragas on the basis that petitioner is the registered owner of the property being occupied by the respondent-spouses who, according to petitioner, are just occupying the said land through the latter’s tolerance without rent. MTCC decided in favor of petitioner. RTC affirmed the MTCC Decision. During the pendency of the appeal with the RTC, respondent-spouses filed against petitioner a complaint for declaration of nullity of Deed of Sale, in effect questioning OWNERSHIP. Respondent Felix Paragas (husband) alleged that Ayson’s father made him sign a Deed of Absolute Sale over Maxima’s (wife) property under threat that Felix will be incarcerated. RTC rendered its decision in favor of respondent-spouses declaring the Deed of Absolute Sale as an equitable mortgage.

It must be remembered that in ejectment suits the issue to be resolved is merely the physical possession over the property, i.e., possession de facto and not possession de jure, independent of any claim of ownership set forth by the party-litigants. Should the defendant in an ejectment case raise the defense of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to determine the issue of possession. The judgment rendered in such an action shall be conclusive only with respect to physical possession and shall in no wise bind the title to the realty or constitute a binding and conclusive adjudication of the merits on the issue of ownership. Therefore, such judgment shall not bar an action between the same parties respecting the title or ownership over the property, which action was precisely resorted to by respondent-spouses in this case.

Issue 1 Issue 2 WON the decision of the court in the ejectment case where ownership was raised as defense by the Spouses Paragas, is conclusive on the issue of ownerhip such that the complaint for declaration of nullity of Deed of Sale by the respondent-spouses is barred.

Decision 1

WON the Deed of Absolute Sale is an equitable mortgage.

Decision 2

Yes. It is an equitable mortgage; hence, the property is still under the ownership of the spouses.

No. Action by the respondent-spouse is not barred. Ratio 2 Ratio 1

The Civil Code enumerates the cases in which a contract, purporting to be a sale, is considered only as a contract of loan secured by a mortgage as per Article 1604 in relation Article 1602. In this case, the evidence before the RTC had established that the possession of the subject property remained with respondent-spouses despite the execution of the Deed of Absolute Sale.

Issue 3

WON the Deed of Absolute Sale was executed through fraud, making the said contract merely voidable, and the action to annul voidable contracts based on fraud prescribed in four (4) years from the discovery of fraud.

Decision 3 and Ratio 3

An equitable mortgage is a voidable contract. As such, it may be annulled within four (4) years from the time the cause of action accrues. This case, however, not only involves a contract resulting from fraud, but covers a transaction ridden with threat, intimidation, and continuing undue influence which started when petitioner’s father Thus, the four-year period should start from the time the defect in the consent ceases.

Benjamin Monillas executed a deed of sale of his share over the property to his brother, Ireneo. Ireneo then caused the transfer of the title in his name. Ireneo mortgaged twenty-two (22) lots to petitioner Philippine Veterans Bank (PVB). Benjamin Monillas filed for the nullification of the deed of sale and for the recovery of the property, which the RTC decided on his favor; hence, he filed for the declaration of the nullity of the titles issued in PVB's name. He caused the annotation of notices of lis pendens relating to the said case on the titles of the lots. While the case remained pending, PVB foreclosed the mortgage, PVB was the highest bidder Benjamin Monillas,

The RTC ruled against PVB. The RTC rationalized that while the annotation of the notices of lis pendens succeeded the registration of the mortgage, still the effect of the notices was that PVB acquired knowledge of an impediment against its interest, and as a matter of fact, PVB ignored the notices and slept on its rights, as it did not intervene in the said civil case.

Issue

WON the prior registered mortgage and the already concluded foreclosure proceedings should prevail over the subsequent annotation of the notices of lis pendens on the lot titles.

Philippine Veterans Bank vs Monillas Nachura – 2008

Decision

Topic: Effects of Prior Registration of Mortgage shall Prevail over the Belated Annotation of a Lis Pendens.

Prior registered mortgage of PVB and the foreclosure proceedings already conducted prevail over Benjamin Monilla's subsequent

annotation of the notices of lis pendens on the titles to the property.

Ratio

A prior registration of a lien creates a preference; hence, the subsequent annotation of an adverse claim cannot defeat the rights of the mortgagee, or the purchaser at the auction sale whose rights were derived from a prior mortgage validly registered. A contrary rule will make a prior registration of a mortgage or any lien nugatory or meaningless.

Bank of the Philippine Islands v. Spouses Royeca (July 21, 2008) Subject: Obligations and Contracts Facts : In 1993, spouses Royeca executed and delivered to Toyota Shaw, Inc. a promissory note for P577,008 payable in 48 equal monthly installments. It provides for a penalty of 3% for every month or fraction of a month that an installment remains unpaid. To secure the payment of said promissory note, the spouses executed a Chattel Mortgage in favor of Toyota over a certain motor vehicle. Toyota assigned the interest over the Chattel with Far East Bank and Trust Company (FEBTC) which eventually merged with BPI. The bank claimed that the spouses failed to pay 4 monthly amortizations and made formal demands. The respondents refused to pay on the ground that they have paid their obligation by issuing 8 postdated checks in different amounts. FEBTC then filed a complaint for replevin and damages. The spouses filed a counterclaim for damages. They averred that they were in good faith since they did

not receive any notice from the drawee banks or from FEBTC that these checks were dishonored. MeTC ruled for the spouses. On appeal the RTC reversed, holding for the BPI. The CA ruled for the spouses and reinstated the MeTC decision.

Issues: WON tender of checks constitutes payment Held: No. Settled is the rule that payment must be in legal tender. A check is not legal tender and, therefore, cannot constitute a valid tender of payment. Since a negotiable instrument is only a substitute for money and not money, the delivery of such an instrument does not, by itself, operate as payment. Mere delivery of checks does not discharge the obligation under a judgment. The obligation is not extinguished and remains suspended until the payment by commercial document is actually realized. To establish their defense, the respondents therefore had to present proof, not only that they delivered the checks to the petitioner, but also that the checks were encashed. The respondents failed to do so. As a general rule, one who pleads payment has the burden of proving it. Even where the plaintiff must allege non-payment, the general rule is that the burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-payment. The debtor has the burden of showing with legal certainty that the obligation has been discharged by payment. Corinthian Gardens Association vs Spouses Tanjangcos and Spouses Cuasos June 27, 2008 Nachura, J. Torts and Damages: * (ELEMENTS/REQUISITES)

In every tort case filed under Article 2176, plaintiff has to prove by a preponderance of evidence: (1) the damages suffered by the plaintiff; (2) the fault or negligence of the defendant or some other person for whose act he must respond; and (3) the connection of cause and effect between the fault or negligence and the damages incurred. * (DEFINITION) A negligent act is an inadvertent act; it may be merely carelessly done from a lack of ordinary prudence and may be one which creates a situation involving an unreasonable risk to another because of the expectable action of the other, a third person, an animal, or a force of nature. A negligent act is one from which an ordinary prudent person in the actor's position, in the same or similar circumstances, would foresee such an appreciable risk of harm to others as to cause him not to do the act or to do it in a more careful manner. * (TEST) The test to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in committing the alleged negligent act use that reasonable care and caution which an ordinary person would have used in the same situation? Facts: Tanjangcos owned joined lots in Corinthian Gardens. Spouse Cuasos, on the other hand, own a lot adjacent to the former’s. Before the Cuasos constructed their house, it was surveyed by De Dios

Realty (surveyor) as per recommendation of the petitioner association. Later on, the petitioner approved the plans made by CB Paras Construction (builder). Corinthian conducted periodic ocular inspections in order to determine compliance with the approved plans pursuant to the Manual of Rules and Regulations of Corinthian (MRRC). Unfortunately, after construction, the perimeter fence of the Cuasos’ encroached upon the Tanjangcos’ lot. Issue: Whether Corinthian was negligent under the circumstances and, if so, whether such negligence contributed to the injury suffered by the Tanjangcos. Decision: Corinthian is negligent. Its approval of the plan is tainted with negligence. Ratio: Petitioner is found negligent under the TEST. The MRRC provides that no new constructions can be started without the approval of the petitioner association. Thus, it is reasonable to assume that Corinthian, through its representative, in the approval of building plans, and in the conduct of periodic inspections of ongoing construction projects within the subdivision, is responsible in insuring compliance with the approved plans, inclusive of the construction of perimeter walls. Corinthian’s failure to prevent the encroachment of the Cuasos’ perimeter wall into Tanjangcos’ property – despite the inspection conducted – constitutes negligence and, at the very least, contributed to the injury suffered by the Tanjangcos.

NB 1. The court here categorized the case as falling under tort. Take note that there are discussions regarding similarity or difference of a QD and a tort. (just thinking out loud) 2. This is another case where the court ruled using Article 2176 despite the fact that there is an existing contractual obligation between the parties. (just a thought to ponder on) April 30, 2008 G.R. No. 140944 RAFAEL ARSENIO S. DIZON, IN HIS CAPACITY AS THE JUDICIAL ADMINISTRATOR OF THE ESTATE OF THE DECEASED JOSE P. FERNANDEZ v. COURT OF TAX APPEALS AND COMMISSIONER OF INTERNAL REVENUE Ponente Justice Nachura Subject Estate Taxation – Allowable Deductions, Date-of-Death Valuation Principle Facts Jose P. Fernandez died in November 7, 1987. Thereafter, a petition for the probate of his will was filed. The probate court appointed Atty. Rafael Arsenio P. Dizon as administrator of the Estate of Jose Fernandez. An estate tax return was filed later on which showed ZERO estate tax liability. BIR thereafter issued a deficiency estate tax assessment, demanding payment of Php 66.97 million as deficiency estate tax. This was subsequently reduced by CTA to Php 37.42 million. The CA affirmed the CTA’s ruling, hence, the instant petition.

The petitioner claims that in as much as the valid claims of creditors against the Estate are in excess of the gross estate, no estate tax was due. On the other hand, respondents argue that since the claims of the Estate’s creditors have been condoned, such claims may no longer be deducted from the gross estate of the decedent. Issue Whether the actual claims of creditors may be fully allowed as deductions from the gross estate of Jose despite the fact that the said claims were reduced or condoned through compromise agreements entered into by the Estate with its creditors Decision YES. Ratio Following the US Supreme Court’s ruling in Ithaca Trust Co. v. United States, the Court held that post-death developments are not material in determining the amount of deduction. This is because estate tax is a tax imposed on the act of transferring property by will or intestacy and, because the act on which the tax is levied occurs at a discrete time, i.e., the instance of death, the net value of the property transferred should be ascertained, as nearly as possible, as of the that time. This is the date-of-death valuation rule. The Court, in adopting the date-of-death valuation principle, explained that: •

First. There is no law, nor do we discern any legislative intent in our tax laws, which disregards the dateof-death valuation principle and particularly provides that post-death developments must be considered in determining the net value of the estate. It bears emphasis that tax burdens are not to be imposed, nor presumed to be imposed, beyond what the statute expressly and clearly imports, tax statutes being construed strictissimi juris against the government.

•

Second. Such construction finds relevance and consistency in our Rules on Special Proceedings wherein the term "claims" required to be presented against a decedent's estate is generally construed to mean debts or demands of a pecuniary nature which could have been enforced against the deceased in his lifetime, or liability contracted by the deceased before his death. Therefore, the claims existing at the time of death are significant to, and should be made the basis of, the determination of allowable deductions.

EZTINOZO vs. CA •

FEBRUARY 12, 2008

•

NACHURA, J.

•

SUBJECT AREA: Rule 45; Rule 65

•

NATURE: Petition for Certiorari under Rule 65

•

FACTS: Petitioner was charged with the crime of estafa. It was alleged that petitioner represented herself to the complainants that she was the owner of a recruitment agency and that she was recruiting workers to be sent abroad. She asked from these complainants the payment of placement and processing fees totaling P15,000.00. Complainants were promised that they would be deployed by July 1986. However, private complainants never left the country.

•

In her defense, she contended that she was merely an agent of the real recruiter, a certain Fe Corazon Ramirez, and the money she received from the Complainants was remitted to Ramirez.

•

The RTC found her guilty of seven counts of estafa. The petitioner

appealed the case to the CA. The CA affirmed the ruling of the RTC. •

On May 30, 2001, within the 15-day reglementary period to file a motion for reconsideration or a petition for review, petitioner filed with the appellate court a Motion for Extension of Time to File a Motion for Reconsideration. On June 28, 2001, the CA denied the said motion pursuant to Rule 52, Section 1 of the Rules of Court and Rule 9, Section 2 of the Revised Internal Rules of the Court of Appeals (RIRCA).

•

Petitioner then filed a Motion for Reconsideration of the June 28, 2001 Resolution of the CA. The appellate court denied the same, on August 17, 2001.

•

Hence, this instant Petition Certiorari under Rule 65.

•

ISSUE: WON petition for certiorari under Rule 65 is the proper remedy.

•

HELD: It was not the proper remedy. The petitioner should have filed it under Rule 45.

•

RATIO: Section 1 of Rule 45 of the Rules of Court expressly provides that a party desiring to appeal by certiorari from a judgment or final order or resolution of the CA may file a verified petition for review on certiorari. Petition for certiorari under Rule 65 lies only when the judgment or final order was rendered without or in excess of jurisdiction, or with grave abuse of discretion and where there is no appeal or plain, speedy and adequate remedy in the ordinary course of law.

•

In this case, appeal by certiorari was available to petitioner. There was no grave abuse of discretion committed by the CA in its decision. The CA correctly denied petitioner’s Motion for Extension of Time to File a Motion for Reconsideration. The rule is that the 15-day reglementary period for

for

appealing or filing a motion for reconsideration or new trial cannot be extended, except in cases before the Supreme Court, as one of last resort, which may, in its sound discretion grant the extension requested This rule also applies even if the motion is filed before the expiration of the period sought to be extended. •

•

3 weeks after, LBP informed Far East that the amount in the foreign draft had been materially-altered from PHP 300.00 to PHP 380,000.00 and that they will be returning it. Far East thus refunded the amount paid by LBP. Thus, Far East had to seek reimbursement from Gold Palace but they were only able to debit PHP 168,053.37, which was done without a prior written notice to Gold Palace as they only informed them by phone. They thus demanded the difference of PHP 211,946.64 from Gold Palace. As the latter did not respond favorably, Far East instituted a civil case for sum of money and damages. Gold Palace denies the allegations in the complaint and claims as their defense that the subject foreign draft has been cleared and it was not they who caused the alteration. The RTC ruled in favor of Far East but this was reversed by the CA as Far East failed to undergo the proceedings on the protest and thus, Far East could not charge Gold Palace on its secondary liability as an indorser. It further said that the drawee bank had cleared the check and its remedy should be against the part responsible for the alteration.

•

ISSUE: WHETHER OR NOT FAR EAST BANK COULD PROCEED AGAINST GOLD PALACE.

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HELD: No.

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RATIO: The acceptor, by accepting the instrument, engages that he will pay it according to the tenor of his acceptance. This provision applies with equal force in case the drawee pays a bill without having previously accepted it. His actual payment of the amount in the check implies not only his assent to the order of the drawer and a recognition of his corresponding

DISPOSITVE: Petition for Certiorari dismissed

FAR EAST BANK & TRUST COMPANY, Petitioner, - versus - GOLD PALACE JEWELLERY CO., as represented by Judy L. Yang, Julie Yang-Go and Kho Soon Huat, Respondent •

FACTS: Samuel Tagoe, a foreigner, purchased from Gold Palace (SM North) jewelries worth PHP 258,000.00. As payment, he offered a foreign draft issued by the United Overseas Bank of Malaysia addressed to Land Bank, and payable to Gold Palace for PHP 380,000.00. Judy Yang, the assistant GM of Gold Palace inquired from Far East Bank (SM North) regarding the draft’s nature. The teller told her that it was similar to a manager’s check but advised her to not release the jewelry until the draft has been cleared. Following the advice, Yang Issued a cash invoice to Tagoe & told him that the jewelries would be released when the draft had been cleared. Julie Yang-Go, the manager of Gold Palace, deposited the draft in the company’s account with Far East Bank SM North. The latter presented it for clearing to LBP, the drawee bank, who cleared the same. United Overseas account with LBP was debited and Gold Palace’s account with Far East was credited with the amount stated in the draft. The pieces of jewelry were then released to Tagoe and because the amount in the draft was more than the value of the goods, a check for PHP 122,000 was issued to him. It was encashed by Tagoe.

obligation to pay the aforementioned sum, but also, his clear compliance with that obligation. Actual payment by the drawee is greater than his acceptance, which is merely a promise in writing to pay. The payment of a check includes its acceptance. •

•

Unmistakable herein is the fact that the drawee bank cleared and paid the subject foreign draft and forwarded the amount thereof to the collecting bank. LBP was liable on its payment of the check according to the tenor of the check at the time of payment, which was the raised amount. Thus, LBP could no longer repudiate the payment it erroneously made to a due course holder. Gold Palace was not a participant in the alteration of the draft, was not negligent, and was a holder in due course—it received the draft complete and regular on its face, before it became overdue and without notice of any dishonor, in good faith and for value, and absent any knowledge of any infirmity in the instrument or defect in the title of the person negotiating it. This construction and application of the law is in line with the sound principle that where one of two innocent parties must suffer a loss, the law will leave the loss where it finds it. It further reasserts the usefulness, stability and currency of negotiable paper without seriously endangering accepted banking practices. Banking institutions can readily protect themselves against liability on altered instruments either by qualifying their acceptance or certification, or by relying on forgery insurance and special paper which will make alterations obvious. The drawee bank, in most cases, is in a better position, compared to the holder, to verify with the drawer the matters stated in the instrument.

•

Thus, considering that, in this case, Gold Palace is protected by Section 62 of the NIL, its collecting agent, Far East, should not have debited the money paid by the drawee bank from respondent company’s account. When Gold Palace deposited the check with Far East, the latter, under the terms of the deposit and the provisions of the NIL, became an agent of the former for the collection of the amount in the draft. The subsequent payment by the drawee bank and the collection of the amount by the collecting bank closed the transaction insofar as the drawee and the holder of the check or his agent are concerned, converted the check into a mere voucher, and, as already discussed, foreclosed the recovery by the drawee of the amount paid. This closure of the transaction is a matter of course.

•

As the transaction in this case had been closed and the principal-agent relationship between the payee and the collecting bank had already ceased, the latter in returning the amount to the drawee bank was already acting on its own and should now be responsible for its own actions. Neither can petitioner be considered to have acted as the representative of the drawee bank when it debited respondent’s account, because, as already explained, the drawee bank had no right to recover what it paid. Likewise, Far East cannot invoke the warranty of the payee/depositor who indorsed the instrument for collection to shift the burden it brought upon itself. This is precisely because the said indorsement is only for purposes of collection which, under Section 36 of the NIL, is a restrictive indorsement. It

did not in any way transfer the title of the instrument to the collecting bank. •

CA ruling is affirmed to the extent that Far East could not debit Gold Palace’s account. Its remedy is not against Gold Palace but against the draweebank or the person responsible for the alteration.

Held/Ratio: YES. •

Proof of knowledge of and participation in the publication is not required, if the accused has been specifically identified as “author, editor, or proprietor” or “printer/publisher” of the publication. o

Title: Fermin v. People Date: 28 March 2008 Ponente: J. Nachura Subject/Topic: Criminal Law, Libel Facts: • •

• • • •

Cristy Fermin is the publisher and Bogs Tugas is the editor-in-chief of Gossip Tabloid The June 14, 1995 headline and lead story of the tabloid says that it is improbable for Annabelle Rama to go to the US should it be true that she is evading her conviction in an estafa case here in the Philippines for she and husband Eddie have more problems/cases to confront there. This was said to be due to their, especially Annabelle's, using fellow Filipinos’ money, failure to remit proceeds to the manufacturing company of the cookware they were selling and not being on good terms with the latter. Annabelle and Eddie filed libel cases against Fermin and Tugas before RTC of QC, Br. 218. RTC: Fermin and Tugas found guilty of libel. CA: Tugas was acquitted on account of non-participation but Fermin's conviction was affirmed. Fermin's motion for reconsideration was denied hence, this petition. She argues that she had no knowledge and participation in the publication of the article, that the article is not libelous and is covered by the freedom of the press.

Issue: of libel?

WON Cristy Fermin is guilty

•

Petitioner was not only the “publisher,” but also the “president” and “chairperson.”  Petitioner’s criminal guilt should be affirmed, whether or not she had actual knowledge and participation.

The elements present. o

o o o

of

libel

were

Evident imputation of the crime of malversation (converting money for personal use), of vices or defects for being fugitives from the law (evading prosecution in America) and of being a wastrel Attribution made publicly. Gossip Tabloid had a nationwide circulation. The victims were identified and identifiable. The article reeks of malice, as it tends to cause the dishonor, discredit, or contempt of the complainants.  Malice in law - the article was malicious in itself; the imputations were false.  Malice in fact - there was motive to talk ill against complainants during the electoral campaign as Fermin is a close friend of Eddie's opponent in the Congressional race

•

While complainants are considered public figures for being personalities in the entertainment business, media people do not have the unbridled license to malign their honor and dignity by indiscriminately airing fabricated and malicious comments, whether in broadcast media or in print, about their personal lives.

Note: CA erred in acquitting Tugas, he being the editor-in-chief. But the SC cannot reinstate the ruling of the trial court convicting Bogs Tugas because with his acquittal by the CA as that would run afoul of his constitutional right against double jeopardy. Fernandez v. Comelec and Rodriguez June 30, 2008; Nachura Election Law; Appelate jurisdiction of Comelec

Facts:

July 15, 2002 SK elections of Barangay Pandan del Sur, Pandan, Catanduanes, resp. Rodriguez won as SK chairman over pet. Fernandez. Fernandez filed a protest in the MCTC of Pandan. On January 12, 2004, MCTC declared Fernandez as the winner and ordered her proclamation. Rodriguez appealed to Comelec, which, on Dec. 4, 2006 reversed the MCTC decision. Motion for recon was denied, so Fernandez went to SC arguing that that the Comelec has no appellate jurisdiction over contests involving SK officials decided by trial courts of limited jurisdiction.

The Constitution [Art. IX-C, Sec. 2(2)] vests in the COMELEC appellate jurisdiction over all contests involving elective barangay officials decided by trial courts of limited jurisdiction. Construed in relation to the provision in RA 7160 [LocGovCode] that includes in the enumeration of barangay officials the SK chairman,[Sec. 387(a)] the constitutional provision indeed sanctions the appellate review by the COMELEC of election protests involving the position of SK chairman, as in the instant case. Hence, we find nothing improper in the COMELEC’s assumption of jurisdiction over respondent’s appeal. Petitioner’s reliance on our ruling in Mercado v. Board of Election Supervisors[1995] that contests involving the SK chairman do not fall within Section 252 of the Omnibus Election Code and paragraph 2, Section 2, Article IX-C of the Constitution, is misplaced. The doctrine therein, as we explained in the much later Marquez v. Commission on Elections[1999], is no longer controlling. Thus, the present rule is that trial courts of limited jurisdiction have exclusive original jurisdiction over election protests involving barangay officials, which include the SK chairman, and that the COMELEC has the exclusive appellate jurisdiction over such protests [Batoy v. Judge Calibo, Jr., 445 Phil. 547, 553-554 (2003); Beso v. Aballe, 382 Phil. 862, 870 (2000)]. Note: SC also dismissed the case as moot and academic. By the time the case reached the SC, the term of office of the SK chair already expired. The discussion on Comelec jurisdiction is for the guidance of the bench and bar.

Issue: WON Comelec has jurisdiction. Ferrer v. Ombudsman Held: YES.

[COL. ARTURO C. FERRER (RET.), petitioner, vs. HON. OFFICE OF THE OMBUDSMAN,

ROMEO G. DAVID, Former Administrator, JOEMARI D. GEROCHI, Administrator, National Food Authority (NFA), FRANCISCO G. CORDOBA, JR., chairman, PBAC, MARCELINO B. AGANA IV, EVANGELINE V. ANAGO, BENJAMIN D. JAVIER, and CELIA Z. TAN, Members, PBAC, respondents] Aug. 6, 2008; Nachura Ombudsman jurisdiction/authority

Facts:

The National Food Authority (NFA) needed security services nationwide. The Prequalification, Bids and Awards Committee (PBAC) was tasked to undertake the prequalification of prospective bidders, etc. The bidding was held in June 1994, and among the bidders were Odin Security Agency (owned by petitioner) and Metroguard and Protective Security Agency of the Philippines (Metroguard) and Davao Security and Investigation Agency, Inc. (DASIA). Metroguard and DASIA were admittedly “sister” agencies. Having perceived a collusion between DASIA and Metroguard, the other participating bidders, including Odin, protested. NFA sought opinion of the Office of the Govt. Corp. Counsel (OGCC), which stated that bid proposal of both Metroguard and DASIA should be rejected for being collusive. Consequently, the bids of the two agencies were rejected by NFA. DASIA went to RTC, which ruled that the rejection of DASIA’s bid invalid and illegal, in violation of its right to due process. David and Cordoba of NFA appealed to CA, but during the pendency of the appeal, respondents proceeded to award the security service contracts to both Metroguard and DASIA (kasi binding pa yung ruling ng RTC na kasali sila sa bidding; at ok din ung bids nila). This prompted petitioner to file on August 23, 1996 a ComplaintAffidavit against respondents before the

Office of the Ombudsman, but it was dismissed outright for lack of merit based on the Evaluation Report of Graft Investiation Officer (GIO) Gruta dated October 25, 1996. The said report was approved by then Ombudsman Aniano A. Desierto on November 27, 1996. Petitioner went to SC on the following: Issues: 1. Whether or not petitioner’s complaint (OMB-0-96-1986) may be dismissed on the basis of a resolution in another complaint (OMB-0-96-1552) filed by another complainant (Eugenio M. Revita). Petitioner contends that in issuing the questioned Evaluation Report, GIO Gruta failed to consider the merits of his complaint but simply adopted the Resolution of GIO Ginez-Jabalde in OMB-0-96-1552 which is tantamount to a violation of his right to due process. We disagree. The prerogative as to whether or not a complaint may be given due course belongs exclusively to the Office of the Ombudsman, through its assigned investigation officer, who in this case was GIO Gruta. It is apparent that GIO Gruta had carefully studied the complaint which, indeed, raised the very same arguments as in OMB-0-961552 pertinent to the alleged collusion between Metroguard and DASIA in the very same public bidding held by NFA on June 21, 1994 and the purported unwarranted benefits given to these security agencies by respondents when they were awarded the security service contracts for the NFA areas of operations said agencies tendered their bids for. Concurring with the recommendation of GIO Ginez-Jabalde in OMB-0-96-1552 to dismiss the complaint, similarly approved by then Ombudsman Desierto, does not necessarily indicate that GIO Gruta did not exercise her independent judgment in this case in concluding that the complaint lodged by petitioner lacks merit.

To conduct a preliminary investigation when deemed unnecessary as the same issues being raised had already been resolved would be superfluous. 2. Whether or not the decision of the RTC-Davao, Br. 17, in Civil Case No. 23, 531 may be validly used as the basis by respondents for the award of the contracts for security services in favor of Metroguard and DASIA, notwithstanding the pendency of the appeal of the decision with the Court of Appeals, and despite the opinion of the OGCC that Metroguard and DASIA must be disqualified from the public bidding on the ground of collusion between them. It bears mentioning that the Decision of the RTC, Branch 17, Davao City already passed upon the opinions of the OGCC and ruled that there was no collusion between Metroguard and DASIA. Since the CA had not reversed and set aside the decision of the RTC, Branch 17, Davao City at the time GIO Gruta reviewed petitioner’s complaint for alleged violation of Section 3(e) and (g) of R.A. No. 3019, the RTC Decision remained controlling. Thus, GIO Gruta was correct in dismissing the charge for lack of merit. 3. Whether or not the Office of the Ombudsman has no authority to investigate charges of violation of Republic Act 5487, otherwise known as the Private Security Agency Law, to determine the criminal liability of respondents. The jurisdiction of the Office of the Ombudsman to investigate and prosecute criminal cases pertains to violations of R.A. No. 3019, as amended, R.A. No. 1379, as amended, R.A. No. 6713, Title VII, Chapter II, Section 2 of the Revised Penal Code, and such other offenses committed by public officers and employees in relation to office. On the other hand, in R.A. No. 5487, it is the Philippine National Police (PNP) that

exercises general supervision over the operation of all private detective and watchman security guard agencies. It has the exclusive authority to regulate and to issue the required licenses to operate security and protective agencies. In this case, in the absence of a declaration from the PNP that a violation of the said law was committed by Metroguard and DASIA, the act of the NFA officials in awarding the security service contracts to the said agencies after a showing that their bids were the most advantageous to the government is presumed to be valid. Verily, the Court has almost always adopted, and quite aptly, a policy of non-interference in the exercise of the Ombudsman’s constitutionally mandated powers. The Ombudsman has the power to dismiss a complaint outright without going through a preliminary investigation. To insulate the Office of the Ombudsman from outside pressure and improper influence, the Constitution, as well as R.A. No. 6770, saw fit to endow that office with a wide latitude of investigatory and prosecutory powers, virtually free from legislative, executive, or judicial intervention. If the Ombudsman, using professional judgment, finds the case dismissible, the Court shall respect such findings unless tainted with grave abuse of discretion. The Ombudsman has discretion to determine whether a criminal case, given its attendant facts and circumstances, should be filed or not. It is basically his judgment call.

FIGUEROA vs. PHILIPPINES

JULY 14, 2008

NACHURA, J.

PEOPLE

OF

THE

SUBJECT AREA: Estoppel by laches

NATURE: Petition for review on certiorari

FACTS: Petitioner was charged with the crime of reckless imprudence resulting in homicide. The RTC found him guilty. In his appeal before the CA, the petitioner, for the first time, questioned RTCs jurisdiction on the case.

The CA in affirming the decision of the RTC, ruled that the principle of estoppel by laches has already precluded the petitioner from questioning the jurisdiction of the RTC—the trial went on for 4 years with the petitioner actively participating therein and without him ever raising the jurisdictional infirmity.

The petitioner, for his part, counters that the lack of jurisdiction of a court over the subject matter may be raised at any time even for the first time on appeal. As undue delay is further absent herein, the principle of laches will not be applicable.

Hence, this petition.

ISSUE: WON petitioner’s failure to raise the issue of jurisdiction during the trial of this case, constitute laches in relation to the doctrine laid down in Tijam v. Sibonghanoy, notwithstanding the fact that said issue was immediately raised in petitioner’s appeal to the CA

HELD: No.

RATIO: Citing the ruling in Calimlim vs. Ramirez, the Court held that as a general rule, the issue of jurisdiction may be raised at any stage of the proceedings, even on appeal, and is not lost by waiver or by estoppel.

Estoppel by laches may be invoked to bar the issue of lack of jurisdiction only in cases in which the factual milieu is analogous to that of Tijam v. Sibonghanoy.

Laches should be clearly present for the Sibonghanoy doctrine to be applicable, that is, lack of jurisdiction must have been raised so belatedly as to warrant the presumption that the party entitled to assert it had abandoned or declined to assert it.

In Sibonghanoy, the party invoking lack of jurisdiction did so only after fifteen years and at a stage when the proceedings had already been elevated to the CA. Sibonghanoy is an exceptional case because of the presence of laches.

In the case at bar, the factual settings attendant in Sibonghanoy are not present. Petitioner Atty. Regalado, after the receipt of the Court of Appeals resolution finding her guilty of contempt, promptly filed a Motion for Reconsideration assailing the said court’s jurisdiction based on procedural infirmity in initiating the action. Her compliance with the appellate court’s directive to show cause why she should not be cited for contempt and filing a single piece of pleading to that effect could not be considered as an active participation in the judicial proceedings so

as to take the case within the milieu of Sibonghanoy. Rather, it is the natural fear to disobey the mandate of the court that could lead to dire consequences that impelled her to comply.

The petitioner is in no way estopped by laches in assailing the jurisdiction of the RTC, considering that he raised the lack thereof in his appeal before the appellate court. At that time, no considerable period had yet elapsed for laches to attach.

DISPOSITIVE: Petition for review on certiorari is granted. Criminal case is dismissed.

Flourish Maritime Shipping vs. Almanzor March 14, 2008 Nachura, J. Labor Law. The choice of which amount to award an illegally dismissed overseas contract worker, i.e., whether his salaries for the unexpired portion of his employment contract, or three (3) months’ salary for every year of the unexpired term, whichever is less, comes into play only when the employment contract concerned has a term of at least one (1) year or more. Facts: Respondent Almanzor entered into a two-year employment contract with petitioner Flourish Maritime Shipping as fisherman and was deployed to Taipei, Taiwan. While on board, he was given an instruction which he did not understand and therefore was unable to obey. The master of the vessel struck him and refused his requested medical assistance. Respondent was repatriated to the Philippines but was

not redeployed as promised, thus the complaint for illegal dismissal, payment for the unexpired portion of his employment contract, earned wages, moral and exemplary damages plus attorney’s fees. Petitioners Flourish Maritime Shipping and Uy contended that respondent voluntarily resigned and that the same did not comply with the grievance machinery and arbitration clause embodied in the employment contract. The Labor Arbiter rendered a decision in favour of respondent, awarding him six months of his monthly pay (3months for every year of the unexpired term). On appeal, the NLRC affirmed in toto the Labor Arbiter’s findings. The Court of Appeals, on petition for certiorari, modified the NLRC decision by increasing the monetary award due respondent. The Court of Appeals awarded respondent the unexpired portion of the first year (11 months and 4 days) and 3 months for the unexpired second year, for a total of 14 months and 4 days. Issue No. 1: WON respondent was illegally dismissed from employment. Held: YES. Ratio: Petitioners, as concluded by the Labor Arbiter, failed to adduce any convincing evidence to establish its claim that respondent voluntarily residned from employment. Likewise, the NLRC held that petitioners failed to show that respondent was not physically fit to perform work due to his old age. Neither was it proved that the employment contract indeed provided a grievance machinery. Both labor tribunals correctly concluded, as affirmed by the Court of Appeals, that respondent was not redeployed for work, in violation of their employment contract. Perforce, the

termination of respondent’s services is without just or valid cause.

held by the Labor Arbiter and affirmed by the NLRC.

Issue No. 2:

Galero vs. CA

WON the award made by the Court of Appeals was contrary to law. Held: YES. Ratio: Section 10 of R.A. 8042 provides: Section 10. Money Claims. – x x x xxxx In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. x x x x. The correct interpretation of this provision was settled in Marsaman Manning Agency Inc. v. NLRC where this Court held that “the choice of which amount to award an illegally dismissed overseas contract worker, i.e., whether his salaries for the unexpired portion of his employment contract, or three (3) months’ salary for every year of the unexpired term, whichever is less,” comes into play only when the employment contract concerned has a term of at least one year or more. The employment contract involved in the instant case covers a two-year period but the overseas contract worker actually worked for only 26 days prior to his illegal dismissal. Thus, the three months’ salary rule applies. Respondent, therefore, is entitled to six (6) months’ salary as correctly

Facts: 1. Resident Ombudsman for Phil.Ports Authority-Port Management Office (PPA-PMO) received two anonymous letters. 2. The first letter alleged that Security Guard Geocadin was receiving compensation from PPA in spite of the fact that Geoacadin is assigned in and is also receiving salary from NAPOCOR. 3. Second letter alleged that Mr. Elizalde (Port Manager of PPA) and Mr. Galero (acting Port Police Division Commander) was receiving shares in the salaries of ghost employees like Geocadin in PPA. 4. Resident Ombudsman Caigoy recommended the filing of criminal and administrative complaint against Galero for dishonesty, falsification of public documents and causing undue injury to the government. Complaint against Elizalde however is dismissed for insufficient evidence. 5. Office of the Ombudsman for Visayas found Galero guilty and recommended Galero’s dismissal from service, forfeiture of benefits and perpetual disqualification from holding public office. 6. CA affirmed the decision of the Office of the Ombudsman Visayas. Issue: Whether or not Galero is administratively liable

Held: Yes but only for simple neglect of duty.

Ratio:

1. That Geocadin is security guard of PPA-PMO assigned to inspect equipment at different PPA stations was sufficiently established by the records. He is therefore not a ghost employee. Hence, nothing was falsified and Galero is not dishonest in certifying the DTR of Geocadin. 2. There was also no showing in the records that Galero was in conclusion with Geocadin in defrauding the government, hence Galero cannot be said to have intended to cause undue injury to the Government.

simple neglect of duty, but insufficient to make him answer for charges of dishonesty and falsification of document. Title: Luces v. Damole Date: 14 March 2008 Ponente: J. Nachura Subject/Topic: Criminal Law, Estafa Facts: •

3. Galero however is guilty of simple neglect in failing to implement measures which could have prevented Geocadin from defrauding the government. 4. Simple neglect of duty is defined as the failure to give proper attention to a task expected from an employee resulting from either carelessness or indifference. 5. In this case, had Galero performed the task required of him, that is, to monitor the employees’ attendance, he would have discovered that indeed Mr. Geocadin was dividing his time between PPA and Napocor. Though not required to know every detail of his subordinates’ whereabouts, Galero should have implemented measures to make sure that the government was not defrauded. As he was required to sign Mr. Geocadin’s DTR, Galero should have verified the truthfulness of the entries therein. 6. Indeed, Galero neglected his duty which caused prejudice to the government in that Mr. Geocadin was paid twice for his services. 7. These facts, taken together, are sufficient to make Galero liable for

•

•

Petitioner Luces and respondent Damole agreed that Luces would sell the P.O. cards issued by the latter to the former's customers. Luces would get her commission therefrom in the form of marked up prices. Petitioner further agreed that she would hold the P.O. cards as trustee of the private complainant with the obligation to remit the proceeds of the sale thereof less the commission, and before such remittance, to hold the same in trust for the latter. Lastly, petitioner undertook to return the unsold PO cards. Initially, petitioner complied with her obligations, but later she defaulted in remitting the proceeds. Some P.O. cards were even used by petitioner herself and her relatives, but they did not pay the corresponding price, nor remitted the proceeds. Damole filed a civil case for collection of money and a criminal case for estafa. 1. Petitioner - found guilty of violation of Article 315(1) (b) (through misappropriation or conversion). 2. CA affirmed the RTC decision but with modification on the penalty. • Damole filed a petition before the SC, arguing that the CA erred in convicting her and that she is only liable civilly and not criminally.

Issue: WON Luces is criminally liable for estafa? Held/Ratio: YES.

The elements of estafa through misappropriation or conversion (Article 315(1) (b)) were present. 1. That the money, goods or other personal property is received by the offender in trust, or on commission, or for administration, or under any other obligation involving the duty to deliver or return the same. o It was established that petitioner received from the private complainant the subject PO cards to be sold by the former on commission, as evidenced by their Trust Receipt Agreements 2. That there be misappropriation or conversion of such money or property by the offender or denial on his part of such receipt. o Using or disposing of P.O. cards by Luces for her and her relatives’ own personal purpose and benefit, constitutes breach of trust, unfaithfulness and abuse of confidence. o The failure of LUCES to account for them establishes the felony of estafa through abuse of confidence by misappropriation or conversion. 3. That such misappropriation or conversion or denial is to the prejudice of another 1. Damole was deprived of her right to enjoy the proceeds of the sale as a result of petitioner’s unauthorized use of the PO cards. 4. That there is a demand made by the offended party on the offender. o In spite of repeated demands made upon Luces by Damole, she has failed and refused to comply with her obligation. The civil case filed by the Damole is not a prejudicial question. The issues were different.

• Civil case - Damole’s right to recover from Luces the amount representing the value of the P.O. cards allegedly embezzled by the latter. • Criminal case - WON Luces’ failure to account for the proceeds of the sale of P.O. cards and/or to return the unsold P.O. cards as Damole’s trustee constitutes estafa under Art. 315 par. 1 (b) of the RPC. MATA vs AGRAVANTE August 6, 2008 Nachura, J. TORTS AND DAMAGES: * DEFINITION Article 19 which contains what is commonly referred to as the principle of abuse of rights, is not a panacea for all human hurts and social grievances. The object of this article is to set certain standards which must be observed not only in the exercise of one’s rights but also in the performance of one’s duties. STANDARDS (A19) Act with justice, Give everyone his due, and Observe honesty and good faith. *

DEFINITION Article 21 refers to acts contra bonos mores ELEMENTS (1) an act which is legal; (2) but which is contrary to morals, good custom, public order or public policy; and (3) is done with intent to injure.

*

The common element under Articles 19 and 21 is that the act complained of must be intentional, and attended with malice or bad faith.

*

There is no hard and fast rule which can be applied to determine whether or not the principle of abuse of rights may be invoked. The question of whether or not this principle has been violated, depends on the circumstances of each case.

Facts Mata owns a security agency. Respondents were former security gurads who filed a complaint in the NLRC for non-payment of salaries and wages. They then subsequently filed an affidavit complaint with the PNP, copies were then sent to various offices including the Office of the President and the DPWH, petitioner’s biggest client.

furnishing copies thereof to seven (7) other executive offices of the national government, the defendantsappellants may not be said to be motivated simply by the desire to “unduly prejudice the good name and reputation” of plaintiff-appellee. Such act was consistent with and a rational consequence of seeking justice through legal means for the alleged abuses defendants-appellants suffered in the course of their employment. The act of furnishing copies was merely to inform said offices of the fact of filing of such complaint, as is usually done by individual complainants seeking official government action to address their problems or grievances. In the absence of proof that there was malice or bad faith on the part of the respondents, no damages can be awarded.

Issue Whether or not respondents furninshing of copies to the PNP, DPWH etal was tainted with bad faith and hence liable for damages.

MERALCO vs WILCON BUILDERS SUPPLY, INC. June 30, 2008 Nachura, J.

Decision

TORTS AND DAMAGES: * RIDJO DOCTRINE (Ridjo Tape vs CA) Public utility has the imperative duty to make a reasonable and proper inspection of its apparatus and equipment to ensure that they do not malfunction. Its failure to discover the defect, if any, considering the length of time, amounts to inexcusable negligence; its failure to make the necessary repairs and replace the defective electric meter installed within the

Respondents not liable. There was no malicious intent to injure petitioner’s good name and reputation. The respondents merely wanted to call the attention of responsible government agencies in order to secure appropriate action upon an erring private security agency and obtain redress for their grievances. Ratio In filing the letter-complaint with the Philippine National Police and

consumer’s premises limits the latter’s liability. Defect may be inherent, intentional or unintentional, which therefore covers tampering, mechanical defects and mistakes in the computation of the consumers’ billing Facts Wilcon Builders is a registered customer of MERALCO. In 1991, MERALCO’s inspectors did a routine inspection of the electric meters of Wilcon. Allegedly, the meters were found to have been tampered. Meralco seized the meters and later informed Wilcon of the tampering and was demanding s certain sum representing the unregistered electric consumption. Wilcon, for its part, said that the reason for the abrupt decrease in their consumption was the breaking down of their 7.5 ton air-conditioning unit in 1986. Issue Whether or not MERALCO is negligent applying the Ridjo Doctrine.

consumption was reflected in its records, petitioner should have conducted an immediate investigation to make sure that there was nothing wrong with the meter, especially because, by its own account, the subject meter had a history of previous tampering. We cannot sanction a situation wherein the defects in the electric meter are allowed to continue indefinitely until suddenly the public utilities concerned demand payment for the unrecorded electricity utilized when, in the first place, they should have remedied the situation immediately. If we turn a blind eye on MERALCO’s omission, it may encourage negligence on the part of public utilities, to the detriment of the consuming public.

Novicio vs People GR No 163331 Date:

August 29, 2008

Petitioner:

Arellano Novicio

Respondent: People of the Philippines Nature:

for the reversal of the CA decision

Decision MERALCO is negligent. Public service companies which do not exercise prudence in the discharge of their duties shall be made to bear the consequences of such oversight. Ratio According to the petitioner, there was a sudden drop in respondent’s electric consumption during the last quarter of 1984. If this contention were true, the moment a sudden drop of electric

Petition for Review On Certiorati (Rule 45)

Facts: o o o

The incident took place on Sept 24, 1998 in Bacong San Luis, Aurora. Mario Mercado was already drinking with his friends when Arellano Novicio arrived. (MERCADO’S VERSION)Novicio drew a gun, pointed it at Mercado, and threatened him. When Mercado was about to stand, Novicio shot him. Mercado ran and hid as Novicio

o

o

attempted to shoot him for a second time. (NOVICIO’S VERSION) Mercado loudly exclaimed lies and fabrications intended to provoke Novicio. When Novicio asked him to stop, Mercado got mad. Mercado drew his gun and pointed it at Novicio. Novicio tried to wrest the gun and a scuffle ensued. The gun fired accidentally. Novicio was charged with the crime of frustrated homicide, since all the acts of execution that would have caused the death of Mercado if not for the timely and effective medical attention given to him.

Issue (1) : self-defense.

Held:

WON Novicio acted in

Decision:

Petition denied.

TITLE OF THE CASE: OLIVEROS V. SISON

DATE OF PROMULGATION: 2008

March 14,

SUBJECT AREA: Civil Procedure

KEY DOCTRINES/CONCEPTS: Ignorance of the Law; Contempt

Gross Indirect

FACTS:

No.

Ratio: There was no unlawful aggression on the part of Mario to justify Novicio’s act of shooting him. No reason to depart from the findings of RTC and CA.

Issue (2): kill.

WON there was intent to

Held:

Yes.

Ratio: Intent to kill is manifested in the act of using the lethal weapon, attempting to shoot the victim for a second time, and the seriousness of the injury sustained.

Before the SC is a Motion for Partial Reconsideration filed by Judge Dionisio C. Sison seeking the reversal the SC decision finding him guilty of gross ignorance of the law and fined P1,000. Judge Sison failed to abide by the requirements under the Revised Rules on Civil Procedure in citing complainant spouses Arleen and Lorna Oliveros for indirect contempt. As gleaned from the resolution, the contempt charge was not filed as a separate and independent petition from the principal action pending before the court. Also, the warrant of arrest was issued on the same day that the motion for contempt was made in a hearing in which the complainant spouses failed to appear.

Complainant spouses Oliveros filed a petition for certiorari before the CA questioning the contempt order. Subsequently, they filed the present administrative case with the SC. They failed to inform the SC of the petition for certiorari pending before the CA.

ISSUE 1: WON JUDGE SISON IS GUILTY OF GROSS IGNORANCE OF THE LAW

decided separately, unless the court in its discretion orders the consolidation of the contempt charge and the principal action for joint hearing and decision.

DECISION: Yes.

RATIO:

Rule 71 of the Revised Rules on Civil Procedure explicitly sets out the requirements for instituting a complaint for indirect contempt.

SEC. 4. How proceedings commenced. – Proceedings for indirect contempt may be initiated motu proprio by the court against which the contempt was committed by an order or any formal charge requiring the respondent to show cause why he should not be punished for contempt.

In all other cases, charges for indirect contempt shall be commenced by a verified petition with supporting particulars and certified true copies of documents or papers involved therein, and upon full compliance with the requirements for filing initiatory pleadings for civil actions in the court concerned. If the contempt charges arose out of or are related to a principal action pending in court, the petition for contempt shall allege that fact but said petition shall be docketed, heard and

Good faith in situations of fallible discretion inheres only within the parameters of tolerable misjudgment and does not apply where the issues are so simple and the applicable legal principle evident and basic as to be beyond permissible margins of error. When the law is so elementary, not to know it constitutes gross ignorance of the law.

Moreover, complainants should have been given the opportunity to be heard and to defend themselves against the contempt charge, involving as it does such a dire consequence as imprisonment for six months. The undue haste in disposing of the motion for contempt deprived complainants of one of man’s most fundamental rights, the right to be heard.

ISSUE 2: WON COMPLAINANT SPOUSES OLIVEROS MAY BE HELD LIABLE FOR CONTEMPT FOR NOT DISCLOSING THE PETITION FOR CERTIORARI INVOLVING THE SAME ISSUE PENDING BEFORE THE CA

DECISION: Yes

RATIO:

Complainants

themselves

admitted

that

they failed to inform this Court of the petition they filed before the CA within five days after they “learn[ed] that the same or similar action or claim has been filed or is pending,” as provided by the Rules. They, however, argue that they were not aware of such requirement. While that may have been true, their argument becomes untenable when seen in the light of their subsequent actions. The Verification/Certification of the Petition for Certiorari before the CA clearly shows that both complainants signed the same. Thus, they are presumed to have read its contents. This should have already made them aware of the requirement to inform the Court of the filing of the case before the CA considering that in the latter case, they are praying for the nullification of the very same Order for which they were seeking administrative sanctions against respondent Judge before this Court. Thus, there appears a real possibility that the pernicious effect sought to be prevented by the rules requiring the Certification against Forum Shopping would arise. Accordingly, the complainants could be held liable for contempt of this Court.

Orozco v CA August 13, 2008 J. Nachura Subject Area: employer-employee relationship, control test, economic reality test Facts: Orozco was a columnist of PDI whose column was discontinued. She is now suing for illegal dismissal as an employee. Issue: (In the first place) WON a columnist is an employee of the newspaper. Decision: No. Ratio: Control Test - The main determinant of the ee-er relationship is whether the rules set by the er are meant to control not just the results of the work but also the means and

methods to e used by the hired party in order to achieve the results. Petitioner was engaged as a columnist for her talent, skill, experience, and unique viewpoint as a feminist advocate. How she utilized all these in writing her column was not subject to dictation. Any rules imposed on her as to length of articles, time of submission, etc. are merely general guidelines dictated by the nature of the newspaper business itself. Economic Reality Test – This is especially appropriate when there is no written agreement, as in this case. The benchmark is the economic dependence of the worker on the employee. Petitioner’s main occupation is not as columnist but as women’s rights advocate, and she also contributes articles to other publications. Magalang vs. CA February 26, 2008 J. Nachura Subject area: CivPro, decisions – final and executor; effect, decisions – coordinate courts Facts: Magalang filed for illegal dismissal. NLRC rendered a decision, denied Motion for Reconsideration of Magalang who filed an appeal with the CA 9th Division; denied MFR of employer who filed an appeal with the CA 4th Division. CA 9th Division promulgated decision first, no appeal made. 4th Division subsequently rendered inconsistent decision. Issue: WON the decision of the 4th Division is valid Decision: No. Ratio: Various divisions of the CA are, in a sense, coordinate courts, and pursuant to the policy of judicial stability, a division of the appellate court should not interfere with the decision of other divisions. Further, no appeal was interposed against the 9th Division’s decision; therefore, it already attained finality. When a decision

becomes final and executor, the court loses jurisdiction and not even an appellate court will have the power to review the said judgment. Just as the losing party has the privilege to file an appeal within the prescribed period, so does the winner have the correlative right to enjoy the finality of the decision. TITLE OF THE CASE: PARISCHA V. DON LUIS DISON REALTY

DATE OF PROMULGATION: 2008

authorized to receive payment. Also, petitioners alleged that they were prevented from using the units rented. Petitioners eventually paid their monthly rent for December 1992 in the amount of P30,000.00, and claimed that respondent waived its right to collect the rents for the months of July to November 1992 since petitioners were prevented from using some of the units. However, they again withheld payment starting January 1993 because of respondent’s refusal to turn over Rooms 36, 37 and 38.

March 14,

SUBJECT AREA: Corporation Law, Civil Procedure, Obligations and Contracts

KEY DOCTRINES/CONCEPTS: Standing to Sue of a Corporation; Capacity to Sue of an Officer on Behalf of a Corporation; Unlawful Detainer

FACTS:

Respondent Don Luis Dison Realty, Inc. and petitioners Parischa executed two Contracts of Lease whereby the former, as lessor, agreed to lease to the latter Units 22, 24, 32, 33, 34, 35, 36, 37 and 38 of the San Luis Building located at Ermita, Manila. Petitioners, in turn, agreed to pay monthly rentals.

Petitioners paid the monthly rentals until May 1992. After that, however, petitioners refused to pay the rent. Petitioners assert that their refusal to pay the rent was justified because of the internal squabble in respondent company as to the person

A complaint for ejectment was filed by private respondent through its representative, Ms. Bautista, before the MeTC.

The MeTC considered petitioners’ nonpayment of rentals as unjustified. The court held that mere willingness to pay the rent did not amount to payment of the obligation. The court did not give credence to petitioners’ claim that private respondent failed to turn over possession of the premises. The court, however, dismissed the complaint because of Ms. Bautista’s alleged lack of authority to sue on behalf of the corporation.

The RTC of Manila reversed and set aside the MeTC Decision. It adopted the MeTC’s finding on petitioners’ unjustified refusal to pay the rent, which is a valid ground for ejectment. It, however, it upheld Ms. Bautista’s authority to represent respondent notwithstanding the absence of a board resolution to that effect, since her authority was implied from her power as a general manager/treasurer of the company.

The CA affirmed the RTC Decision but

deleted the award of attorney’s fees.

ISSUE 1: WON RESPONDENT COMPANY HAS STANDING TO SUE

its board of directors and/or its duly authorized officers and agents. Physical acts, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate bylaws or by a specific act of the board of directors. Thus, any person suing on behalf of the corporation should present proof of such authority.

DECISION: Yes

RATIO:

Although the SEC suspended and eventually revoked respondent’s certificate of registration on February 16, 1995, records show that it instituted the action for ejectment on December 15, 1993. Accordingly, when the case was commenced, its registration was not yet revoked. Besides, the SEC later set aside its earlier orders of suspension and revocation of respondent’s certificate, rendering the issue moot and academic.

ISSUE 2: WON MS. BAUTISTA HAS CAPACITY TO SUE IN BEHALF OF THE COMPANY

DECISION: Yes

RATIO:

A corporation has no powers except those expressly conferred on it by the Corporation Code and those that are implied from or are incidental to its existence. In turn, a corporation exercises said powers through

Although Ms. Bautista initially failed to show that she had the capacity to sign the verification and institute the ejectment case on behalf of the company, when confronted with such question, she immediately presented the Secretary’s Certificate confirming her authority to represent the company. There is ample jurisprudence holding that subsequent and substantial compliance may call for the relaxation of the rules of procedure in the interest of justice. In Novelty Phils., Inc. v. Court of Appeals, the Court faulted the appellate court for dismissing a petition solely on petitioner’s failure to timely submit proof of authority to sue on behalf of the corporation. In Pfizer, Inc. v. Galan, we upheld the sufficiency of a petition verified by an employment specialist despite the total absence of a board resolution authorizing her to act for and on behalf of the corporation. Lastly, in China Banking Corporation v. Mondragon International Philippines, Inc, we relaxed the rules of procedure because the corporation ratified the manager’s status as an authorized signatory. In all of the above cases, we brushed aside technicalities in the interest of justice. This relaxation of the rules applies only to highly meritorious cases, and when there is substantial compliance.

ISSUE 3: WON THE DENIAL OF THE MOTION TO INHIBIT CA JUSTICE RUBEN

REYES IS PROPER

DECISION: Yes

DECISION: Yes

RATIO:

RATIO:

Unlawful detainer cases are summary in nature. In such cases, the elements to be proved and resolved are the fact of lease and the expiration or violation of its terms. Specifically, the essential requisites of unlawful detainer are: 1) the fact of lease by virtue of a contract, express or implied; 2) the expiration or termination of the possessor’s right to hold possession; 3) withholding by the lessee of possession of the land or building after the expiration or termination of the right to possess; 4) letter of demand upon lessee to pay the rental or comply with the terms of the lease and vacate the premises; and 5) the filing of the action within one year from the date of the last demand received by the defendant.[49]

First, the motion to inhibit came after the appellate court rendered the assailed decision, that is, after Justice Reyes had already rendered his opinion on the merits of the case. It is settled that a motion to inhibit shall be denied if filed after a member of the court had already given an opinion on the merits of the case, the rationale being that “a litigant cannot be permitted to speculate on the action of the court x x x (only to) raise an objection of this sort after the decision has been rendered.”

Second, it is settled that mere suspicion that a judge is partial to one of the parties is not enough; there should be evidence to substantiate the suspicion. Bias and prejudice cannot be presumed, especially when weighed against a judge’s sacred pledge under his oath of office to administer justice without regard for any person and to do right equally to the poor and the rich. There must be a showing of bias and prejudice stemming from an extrajudicial source, resulting in an opinion on the merits based on something other than what the judge learned from his participation in the case.

ISSUE 4: WON THE PETITIONERS MAY BE VALIDLY EJECTED FROM THE LEASED PREMISES

It is undisputed that petitioners and respondent entered into two separate contracts of lease involving nine (9) rooms of the San Luis Building. Records, likewise, show that respondent repeatedly demanded that petitioners vacate the premises, but the latter refused to heed the demand; thus, they remained in possession of the premises. The only contentious issue is whether there was indeed a violation of the terms of the contract.

This issue involves questions of fact, the resolution of which requires the evaluation of the evidence presented. The MeTC, the RTC and the CA all found that petitioners failed to perform their obligation to pay the stipulated rent. It is settled doctrine that in a civil case, the conclusions of fact of the trial court, especially when affirmed by the Court of Appeals, are final and conclusive,

and cannot be reviewed on appeal by the Supreme Court.

Petitioners’ justifications are belied by the evidence on record. As correctly held by the CA, petitioners’ communications to respondent prior to the filing of the complaint never mentioned their alleged inability to use the rooms. What they pointed out in their letters is that they did not know to whom payment should be made. Although petitioners stated in their December 30, 1993 letter that respondent failed to fulfill its part of the contract, nowhere did they specifically refer to their inability to use the leased rooms. Besides, at that time, they were already in default on their rentals for more than a year.

What was clearly established by the evidence was petitioners’ non-payment of rentals because ostensibly they did not know to whom payment should be made. However, this did not justify their failure to pay. They should have availed of the provisions of the Civil Code of the Philippines on the consignation of payment and of the Rules of Court on interpleader.

In light of the foregoing disquisition, respondent has every right to exercise his right to eject the erring lessees. Moreover, Article 1673 of the Civil Code gives the lessor the right to judicially eject the lessees in case of non-payment of the monthly rentals. A contract of lease is a consensual, bilateral, onerous and commutative contract by which the owner temporarily grants the use of his property to another, who undertakes to pay the rent therefor. For failure to pay the rent, petitioners have no right to remain in the leased premises. TITLE OF ALEJANDRO

THE

CASE:

PCIB

V.

DATE OF PROMULGATION: 21, 2007

September

SUBJECT AREA: Civil Procedure

KEY DOCTRINES/CONCEPTS: Conclusiveness of Judgment; Attachment; Mode of Service for Resident Temporarily Out of the Philippines; Damages

FACTS: Complaint for a sum of money with prayer for the issuance of a writ of preliminary attachment (FIRST CASE)

Petitioner PCIB filed against respondent Alejandro a complaint for a sum of money with prayer for the issuance of a writ of preliminary attachment. Said complaint alleged that on September 10, 1997, Alejandro, a resident of Hong Kong, executed in favor of PCIB a promissory note obligating himself to pay P249,828,588.90 plus interest. In view of the fluctuations in the foreign exchange rates which resulted in the insufficiency of the deposits of Alejandro as security for the loan, PCIB requested the latter to put up additional security. Alejandro sought a reconsideration of said request pointing out petitioner’s alleged mishandling of his account due to its failure to carry out his instruction to close his account as early as April 1997, when the prevailing rate of exchange of the US Dollar to Japanese yen was US$1.00:JPY127.50. The amount of P249,828,588.90 was the consolidated amount of a series of yen loans granted by PCIB to Alejandro during the months of February and April 1997.

In praying for the issuance of a writ of preliminary attachment under Section 1 paragraphs (e) and (f) of Rule 57 of the Rules of Court, petitioner alleged that (1) respondent fraudulently withdrew his unassigned deposits notwithstanding his verbal promise to PCIB not to withdraw the same prior to their assignment as security for the loan; and (2) that respondent is not a resident of the Philippines.

The trial court granted the application and issued the writ ex parte after PCIB posted a Php 18.7M bond, issued by Prudential Guarantee & Assurance Inc. Also, the bank deposits of Alejandro with RCBC were garnished. Alejandro, through counsel, voluntarily submitted to the jurisdiction of the court.

Subsequently, Alejandro filed a motion to quash the writ contending that the withdrawal of his unassigned deposits was not fraudulent as it was approved by PCIB. He also alleged that petitioner knew that he maintains a permanent residence at Calle Victoria, Ciudad Regina, Batasan Hills, Quezon City, and an office address in Makati City at the Law Firm Romulo Mabanta Buenaventura Sayoc & De los Angeles, where he is a partner. In both addresses, petitioner regularly communicated with him through its representatives. Respondent added that he is the managing partner of the Hong Kong branch of said Law Firm; that his stay in Hong Kong is only temporary; and that he frequently travels back to the Philippines.

The trial court issued an order quashing the writ and holding that the withdrawal of respondent’s unassigned deposits was not intended to defraud petitioner. It also found

that the representatives of petitioner personally transacted with respondent through his home address in Quezon City and/or his office in Makati City. It thus concluded that petitioner misrepresented and suppressed the facts regarding respondent’s residence considering that it has personal and official knowledge that for purposes of service of summons, respondent’s residence and office addresses are located in the Philippines.

With the denial of PCIB’s motion for reconsideration, it elevated the case to the CA via a petition for certiorari. The petition was dismissed for failure to prove that the trial court abused its discretion in issuing the aforesaid order. PCIB filed a motion for reconsideration but was denied. On petition with the SC, the case was dismissed for late filing. PCIB filed a motion for reconsideration but was likewise denied with finality on March 6, 2000. Complaint for damages (SECOND CASE AND CASE BEFORE THE COURT) Meanwhile, on May 20, 1998, Alejandro filed for damages in the amount of P25 Million on the attachment bond posted by Prudential Guarantee & Assurance, Inc. on account of the wrongful garnishment of his deposits. He presented evidence showing that his P150,000.00 RCBC check payable to his counsel as attorney’s fees, was dishonored by reason of the garnishment of his deposits. He also testified that he is a graduate of the Ateneo de Manila University in 1982 with a double degree of Economics and Management Engineering and of the University of the Philippines in 1987 with the degree of Bachelor of Laws. Respondent likewise presented witnesses to prove that he is a well known lawyer in the business community both in the Philippines and in Hong Kong.

The trial court awarded damages to Alejandro in the amount of P25 Million without specifying the basis thereof. It also denied petitioner’s motion for reconsideration.

PCIB elevated the case to the CA which affirmed the findings of the trial court. It held that in claiming that respondent was not a resident of the Philippines, petitioner cannot be said to have been in good faith considering that its knowledge of respondent’s Philippine residence and office address goes into the very issue of the trial court’s jurisdiction which would have been defective had respondent not voluntarily appeared before it. The CA, however, reduced the amount of damages awarded to petitioner and specified their basis: P2M as nominal damages; P5M as moral damages; and P1M as attorney’s fees, to be satisfied against the attachment bond under Prudential Guarantee & Assurance, Inc.

Both parties moved for reconsideration. The CA denied PCIB’s motion for reconsideration but granted that of Alejandro’s by ordering PCIB to pay additional P5M as exemplary damages.

ISSUE 1: WON THE COURT CAN PASS UPON THE ISSUES OF PROPRIETY OF THE ISSUANCE OF A WRIT OF ATTACHMENT, MISREPRESENTATION BY PCIB AND RESIDENCE OF ALEJANDRO

DECISION: No.

RATIO:

The ruling of the trial court that PCIB is not entitled to a writ of attachment because Alejandro is a resident of the Philippines, that his act of withdrawing his deposits with petitioner was without intent to defraud, and that PCIB misrepresented that Alejandro was residing out of the Philippines, is now beyond the power of this Court to review, having been the subject of a final and executory order. The rule on conclusiveness of judgment precludes the relitigation of a particular fact or issue in another action between the same parties even if based on a different claim or cause of action. The judgment in the prior action operates as estoppel as to those matters in issue or points controverted, upon the determination of which the finding or judgment was rendered. Hence, the issues of misrepresentation by petitioner and the residence of respondent for purposes of service of summons can no longer be questioned by petitioner in this case.

ISSUE 2: WON PCIB IS LIABLE FOR DAMAGES FOR THE IMPROPER ISSUANCE OF THE WRIT OF ATTACHMENT AGAINST ALEJANDRO

DECISION: Yes.

RATIO:

PCIB is barred by the principle of conclusiveness of judgment from invoking good faith in the application for a writ of attachment in order to avoid liability for damages

The trial court settled in its final order the two grounds invoked by PCIB for the issuance of a writ for preliminary attachment. Contrary to the assertions of PCIB, Alejandro is a resident of the Philippines, and he did not withdraw his deposits from PCIB with intent to defraud creditors. Firstly, in the hearings of the motion, and oral arguments of counsels before the SC, it appeared that PCIB personally transacted with Alejandro mainly through the latter’s Metro Manila residence, either in Alejandro’s home address in Quezon City or his main business address at the ROMULO MABANTA BUENAVENTURA SAYOC & DELOS ANGELES in Makati. Thus PCIB could not deny personal and official knowledge that Alejandro’s residence for purposes of service of summons is in the Philippines. Secondly, the amount withdrawn by Alejandro from PCIB was not part of his peso deposits assigned with the bank to secure the loan. Proof that the withdrawal was not intended to defraud PCIB as creditor is that plaintiff approved and allowed said withdrawals. Moreover, the tenor of the final order of the trial court which quashed the writ evidently considers PCIB to have acted in bad faith by resorting to a deliberate strategy to mislead the court. Thus, PCIB cannot again invoke good faith in the present case since such issue was already aired and squarely ruled upon in the first case. Similarly, in the case of Hanil Development Co., Ltd. v. Court of Appeals, the Court debunked the claim of good faith by a party who maliciously sought the issuance of a writ of attachment, the bad faith of said party having been previously determined in a final decision which voided the assailed writ.

Discussion on when attachment is proper as a means for the court to acquire jurisdiction (over the res, not over the non-resident defendant)

The circumstances under which a writ of preliminary attachment may be issued are set forth in Section 1, Rule 57 of the Rules of Court, to wit:

SEC. 1. Grounds upon which attachment may issue. — At the commencement of the action or at any time before entry of judgment, a plaintiff or any proper party may have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered in the following cases:

f) In an action against a party who resides out of the Philippines, or on whom summons may be served by publication.

The purposes of preliminary attachment are: (1) to seize the property of the debtor in advance of final judgment and to hold it for purposes of satisfying said judgment, as in the grounds stated in paragraphs (a) to (e) of Section 1, Rule 57 of the Rules of Court; or (2) to acquire jurisdiction over the action by actual or constructive seizure of the property in those instances where personal or substituted service of summons on the defendant cannot be effected, as in paragraph (f) of the same provision.

Corollarily, in actions in personam, such as the case for collection of sum of money, summons must be served by personal or substituted service, otherwise the court will not acquire jurisdiction over the defendant.

In case the defendant does not reside and is not found in the Philippines (and hence personal and substituted service cannot be effected), the remedy of the plaintiff in order for the court to acquire jurisdiction to try the case is to convert the action into a proceeding in rem or quasi in rem by attaching the property of the defendant. The service of summons in this case (which may be by publication coupled with the sending by registered mail of the copy of the summons and the court order to the last known address of the defendant), is no longer for the purpose of acquiring jurisdiction but for compliance with the requirements of due process.

Discussion on the propriety of issuing a writ of attachment / proper mode of service in the case of a resident temporarily out of the Philippines

PCIB seeks to nuance its argument by saying that it considers Alejandro a resident temporarily out of the Philippines such that attachment is still a proper and available remedy.

However, the SC held that where the defendant is a resident who is temporarily out of the Philippines, attachment of his/her property in an action in personam, is not always necessary in order for the court to acquire jurisdiction to hear the case.

Section 16, Rule 14 of the Rules of Court reads:

Sec. 16. Residents temporarily out of the Philippines. – When an action is commenced against a defendant who ordinarily resides within the Philippines, but who is temporarily out of it, service may, by leave of court, be also effected out of the Philippines, as under the preceding section.

The preceding section referred to in the above provision is Section 15 which provides for extraterritorial service – (a) personal service out of the Philippines, (b) publication coupled with the sending by registered mail of the copy of the summons and the court order to the last known address of the defendant; or (c) in any other manner which the court may deem sufficient.

In Montalban v. Maximo, the Court held that substituted service of summons (under the present Section 7, Rule 14 of the Rules of Court) is the normal mode of service of summons that will confer jurisdiction on the court over the person of residents temporarily out of the Philippines. Meaning, service of summons may be effected by (a) leaving copies of the summons at the defendant’s residence with some person of suitable discretion residing therein, or (b) by leaving copies at the defendant’s office or regular place of business with some competent person in charge thereof. Hence, the court may acquire jurisdiction over an action in personam by mere substituted service without need of attaching the property of the defendant.

The rules on the application of a writ of attachment must be strictly construed in

favor of the defendant. For attachment is harsh, extraordinary, and summary in nature; it is a rigorous remedy which exposes the debtor to humiliation and annoyance. It should be resorted to only when necessary and as a last remedy.

In the instant case, it must be stressed that the writ was issued by the trial court mainly on the representation of petitioner that respondent is not a resident of the Philippines. Obviously, the trial court’s issuance of the writ was for the sole purpose of acquiring jurisdiction to hear and decide the case. Had the allegations in the complaint disclosed that respondent has a residence in Quezon City and an office in Makati City, the trial court, if only for the purpose of acquiring jurisdiction, could have served summons by substituted service on the said addresses, instead of attaching the property of the defendant. The misrepresentation of petitioner that respondent does not reside in the Philippines and its omission of his local addresses was thus a deliberate move to ensure that the application for the writ will be granted.

In light of the foregoing, the Court of Appeals properly sustained the finding of the trial court that petitioner is liable for damages for the wrongful issuance of a writ of attachment against respondent. Discussion on damages

Anent the actual damages, the Court of Appeals is correct in not awarding the same inasmuch as the respondent failed to establish the amount garnished by petitioner. It is a well settled rule that one who has been injured by a wrongful attachment can recover damages for the actual loss resulting therefrom. But for such losses to be recoverable, they must

constitute actual damages duly established by competent proofs, which are, however, wanting in the present case.

Nominal damages may be awarded to a plaintiff whose right has been violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, and not for indemnifying the plaintiff for any loss suffered by him. Its award is thus not for the purpose of indemnification for a loss but for the recognition and vindication of a right. In this case, nominal damages is proper considering that the right of respondent to use his money has been violated by its garnishment. The amount of nominal damages must, however, be reduced from P2 million to P50,000.00 considering the short period of 2 months during which the writ was in effect as well as the lack of evidence as to the amount garnished.

The award of attorney’s fees is proper when a party is compelled to incur expenses to lift a wrongfully issued writ of attachment. The basis of the award thereof is also the amount of money garnished, and the length of time respondents have been deprived of the use of their money by reason of the wrongful attachment. It may also be based upon (1) the amount and the character of the services rendered; (2) the labor, time and trouble involved; (3) the nature and importance of the litigation and business in which the services were rendered; (4) the responsibility imposed; (5) the amount of money and the value of the property affected by the controversy or involved in the employment; (6) the skill and the experience called for in the performance of the services; (7) the professional character and the social standing of the attorney; (8) the results secured, it being a recognized rule that an attorney may properly charge a much larger fee when it is contingent than when it is not. All the aforementioned

weighed, and considering the short period of time it took to have the writ lifted, the favorable decisions of the courts below, the absence of evidence as to the professional character and the social standing of the attorney handling the case and the amount garnished, the award of attorney’s fees should be fixed not at P1 Million, but only at P200,000.00.

The courts below correctly awarded moral damages on account of petitioner’s misrepresentation and bad faith; however, we find the award in the amount of P5 Million excessive. Moral damages are to be fixed upon the discretion of the court taking into consideration the educational, social and financial standing of the parties. Moral damages are not intended to enrich a complainant at the expense of a defendant. They are awarded only to enable the injured party to obtain means, diversion or amusements that will serve to obviate the moral suffering he has undergone, by reason of petitioner’s culpable action. Moral damages must be commensurate with the loss or injury suffered. Hence, the award of moral damages is reduced to P500,000.00.

DATE OF PROMULGATION: 2008

July 14,

SUBJECT AREA: Criminal Procedure

KEY DOCTRINES/CONCEPTS: Special Civil Action for Certiorari in Criminal Cases; Double Jeopardy

FACTS:

Accused Joseph Terrado was charged with Carnapping under Republic Act 6538, otherwise known as the “Anti-Carnapping Act of 1972.” According to the Information, the accused carted away a motorized tricycle after threatening the driver with a fan knife. The accused was arraigned and pleaded not guilty to the crime charged.

Considering petitioner’s bad faith in securing the writ of attachment, we sustain the award of exemplary damages by way of example or correction for public good. While as a general rule, the liability on the attachment bond is limited to actual (or in some cases, temperate or nominal) damages, exemplary damages may be recovered where the attachment was established to be maliciously sued out. Nevertheless, the award of exemplary damages in this case should be reduced from P5M to P500,000.00.

The defense claimed that the accused merely borrowed the tricycle from its driver Dalmacio. However, when accused was about to return the same, he hit a stone, lost control of the tricycle and bumped a tree. Three persons came and helped him bring the tricycle back to the roadside. The accused returned the tricycle at around 11:00 pm of the same day to the Spouses Garcia, owners of the tricycle. The defense did not deny that the tricycle, when returned, was damaged and, in fact, the accused voluntarily paid the amount of P8,000.00 as partial remuneration for the repair of the tricycle.

TITLE OF TERRADO

The trial court acquitted accused Terrado for failure of the prosecution to establish intent

THE

CASE:

PEOPLE

V.

to take the tricycle and intent to gain from the same. Thus, the court held that the prosecution failed to prove the guilt of the accused beyond reasonable doubt.

The prosecution filed a Motion for Reconsideration which the trial court denied. Aggrieved, the complainants come to this Court via a Petition for Certiorari seeking to annul and set aside the decision

ISSUE 1: WON THE PUBLIC RESPONDENT IN RENDERING THE QUESTIONED DECISION ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION.

DECISION: No.

RATIO:

The special civil action for certiorari is intended for the correction of errors of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction. Its principal office is to keep the inferior court within the parameters of its jurisdiction or to prevent it from committing such a grave abuse of discretion amounting to lack or excess of jurisdiction.

By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse of discretion must be grave as where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility and must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to

perform the duty enjoined by or to act at all in contemplation of law.

While petitioner alleges grave abuse of discretion amounting to lack or excess of jurisdiction, the imputation is premised on the averment that the trial court reached its conclusions based on speculation, surmises and conjectures. As alleged by the petitioners, the accused forcibly took the vehicle from the complainant’s driver and the public respondent acquitted the accused for alleged failure to meet the element of intent to gain. Specifically, the allegations delve on the misapprehension of facts by the trial court.

As a rule, factual matters cannot be normally inquired into by the Supreme Court in a certiorari proceeding. The present recourse is a petition for certiorari under Rule 65. It is a fundamental aphorism in law that a review of facts and evidence is not the province of the extraordinary remedy of certiorari, which is extra ordinem – beyond the ambit of appeal.

At least, the mistakes ascribed to the trial court are not errors of jurisdiction correctible by the special civil action for certiorari, but errors of judgment, which is correctible by a petition for review on certiorari under Rule 45 of the Revised Rules of Court. The mere fact that a court erroneously decides a case does not necessarily deprive it of jurisdiction. Thus, assuming arguendo that the trial court committed a mistake in its judgment, the error does not vitiate the decision, considering that it has jurisdiction over the case.

In our jurisdiction, availment of the remedy of certiorari to correct an erroneous acquittal

may be allowed in cases where petitioner has clearly shown that the public respondent acted without jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction. However, and more serious than the procedural infraction, if the petition merely calls for an ordinary review of the findings of the court a quo, we would run afoul of the constitutional right against double jeopardy. Such recourse is tantamount to converting the petition for certiorari into an appeal, which is proscribed by the Constitution, the Rules of Court and prevailing jurisprudence on double jeopardy. Verdicts of acquittal are to be regarded as absolutely final and irreviewable. The fundamental philosophy behind the principle is to afford the defendant, who has been acquitted, final repose and to safeguard him from government oppression through the abuse of criminal processes. [G.R. No. 178884, June 30, 2008] RICARDO P. PRESBITERO, JR., JANET PALACIOS, CIRILO G. ABRASIA, ARMANDO G. ALVAREZ, NENITO A. ARMAS, RENE L. CORRAL, JOEMARIE A. DE JUAN, ENRILICE C. GENOBIS, WILLIAM A. PRESBITERO AND REYNO N. SOBERANO, PETITIONERS, VS. COMMISSION ON ELECTIONS, ROMMEL YOGORE, GLORY GOMEZ, DAN YANSON, JOENITO DURAN, SR., LUCIUS BODIOS AND REY SUMUGAT, RESPONDENTS.

FACTS: The MCTC Valladolid-San EnriquePulupandan, Negros Occidental ordered the municipal election officer (EO) of Valladolid to include the names of 946 individuals in the list of qualified voters of the said municipality for the May 2007 elections. Prompted by the advice of COMELEC Manila that decisions of trial courts of limited jurisdiction in inclusion/exclusion cases attain finality only after the lapse of five days from receipt of notice sans any appeal

therefrom, the acting provincial election supervisor (PES), directed the EO on May 13, 2007 not to comply with the MCTC order. Thus, the said 946 were disallowed by the board of election inspectors to vote. These 946 moved for the issuance of a TRO to prevent the Municipal Board of Canvassers from canvassing the election returns & from proclaiming the winning candidates for the local positions in the municipality. Such was granted. However, the MBOC continued canvassing & proclaimed the winning candidates. Presbitero et al thus filed before the COMELEC a pet. for declaration of failure of election and the holding of a special election because 946 voters were disenfranchised, the Election Officer of the municipality (also the ef-officio chair of the MBOC) was abruptly replaced, the # of voters was unusually low, no less than 2,000 supporters of petitioners failed to vote as their names were missing from the list of voters, the MBOC defied the TRO, and the acting provincial election supervisor and acting election officer threated & coerced the vice-chair & member-secretary of the MBOC to continue w/ the canvassing & the proclamation.

ISSUE: WHETHER OR NOT THERE WAS A FAILURE OF ELECTION.

HELD: NO. ELECTION.

THERE WAS NO FAILURE OF

RATIO: A failure of election may be declared only in the three instances stated in Section 6 of the OEC: the election has not been held; the election has been suspended before the hour fixed by law; and the preparation and the transmission of the election returns have given rise to the consequent failure to elect, meaning nobody emerged as the winner. Furthermore, the

reason for such failure of election should be force majeure, violence, terrorism, fraud or other analogous causes. Finally, before the COMELEC can grant a verified petition seeking to declare a failure of election, the concurrence of 2 conditions must be established, namely: (1) no voting has taken place in the precincts concerned on the date fixed by law or, even if there was voting, the election nevertheless resulted in a failure to elect; and (2) the votes cast would affect the result of the election. In the instant case, it is admitted by the petitioners that elections were held in the subject locality. Also, the private respondents and four of the petitioners won in the elections and were proclaimed as the duly elected municipal officials. There is nothing in the records from which the Court can make even a slim deduction that there has been a failure to elect. Absent any proof that the voting did not take place, the alleged disenfranchisement of the 946 individuals and 2,000 more supporters of the petitioners cannot even be considered as a basis for the declaration of a failure of election. Had petitioners been aggrieved by the allegedly illegal composition and proceedings of the MBOC, then they should have filed the appropriate pre-proclamation case contesting the aforesaid composition or proceedings of the board, rather than erroneously raising the same as grounds for the declaration of failure of election. On the TRO issued by the MCTC and the subsequent defiance thereof by the MBOC, suffice it to state that the propriety of suspending the canvass of returns or the proclamation of candidates is a pre-proclamation issue that is solely within the cognizance of the COMELEC.[21] In sum, petitioners have not adduced any ground which will warrant a declaration of failure of election.

TITLE OF THE CASE: MAPA

SALVADOR V.

DATE OF PROMULGATION: 28, 2007

SUBJECT AREA: Criminal Law

Civil

November

Procedure;

KEY DOCTRINES/CONCEPTS: Special Civil Action for Certiorari (Rule 65) vs. Petition for Review on Certiorari (Rule 45); Prescription; Ex Post Facto Laws

FACTS:

On October 8, 1992 then President Fidel V. Ramos issued Administrative Order No. 13 creating the Presidential Ad Hoc Fact-Finding Committee on Behest Loans. Behest loans are loans granted by government banks or GOCC at the behest, command, or urging by previous government officials to the disadvantage of the Philippine government. The Committee was tasked to inventory all behest loans and determine the courses of action that the government should take to recover these loans.

By Memorandum Order No. 61 dated November 9, 1992, the functions of the Committee were expanded to include all non-performing loans which shall embrace behest and non-behest loans. Said Memorandum also named criteria to be utilized as a frame of reference in determining a behest loan

Several loan accounts were referred to the Committee for investigation, including the loan transactions between Metals Exploration Asia, Inc. (MEA), now Philippine Eagle Mines, Inc. (PEMI) and the Development Bank of the Philippines (DBP). The Committee determined that they bore the characteristics of behest loans, as defined under Memorandum Order No. 61 because the stockholders and officers of PEMI were known cronies of then President Ferdinand Marcos; the loan was undercollateralized; and PEMI was undercapitalized at the time the loan was granted.

Consequently, Atty. Orlando L. Salvador, Consultant of the Fact-Finding Committee, and representing the PCGG, filed with the Ombudsman a sworn complaint for violation of Sections 3(e) and (g) of Republic Act No. 3019, or the Anti-Graft and Corrupt Practices Act, against the respondents Mapa, Jr. et. al.

The Ombudsman dismissed the complaint on the ground of prescription. It stressed that Section 11 of R.A. No. 3019 as originally enacted, provides that the prescriptive period for violations of the said Act (R.A. 3019) is ten (10) years. Moreover, the computation of the prescriptive period of a crime violating a special law like R.A. 3019 is governed by Act No. 3326 which provides that prescription shall begin to run from the day of the commission of the violation of law, and if the same be not known at the time, from the discovery thereof and the institution of the judicial proceedings for its investigation and punishment. Corollary thereto, the Supreme Court in the case of People vs. Dinsay, C.A. 40 O.G. 12th Supp., 50, ruled that when there is nothing which was concealed or needed to be discovered because the entire series of transactions were by public instruments, the period of

prescription commenced to run from the date the said instrument were executed.

In the case at bar, the loans were entered into by virtue of public documents (e.g., notarized contracts, board resolutions, approved letter-request) during the period of 1978 to 1981. Records show that the complaint was referred and filed with the Ombudsman on October 4, 1996 or after the lapse of more than fifteen years from the violation of the law. Therefore, the offenses charged had already prescribed.

Also pointed out was that the Presidential Ad Hoc Committee on Behest Loans was created on October 8, 1992 under Administrative Order No. 13. Subsequently, Memorandum Order No. 61, dated November 9, 1992, was issued defining the criteria to be utilized as a frame of reference in determining behest loans. Accordingly, if these Orders are to be considered the bases of charging respondents for alleged offenses committed, they become ex-post facto laws which are proscribed by the Constitution.

The Committee filed a Reconsideration, but the denied it on July 27, 1998.

Motion for Ombudsman

ISSUE 1: WON THE PRESENT PETITION FOR REVIEW ON CERTIORARI SHOULD BE DISMISSED FOR BEING THE WRONG REMEDY IN ELEVATING THE CASE TO THE SC.

DECISION: No.

RATIO:

A petition for review on certiorari under Rule 45 is not the proper mode by which resolutions of the Ombudsman in preliminary investigations of criminal cases are reviewed by the SC. The remedy from the adverse resolution of the Ombudsman is a petition for certiorari under Rule 65.

However, though captioned as a Petition for Review on Certiorari, the SC treated the petition as one filed under Rule 65 since a reading of its contents reveals that petioner imputes grave abuse of discretion to the Ombudsman for dismissing the complaint. The averments in the complaint, not the nomenclature given by the parties, determine the nature of the action.

ISSUE 2: WON THE CRIME DEFINED BY SEC. 3(e) AND (g) OF R.A. 3019 HAS ALREADY PRESCRIBED

DECISION: No

RATIO:

It is well-nigh impossible for the State to have known the violations of R.A. No. 3019 at the time the questioned transactions were made because the public officials concerned connived or conspired with the beneficiaries of the loans. Thus, the prescriptive period should be computed from the discovery of the commission thereof

and not from commission.

the

day

of

such

ISSUE 3: WON ADMINISTRATIVE ORDER NO. 13 AND MEMORANDUM ORDER NO. 61 ARE EX-POST FACTO LAW[S].

DECISION: No.

RATIO:

The SC did not sustain the Ombudsman’s declaration that Administrative Order No. 13 and Memorandum Order No. 61 violate the prohibition against ex post facto laws for ostensibly inflicting punishment upon a person for an act done prior to their issuance and which was innocent when done.

The constitutionality of laws is presumed. To justify nullification of a law, there must be a clear and unequivocal breach of the Constitution, not a doubtful or arguable implication. Furthermore, the Ombudsman has no jurisdiction to entertain questions on the constitutionality of a law. The Ombudsman, therefore, acted in excess of its jurisdiction in declaring unconstitutional the subject administrative and memorandum orders.

In any event, the SC held that Administrative Order No. 13 and Memorandum Order No. 61 are not ex post facto laws.

An ex post facto law has been defined as one — (a) which makes an action done before the passing of the law and which was innocent when done criminal, and punishes such action; or (b) which aggravates a crime or makes it greater than it was when committed; or (c) which changes the punishment and inflicts a greater punishment than the law annexed to the crime when it was committed; or (d) which alters the legal rules of evidence and receives less or different testimony than the law required at the time of the commission of the offense in order to convict the defendant. This Court added two (2) more to the list, namely: (e) that which assumes to regulate civil rights and remedies only but in effect imposes a penalty or deprivation of a right which when done was lawful; or (f) that which deprives a person accused of a crime of some lawful protection to which he has become entitled, such as the protection of a former conviction or acquittal, or a proclamation of amnesty.

The constitutional doctrine that outlaws an ex post facto law generally prohibits the retrospectivity of penal laws. Penal laws are those acts of the legislature which prohibit certain acts and establish penalties for their violations; or those that define crimes, treat of their nature, and provide for their punishment. The subject administrative and memorandum orders clearly do not come within the shadow of this definition. Administrative Order No. 13 creates the Presidential Ad Hoc Fact-Finding Committee on Behest Loans, and provides for its composition and functions. It does not mete out penalty for the act of granting behest loans. Memorandum Order No. 61 merely provides a frame of reference for determining behest loans. Not being penal laws, Administrative Order No. 13 and Memorandum Order No. 61 cannot be characterized as ex post facto laws.

Title of the Case: Sps Santos v Heirs of Lustre August 6, 2008 NACHURA CivPro: forum shopping, prescription

Facts:

Lustre owned a lot which she mortgaged & later on sold to Natividad Santos who subsequently sold it to her son Froilan for which a TCT was issued in his name.

Lustre’s heirs Macaspac & Maniquiz filed w/ RTC of Gapan, Nueva Ecija a Complaint for Declaration of the Inexistence of Contract, Annulment of Title, Reconveyance and Damages against Froilan Santos.

Lustre’s other heirs filed a Complaint for Annulment of Transfer Certificate of Title and Deed of Absolute Sale against spouses Santos, Froilan Santos, R Transport Corp, Cecilia Macaspac with the same RTC. Macaspac was impleaded as defendant in the 2nd case because she refused to join the other heirs as plaintiffs.

Alleging that the plaintiffs’ right of action for annulment of the Deed of Sale and TCT had long prescribed and was barred by laches, petitioners filed a Motion to Dismiss, also on the ground of litis pendentia.

The RTC denied the Motion to Dismiss. They then filed a petition for certiorari with the Court of Appeals (CA) which dismissed the petition for lack of merit.

Issue #1: Was there forum shopping Decision: No

they filed the 2nd case wherein they prayed that TCT Lustre be reinstated, or a new certificate of title be issued in her name.

Ratio: Forum shopping exists when the elements of litis pendentia are present or when a final judgment in one case will amount to res judicata in the other. Its elements are identity of the subject matter, identity of the causes of action and identity of the parties in the two cases. There is substantial identity of parties when there is a community of interest between a party in the first case and a party in the second case.

There is no forum shopping because there is no identity of parties because the plaintiff in the 1st case (Macaspac) does not, in fact, share a common interest with the plaintiffs in the 2nd case.

Plaintiffs in both cases are the heirs of Lustre; they are therefore co-owners of the property. However, the fact of being a coowner does not necessarily mean that a plaintiff is acting for the benefit of the coownership when he files an action respecting the co-owned property. Co-owners are not parties inter se in relation to the property owned in common. The test is whether the “additional” party, the co-owner in this case, acts in the same capacity or is in privity with the parties in the former action. [28]

Macaspac filed the 1st case seeking the reconveyance of the property to her, and not to Lustre or her heirs. This is a clear act of repudiation of the co-ownership which would negate a conclusion that she acted in privity with the other heirs or that she filed the complaint in behalf of the co-ownership. In contrast, respondents were evidently acting for the benefit of the co-ownership when

Issue #1: Does prescription or laches apply? Decision: No Ratio:

The action for reconveyance on the ground that the certificate of title was obtained by means of a fictitious deed of sale is virtually an action for the declaration of its nullity, which does not prescribe. Moreover, a person acquiring property through fraud becomes, by operation of law, a trustee of an implied trust for the benefit of the real owner of the property. An action for reconveyance based on an implied trust prescribes in ten years. And in such case, the prescriptive period applies only if there is an actual need to reconvey the property as when the plaintiff is not in possession of the property. Otherwise, if plaintiff is in possession of the property, prescription does not commence to run against him. Thus, when an action for reconveyance is nonetheless filed, it would be in the nature of a suit for quieting of title, an action that is imprescriptible.

It follows then that the respondents’ present action should not be barred by laches. Laches is a doctrine in equity, which may be used only in the absence of, and never against, statutory law. Obviously, it cannot be set up to resist the enforcement of an imprescriptible legal right.[39]

Title of the Case: Tabuada v Hon Ruiz June 27, 2008 NACHURA

SpecPro: non-contentious nature of special proceedings, compromise/amicable settlement

Facts: In the proceedings for the settlement of the intestate estate, trial court issued the following Order: In view of the strong manifestation of the parties herein and their respective counsel that they will be able to raise (sic) an amicable settlement, finally, on or before 25 December 2004, the Court will no longer be setting the pending incidents for hearing as the parties and their counsel have assured this Court that they are going to submit a “Motion for Judgment Based On An Amicable Settlement” on or before 25 December 2004.

The RTC, invoking Section 3,[5] Rule 17, of the Rules of Court, terminated the proceedings on account of the parties’ failure to submit the amicable settlement and to comply with its Order.

Issue #1: Was the termination of the case premature? Decision: Yes Ratio: While a compromise agreement or an amicable settlement is very strongly encouraged, the failure to consummate one does not warrant any procedural sanction, much less provide an authority for the court to jettison the case. The case should not have been terminated or dismissed by the trial court on account of the mere failure of the parties to submit the promised amicable settlement and/or the Motion for Judgment Based On An Amicable Settlement. Given

the non-contentious nature of special proceedings[11] (which do not depend on the will of an actor, but on a state or condition of things or persons not entirely within the control of the parties interested), its dismissal should be ordered only in the extreme case where the termination of the proceeding is the sole remedy consistent with equity and justice, but not as a penalty for neglect of the parties therein.

The third clause of Section 3, Rule 17, which authorizes the motu propio dismissal of a case if the plaintiff fails to comply with the rules or any order of the court,[13] cannot even be used to justify the convenient, though erroneous, termination of the proceedings herein. The RTC, in its Order, neither required the submission of the amicable settlement or the aforesaid Motion for Judgment, nor warned the parties that should they fail to submit the compromise within the given period, their case would be dismissed. Hence, it cannot be categorized as an order requiring compliance to the extent that its defiance becomes an affront to the court and the rules. And even if it were worded in coercive language, the parties cannot be forced to comply, for, as aforesaid, they are only strongly encouraged, but are not obligated, to consummate a compromise. An order requiring submission of an amicable settlement does not find support in our jurisprudence and is premised on an erroneous interpretation and application of the law and rules. MAYOR JOSE UGDORACION, JR. v COMMISSION ON ELECTIONS and EPHRAIM M. TUNGOL April 18, 2008, NACHURA PUB OFF • Acquisition of a permanent resident status abroad constitutes an abandonment of domicile and residence in the Philippines. Thus, the

•

•

“green card” status in the USA is a renunciation of one’s status as a resident of the Philippines. Domicile is the place where one actually or constructively has his permanent home, where he, no matter where he may be found at any given time, eventually intends to return (animus revertendi) and remain (animus manendi). Domicile is classified into (1) domicile of origin, which is acquired by every person at birth; (2) domicile of choice, which is acquired upon abandonment of the domicile of origin; and (3) domicile by operation of law, which the law attributes to a person independently of his residence or intention.

FACTS Jose Ugdoracion and Ephraim Tungol were rival mayoralty candidates in Albuquerque, Bohol in the May 2007 elections. Tungol filed a petition to cancel Ugdoracion’s Certificate of Candidacy contending that the latter’s declaration of eligibility for Mayor constituted material misrepresentation; that he is actually a “green card” holder or a permanent resident of the US. It appears that Ugdoracion became a permanent US resident on September 26, 2001 and was issued an Alien Number by the USINS. Ugdoracion, on the other hand, presented the following documents as proof of his substantial compliance with the residency requirement: (1) a residence certificate; (2) an application for a new voter’s registration; and (3) a photocopy of Abandonment of Lawful Permanent Resident Status. COMELEC cancelled Ugdoracion’s COC and removed his name from the certified list of candidates for Mayor. His motion for recon was denied. Hence, the petition imputing grave abuse of discretion to the COMELEC. ISSUE #1 Whether there is material misrepresentation which is a valid ground for the cancellation of Ugdoracion’s COC DECISION YES

RATIO Section 74, in relation to Section 78 of the Omnibus Election Code, requires that the facts stated in the COC must be true, and any false representation therein of a material fact shall be a ground for cancellation thereof, thus: SEC. 74. Contents of certificate of candidacy. — The certificate of candidacy shall state that the person filing it is announcing his candidacy for the office stated therein and that he is eligible for said office; if for Member of the Batasang Pambansa, the province, including its component cities, highly urbanized city or district or sector which he seeks to represent; the political party to which he belongs; civil status; his date of birth; residence; his post office address for all election purposes; his profession or occupation; that he will support and defend the Constitution of the Philippines and will maintain true faith and allegiance thereto; that he will obey the laws, legal orders, and decrees promulgated by the duly constituted authorities; that he is not a permanent resident or immigrant to a foreign country; that the obligation assumed by his oath is assumed voluntarily, without mental reservation or purpose of evasion; and that the facts stated in the certificate of candidacy are true to the best of his knowledge. xxxx SEC. 78. Petition to deny due course to or cancel a certificate of candidacy. – A verified petition seeking to deny due course or to cancel a certificate of candidacy may be filed by any person exclusively on the ground that any material

representation contained therein as required under Section 74 hereof is false. The petition may be filed at any time not later than twenty-five days from the time of the filing of the certificate of candidacy and shall be decided, after due notice and hearing not later than fifteen days before the election. The false representation contemplated by Section 78 of the Code pertains to material fact, and is not simply an innocuous mistake. A material fact refers to a candidate’s qualification for elective office such as one’s citizenship and residence. Aside from the requirement of materiality, a false representation under Section 78 must consist of a “deliberate attempt to mislead, misinform, or hide a fact which would otherwise render a candidate ineligible.” Section 74 specifically requires a statement in the COC that the candidate is “not a permanent resident or an immigrant to a foreign country.” Ugdoracion explicitly stated in his COC that he had resided in Albuquerque, Bohol before the May 2007 elections for 41 years. Even if Ugdoracion might have been of the mistaken belief that he remained a resident of the Philippines, he hid the fact of his immigration to the USA and his status as a “green card” holder. Although Ugdoracion have won the election as Mayor of Albuquerque before, it does not substitute for the specific requirements of law on a person’s eligibility for public office which he lacked, and does not cure his material misrepresentation which is a valid ground for the cancellation of his COC. ISSUE #2 Whether Ugdoracion lost his domicile of origin DECISION YES RATIO

Residence, in contemplation of election laws, is synonymous to domicile. Domicile is the place where one actually or constructively has his permanent home, where he, no matter where he may be found at any given time, eventually intends to return (animus revertendi) and remain (animus manendi). Domicile is classified into (1) domicile of origin, which is acquired by every person at birth; (2) domicile of choice, which is acquired upon abandonment of the domicile of origin; and (3) domicile by operation of law, which the law attributes to a person independently of his residence or intention. We are guided by three basic rules: (1) a man must have a residence or domicile somewhere; (2) domicile, once established, remains until a new one is validly acquired; and (3) a man can have but one residence or domicile at any given time. The general rule is that the domicile of origin is not easily lost; it is lost only when there is an actual removal or change of domicile, a bona fide intention of abandoning the former residence and establishing a new one, and acts which correspond with such purpose. In the instant case, however, Ugdoracion’s acquisition of a lawful permanent resident status in the US amounted to an abandonment and renunciation of his status as a resident of the Philippines; it constituted a change from his domicile of origin, which was Albuquerque, Bohol, to a new domicile of choice, which is the USA.

Title of the Case: Unlad v Dragon June 27, 2008 NACHURA ObliCon: jurisdiction, rescission

Facts: The parties entered in a Memorandum of Agreement: respondents as controlling stockholders of the Rural Bank shall allow Unlad Resources to subscribe to a minimum of P480, 000 common or preferred nonvoting shares of stock with a total par value of P4.8 M and pay up immediately P1.2M for said subscription; that the respondents,

upon the signing of the said agreement shall transfer control and management over the Rural Bank to Unlad Resources. The respondents complied with their obligation but the petitioners did not, thus respondents filed a Complaint for rescission of the agreement and the return of control and management of the Rural Bank from petitioners to respondents, plus damages. RTC declared the MOA rescinded &ordered to immediately return control and management over the Rural to respondents. Petitioners appealed to the CA which dismissed the appeal for lack of merit. Petitioners contend that the issues court are intra-corporate in nature and are, therefore, beyond the jurisdiction of the trial court. They point out that respondents' complaint charged them with mismanagement and alleged dissipation of the assets of the Rural Bank.

Issue #1: Does RTC have jurisdiction over the case? Decision: Yes Ratio: The main issue in this case is the rescission of the Memorandum of Agreement. This is to be distinguished from respondents' allegation of the alleged mismanagement and dissipation of corporate assets by the petitioners, which is based on the prayer for receivership over the bank. The two issues, albeit related, are obviously separate, as they pertain to different acts of the parties involved. The issue of receivership does not arise from the parties' obligations under the Memorandum of Agreement, but rather from specific acts attributed to petitioners as members of the Board of Directors of the Bank. Clearly, the rescission of the Memorandum of Agreement is a cause of action within the jurisdiction of the trial courts, notwithstanding the fact that the

parties involved are all directors of the same corporation. The petitioners insist that the trial court had no jurisdiction over the complaint because the issues involved are intra-corporate in nature. This point has been rendered moot by RA 8799, also known as the Securities Regulation Code, which took effect in 2000, transferred jurisdiction over such disputes to the RTC.

Issue #2: Has the action prescribed? Decision: No Ratio: Petitioners contend that the action for rescission has prescribed under Article 1398 of the Civil Code, which provides: The action to claim rescission must be commenced within 4 years. This is an erroneous proposition. Article 1389 specifically refers to rescissible contracts as, clearly, this provision is under the chapter entitled "Rescissible Contracts." Article 1389 applies to rescissible contracts, as enumerated and defined in Articles 1380 and 1381. The "rescission" in Article 1381 is not akin to the term "rescission" in Article 1191 and Article 1592. In Articles 1191 and 1592, the rescission is a principal action which seeks the resolution or cancellation of the contract while in Article 1381, the action is a subsidiary one limited to cases of rescission for lesion as enumerated in said article. The prescriptive period applicable to rescission under Articles 1191 and 1592, is found in Article 1144, which provides that the action upon a written contract should be brought within ten years from the time the right of action accrues.

Article 1381 sets out what are rescissible contracts, to wit:

Issue #2: Did the RTC correctly rule for the rescission of the MOA?

Article 1381. The following contracts are rescissible: (1) Those which are entered into by guardians whenever the wards whom they represent suffer lesion by more than onefourth of the value of the things which are the object thereof; (2) Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the preceding number; (3) Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them; (4) Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority; (5) All other contracts specially declared by law to be subject to rescission.

Decision: Yes

The Memorandum of Agreement subject of this controversy does not fall under the above enumeration. Accordingly, the prescriptive period that should apply to this case is that provided for in Article 1144, to wit: The following actions must be brought within ten years from the time the right of action accrues: (1) Upon a written contract;

The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.

Based on the records of this case, the action was commenced on July 3, 1987, while the Memorandum of Agreement was entered into on December 29, 1981. Article 1144 specifically provides that the 10-year period is counted from "the time the right of action accrues." The right of action accrues from the moment the breach of right or duty occurs. Thus, the original Complaint was filed well within the prescriptive period.

Ratio: Petitioners failed to fulfill their obligation under the MOA. Even they admit the same, albeit laying the blame on respondents. It is true that respondents increased the Rural Bank's authorized capital stock to only P5 million, which was not enough to accommodate the P4.8 million worth of stocks that petitioners were to subscribe to and pay for. However, respondents' failure to fulfill their undertaking in the agreement would have given rise to the scenario contemplated by Article 1191 of the Civil Code, which reads: Article 1191. The power to rescind reciprocal obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him.

The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law. Thus, petitioners should have exacted fulfillment from the respondents or asked for the rescission of the contract instead of simply not performing their part of the Agreement. But in the course of things, it was the respondents who availed of the remedy under Article 1191, opting for the

rescission of the Agreement in order to regain control of the Rural Bank. Having determined that the rescission of the subject Memorandum of Agreement was in order, the trial court ordered petitioner Unlad Resources to return to respondents the management and control of the Rural Bank and for the latter to return the sum of P1,003,070.00 to petitioners. Mutual restitution is required in cases involving rescission under Article 1191. This means bringing the parties back to their original status prior to the inception of the contract.[14] Article 1385 of the Civil Code provides, thus: ART. 1385. Rescission creates the obligation to return the things which were the object of the contract, together with their fruits, and the price with its interest; consequently, it can be carried out only when he who demands rescission can return whatever he may be obligated to restore. Neither shall rescission take place when the things which are the object of the contract are legally in the possession of third persons who did not act in bad faith. In this case, indemnity for damages may be demanded from the person causing the loss. This Court has consistently ruled that this provision applies to rescission under Article 1191: [S]ince Article 1385 of the Civil Code expressly and clearly states that "rescission creates the obligation to return the things which were the object of the contract, together with their fruits, and the price with its interest," the Court finds no justification to sustain petitioners' position that said Article 1385 does not apply to rescission under Article 1191.[15] Rescission has the effect of "unmaking a contract, or its undoing from the beginning,

and not merely its termination."[16] Hence, rescission creates the obligation to return the object of the contract. It can be carried out only when the one who demands rescission can return whatever he may be obliged to restore. To rescind is to declare a contract void at its inception and to put an end to it as though it never was. It is not merely to terminate it and release the parties from further obligations to each other, but to abrogate it from the beginning and restore the parties to their relative positions as if no contract has been made.[17] Accordingly, when a decree for 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 his original situation. The rescission has the effect of abrogating the contract in all parts. [18]

Clearly, the petitioners failed to fulfill their end of the agreement, and thus, there was just cause for rescission. With the contract thus rescinded, the parties must be restored to the status quo ante, that is, before they entered into the Memorandum of Agreement.

Primer on the SC Decision in Neri vs. Senate Committee April 3, 2008 in CuRReNT IsSues Primer on the Supreme Court Decision in Neri vs. Senate Committee and its Implications IN GENERAL: What is the case of Neri vs. Senate Committee? This case is about the Senate investigation of anomalies concerning the NBN-ZTE project. During the hearings, former NEDA head Romulo Neri refused to answer certain questions involving his conversations with President Arroyo on the ground they are covered by executive privilege. When the Senate cited him in contempt and ordered his arrest, Neri filed a case against the Senate with the Supreme Court. On March 25, 2008, the Supreme Court ruled in favor of Neri and upheld the claim of executive privilege. What is “executive privilege”? It is the right of the President and high-level executive branch officials to withhold information from Congress, the courts and the public. It is a privilege of confidentiality which applies to certain types of information of a sensitive character that would be against the public interest to disclose. Executive privilege is based on the constitution because it relates to the President’s effective discharge of executive powers. Its ultimate end is to promote public interest and no other. Is executive privilege absolute? No. Any claim of executive privilege must be weighed against other interests recognized by the constitution, like the state policy of full public disclosure of all transactions involving public interest, the right of the people to information on matters of public concern, the accountability of public officers, the power of legislative inquiry, and the judicial power to secure evidence in deciding cases. Did the revocation by the President of E.O. 464 on March 6, 2008 diminish the concept of executive privilege? No. Executive privilege may still be invoked despite the President’s revocation of E.O. 464 because it is based on the constitution. ON THE CONTENTS OF THE SUPREME COURT DECISION: What events led to the filing of the case before the Supreme Court? On April 21, 2007, the DOTC and Zhing Xing Telecommunications Equipment (ZTE), a corporation owned by the People’s Republic of

China, executed a “Contract for the Supply of Equipment and Services for the National Broadband Network Project” (NBN-ZTE Contract) worth US$329,481,290.00 (around PhP 16B). The project sought to provide landline, cellular and internet services in government offices nationwide and was to be financed through a loan by China to the Philippines. President Arroyo witnessed the contract signing in China. After its signing, reports of anomalies concerning the project (e.g., bribery, “overpricing” by US$ 130M, “kickback commissions” involving top government officials, and loss of the contract) prompted the Senate, through the Committees on Accountability of Public Officers and Investigations (Blue Ribbon), Trade and Commerce, and National Defense and Security, to conduct an inquiry in aid of legislation. The inquiry was based on a number of Senate resolutions and in connection with pending bills concerning funding in the procurement of government projects, contracting of loans as development assistance, and Senate concurrence to executive agreements. In one of the hearings held on Sept. 26, 2007, former NEDA Director General Romulo Neri testified that President Arroyo initially gave instructions for the project to be undertaken on a Build-OperateTransfer (BOT) arrangement so the government would not spend money for it, but eventually the project was awarded to ZTE with a government-to-government loan from China. He also said that then COMELEC Chairman Benjamin Abalos, the alleged broker in the project, offered him PhP 200M in exchange for NEDA’s approval of the project. Neri testified that when he told President Arroyo of the bribe offer, she told him not to accept it. But Neri refused to answer questions about what he and the President discussed after that, invoking executive privilege since they concerned his conversations with the President. The Senate required him to appear again and testify on November 20, 2007. On November 15, 2007, Executive Secretary Eduardo Ermita wrote the Senate Committees and asked that Neri’s testimony on November 20, 2007 be dispensed with because he was invoking executive privilege “by Order of the President” specifically on the following questions: a. Whether the President followed up on the NBN project? b. Were you dictated to prioritize the ZTE? c. Whether the President said to go ahead and approve the project after being told about the alleged bribe? When Neri failed to appear on November 20, 2007, the Senate required him to show cause why he should not be cited in contempt. Neri explained that he thought the only remaining questions were those he claimed to be covered by executive privilege and that should there be new matters to be taken up, he asked that he be informed in advance of what else he needs to clarify so he could prepare himself. On Dec. 7, 2007, Neri questioned the validity of the Senate’s show cause order before the Supreme Court. On January 30, 2008, the Senate cited Neri in contempt and ordered his arrest for his failure to appear in the Senate hearings. On February 1, 2008, Neri asked the Supreme Court to stop the Senate from implementing its contempt

order, which the Court granted on Feb. 5, 2008. The Supreme Court also required the parties to observe the status quo prevailing before the issuance of the contempt order. What reasons were given for the claim of executive privilege? Executive Secretary Ermita said that “the context in which executive privilege is being invoked is that the information sought to be disclosed might impair our diplomatic as well as economic relations with the People’s Republic of China.” Neri further added that his “conversations with the President dealt with delicate and sensitive national security and diplomatic matters relating to the impact of the bribery scandal involving high government officials and the possible loss of confidence of foreign investors and lenders in the Philippines.” What issues were considered by the Supreme Court in resolving the case? The Supreme Court said there were two crucial questions at the core of the controversy: a. Are the communications sought to be elicited by the three questions covered by executive privilege? b. Did the Senate Committees commit grave abuse of discretion in citing Neri in contempt and ordering his arrest? How did the Supreme Court resolve these issues? The Supreme Court first recognized the power of Congress to conduct inquiries in aid of legislation. The Court said that the power extends even to executive officials and the only way for them to be exempted is through a valid claim of executive privilege. On the first question, the Supreme Court said that the communications sought to be elicited by the three questions are covered by the presidential communications privilege, which is one type of executive privilege. Hence, the Senate cannot compel Neri to answer the three questions. On the second question, the Supreme Court said that the Senate Committees committed grave abuse of discretion in citing Neri in contempt. Hence, the Senate order citing Neri in contempt and ordering his arrest was not valid. What are the types of executive privilege? a. state secrets (regarding military, diplomatic and other security matters) b. identity of government informers c. information related to pending investigations d. presidential communications e. deliberative process In what cases is the claim of executive privilege highly recognized?

The claim of executive privilege is highly recognized in cases where the subject of inquiry relates to a power textually committed by the constitution to the President, such as the commander-in-chief, appointing, pardoning, and diplomatic powers of the President. Information relating to these powers may enjoy greater confidentiality than others. What specifically are the executive privileges relating to deliberations or communications of the President and other government officials? These are the presidential communications privilege and the deliberative process privilege. How are the presidential communications privilege and the deliberative process privilege distinguished? The presidential communications privilege applies to decision-making of the President. It pertains to “communications, documents or other materials that reflect presidential decision-making and deliberations and that the President believes should remain confidential”. The deliberative process privilege applies to decision-making of executive officials. It includes “advisory opinions, recommendations and deliberations comprising part of a process by which governmental decisions and policies are formulated.” Unlike the deliberative process privilege, the presidential communications privilege applies to documents in their entirety, and covers final and post-decisional materials as well as predeliberative ones. Moreover, congressional or judicial negation of the presidential communications privilege is always subject to greater scrutiny than denial of the deliberative process privilege. What is the type of executive privilege claimed in this case? The type of executive privilege claimed in this case is the presidential communications privilege. Is there a presumption in favor of presidential communications? Yes. Presidential communications are “presumptively privileged”. The presumption is based on the President’s generalized interest in confidentiality. The privilege is necessary to guarantee the candor of presidential advisors and to provide the President and those who assist him with freedom to explore alternatives in the process of shaping policies and making decisions and to do so in a way many would be unwilling to express except privately. The presumption can be overcome only by mere showing of public need by the branch seeking access to presidential communications.

Who are covered by the presidential communications privilege? Aside from the President, the presidential communications privilege covers senior presidential advisors or Malacanang staff who have “operational proximity” to direct presidential decision-making. What are the elements of the presidential communications privilege? The following are the elements of the presidential communications privilege: a. The protected communication must relate to a “quintessential and non-delegable presidential power”. b. The communication must be authored or “solicited and received” by a close advisor of the President or the President himself. The advisor must be in “operational proximity” with the President. c. The privilege is a qualified privilege that may be overcome by a showing of adequate or compelling need that would justify the limitation of the privilege and that the information sought is unavailable elsewhere by an appropriate investigating agency. What are examples of “quintessential and non-delegable presidential powers” which are covered by the presidential communications privilege? The privilege covers only those functions which form the core of presidential authority. These are functions which involve “quintessential and non-delegable presidential powers” such as the powers of the president as commander-in-chief (i.e., to call out the armed forces to suppress violence, to declare martial law, or to suspend the privilege of the writ of habeas corpus), the power to appoint officials and remove them, the power to grant pardons and reprieves, the power to receive ambassadors, and the power to negotiate treaties and to enter into execute agreements. Are the elements of the presidential communications privilege present in this case? Yes. The communications elicited by the three questions are covered by the presidential communications privilege because: a. First, the communications relate to the power of the President to enter into an executive agreement with other countries. b. Second, the communications are received by Neri, who as a Cabinet member can be considered a close advisor of the President. c. Third, the Senate Committees have not adequately shown a compelling need for the answers to the three questions in the enactment of a law and of the unavailability of the information elsewhere by an appropriate investigating authority. Does the grant of the claim of executive privilege violate the right of the people to information on matters of public concern? No, for the following reasons:

a. Neri appeared before the Senate on Sept. 26, 2007 and was questioned for 11 hours. He also expressed his willingness to answer more questions from the Senators, except the three questions. b. The right to information is subject to limitation, such as executive privilege. c. The right of Congress to obtain information in aid of legislation cannot be equated with the people’s right to information. Congress cannot claim that every legislative inquiry is an exercise of the people’s right to information. Was the claim of executive privilege properly invoked by the President in this case? Yes. For the claim to be properly invoked, there must be a formal claim by the President stating the “precise and certain reason” for preserving confidentiality. The grounds relied upon by Executive Secretary Ermita are specific enough, since what is required is only that an allegation be made “whether the information demanded involves military or diplomatic secrets, closed-door Cabinet meetings, etc.” The particular ground must only be specified, and the following statement of grounds by Executive Secretary Ermita satisfies the requirement: “The context in which executive privilege is being invoked is that the information sought to be disclosed might impair our diplomatic as well as economic relations with the People’s Republic of China.” What reasons were given by the Supreme Court in holding that it was wrong for the Senate to cite Neri in contempt and order his arrest? a. There was a legitimate claim of executive privilege. b. The Senate’s invitations to Neri did not include the possible needed statute which prompted the inquiry, the subject of inquiry, and the questions to be asked. c. The contempt order lacked the required number of votes. d. The Senate’s rules of procedure on inquiries in aid of legislation were not duly published. e. The contempt order is arbitrary and precipitate because the Senate did not first rule on the claim of executive privilege and instead dismissed Neri’s explanation as unsatisfactory. IMPLICATIONS OF THE SUPREME COURT DECISION: Who has the burden of showing whether or not a claim of executive privilege is valid? Executive privilege is in derogation of the search for truth. However, the decision recognized Presidential communications as presumptively privileged. Hence, the party seeking disclosure of the information has the burden of overcoming the presumption in favor of the confidentiality of Presidential communications. This presumption is inconsistent with the Court’s earlier statement in Senate vs. Ermita (April 20, 2006) that “the presumption inclines heavily against executive secrecy and in favor of disclosure”. It

is also inconsistent with constitutional provisions on transparency in governance and accountability of public officers, and the right of the people to information on matters of public concern. Does the decision expand the coverage of executive privilege? Yes, the decision expands the coverage of executive privilege in at least two ways: a. The decision explained that the presidential communications privilege covers communications authored or “solicited and received” by a close advisor of the President or the President himself. This means that the privilege applies not only to communications that directly involve the President, but also to communications involving the President’s close advisors, i.e., those in “operational proximity” with the President. There is no definition of “operational proximity”, so it is not clear how far down the chain of command the privilege extends. This expansion of the coverage of the privilege means that information in many areas of the executive branch will become “sequestered” from public view. b. The decision also stated that the presidential communications privilege applies to documents in their entirety, and covers final and post-decisional materials as well as pre-deliberative ones. This means that the privilege protects not only the deliberative or advice portions of documents, i.e., communications made in the process of arriving at presidential decisions, but also factual material or information concerning decisions already reached by the President. How will the decision affect other investigations? The decision makes it easy for the President to invoke executive privilege, since what is required is only that an allegation be made “whether the information demanded involves military or diplomatic secrets, closed-door Cabinet meetings, etc.” This in effect will enable the use of executive privilege to hide misconduct or crime. According to Fr. Bernas, S.J., the implication of the ruling is that once the “presidential communications privilege” is invoked, no evidence is needed to support it even if there are valid reasons for disclosing the information sought. “This would revolutionize the doctrine in a manner that can affect all other investigations. This can, for instance, hamper effective use of the … writ of amparo and writ of habeas data. It can also cripple efforts to battle official corruption ….” In particular, what is the effect of the decision on the Senate’s power to conduct inquiries in aid of legislation? The decision severely limits the Senate’s power of legislative inquiry and its ability to investigate government anomalies in aid of legislation. The decision encroaches upon matters internal to the Senate as an institution separate from and co-equal to other branches of government. The decision, for instance, requires the Senate to give its questions

in advance of its hearings. But this is a requirement applicable only to the question hour and not to inquiries in aid of legislation. Moreover, it is impractical, since follow-up questions of Senators will be difficult to anticipate. The decision also requires the Senate to publish its rules of procedure on legislative inquiries every three years. But the Senate traditionally considered as a continuing body. Senate committees continue to work even during senatorial elections. By tradition and practice, the Senate does not re-publish its rules. To require publication of its rules every three years is unnecessary and inconsistent with its tradition and practice. Did the Supreme Court ruling establish a doctrine on executive privilege? No. Although the vote is 9 – 6 in favor of upholding the claim of executive privilege, two of the nine Justices concurred merely in the result, while one Justice argued not on the basis of executive privilege. Hence, only six out of the nine Justices explained their votes in favor of the claim of executive privilege. Six out of a total of 15 Justices do not establish a doctrine. Can the Senate continue with its investigations despite the Supreme Court ruling? The decision does not stop the Senate from continuing with its investigations and from undertaking other inquiries, although the government has already declared that officials will not appear unless the Senate rules are first published. Should Neri (and other officials) appear, the Senate can ask him questions other than the three questions. But Neri may again invoke executive privilege on other questions, which could result in another case before the Supreme Court, and the cycle may be repeated again and again. Such a situation, particularly where there appears to be a pattern of concealment in government activities, will ultimately be harmful to public interest. Prepared by: ATTY. CARLOS P. MEDINA, JR. Ateneo Human Rights Center March 30, 2008